5 wins and 5 losses IT Ukraine in 2016

What is lost and what is found in 2016 the IT industry of Ukraine? “Economic Pravda” publishes a selection of 5 win and 5 loss cases of the year in the field of information technology.

As you know, the domestic IT industry is credited with $ 2.7 billion or 3.3% of Ukraine’s GDP and 91 thousand programmers.

The experts of the auditing company PricewaterhouseCoopers promise in 2020 27.2 billion UAH revenues to the state budget from export-oriented IT industry.

What failures and achievements showed the country in 2016 on the way to this ambitious goal?

loss. Searches

The order of competitors, extortion, and even the imposition of a “roof” in the style of the 90s were the main motives of many of the searches, working in the country’s IT companies. About it off the record say businessmen and lawyers out of IT.

“Raids” of the SBU, Prosecutor’s office, interior Ministry, tax on medium and large enterprises are conducted under the pretext of combating terrorism and separatism. Over the past year and a half IT company has experienced more than 50 searches, but no criminal case was not brought to the court, and not one security officer was not prosecuted for abuse of power.

During raids members of the security forces are blatantly fail to abide by the rules of the CCP are not allowed to take video of their actions, incapacitate surveillance system, withdraw money, valuables and servers.

Direct annual damage to the industry is between 10 and 20 million dollars. Indirect losses of the country can reach $ 100 million in lost investments. Searches tentacio stimulate the sector, the outflow abroad of experts, change of tax residency Ukrainian IT-entrepreneurs.

win. AgTech

The agricultural industry is intensely included in the scope of interests of the Ukrainian innovative entrepreneurs and the entire venture ecosystem. This is the only sector in the domestic market, where there is money and demand for innovation. In 2015, Ukraine exported foodstuffs and agricultural products to 14.5 billion dollars. This is much more than able to get from the export of metallurgical products.

An example of the rapid rise of the innovative project in symbiosis with the agricultural industry became Drone.ua. Founded in 2013, today Drone.ua is a company with a world name. Its value is in the collection of data on crops with UAVs and their interpretation.

While AgTech by the number of “star” of projects is not comparable with mainstreami niches. However, the potential area is huge because the share of agriculture in the economy of Ukraine significant.

loss. The outcome startups

The vast majority of successful Ukrainian startups leaving the country. They beckon global markets, smart money and a great opportunity for networking in global growth centres of business innovation. In the best case, Ukraine will remain the team, but all investments and revenue pass through entities-non-residents.

“No one to ask for money in Ukraine? We will ask in the Czech Republic, and Poland. In Poland “seed” money in incredible amounts. There are startups that asked for money three or four times and failed, a lot, and nobody keeps a register. There it’s all very well, so our startups to go with a happy and feel fine, raise the economy of Poland,” — says the founder of a start-up incubator “1991” Denis Gursky.

Estonia, Latvia, Lithuania, Poland, Canada, at the state level launch of the special programme for hundreds of millions of euros to attract from Ukraine the best professionals, innovative entrepreneurs. Ukraine is losing the war for hearts and minds.

win. Cancellation of registration of foreign investments

Almost win. Parliament in October 2016 was adopted in the first reading a bill to abolish the compulsory state registration of foreign investments. The law also simplifies the regime of visits by foreign investors.

Registration of investments is an opaque bureaucratic obstacle for the realization of the rights of investors. Also, a foreign investor who is not an employee of the company, has the right freely to visit Ukraine for control over the activities of their business.

loss. Raw IT-outsourcing

The domestic IT sector, as 70% of the economy, selling raw materials — knowledge and Ukrainian it people. Although the highest value is ready IT product.

In Ukraine there are no strong players who are motivated to create their own products, rather than on the development of outsourcing. This plays into the hands of the strongest economies in the world. They are interested in using cheap raw materials for production of products with high added value, which eventually buy their own raw material suppliers.

“There are still the US, EU and Russia. Who are interested in the fact that we have ceased to use foreign products, as it did for 25 years, and created their products? In my opinion, this is a rhetorical question,” says President technology holding KM Core Evgeny Utkin.

win. Fund of funds

The state, represented by Deputy head of the presidential Administration Dmytro Shymkiv expressed a willingness to vouch for the creation of a Fund of funds (FF). He needed to Ukrainian startups received funding in the country and not go abroad.

FF — this tool is a large investment, intermediate between major foreign investors, local venture capital funds and start-UPS. Head of the Supervisory Board of the Ukrainian venture capital Association (UVCA) Andrey Kolodyuk believes that FF will be able to attract $ 500 million.

For Ukraine, this instrument of financing is not unique. A similar project introduced in many States in the US, the EU, Canada and China.

loss. The Exodus of IT specialists

Over the past two years, from the Ukraine left 9 thousand IT specialists. They emigrated to the US and the EU. Professionals go in search of professional growth and a more comfortable living conditions. While leaving the country EN masse pros with the experience of seven years or more — those that generate the greatest revenue autorskim companies.

It is noteworthy that in conditions of instability, devaluation and the low level of development in the country, the outflow of IT professionals is not catastrophic. The main reason is that the standard of living of it specialists in Ukraine is much higher than in developed countries.

win. Simplification of the export of IT services

In November 2016, the Parliament adopted the law on the abolition of mandatory detention of a foreign economic agreement in a written form. Now the contract can be concluded in electronic form, virtually by e-mail.

The law significantly simplifies the conditions of cooperation with foreign customers in the export of services. It also significantly reduces the number of ways in which the SFS produces additional taxes.

loss. PayPal will not come

The global system of Internet payments has no plans in the next year to expand its functionality in the Ukraine. “From the PayPal interest in Ukraine no” — said the Director of Department of payment systems and the innovative development of the national Bank Sergey Shatsky. He took the NBU in relation to PayPal hard wait.

Despite the fact that Ukrainian IT-business successfully uses many alternative payment systems, PayPal is still almost no alternative payment instrument for cross-border e-Commerce. Meanwhile the payment system has been artificially set for Ukraine a barrier to the export of services and products.

It is difficult to say whether these restrictions only economic or also political overtones. One thing is clear: they are unfriendly and inhibit the development of Ukrainian cross-border e-commerce and e small business. This loses in the first state.

win. Telecom cluster

Operating in Ukraine, the mobile operators initiated the creation of an ecosystem of the Telecom startups. In April 2016 ENEA-Tech together with “Kyivstar” company has launched the accelerator for IT projects in the field of telecommunications. In October, the operator has selected three projects to support the commercial launch: Gravitec, inCust, Virbox.

In addition, in August, Kyivstar, Vodafone and outsourcing company EPAM, with the support of the Ministry of economic development and trade has opened a Hi-Tech Office. It is designed to support Ukrainian startups and innovative projects with commercialization potential. The office will provide funding, incubation and acceleration programs.