Despite a war, this Ukrainian city's tech sector has tripled in six years

Tech businesses in the city of Lviv are thriving thanks to outsourcing, and 90 percent of the clients are US, Canadian, and European companies.
Written by Andrada Fiscutean, Contributor

Lviv's IT sector is still thriving, despite the ongoing conflict.

Image: Getty Images/iStockphoto

Ukraine is still plagued by its recent turmoil, which culminated two years ago in Russia's annexation of Crimea, a territory of 10,000 square miles. However, one Ukrainian city that's thriving has its technology sector to thank for it.

Lviv is located in the pro-European region of western Ukraine, next to the EU border, and has 15,000 people employed as IT professionals -- about two percent of its population. They took the sector's turnover to €270m ($300m) last year: that's three times the figure for 2010, and 20 percent year-on-year growth, according to Lviv IT Cluster report.

The city decided to make IT central to its development strategy. "In 2011, we came up with a plan to build a tech community. We focused on IT education, IT promotion, and IT infrastructure," Stepan Veselovskyi, CEO of Lviv IT Cluster, tells ZDNet. "Now, we're seeing that the plan has worked."

Doing business with foreign partners was the only viable option, because the domestic market was struggling from the country's economic troubles. Almost 90 percent of the tech sector's revenues come from software outsourcing, and companies working for foreign businesses thrive. Some of them, such as N-iX, have doubled their staff in the past two to three years.

Andrew Pavliv, CEO of software-development outsourcing firm N-iX, says: "My company grew from a team of 90 professionals [in 2010] to more than 350 [today], and opened offices in Kiev and Krakow [Poland]. Lviv is a good place to start your business."

The talent pool is, he says, the city's greatest asset. Lviv has skilled and creative developers, with a good command of English, who are willing to work overtime if necessary to complete a project, according to the IT Cluster report.

The talent pool is also set to develop further in future, because there are 4,000 new IT graduates every year, and companies also run their own programs to train future and current employees.

As new job opportunities continue to arise, techies are also less likely to move abroad seeking work in tech companies that might pay them better or offer more challenging tasks.

Another benefit is the country's living costs, which are much lower than those found in Western Europe. Renting a one-bedroom apartment outside Lviv's city centre costs an average of €150 ($166) a month, while a three-course meal for two at a mid-range restaurant is less than €11 ($12).

The average tech worker makes about €1,580 ($1,750) a month in take-home pay. The best-paid tech professionals work as solution architects, tech leads, team leads, and software engineers, and sometimes earn above €3,600 ($4,000) a month in take-home pay. Salaries are growing at an average of 10 percent every six months.

Outsourcing might pay the bills today, but software companies are beginning to think bigger and have started expanding or building their own products. N-iX, for example, is working on VR technologies, games, and data science.

Startups are also emerging, as more entrepreneurially-inclined techies take steps towards learning business skills. "From a tech guy's perspective, the most difficult thing is to stop coding and start doing business," Pavliv says.

People and tech companies from the eastern regions of Ukraine have moved to Lviv in the past years, because the city is considered safer and pro-European.

Lviv IT Cluster's Veselovskyi says: "Ukrainians want to work here since it is very close to the EU and gives them the same feeling as if they were living in the EU."

The feedback Lviv's tech sector receives from overseas is encouraging. Steve Mezak, CEO and founder of Accelerance, an American outsourcing company that partnered with Ukrainian business Intellias, prizes Lviv staff, for their "very high technical capabilities".

In this city at least, software engineers have never failed to deliver on their commitments despite the turmoil in recent years, according to Mezak.

"There've been absolutely no disruptions in software development work for clients in Lviv in the past five years due to the dispute with Russia or for any other reason," he says.

"American media portrays the situation with a broader brush, which is not as accurate. We do have American clients who look beyond news reports to welcome working with a high-quality software outsourcing partner in Lviv and take advantage of the presently lower rates."

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