The saying "Ukraine is India, only closer" is gradually losing its relevance. Besides outsourcing firms, more and more companies in the country are creating IT solutions under their own brands. What is holding them back?
On the morning of September 17, the offices of the Divan.TV service were searched — Kyiv police began seizing servers and other equipment. The official reason was the fight against piracy and the broadcasting of Russian channels banned in Ukraine. Andriy Kolodyuk, founder of Divan.TV and managing partner of the AVentures Capital fund, does not hide his disappointment: "IT is the only sector in Ukraine today that still attracts investment. The current situation will stop that inflow completely."
Four days later, the story repeated itself at the Kharkiv office of NIX Solutions — this time a company employee was hurt. And a day after that, again in Kharkiv, law enforcement raided the company Intego.
The situation in the industry is already strained to the limit. Because of the hostilities and economic instability in the country, the IT business is increasingly discussing the possibility of moving abroad. The first movers have already left. This year, for example, the Augmented Pixels team, which develops augmented reality technologies, moved to California. Settle, a service for ordering food in restaurants, has partly relocated abroad. The CEO of the Dnipropetrovsk studio "908" announced that the company's main office was moving from Ukraine to Poland. "The authorities demonstrate an absence of rules of the game and an inability to introduce them. Most entrepreneurs are fed up with this and are moving their businesses to a more predictable environment," says Vitaliy Goncharuk, CEO of Augmented Pixels. Kolodyuk agrees: "We are losing our talent and our ideas, which could have attracted investment and could have contributed to the development of Ukraine as a whole." And many countries stand to gain from this. "They compete for talent at a systemic level," says Viktor Valeev, director of the IT Ukraine Association.
Those who are not planning to emigrate with their businesses try to work as discreetly as possible. "Given the searches at IT companies and the situation in the country, we ask you not to mention us in the ranking," the press office of one firm told Forbes. Many companies have kept only their development centers in Ukraine, which are profitable to maintain thanks to relatively inexpensive labor and professional programmers. The lion's share of Ukrainian IT companies' business comes from deals abroad. Their sales, support and marketing offices, and sometimes even their headquarters, operate abroad. That is where the money actually stays.
Because the market is so heavily regulated, entrepreneurs are in no hurry to bring all their earnings back into the country. "Just look at the legislation on foreign currency earnings controls. It belongs in a museum," Valeev complains. The lack of proper legislation is an even bigger obstacle than the searches at companies, he believes.
Still, it is the searches that can now be considered one of the main problems. As early as October 20, the game developer Lucky Labs was searched. Even Deputy Head of the Presidential Administration Dmytro Shymkiv, formerly head of Microsoft Ukraine, agrees that the situation has spiraled out of control. Not long ago he claimed that IT companies themselves give grounds for searches, but now he admits that recent events have dealt a painful blow to the country's investment appeal.
As proof, in the past month alone, representatives of Opera and HP announced plans to move some of their staff out of Ukraine. Market participants are convinced that the problem is not some alleged violation of the law: "Law enforcement agencies are in no hurry to solve other cases, because there is no money in them. But IT people have money," says one business owner who asked not to be named.
Despite the difficulties, Ukrainians continue to create unique IT products under their own brands that are sold in Ukraine and on the global market.