“In the 21st century, wars will be won by technology, not tanks”: the expert said what could save Ukraine’s GDP

Ukraine

“In the 21st century, wars will be won by technology, not tanks”: the expert said what could save Ukraine’s GDP. Source: depositphotos.com

During the war, the IT industry remains one of the few industries capable of supporting Ukraine’s economy with foreign exchange earnings.

Thus, in a “positive scenario”, IMF experts in 2022 predict a decline in Ukraine’s GDP by 10% over the previous year and a decrease in production by 25-30% due to the shutdown of key industries. Under a positive scenario, Ukrainian IT is able to almost completely resume its work and bring more than 20 billion hryvnias in taxes to the budget of Ukraine in 2022.

According to the 2021 outcomes, the IT industry ranks second in the structure of Ukrainian exports of services, with a share of 37%. Last year, the industry brought in more than $6.8 billion in export earnings to the Ukraine economy. Having regard to the risks for key sectors of Ukraine’s war-related exports (agriculture and metallurgy), the role of IT in the economy and recovery will be even greater this year.

Currently, Ukrainian IT companies are talking about significant support from international customers and the restoration of productivity at the level of 80-90% of pre-war — this gives hope for the preservation of last year figures despite a full-scale war in Ukraine. The main reason for the stability of the industry is the IT specialists` mobility and independence from production facilities, which in other industries are temporarily unavailable or significantly affected by hostilities.

Whether it will be preceded by further explosive growth depends on many factors (the duration of the war, its impact on human capital, infrastructure, the trust of international customers, etc.). But it is clear that every dollar the industry brings to the country economy is now becoming even more important.

The work of the IT industry is a stable inflow of currency in the form of export earnings, hundreds of thousands of high-paying jobs that continue to work and create domestic demand for goods and services (and therefore support other sectors of the economy), paid personal and corporate taxes (including in advance), etc. In addition, stable IT work is a guarantee of further financial support for the Defenders of Ukraine and volunteers who help them. In the first 10 days of the war alone, Ukrainian IT companies raised more than 710 million hryvnias for military needs, humanitarian projects, state budget support, and more.

According to Vladislav Rashkovan, IMF Deputy Executive Director, in order to support the country and the population during the war, IT companies can at least continue to work, pay salaries, cooperate with the state in the fight against the enemy and develop cybersecurity.

“The IT industry helped Ukraine a lot before the war, plays an important role during and will play even more after. In the 21st century, war must be won by intelligence and technology, not missiles and tanks. The country needs military decision-making, drone control, troop coordinating, disinformation analyzing systems and special search engines. The IT industry can help with this and a low bow to the engineers who are approaching our victory, — says Vladislav and shares his forecasts. — After the war, we will not only teach children coding and algorithmic thinking in primary school, but also develop business education to create IT products in Ukraine. We will need smart solutions — the state, cities, roads and homes. This will lead to the great growth of IT specialists in the Ukrainian market. “

Even during the pandemic, IT companies have become adjusted to virtual workstations and online processes, so even in such unstable conditions, they can be effective. GlobalLogic, one of the three largest companies in Ukraine, reports that 100% of customers are ready to continue working with the company. Currently, the team’s productivity is almost 90% compared to the pre-war period. This allows talking about the gradual resumption of business, even in such difficult conditions. The company emphasizes the importance of the personal contribution and dedication of each engineer who continues to perform work tasks in extremely difficult military conditions.

“The key contribution of IT companies to the victory of Ukraine lies in the economic sphere and is rising every year. So, last year, IT companies transferred almost 40% more taxes and increased exports. Now that the economy is grounding to a halt, IT is able to alleviate this decline, support Ukraine in the most difficult times of our history and accelerate recovery from victory, — said Andrew Yavorsky, Senior Vice President GlobalLogic. — At the same time, now Ukrainian IT is building muscle and has even better prospects. The war shocked the entire world economy and led to the isolation of the Russian market. As a result, there will be a surge in demand for engineers in the near future and the IT market will boil over. Our strong Ukrainian specialists will have an advantage that will strengthen the role of Ukraine in the international arena. We are supported by the world and, by working even more closely with foreign businesses, the IT industry will be able to accelerate the recovery of the domestic economy. Everyone makes a contribution to the victory. We believe that it will be very soon.”

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