With the government’s support, Ukrainian IT can bring in up to $5.1 Bln of export earnings according to the research done by PricewaterhouseCoopers (PwC). The research was done for the IT committee of the European Business Association, and was the main topic of discussion during the Lviv IT Arena conference. Check our blog post to find out the place that the IT market has in Ukrainian’s economy today.
Key Numbers of the IT market in Ukraine and in the world
According to PwC, Ukraine is one of the top 20 biggest exporters of IT services in the world. More than 70% of all exports of the IT services are software development and outsourcing services. Right now the IT sector is one of the top key drivers of the Ukrainian economy, which is demonstrating the highest growth comparing to other export industries.
From 2011 to 2015 the share of IT income in the GDP has increased from 0.6 to 3.3% (or from $1.1 to $2.7 Bln). That was possible due to a new generation of young developers and engineers – during the last four years the number of IT specialists has increased from 42.4K to 91.7K IT specialists. By 2020 the number of software developers, engineers, and other IT specialists in Ukraine could reach up to 250K people.
Taking about the market’s economy, IT specialists are the main part of the Ukrainian middle class. One interesting fact – one Ukrainian IT employee creates 3.6 additional jobs in related industries. You can better understand the role of the IT specialists in the Ukrainian society with this pic:
What future scenario is waiting for the Ukrainian IT?
According to the research done by PwC, there are three possible scenarios of the IT market’s development by 2020:
1. First scenario – leave everything as it is. If the government won’t change the tax rates for the IT market, and won’t add additional actions to stimulate the industry, then it will continue to grow at the same pace. In such a case, the number of developers will grow up to 142K people, while the state’s income is estimated to – up to 21 Bln UAH. But is it enough?
Right now the growth rate of the Ukrainian IT is 7%, while in Poland – 22%, and in Romania – 19%.
2. Second scenario – ruin everything. If the government will increase income tax to 20%, everyone will lose. The competitiveness will decrease; the number of specialists will decrease to around 72K people; the best developers and engineers will relocate to other countries. And the state’s income from IT services will decrease to about 13 bln UAH.
3. Third scenario – “Win-win situation”. The most optimistic approach is a planned annual tax growth by 1%, with additional state actions to stimulate the industry. In such a case the Ukrainian IT talents will be able to achieve better results; the number of IT specialists will increase up to somewhere around 146K people by 2020; the state’s budget will receive up to 27 Bln UAH from the IT services.