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“I can hear sirens, there’s a rocket strike in the vicinity… well, anyways….” That interruption has become a daily norm for Alex Bornyakov, the deputy minister of digital transformation for IT development in Ukraine.
Located in the country’s capital city, Kyiv, this is just another day in the office for Bornyakov. When he hears a siren now, he opens an app on his phone that tracks information about the strikes and warnings. Although it has been a little while since a rocket strike hit Kyiv, the sirens warn that it could come again at any time — and they don’t let up. Hearing them has become so common, happening sometimes a couple of times a day, he says, that he rarely feels the need to run to shelter anymore. He keeps working — just like he and so many others in the IT and tech sector have since the day the war started.
“If you concentrate on work, you don’t usually feel terrible, but of course, it’s upsetting. I think we as Ukrainians are all trying to do our best. I’m working in this field and someone else is defending the zero line on the frontlines and someone else is volunteering,” he said. “We’re all doing our job to help the country go through it. This is my role, and I can’t just abandon it. I feel responsible. It keeps me motivated.”
As the deputy minister of digital transformation for Ukraine, a major part of Bornyakov’s day-to-day work is supporting technology initiatives and keeping the country’s IT and technology sector strong — even during the war. His office also helps Ukrainian citizens maintain access to technology to do their jobs and generate business so they can continue paying taxes to support the army.
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Acting as an anchor for the country’s IT industry, the ministry of digital transformation (MDT) has been working on several initiatives to support the sector, including lowering taxes for IT companies and working to ensure technology infrastructure remains intact to strengthen civilian and government communications.
Most recently, the MDT launched a free nationwide program to help Ukrainian citizens enter the IT workforce. The aim is twofold: To solve the country’s personnel shortage in IT and “give people who lost their jobs due to the war the opportunity to find a new and promising field,” Mykhailo Fedorov, deputy prime minister of digital transformation for Ukraine, said in a statement.
Bornyakov said that as a supplement to the effort, he and his team are working to launch startup accelerators and incubators. He added that some may focus on advancing military technologies as well. There will also be private venture funds launched to assist financially.
The MDT’s efforts have proven vital in strengthening the country’s technological defenses amidst the less visible side of the war with Russia: cyberwar. An April 2022 report from Microsoft revealed that Russian cyberattacks on Ukraine have been carried out by “Russian nation-state cyber actors conducting intrusions in concert with kinetic military action.”
Microsoft’s overview of the attacks also revealed that “more than 40% of the destructive attacks were aimed at organizations in critical infrastructure sectors that could have negative second-order effects on the government, military, economy and people,” and additionally, “Thirty-two percent of destructive incidents affected Ukrainian government organizations at the national, regional and city levels.”
IT down, but certainly not out
The IT sector in Ukraine generates 4% of the country’s GDP. A 2021 report from the country’s IT Association says the industry employs about 300,000 professionals and around 5,000 IT companies in its labor market. The sector has reportedly continued to grow by about 25-50% per year.
The report, which was published before Russia’s invasion, quotes Konstantin Vasyuk, executive director of the country’s IT Association, as saying, “Over the past 25 years, the Ukrainian IT sector has made a quantum leap forward. Starting almost from scratch, it has turned into a highly intelligent industry … For the first time in its history, the IT industry is no longer a niche sector, instead, it is becoming fashionable almost everywhere.”
Now entering its sixth month of warfare, Ukraine has seen several industries upended, companies halted, thousands of lives taken [subscription required] and thousands more injured.
What may come as a surprise — despite the destruction of war — is that Ukraine’s IT sector has not only remained strong, it’s doing well. This is in part because of the capabilities that remote work provides.
According to Vasyuk, a recent survey the Ukrainian IT Association conducted among IT companies found 77% have attracted new customers already, even during the war — and 56% expect internal growth by around 500 employees this year.
He notes that, of course, the situation is volatile and ongoing because of the war, but says the third quarter will reveal more and that the IT Association is in close communication with its member companies about issues, exchanging information about how to overcome infrastructure challenges, and more.
“For now, we are more or less stable and basically all business contingency plans have been implemented, but we have A, B, C plans for other developments,” he said. “We understand that infrastructure can suffer and figuring out how to live during this winter is not simple… We think about the worst scenarios, and we should be prepared for them.”
Tech innovation from the ashes
Wartime is historically associated with destruction, not innovation. But from day one of the war, tech professionals in Ukraine have been using their talents to aid the nation’s efforts and support humanitarian needs amid the crisis.
When the February 24th invasion shifted their reality, after relocating outside the country to safety or staying put as best they could, Ukrainians in IT either pivoted to work with the government –- to help bolster the nation’s IT Army and cybersecurity infrastructure amid Russian hackers — or they took the innovative route described above.
“A lot of people working in the IT sector switched their focus to nonprofit ideas,” Bornyakov said. Ukrainians wanted to help and started to work on new projects, like helping each other create apps that notify about bombings, supporting humanitarian needs or doing different projects with volunteers, Bornyakov said.
The products that have emerged from these ideas range from apps providing resources for citizens relocating to safer countries, to others that scan grocery items and let the user know if a product is Russian-owned so they can avoid buying it to assert economic loyalty to Ukraine.
“I must say that, overall, the feeling among the Ukrainian software developers and engineers [is] of enthusiasm to be useful in any way they can – be it joining the army or the territorial defense units, taking part in cyberattacks against Russian government institutions and banks, or simply continuing with their usual jobs to keep the economy going,” Pavel Belavin, editor-in-chief at Highload, a Ukrainian tech news site, wrote in a statement to VB earlier this year.
A few of the innovative companies that have risen from the ashes of war include the following:
Tonti Laguna Mobile
Tonti Laguna Mobile is a multi-product company specializing in the development and promotion of apps for iOS and Android, which the team also builds in-house. Dmytro Lola, the company’s CEO, leads a team that is spread across nine countries, including Ukraine.
Lola said the war didn’t hurt the company because its business model relies on factors outside of just the markets in Ukraine and Russia, but that it did upend the way the company works and what it works on.
“There are certain adjustments, of course: There are no mandatory meetings now; participants come when they can because many are forced to spend time in shelters during the bombing. The workday is no longer fixed, everyone works as much as they can,” Lola said via email to VentureBeat. “I am proud of our team because, despite all the difficulties, our productivity has not suffered a lot.”
Lola and his team also spent time further developing an app called Food Scanner. Initially built two years prior, the app was designed to make shopping easier for individuals with an allergy or food sensitivity. When the war hit, Lola and his team built in a new feature, one that alerts a buyer if the product supports a Russian company so they can choose not to buy it.
“We saw the trend: Many people do not want to be complicit in killing Ukrainian civilians by not boycotting the goods of companies that continue to cooperate with Russia. Our team adds a handy feature to our app to facilitate this initiative,” he wrote. “Suppose the scanned product is produced by a brand that continues to operate in Russia despite international sanctions. In that case, the users will see a disclaimer that they are sponsoring the war in Ukraine by buying this product. It is better to choose an analog from a more humane competitor.”
Led by CEO Artem Borodatyuk, (who is a cofounder at Tonti Laguna Mobile), Netpeak Group is a Ukranian IT collective that consists of 14 companies, 900 employees and 5,000 clients. Borodatyuk explained via email that before the war, the group largely focused on developing software-as-a-service (SaaS), B2C tools and mobile apps. After helping to evacuate their employees to safety, the wartime shift caused the group to, at first, just try to maintain solid ground in the markets.
“We’re trying to hold our position in the markets in which we were already active, but we are also aiming to enter new markets to continue supporting the Ukrainian economy,” Borodatyuk said. “In the meantime, we are contributing to Ukraine’s informational defense against Russian propaganda together with other IT companies founded and based in Ukraine.”
Netpeak Group, like Tonti Laguna Mobile (which is part of the collective), also felt a need to encourage citizens to boycott anything to do with the Russian government and economy. “Ukrainian businesses refuse to use any software of Russian origin, too. By paying for Russian software products, businesses sponsor Russian aggression toward Ukraine,” Borodatyuk wrote. “So, Netpeak Group created [the] #ReplaceRUwithUA project and promoted the list of alternative solutions for businesses, thus encouraging non-Russian startup companies to provide better software and SaaS solutions.”
Redwerk is a midsized Ukrainian software development company that builds Web2 and Web3 products, as well as SaaS tools. Founder and CEO, Konstantin Klyagin, echoes the sentiments of resilience.
When the war began, Klyagin fled, as did his fellow employees. The company at one point had two offices, but the in-office work became nearly obsolete due to COVID-19 and then the compounding threats. Since the early days of the war with Russia, Klyagin’s team has been working from different regions. When it began, several of Redwerk’s customers offered to continue paying Redwerk for services — even if they couldn’t actually do the work at that time — while they relocated to safety, Klyagin said.
The team kept working.
“It’s good for our mental health and we wanted to keep providing value to our customers,” Klyagin told VentureBeat.
Klyagin and his team focused its efforts on trying to hire some of the engineers and developers who had lost jobs because their companies catered to the local Ukrainian markets.
“I wanted to rehire them. I wanted those talented people to be able to provide for their families, too,” he said. “So I started writing and talking with every customer of mine and they were very supportive. Some even sent extra money to help hire them.”
In addition to hiring displaced engineers, Klyagin’s team also worked to support the army and other volunteers in any way they could. Fortunately, everyone on Klyagin’s team was safe after initially relocating. Two employees were actively employed in the army. They would tell Klyagin if they needed anything, and he and his team would try to find it and get whatever it was to support them.
Since the early days of the war, Klyagin said some of his team members were able to return to their homes in Ukraine and that the company itself has continued to expand partnerships, hired more than 25 new employees and even secured five new customers since the war began.
Right now, it’s working on building out a Web3 data storage solution and a decentralized messenger product for the metaverse, according to Klyagin.
An uncertain horizon
Resilience seems to be a common thread among Ukrainans in the IT sector — not stopping even when sirens are blaring.
“I can say with confidence that the IT industry in Ukraine has fully adapted to the current realities and now we are not afraid of any problems,” Lola said. “We have become much stronger and I predict a big breakthrough of Ukrainian technological products in the world market in the coming years.”