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Home Business IT Ukraine in March 2022 – Interview with Stepan Veselovskyi, CEO of Lviv IT-Cluster

Stepan, as CEO of the Lviv IT Cluster you represent one of the largest and most dynamic IT-business clusters in Ukraine and in the region. Therefore, you are also on the pulse of what’s happening now in the IT sector in Ukraine, why I am very happy to have the chance to talk to you and gain some insights into the way companies, clients and partners deal with the situation of being caught in the midst of a severe military conflict.

Can you tell us a little bit about the situation for the IT-sector in Lviv and Ukraine right now?

The first week was really a shock for the businesses in the IT-sector too. IT-companies have offices in different cities in Ukraine, like here in Lviv, but then also in the Eastern region in Kharkov, in Central Ukraine in Kiev, and in the South in Odessa etc., where the Russian invasion today has bought business and public life to a defacto still stand.

The signs of Russia’s plans to eventually invade Ukraine were already there in January, so companies were not unprepared when it really happened. As a response, companies rather quickly moved personnel and operations towards the western parts of the country. Also because of the attacks by Russia in 2014 companies also in the IT sector had contingency plans in place in order to ensure continued operation and delivery of client projects.

How did clients of Ukrainian IT companies react?

Generally, clients fully understand the situation and are very supportive, which is very important to us and we appreciate a lot. Sure, we have cases in which clients left too, but the overall reaction from client side is very encouraging and supportive. We know of cases where clients even offered forward payments in order to support their IT-partner company in Ukraine.

And clients have good reasons to be loyal. Two weeks ago at the beginning of the invasion companies reported to work with about 75% of their capacities and today we receive reports of about 85% to 90%. And of course companies also continue hiring new people. From all export-orientated sectors the IT sector is the only one that shows growth, even during a war economy. So this is very good news and I am very happy that companies can continue to work and thus not only support their clients, but at the same time also our economy and public finances.

What do companies report? We hear many reports that civilians join the armed forces. Does that not leave also IT companies with many open positions?

Every man between 18 and 60 years can be asked to join the armed forces and a lot of people want to join the defense forces too. However, for the IT sector – here in Lviv at least – we only see around 1,000 people putting down their daily jobs and joining the forces. And companies are actually very supportive and show solidarity, e.g. by continuing to pay salaries and even bonuses for those, who join city territory defense teams for instance. Also companies contribute with personnel to cypersecurity and cyber defense teams of the government. But again the overall numbers are in absolute relations to the business needs.

How did Lviv IT-cluster react?

We actively support our members but also other IT companies, so they can operate and pay their taxes which is very important for our government and our ability to finance our defense and the reconstruction of Ukraine’s infrastructure. For example, through January and February we contacted all IT businesses in the country, not only in Lviv, to ask about and to suggest putting their contingency plans in place, so that the interruption of business and services for clients could be reduced to a minimum.

From the first day of the Russian invasion we have activated all our resources to provide assistance not only to member companies and the IT sector in Ukraine, but also to the defense forces and to civilians that are effected by the humanitarian crisis. For instance we have opened 5 centers, equipped with all necessities for displaced persons from other regions of the country. On our website we give more information on our various and extensive support activities.

Do you dare to take look into the future?

Of course at the moment the way this invasion is going to come to an end is unpredictable. We are very positive to be able to defend our country and our values effectively and victoriously, but whether the conflict is put to an end on the negotiation table and by agreeing to compromises or by a complete defeat of the Russian aggressor will determine the way we will operate in the future.

But what I see for instance are new opportunities for job creation and development in the ICT sector also for smaller cities in Central and Western Ukraine.

Also our international partners show great support and understand the task but also the opportunities in rebuilding our country. Finally, I also think that the Ukrainians have built an imperishable reputation of strengths, values and right decisions that has charged the Ukrainian brand and will attract new partners, investors and clients.

Lastly, what do you think how international partners and clients can support the IT sector in Ukraine?

The support we experienced from clients and partners has been exceptional. And of course this is very important to us. If we can ask for anything than it would be that clients keep trusting our companies and our people as they did so far. After all we’ve proven to be able to continue delivering IT expertise and services even in very difficult times. Finally, we appreciate any ordered and freely chosen sanctions by our international partners and clients against the Russian economy.

This interview took place over the phone on March 9th with with Stepan Veselovskyi, CEO of Lviv IT-Cluster and was conducted by Stephan Fricke, CEO of the German Outsourcing Association.