According to Gartner analysts, a global software exports market place is estimated at 90 billion US Dollars, while by the year 2013 it could be increased up to 120 billion US Dollars. With its potentially promising opportunities in this area, Ukraine is likely to left out of the global IT industry trends.

Thus, experts estimate the Indian software exports market place at US $ 34 billion, Chinese – at US $ 28 billion, Russian – at US $ 2.65 billion, whereas the Ukrainian one is getting hardly US $ 1 billion.

At its second session, members of the Working Team on the Software Industry Development set up by the Government last August, on the initiative of “IT Ukraine” Association, have expressed their concern about such state of things.

Mr. Igor Lisitsky, “IT Ukraine” President, said there was a way out in this situation: “we do not have to invent a wheel, suffice to adopt the experience of these countries and create our own efficient model, modified to Ukrainian specifics. For this we need a full understanding of the situation and support from the state. Be it a Silicon Valley, its Israeli clone or the Indian miracle model, all those models were a result of a public/private partnership and rules of the game, which took account of everybody’s interests, that is, those of the state, business (entrepreneurs) and employees. And if there is I bias toward one of the elements of this triangle or one of these elements is not operational, the entire system is suffering.”

In this regard, Mr. Valery Polischuk, Director of the Ukrainian IT Research Center, has rightfully noted that, at the moment, we need to introduce our changes to the Taxation Code and get involved in its discussion in the rush. On the other hand, in its draft, software development services were deleted from the list of activities to be included in the simplified system of taxation, reporting and accounting. To correct this, said Mr. Vitali Oknov, Chief of Department, State Committee for IT and Science, we need, based on representative statistics, to calculate a budget efficiency and submit a relevant document to the Government.
 
However, during the Working Team meeting, everybody learnt that this very statistics is not existing for the IT industry in general, since the data made public by the State Committee for Statistics do not show a true picture and frequently is not reliable. Therefore, big outsourcing companies representatives have expressed their desire to participate in it, by providing data, and join a development of the calculation methodology.

According to the Working Team members, to create favorable conditions for the IT industry further development, we need not only to get an adequate taxation, but work out a strategic Concept for the IT Industry Further Development and Reform including support of science, education, setting up business incubators, motivation for research clusters, etc. “Effect of reforming software developing industry could be tremendous – it means pulling out outsourcing companies from a shadow economy, entire industry growth, budgetary allocations, new jobs, – said Mr. Vitali Oknov convincingly. He was backed by Mr. Yuri Antonyuk, Director, EPAM Systems Company.

Specifically, he observed that top 10 Ukrainian IT companies take about 50% of the market share and earn half a million US Dollars a year. If this growth index is maintained, at least, at 40% level, then in the coming years these companies could have increased their operations five fold, which, among other things, would mean 100 thousand new jobs. However, even now the industry is experiencing a shortage of qualified personnel, as just 10% of university graduates are capable for starting their work immediately, while others need to be additionally educated and trained. 

Mr. Dmitri Kushnir, Director of “Luxoft-Ukraine” outsourcing company, said the following: “It is not realistic for Ukraine to compete, in terms of volumes and prices, with India or China. However, we can provide a more profound technological and industrial expertise, our extensive research potential.” Adjourning the meeting, Igor Lisitsky has expressed his hope that in the new IT industry Concept, public support to business shown in orders for fundamental R & D, as it is done in highly industrialized countries – leaders at international markets, would become one of the top priority issues.

Next Working Team session is planned for September, 22nd, 2010. Its participants are going to discuss there specific proposals as to how create better conditions for IT software development industry in Ukraine.

May we remind you that, according to the Government decision, the Working Team was set up and composed of representatives of interested ministries and agencies, business and members of “IT Ukraine” Association. Until November, 1st, 2010, it should submit the Concept on favorable conditions for the Ukrainian IT industry further development. Please have a look at the Working Team records  here.