THE LABOR MARKET IN THE UKRAINIAN IT SECTOR DURING THE WAR
INTRODUCTION
The IT sector has attracted considerable public attention over the past decades and has influenced economic and socio-cultural aspects, becoming a phenomenon of the 21st century. The generators of the buzz around IT have traditionally been not only the relatively high hard currency salaries and low entry threshold for active young people but also the crazy annual revenue growth rates and significant export orientation. However, despite this scale of IT industry development, the crisis managed to shake this mechanism from within.
The news that in recent years the IT community has been going through hard times both in the world and in Ukraine is unsurprising.
The Ukrainian IT sector had high hopes and showed itself on par with many highly developed European countries, but what happened to it after the war started? What do the statistics look like today and what to expect in the near future? This is the research that our article aims to explore.
WHAT HAS BEEN HAPPENING OVER THE LAST FEW YEARS AROUND THE WORLD
Before we get directly to what is happening to the IT sector in Ukraine, let's rewind the tape and look at what has been happening over the last few years around the world.
Mass layoffs in IT companies have become one of the most notable events in the technology sector. According to statistics, in 2022, more than 155,000 IT specialists lost their jobs and more than a thousand IT companies announced layoffs. In the first three weeks of 2023, more than 150 organizations announced layoffs of 55,000 specialists. The momentum of layoffs has picked up significantly early in the year, with the number of those who lost their jobs in the first three weeks of the year exceeding by a third of those who were laid off in 2022.
Among the companies that decided to say goodbye to their staff are startups, tech giants Meta, Twitter, Amazon, Google, and Vimeo, and mid-sized companies operating in various market segments - from cryptocurrencies and digital entertainment to e-commerce and social platforms.
According to experts, the global crisis is slowly easing and the world economy is approaching a soft landing, but risks remain.
It is important to realize that the IT industry is not a separate universe, and all economic, political, and social processes that take place in the world somehow influence the technology sector.
IT SECTOR IN UKRAINE DURING THE WAR. THE MAIN THINGS IN FIGURES
Of course, the financial situation of IT specialists has somewhat worsened due to the war: this year 66% of specialists earn more than they spend, compared to 71% two years ago.
As in previous years, the main areas in which Ukrainian IT specialists work remain e-commerce (19%) and fintech (14%). The share of projects in MedTech is gradually growing (9% compared to 5% in 2020).
There is also only a slight recovery of the labor market in frontline regions, especially compared to the overall positive trend. The regions with the most vacancies in this category are Kyiv (1,731 vacancies), Lviv (387), Dnipro (353), Odesa (257), and Kharkiv (100). Moreover, the latter shows perhaps the lowest share of labor market renewal in Ukraine. Before the full-scale war, Kharkiv was one of the cells of the IT cluster, which explains the rather large number of vacancies today.
Ukrainian IT services exports in 2023 amounted to $6,7 billion, which is 8.4% less than in 2022 when they reached a record $7.3 billion.
However, it's worth noting that for a country at war, the numbers are quite good. Yes, the flow of investors has decreased, but the situation is not so critical to talk about serious problems and the "fall" of the industry. Ukraine still has a good concentration of talent, specialists adapt quickly and keep the bar, and expertise in several key sectors (defense, military, and MedTech) may give Ukraine an advantage in the global labor market.
SALARY OF IT SPECIALISTS IN UKRAINE. COMPARISON OF 2023 AND 2024
According to the study IT Research Ukraine, conducted in 2023, the number of IT specialists in Ukraine increased by 8%, and their average salary increased by 270 dollars. However, the figures for the beginning of 2024 are no longer happy with good news.
Salaries of developers decreased for the first time since the beginning of the war. In December 2023, the median was $3,300 compared to $3,435 six months ago. This affected specialists at almost all levels.
The biggest drop was in the salaries of senior-level specialists (by $163, to $4738). Middle salaries fell by $100 to $2,500.
Newcomers weren't spared from the trend either, with Junior’s average salary at $950, down from $1,000 six months ago. Seniors can expect to make an average of $350 instead of $450.
Median salaries for the most experienced developers - Tech Lead and Architect - are still flat, while Team Lead has a slight drop (-$25 compared to summer 2023).
In most cities, including Kyiv and Lviv, the average salary has decreased: in Kyiv, the drop is $131, to $3619, in Lviv - by $225, to $3500. The biggest decrease in the salaries of middles and seniors, while those of juniors remained virtually unchanged.
In Dnipro, Kharkiv and Chernivtsi median salaries are at the same level, while in Lutsk and Poltava, there is a slight increase (by $100 and $25).
IT TRENDS FOR 2024
Despite the statistics that the beginning of 2024 showed us, the Ukrainian IT market has huge plans for the future, among them:
1. Process optimization. The first thing the Ukrainian market is facing in 2024 is the automation of business processes. Adjusted processes, their optimization and automation, execution monitoring, and efficiency control - it is extremely important for a business operating in a war environment to maintain management and optimize its costs. At most, companies that have these systems in place now will be able to scale and grow much faster during Ukraine's reconstruction.
2. Cybersecurity and Defense. The next thing most IT companies will pay attention to in 2024 is cybersecurity. During the war, the number of cyberattacks increased tenfold - russian hackers are trying to gain access to the corporate and personal data of Ukrainians, as well as damage the infrastructure of state and private enterprises.
3. Cloud platforms. The next trend will already be taken from global trends. Cloud platforms allow us to create new and flexible application architectures and use modern programming languages. Cloud technologies enable faster innovation, change the terms of distributed teams, and significantly reduce the cost of physical hardware acquisition. Analysts predict that by 2025, cloud platforms will anchor more than 95% of new digital products.
4. AI. For IT specialists, AI will become a must-have tool. The technology will make it possible to quickly and qualitatively compare the qualifications and skills of candidates, as well as to select the ideal match for the professional and the company. Analysts predict that AI will most actively break into banking, insurance, software platforms, capital markets, energy, and media. This includes global automation of routine processes and improving employee efficiency.
5. Blockchain is gaining momentum. In early 2024, the SEC approved the first U.S.-regulated exchange-traded funds (ETFs) for spot bitcoin. This means that the cryptocurrency market will grow and digital coins will move more aggressively towards the status of a common financial instrument. This may cause an increase in demand for relevant specialists, and it seems that this demand will only grow. Currently, there are not so many of these vacancies in Ukraine, but the situation is somewhat different on foreign exchanges. It is also worth noting that there are not so many specialists in this direction either, but the growth of demand will cause the growth of supply as well.
WHAT IT PROFESSIONALS WILL BE LOOKING FOR IN THE NEAR FUTURE
Predictions say that the trends for talent over the next year will be security, stability, and flexibility. Remote work options will also be a key - currently 98% of professionals plan to work from home for at least most of their career.
This is in line with the general sentiment of business owners - 8 out of 10 Fortune 500 executives have no plans to give up remote work. Remote work has already proven to be effective with properly configured processes, and no one is in a hurry to go back to high costs again: to the business for the office (money), to the employees for travel (time) - right now. Salary benefits are not going anywhere on the priority list either, but at the same time, companies need to create a stable working atmosphere and open up opportunities for career growth. Employees may respond to such moves with loyalty, and it's always advisable to reduce the anxiety of searching for staff.
Another point is that employees will be looking for a place where they can develop and engage in interesting projects. So English courses, psychological support, and other work-related activities will definitely come on top.
CONCLUSION
In general, most top managers of Ukrainian IT companies forecast cautiously optimistic figures for 2024.
According to Digital Tiger's research, Ukraine has a high potential for the development of the IT industry and the return of the previous high rates of IT services exports even during the war. This has become possible, in particular, because Ukrainian techno-companies have restructured their operational processes to meet the existing challenges and are planning their future business strategy under such a forecast: the war in Ukraine may go on for more than one year. Therefore, IT community participants believe that the main drivers for the development of the technology ecosystem will be such sectors as CyberTech & Cybersecurity, AI and IoT, HealthTech and AgriTech, EdTech, MedTech, GovTech, and others.
However, it is important to realize that much of the success will depend on military action and the lack of escalation of war, as well as the overall situation in the global IT market.
If you have any questions or have an idea about hiring a team of professional developers in Ukraine, we would be glad to fuel your business idea with our services: contact.us@gointeractive.co
