Ukraine’s IT sector has seen a mass migration of its employees. With former IT hubs like Kharkiv, Dnipro and Odesa close to the front line, many specialists have moved to Western Ukraine where life is somewhat more normal.
One city which has seen a rapid rise in IT experts is Lviv. The western city is home to the Lviv IT Cluster (LIC), a community of over 260 companies that have successfully maintained their operations despite Russia’s full-scale invasion. By reacting quickly to the situation and implementing impressive projects, the LIC is ensuring that the city will become one of the leading IT centres in emerging Europe.
“Our projects bring Lviv closer to the top European cities in terms of quality of life, updated tech education, infrastructure development, world-noted tech products, and a favourable environment for starting and conducting business,” Sviatoslav Kavetskyi, chairman of the Supervisory Board of Lviv IT Cluster, told bne IntelliNews in an exclusive interview.
Lviv’s reputation as an IT hub prior to the war resulted in thousands of specialists flocking to the city when Russia launched its full-scale invasion. With the IT industry contributing $1.412bn to Lviv’s economy in 2020, double the amount of $734mn in 2016, companies have noted its potential as an Eastern European tech hub and 563 tech companies are currently operating in the city.
The LIC is eager it stays that way. The organisation has guaranteed members are able to conduct business as usual, despite the extreme circumstances, such as co-operating with Elon Musk’s SpaceX to procure over 500 Starlink terminals to Ukrainian business and infrastructure facilities, providing internet connection during blackouts.
As bne IntelliNews previously reported, Ukraine’s IT sector has weathered the impact of the war and continues to expand, even under martial law. IT clusters like the LIC also helped the export revenue of IT services grow last year by 5.85%, bringing in $7.3bn, a $406mn increase on 2021. With IT now leading Ukraine’s industries, Kavetskyi sees Lviv’s tech influence growing both inside and outside Ukraine.
“Lviv has an economically attractive environment and is relatively safe for opening new offices and starting a tech business,” he said.
Lviv’s tech impact can be seen in the rankings of top IT companies. In the 2022 IAOP Global Outsourcing 100, 15 Ukrainian companies were listed, with seven being members of the LIC. At the same time, 19 member companies were featured in the DOU ranking of the top 50 Ukrainian IT enterprises, whilst 26 companies on the list have offices in Lviv.
The Ukrainian government is capitalising on the IT sector, pinpointing it as one of the four key pillars in the reconstruction process. Noticeably, the state is undergoing digitalisation with initiatives like the Diia City tax regime and Kavetskyi believes this has emerged as a major trend that will likely continue into the future. The LIC is participating in this development by modernising surveillance systems in the Lviv region, as part of the Vision project, in order to prevent crime and quickly provide evidence to law enforcement.
Moreover, Ukrainian military tech has developed significantly since the start of the full-scale war and has been identified by the Ministry of Economy Yulia Svyridenko as another key industry. The LIC has made significant contributions in this field, including its latest initiative the Dracarys Project, by enhancing the battlefield capabilities of the 24th Mechanised Brigade, based in the Lviv region, through vital equipment and technology.
The organisation also modernised Ukraine’s air defence systems via the Sky Project. As a result, air defence capabilities in eight regions in Western Ukraine saw efficiency improve by 40%. In addition, the LIC donated UAH2mn to training drone pilots through the Boryviter school, with 1,000 students now capable of flying UAVs in the military.
“The project aims to provide the military with skilled drone pilots, utilising the latest technology in warfare,” Kavetskyi stated.
Overall, the LIC has contributed UAH69mn to so-called Victory projects, providing funding to the military as well as humanitarian projects, such as setting up seven accommodation centres for displaced people, including 4,000 IT specialists.
With the tech sector set to play a significant role in Ukraine’s future, the LIC is investing in the future specialists of Ukraine. Lviv’s educational facilities have contributed to its success in the IT industry with 4,500 IT students graduating every year. The LIC offers 19 programmes in several universities in the city: Lviv Ivan Franko National University, Lviv Polytechnic National University, Lviv State University of Life Safety, and Lviv National Academy of Arts.
As such, Ukraine’s IT sector is unlikely to decline, even after the war, with a record number of Ukrainians seeking employment in the industry. The government is implementing strategies to facilitate “comfortable conditions” for IT professionals to keep them in the country and help with the reconstruction process.
“The export-oriented IT industry means restoring jobs, internal demand for goods and services, and voluntary assistance to the army, hospitals, and rescuers – to everyone who fights for our freedom on the front lines,” Kavetskyi said.
“It provides external export revenues to the Ukrainian economy to support our combat readiness and victory,” he added.