Lviv holds conference on prospects for IT industry

LVIV, Ukraine – Lviv, dubbed the information technology capital of western Ukraine, this year launched a new conference to bring top business leaders, investors and state officials together to discuss the country’s up-and-coming IT industry.

One of Ukraine’s largest communities of information technology companies, the Lviv IT Cluster, on June 26-27, held the Lviv IT Jazz Conference, which attracted a range of big names from government, business and various IT fields.

The Lviv IT Cluster itself includes some of the biggest outsourcers and software developers operating in Ukraine, such as SoftServe, Sigma, Ciklum, EPAM and GlobalLogic, who work together to develop IT in the city and the country.

The conference took place right in the heart of Lviv, at city hall, during the four-day annual international jazz festival – the Alfa Jazz Fest.

While most other tech conferences in Ukraine focus on narrow subjects, the IT Jazz Conference brought in a wide range experts to paint a broad picture of Ukraine’s third major industry.

The conference attracted 22 speakers, including Soros Fund Management managing director Alex Fridlyand, EPAM Systems director Karl Robb, Deputy Economy Minister Max Nefyodov, Education Minister Liliya Hrynevych, AVentures Capital managing partner Andriy Kolodyuk, National Bank Deputy Governor Vladyslav Rashkovan, and Lviv Mayor Andriy Sadoviy.

IT developing state

U.S. Ambassador Geoffrey R. Pyatt, speaking at the conference on June 27, said Ukraine and the United States are similar in that both countries have strong agriculture sectors and a fast growing IT industry.

The U.S. example of technological progress shows that the Ukrainian government should spend the coming years combining “IT with other industries to optimize and maximize them,” Pyatt said.

“Technological enablement means democracy and self-empowerment,” he said.

U.S. Ambassador Geoffrey R. Pyatt speaks at the Lviv IT Jazz Conference on June 27.

Pyatt said the Ukrainian authorities need to pay attention to the tech sphere, improving it and promoting it.

Deputy Economy Minister Max Nefyodov agreed, saying it would be good if the government embraced the opportunities provided by the IT sector.

“Government bodies have a lot to lose” and at the same time they have lot to win with the further introduction and development of technologies, Nefyodov said. “The future is open data.”

“We have a long way to go, but this doesn’t have to be painful – we can create lots of opportunities, especially for Ukrainian businesses.”

According to Nefyodov, Ukraine should now focus on correcting the flaws in legislation protecting intellectual property.

Lviv Mayor Andriy Sadoviy agreed.

“We’re now at a critical point in terms of defending intellectual property,” Sadoviy said. “Until it’s (properly) regulated, we cannot seriously talk about science, education.”

U.S. Ambassador Geoffrey R. Pyatt (L), Lviv Mayor Andriy Sadoviy (2nd L), Deputy Economy Minister Max Nefyodov (C), Chief Innovation Officer of Lviv Jaanika Merilo (2nd R) and member of parliament Oleksiy Skrypnyk participate in the panel discussion on the role of IT industry in state development.

Another area that needs government attention, according to Sadoviy, is taxation.

“I’d like IT companies to have such a taxation system that they’d be able to pay their taxes with pleasure – a system that would eliminate any corrupt schemes. And my IT friends, pay your taxes honestly, please,” Sadoviy said, smiling.

National Bank Deputy Governor Vladyslav Rashkovan said it was important for the National Bank of Ukraine, the country’s central bank, to be innovative in the age of online payment.

“The banking sector is driven by IT,” Rashkovan said. “But that’s not enough. We want to be the leaders in innovation. And to achieve this, we’ve even started to discuss establishing of fin-tech accelerators within the NBU. Who knows – maybe one day the NBU will introduce its own digital currency.”

Education for IT industry

Education Minister Liliya Hrynevych said information technology would have an effect on Ukraine’s educational system – and vice versa.

In order for Ukraine’s universities to provide better tech qualifications, the IT industry needs to help draw up study programs and educational content, she said. This, in turn, will result in better quality graduates being available to the IT industry.

“Universities aren’t giving any of the soft skills that are so needed,” she said. “While educating, we have to aim at a market that keeps changing all the time. That’s why I’m asking the IT community for help.

Education Minister Liliya Hrynevych answers the question asked by Lviv IT Cluster supervisory board member Andriy Hankevych (R). The picture also shows managing director DTZ Ukraine Nick Cotton (L) and chairman at Lviv IT Cluster Andrew Pavliv (2nd R).

“We understand the overall demand, and we’ve even increased the amount of tech students by 1,100,” Hrynevych went on. “We’re ready to pay more, but we need to know that this money is being planted into fertile soil.”

According to Hrynevych, children used to colorful and entertaining applications on smartphones, laptops and tablet computers are bored by the theory-heavy IT educational curriculum.

“We lack electronic books,” she said. “Only if the government cooperates with the private sector can the reform of middle and higher education be realized.”

Investment in IT

AVentures Capital managing partner Andriy Kolodyuk, speaking in both English and Ukrainian at the IT Jazz Conference, said Ukrainian tech startups attracted $132 million under 66 agreements signed last year, while in 2014 Ukrainian companies gained only $33 million in 86 deals.

“We have grown 237 percent,” he said.

Kolodyuk, whose venture company invested in startups like Petcube, CheckiO, and VOX Audio Player, said that today Ukraine has more companies that are targeting the global market.

“Ukrainian startups are now involved in various international incubator programs. Why? Because they’re good,” he said. “Every Ukrainian startup is now building a global product, because there’s no local market. And that’s fine – many countries went through this.”

Founder of Kyiv Mohyla Business School Pavlo Sheremeta (C) moderates the panel discussion on Investments in Ukrainian IT industry. The picture also shows managing director at IT Ukraine Association Victor Valeyev (L).

Meanwhile, global investors are taking more interest in Ukraine: billionaire philanthropist George Soros on Nov. 18, 2015 bought an equity stake in Ukrainian software developer Ciklum for an undisclosed amount of money. The deal was one of the most noticeable struck during the past year.

Alex A. Fridlyand, the managing director at Soros Fund Management, said the deal had nothing to do with philanthropism – the fund saw potential in the Ukrainian market.

“We’re focused on making money,” Fridlyand said. “We felt that Ukrainian market is undervalued. We understand that (Ukrainians) don’t like to hear that, but we’re always looking for undervalued markets. This was a big opportunity for us and, on the other hand, we can (help) build the Ukrainian middle class.”

Board member at EPAM Systems Karl Robb and Horizon Capital partner Vasile Tofan speak at the IT Jazz Conference on June 27 in Lviv.

However, Karl Robb, a board member of one of the country’s largest software companies, EPAM Systems, said Ukraine has lots of great programmers, but is behind the curve when it comes to business and marketing skills.

“Everyone’s complaining about a lack of investments, but that’s absolute nonsense,” Robb said. “(The problem is that) there’s a lack of people that think that sales is an honorable profession, a desirable and credible one.”