Ukraine IT Landscape:
IT Labor Market

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Ukraine’s industrial inheritance from the former Soviet Union, particularly its military-industrial complex, has produced excellent specialists, engineers, and programmers. However, these specialties were usually not commercialized in the Soviet command economy, which left many Ukrainians ill-equipped for the demands of dynamic, information-based commerce.  The Soviet command-administrative system discouraged creativity and entrepreneurial spirit, which still today is inhibiting the growth potential of some businesses in Ukraine. Ukrainian workers, in the blue-collar and white-collar sectors, more often than not respond to “top-down” management practices.  One of Ukraine’s most important goals will be to re-train entire generations of its workers in order to compete in the fast-paced world of high-technology production and modern management methods and practices. Despite a troublesome investment climate, many foreign firms have opened operations in Ukraine to tap into the local IT educated workforce while taking advantage of lower labor costs.  These offshore software development companies represent thousands of Ukrainians working for Western companies.  It is estimated that there are 200 companies with anywhere from 5-50 developers with operations in Ukraine, and several firms employ from 250+ workers.  Many smaller shops have also opened with five or less employed.14  However, as the field becomes more competitive, three trends are becoming clear: 1) Workers require additional training to keep current in the field.  Problems exist in that there are plenty of IT specialists, but very few of them are up to par.  2) Ukraine’s software-development industry is running out of qualified programmers.  Experts say educational centers can’t produce enough IT programmers to meet demand.  3) At the same time, programmers, seeking higher salaries elsewhere, are leaving the country.  It is estimated that more than 2,500 IT specialists leave for Russia, Europe and the US annually.  So the Ukrainian firms that once lured Western firms with the promise of a large pool of inexpensive IT specialists must now face the reality that they may have too few workers to get the job done.  Dozens of private IT training centers are scattered throughout the country but apparently are not filling the current demand for IT specialists.  To fill the gap, some firms are hiring inexperienced university graduates, mostly for one-month paid training programs. IT firms like Lviv’s Softserve and Kyiv’s Tessart have established close ties with regional universities to help prepare future specialists. They provide short-term internship programs and part-time jobs upon graduation. Many IT firms complain that universities are not keeping pace with the industry’s fast-developing trends and technologies.  IT training is primarily theoretical and doesn’t provide students with the practical experience required. It can take up to a year for newly hired developers to work effectively. The shortage is leading some firms to establish their own training centers, as is the case with Kharkiv’s Telesens KSCL Ukraine, one of country’s largest software companies. Launched in January, Telesens’ half-year training program costs $750. The center has already graduated 60 students. Another 60 students are currently enrolled in the program. The training center hopes to become accredited by the Education Ministry, which would give it university status, and the chance to be recognized by international IT educational institutions. In addition to courses on programming languages and software development, students are trained in areas like project management and quality assurance.  The city of Kharkiv is home to a number of good technical universities, and some refer to the city as the Silicon Valley of Eastern Europe. In Soviet times, Kharkiv was a major center of education and technology. When the Soviet Union collapsed, many residents were left unemployed. The area's computer specialists, however, were some of the first to work for Western clients via unregistered, underground programming companies. 15 National Technical University, formerly called Kyiv Polytechnical Institute, is the alma mater of much of Ukraine’s technical elite.  It is known as a tough and demanding university for students. Intel has established an Internet laboratory at Ukraine’s Taras Shevchenko National University. Equipped with four computers based on the Intel Pentium IV processor, the $30,000 lab is part of a global Intel initiative to assist in the development of e-commerce software.  The lab will be available for students to use as part of their academic studies, and to small business entrepreneurs looking for free consulting services in their e-commerce activities. 16  The future of education should be of concern to Ukraine.  In general, their educational system suffers from chronic under-funding and a shortage of good teachers on subjects whose contents were revolutionized by the fall of communism: history, economics, political science and international relations.  Education spending was under 4% of GDP in 1999, having fallen sharply as a result of Ukraine's long post-independence recession.  Demands by schools and colleges for private contributions are increasingly common, and a sizeable number of students who study in public institutes and universities now pay tuition.  It has become fairly common for students to work part-time to cover these expenses.  In fact, less time to study has led college students to bribe teachers for good grades. Despite all of these issues, literacy in Ukraine is still almost universal at more than 99% of the population.

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