Ukrainian IT exports face first decline in years
The export of IT services demonstrated an unprecedented decline in both volume and share of total exports in 2023, reported IT Ukraine Association on Feb. 1.
IT industry generated $6.7 billion in revenue for the Ukrainian economy, which is 8.5% or $622 million less than in 2022. While remaining the country's largest exporting industry, IT sector reduced its share in total service exports to 42%, compared to 45.3% in 2022.
“IT services exports fell to the 2020-2021 levels—$5 and $6.8 billion, respectively,” IT Ukraine Association press-release says. “December has shown growth of 8.3% ($611 million), but it’s misguiding — both the first and the last month of the year are always distinctive in their growth, as projects are wrapped up and started anew.”
Two major challenges are impeding the sector: the difficulty of operating in the global market due to travel restrictions and the low exemption rate of IT professionals from military draft, which is coupled with a scarcity of highly qualified personnel.
The exports of Ukrainian IT services have shown a decline for the first time ever.
Maryna Shevchuk, CEO of IT Ukraine Association, emphasizes the trend's visibility as market volumes have steadily declined with only a marginal share in the domestic market.
"A 10-percent decrease is a clear sign of the hardships facing the Ukrainian IT sector to maintain its previous performance levels, despite considerable efforts from the Ministry of Digital Transformation and the available opportunities," Shevchuk said. She stressed the wartime conditions as a continuing hindrance, underlining the IT industry's critical role in the country's economy and the urgent need for solutions to halt and reverse this downturn, including additional tools to boost sector and export growth.
The roster of top export destinations remains the same, with the United States leading at $2.677 billion, followed by Malta, Great Britain, Cyprus, and Israel. This is in stark contrast to 2022 when the IT industry was the only economic sector in Ukraine to report growth, at 5.8%.
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