Ukraine’s thriving tech sector tries to hang on even as Russia’s attacks intensify

Before Russia invaded Ukraine, Vik Bogdanov was a digital marketer, writing content in Kyiv for a robotics and custom software company and contributing to the open-source coding site Hacker Noon.

Now, he splits his time between his day job and trying to hack websites in Russia and Belarus, as part of the Ukrainian “IT Army,” a volunteer group of around 200,000 people engaged in a cyber conflict with Moscow. From his apartment in Kyiv, he told Rest of World that he knows many other IT workers who joined Ukrainian defense units or volunteered to help civilians hiding in bomb shelters. Others have become refugees, driving in long lines from the city as they flee bombs and shootings.

“I can’t carry arms, I can’t shoot, I can’t do anything, but I can use my skills on the information front,” Bogdanov said. 

Bogdanov is one of thousands of Ukrainians who have built a career in the country’s IT sector over the last decade. Ukraine has emerged as one of the most important centers for the global tech industry, as firms from Western Europe, North America, and Asia have moved there to tap a large pool of technical talent on the eastern border of the European Union. By 2022, there were 285,000 IT professionals in the country, according to the IT Ukraine Association, and the country has produced several homegrown tech unicorns, including DevOps platform GitLab and typing assistant company Grammarly. 

But the impact of the invasion has rippled through the technology sector, causing disruptions to businesses and supply chains which resonate globally.

“If Ukraine becomes unavailable, there will be visible effects on the global IT industry,” said Roman Pavlyuk, vice president of digital strategy at Intellias, a software firm with 2,000 employees in Ukraine. Half of Intellias’ staff have had to leave their homes.

Pavlyuk was attending a client workshop during a business trip in the U.S. when the war started and he first heard the news. “War is always a surprise,” he said. But, he added, Ukrainian companies have been living in a state of alert for almost eight years. In 2014, Russia forcibly annexed Crimea and began to sponsor a proxy war in breakaway provinces in the east of Ukraine, conflicts that continued to simmer until the full-scale invasion in February 2022. 

“Many [local] companies were born since the war was started eight years ago,” Olga Afanasyeva, head of the Kyiv office at software company ELEKS, told Rest of World.

Ukraine’s tech sector has experienced a boom in recent years. Since President Volodymyr Zelensky took office in 2019, the government shifted focus towards the technology sector, offering companies tax breaks and investing heavily in digitizing the country’s ponderous, paper-based post-Soviet bureaucracy. The new government set up the Ministry of Digital Transformation, headed by Mykhailo Fedorov, which was tasked with creating a “state in a smartphone,” aiming to put 100% of government services online by 2024. As well as making the state more efficient, the digital government initiatives tried to imprint technology into the country’s economic identity — Fedorov was later promoted to vice prime minister. 

The strategy seemed to be paying dividends. In 2021, IT exports reached $6.8 billion, up more than a third from the previous year. The country is now home to engineering centers from Google, Samsung and Boeing. The country has also become a software outsourcing hub, competing with India, the industry’s runaway leader, for clients. Some Indian outsourcing companies have joined the rush themselves, setting up subsidiary offices in Ukraine.

The scale of investments into Ukraine by tech companies in 2021 shows how unthinkable the invasion felt just a few months ago, said Evgeny Gurin, a political risk analyst at the consultancy GPW: “It felt like a freak scenario that took the entire world by surprise.” 

At the beginning of February, a survey by the IT Ukraine Association, the country’s largest IT company association, found that companies thought the risks of armed escalation were “low to medium,” but that 92% had an emergency plan in the works in case of a possible invasion. Many companies have since moved their staff out of the country, or to safer areas such as Lviv, a city close to the Polish border. Bogdanov said his company organized buses for its staff. However, he’s staying in Kyiv for now.

“To be honest, [my day] doesn’t look much different from the pre-war-time, because I’ve been working from home since the pandemic,” said Bogdanov. “We have some disruptions, explosions and gunfire, the sounds of cruise missiles. Of course, in these moments, all I can think of is my safety.”

Remote working has become a feature of the local IT sector since the pandemic, and the industry is well-capitalized, meaning that it’s fairly resilient, according to Kostyantyn Gridin, partner at Kyiv-based digital agency CFC Big Ideas. Many companies in Ukraine are trying to reassure their international partners that they can remain open. People are also still working, “driven by adrenaline” and “trying to be united,” said Afanasyeva. 

Even so, the impact of the invasion on the sector, and the Ukrainian economy as a whole, has been devastating. Just over half of all Ukrainian companies are currently operating, according to a survey by the European Business Association in Ukraine. The economy, as a whole, needs huge support packages to keep operating, and the government has requested emergency financing of $1.4 billion from the International Monetary Fund. With the conflict still raging, it’s too early to forecast the impact on global tech, analysts said. But it’s likely to be severe, particularly if Russia succeeds in occupying the country. At Intellias, Pavlyuk said the impact of Ukraine going offline on North American industry could be measured in “hundreds of billions of dollars.”

For the time being, the priority in the Ukrainian tech sector is survival. “They’re thinking about their lives and just trying to survive and fight for their country,” said Gurin, the risk analyst. But, he added, if Ukraine is able to defend itself, it’s likely to see a massive influx of tech investment, due to the outpouring of support and solidarity from the international community.

The same can’t be said for Russia. The global tech sector has been quick to distance itself from Russia and to show support for Ukraine. “Associations with Russia have become so toxic that companies have felt pressured to support Ukraine in some way,” Gurin said.