The Russia-Ukraine war’s impact on the IT sector

Before the Russian invasion of Ukraine, the Ukrainian IT sector was booming. Citizens were flocking to the IT industry in droves, universities were pumping out new talent and a wave of large global technology companies were looking to the country for employees. However, war has forced thousands of tech employees to flee the country.

But Denys and Igor Zhadanov, Ukrainian brothers who were instrumental in building productivity app company Readdle, think the industry will bounce back. From a small team, the brothers grew Readdle to hundreds of employees across the world, scattered across Ukraine, London, Silicon Valley and Berlin. Now stationed in safe places, the brothers are still bullish about Ukraine’s potential as a top source of technical talent.

Tech boom

Back when the iPhone was released in 2007, Igor believed it was the future, but still thought it was far too difficult to read a book on the small screen. That sparked Igor to co-found Readdle, which Denys later joined to lead marketing. In the first couple months after launching their iPhone app, about 60,000 people signed up.

“It’s the literal kind of startup story in the garage,” said Igor, although the company actually started in an apartment. From there, the brothers bootstrapped the company; not because they intended to, but because at 23 years old, far outside of Silicon Valley, they didn’t really have a choice.

Readdle was part of the first wave of mobile software companies in Ukraine that created their own product, marketed it and then sold it globally, said Denys. But now productivity companies like Grammarly, MacPaw and others are ramping up.

Before the war, the Ukrainian tech industry was booming, as major cities Kyiv, Dnipro, Kharkiv, Odessa and Lviv arose as major sources of tech talent. “Definitely Kyiv is the biggest one: My guess would be that they have maybe 40[%] to 50% of all technical talent there,” said Igor. That doesn’t discount the growth in other cities, though. “Just the whole industry is booming. So pretty much every city has a substantial growth of companies, teams and stuff like that,” he said.

The proof is in the numbers. “Last year, the numbers I’ve seen have shown that we’ve crossed 200,000 engineers in Ukraine in general,” said Igor. “So we’re talking about developers, QA, product people, designers all over the place.” That figure is also up from two years ago, when Igor estimates there were only 120,000 engineers.

In Ukraine, most IT companies actually provide services to other companies around the world. “If you look at the tech talent in Ukraine, the majority of it is involved in IT outsourcing,” said Denys. The country is home to several global IT outsourcing companies, such as EPAM, GlobalLogic and SoftServe.

There are also smaller, lesser-known companies that focus on outsourcing for specific industries, such as Luxoft, which services automotive companies. “If you have pretty much any major European car right now, it’s very likely that the entertainment system actually is done in Odessa — BMW, Audi, Volkswagen, you name it,” said Igor.

The reason Ukraine has been so attractive to global companies looking for talent is “because historically in Ukraine, the outsourcing and the arbitrage of the cost” drove a lot of value for companies, said Igor. The same isn’t necessarily true today, but outsourcing to Ukraine is still popular because of the country’s high-quality engineering talent.

Enter IT

The engine fueling that talent is a combination of Ukraine’s educational system, economic forces and unique culture.

“First of all, from the education standpoint, Ukraine’s educational system kind of took a lot from the Soviet educational system,” said Denys. “Science there was quite strong, math and physics always was quite strong. So I think that creates a base for the engineers to appear.”

Financial incentives have also made the IT industry one of the more popular industries in the country. In fact, the slogan “Enter IT,” which rhymes in Ukrainian, has basically become a meme, said Denys. “There is almost no industry in Ukraine that can pay you this much,” he said. And even a junior position in IT support can pay more than being a doctor.

But the biggest advantage of Ukraine’s IT sector might come down to the drive, spirit and resourcefulness of its workforce, according to the brothers.

“I think lots of people in Ukraine, they are accustomed to finding solutions within scarce resources,” said Igor. “You don’t have enough money just to go and buy off-the-shelf cloud solutions,” he said. Instead, you have to put your engineering talent to work to figure out how to build internal tools that might mimic Amazon or a CRM or Slack.

In other cases, engineers might need to figure out how to manage two terabytes of data on small servers as opposed to just buying more. Those constraints naturally lead to innovative, out-of-the-box thinking, said Igor, and “that kind of culture of being able to engineer a solution based on the resources you have kind of naturally extends into software development.”

Fighting back

That same resourcefulness has also been evident in the way Ukrainian software developers have aided war efforts.

“This kind of this agility and resilience to readapt and repurpose in no time actually became a very powerful movement in Ukraine,” said Igor, who noted how technology companies have pivoted to providing war-related services. “So informational campaigns, doing traffic arbitrage, spreading the word, raising money, having alternate volunteers coordinating lots of complicated projects, logistics and whatnot.”

Despite the impacts of the war on the tech sector, Igor doesn’t see people leaving. “I don’t see a substantial intent to move out of the country,” he said. At Readdle, which had about 200 employees in Ukraine when the war started, only one person decided to leave the country permanently, and they had been considering relocation prior to the war. For the other employees, the intent is to flee to safety for now, but return as soon as possible.

Although it’s “a little bit tricky to speculate at this stage what’s going to happen moving forward,” said Igor, “it does not look that people have given up on Ukraine being a nice, really good, solid place to work, to live and to build something.”

Instead, citizens, employees and businesses are focused on helping Ukraine return to normal. “They’re fighting for now, and the intention is to win the war, and then we’ll get back to rebuilding the country and then rebuild the business itself,” said Igor. “So that’s the spirit that we hear on a daily basis.”

This story was update to clarify the location of Readdle’s founding.