Intecracy Group took part in Software Development Forum 3.0, a gathering of professionals held by the IT Ukraine industry association and the IT Committee of the European Business Association (50 leading market players).
One of the key presentations on Ukraine's IT market was the speech by Vitaliy Nuzhnyi, managing director of Luxoft Ukraine. We publish it in full.
For several months we analyzed data and trends in detail, and in officially available sources we found many interesting figures and facts that I would like to share with you.
Most importantly, we, the market players, have come to see ourselves as a powerful industry. In 2012, IT contributed 0.8% to the country's economy. Over these three years that figure has grown, and grown substantially: this year it is expected to reach up to 3% of GDP. It is safe to predict that the weight of IT in society and the economy will continue to grow dynamically.
Who are we, the IT specialists?
There are between 74,000 and 100,000 of us IT specialists in Ukraine — talented Ukrainians who were educated at Ukrainian universities, work in Ukrainian offices and pay taxes into the Ukrainian budget.
In my opinion, the main topic at Software Development Forum last week was not technology, nor even relations with the authorities or taxes, but the need to create the best possible conditions for IT specialists so that they can realize their talents, grow professionally and work on interesting projects. To be paid fairly and, at the same time, to support Ukraine's economy.
Today, the 74,000 entrepreneurs who provide IT services already form a community, part of Ukraine's middle class. They are young men and women (the average age is 27) who are paid fairly for their work — an average of $2,000 a month.
In 2014 alone, all registered IT sole proprietors together earned UAH 18.1 billion. And as a community, we are incredibly important to our country's economy.
At the forum there was much discussion about the taxation of the industry: tax rates, creating conditions for growth, and filling the budget. We would like the IT industry to be seen not just as geeks doing who knows what on their computers, but as a knowledge-intensive industry of creative and talented people who develop Ukraine's economy through their knowledge and their ability to apply it, creating high technology.
Our contribution
It is precisely the Ukrainians working in IT who shape our country's image as an attractive place to invest, work successfully with leading international companies, and help attract investment and strengthen the economy. Total tax revenues from IT to the budget in 2016–2020 are expected to reach UAH 36 billion, and the IT industry's contribution to the country's GDP is expected to reach 5.7% in 2020. According to NASSCOM, the well-known Indian industry association, each new programmer employed in the sector creates up to four additional jobs in related industries. This holds true for Ukraine as well.
The IT industry in Ukraine has come of age. Together with telecommunications, it already ranks third by export volume (after metallurgy and agriculture), having provided $5 billion worth of services in 2013 (World Bank data).
The potential is enormous: by 2020, IT could compete for second place in services exports. The main customers for software development services in Ukraine are companies from the United States and Europe, and their interest in our country keeps growing.
The number of jobs in the industry is projected to grow by up to 20,000 every year, and by 2020 the industry will employ up to 180,000 IT specialists. No other Ukrainian industry shows such growth dynamics.
Conditions for growth
The IT industry will grow under certain conditions. The first is clear and transparent rules of the game that the international community will accept. Of course, the taxation system for IT sole proprietors needs gradual optimization, but the process should not be rushed. Most IT companies share a consolidated view: a gradual increase in the tax rate for IT sole proprietors should go hand in hand with 25% annual growth of the IT industry. We are currently discussing acceptable tax terms with the Ministry of Finance and the Verkhovna Rada Committee on Tax Policy, and we are waiting for signals that the industry's position will be taken into account.
Yet there are far more opportunities for development in the IT industry. Broad engagement and development of qualified IT specialists is creating an ecosystem in which not only outsourcing and product companies can grow, but also startups, e-commerce initiatives, e-government and so on.
In education, we need closer cooperation between universities and business, exchange of experience in training IT specialists with universities around the world, and support for educational IT startups (for example, BrainAcademy and GoIT).
The programming profession also needs further promotion, since demand for specialists is growing faster than their available numbers. Building the IT industry's image among the general public is a separate line of work. And if we manage to respond to market challenges and solve all these tasks in the near future, Ukraine will become a leading global IT player not only in outsourcing but in R&D as a whole, and, importantly, our contribution to the country's GDP could reach not 5.7% but a full 10%!
Source: DOU