Ukrainian crisis impact on its development market.

SWOT analysis.

IT Weekend, Kyiv 2014

Aviram Eisenberg

Are you Crazy????

A lot of people ask me if I am crazy? You are living in Ukraine ? In these times???

Well, I live in Israel, we are kinda used to state of war…

I am just replacing this:

With this:

About Me

Father of 3 wonderful children

High-Tech professional for the last 30 years

Computer geek in my teenage daysPlatoon commander in the Army Intelligence (computer

related)Computer Science Graduate from the TechnionChief Architect at Mind CTIFounder and CEO Of Ignite – a global IT companyChairman of the Israeli R&D Managers forum

Lives in Kiev (Ukraine is my second home!)

SWOT Analysis

* according to the World Bank

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IT industry – global trends

The Virtualization trend

The Cloud trend

The BYOD trend

The mobile explosion

New type of High-Tech entrepreneurs – I HAVE a DREAM

As a result, demand for developers is on the rise!As virtual worlds are growing more people are needed in the industry.

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Global Competitive Landscape of Outsourcing

South America:Argentina, Brazil, Chile, Costa Rica, Mexico and Panama

Asia/Pacific:China, India, Malaysia, Pakistan, Philippines, Thailand and Vietnam

Europe, the Middle East and Africa (EMEA):Czech Republic, Slovakia, Hungary, Poland, Romania, Russia, Egypt, Morocco, South Africa

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Ukrainian IT industry

“Ukraine’s ITO service industry is the largest one in the whole Central and Eastern European region with 90% of it being focused on external markets.”

Main export countries of SW dev services: US, UK, Germany

Top 25 Ukrainian SW companies+ 1363 workers in 2014

899

967 968

889

969

875 875888

928

868

1009

924

750

800

850

900

950

1000

1050

Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

Number of open vacancies in 2014, on DOU.UA

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Strengths – The Talent Pool

High quality of IT talent as a result of strong ICT education 30% of high school grads choose

IT related subjects in universities

Ukrainian Developers reputation

Talent pool growthover 16,000 bachelors in IT every year

Certified IT professionalsUkraine holds 4th position in the world in the total

number of certified IT specialists

The hunger to succeed

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Strengths – Business factors

Large pool and relatively low costs of ICT resources

Result-oriented approach deep involvement of software developers in client’s projects and healthy business environment

Convenient geographical locationright in the center of Europe and in the same time zone and mentality

Fast growth of IT sectorUkrainian exports leverage more than 3 billion $ a year with 84% growth of IT support services volume

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Weaknesses

High fragmentation of IT market most of the companies are fairly small

Low rate of foreign investment$2.67 billion - largest shares for Cyprus, Germany, the Netherlands & Russia in the past*

“Brain drain”Europe, Canada, US, Australia

Unfavorable government policiesthat are not assisting IT economy, but burden it

* Stock of foreign direct investment according to Ukraine’s State Statistics Committee

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Weaknesses

Low IT spending in internal marketPer capita Ukraine was only #33 in 2013, the lowest in CEE.

Loss of Crimea and part of Donbass (taken by Russia & separatists)

which accounted for 5-7% of IT spending in the country

Corruption issues

Non-guaranteed equity rights

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Threats

Fake war propaganda manipulate world opinion regarding the genuine situation in Ukraine

and scares off investments and potential clients

Increased "Brain drainage“ due to the fear of the current political situation

Economical Recession throughout the country

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Opportunities

Fall of the HryvnaMaking the EUR and USD currencies coming in to this industry stronger.

Low attritionPeople hesitate to switch projects as insecurity kicks. Developers are forced to stick to their jobs.

Market consolidationActive international IT enterprises on the Ukrainian market that have no problem ofraising cheap credit resources in Europe or US will absorb smaller companies.

Potential joining the EU It will open new doors and create more opportunities abroad.

Industry shift from IT to High-Tech Over time It will leap into a smart and thriving high-tech market.

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Challenges

Corruption elimination Build new and well paid army forces, police, court judges, prosecutors

Guaranteed equity rights Open registry lists and cadasters for all equity rights (land, real estate, stocks, etc.)

Education system reformDecentralized, more privately held, curriculums created by professional communities

Transparent and automated bureaucracy E-government, easy doing business ranking

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Risk takers…

Climate of uncertainty

Unstable situation

Zero visibility for business (to make global decisions)

Necessity to go blindfolded

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Conclusion

IT Ukraine today and counting: 1500+ IT companies 250K+ IT community, ~ 70K are active Doing Business Rank: in 2013 – 140, in 2014 – 112 (28↑)

Ukraine is driving in the right direction, lets help her overcome the challenges!

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What is the future of Ukrainian IT?

The Chinese curse: “May You live in interesting times”

The Israelis say: “Every difficulty is an opportunity…”

This is the birth labor of new High-Tech economy in Ukraine

This is the birth of a new Ukraine!

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www.igniteso.com

+38 0412 46-61-79

info@igniteso.com

Questions?

“No risk, no champagne.”