. Economic Review – Journal of Economics and Business, Vol. XVII, Issue 2, November 2019 ///

DEVELOPMENT OF IT IN : A PROSPECT OF THE BRAIN DRAIN REDUCTION* Nataliia Marynenko1 , Halyna Tsikh2, Iryna Kramar3

ABSTRACT economic development of Ukraine as a whole is provided. Ukraine is faced by a devastating problem of economically active population emigration, Keywords: IT outsourcing, brain drain, which has reduced the labor force in the country competitive advantage, development by 5-8% in the last two years and demonstrated a negative impact on the potential Gross JEL: L24, O15, M15, O30 Domestic Product (GDP). Despite this, Ukraine is one of the leading software development centers in Central and Eastern and ranks fourth in the export of information technology (IT) 1. INTRODUCTION products and services in the world nowadays. The IT industry is one of the four priority sectors As estimated by the United Nations (2019) by for Ukraine’s export strategy, it is one of the 2050, the population in Ukraine will decrease most perspective, dynamic and innovative to 36 million (43.9 million – in 2019) and 50 branches of Ukraine’s economy. Professional years later it may be recorded at 28 million. expertise, cost effectiveness and high standard Next to low fertility rates, migration plays a key technical education make this industry role for the situation to happen. Every attractive also in terms of employing Ukraine’s Ukrainian who leaves in search of a better life own intellectual resources within the country. is contributing to the loss of one of country’s The article aims to characterize the state of most valuable resources – human potential affairs, potential and prospects for the (Talmazan, 2019). The representative of the development of the Ukrainian IT outsourcing National Bank of Ukraine (NBU) Nikolaichuk market as well as to analyze and evaluate it (2018) said that for the last two years including comparison with foreign practice. migration has reduced Ukrainian workforce by Research methods used are as follows: desk 5-8% and the impact on potential GDP is quite research, inductive and deductive methods, high. The tendency for young people to leave abstract and logical method, system approach, abroad to study is also strong. Despite this, analysis and synthesis, empirical methods, and Ukraine is one of the leading software statistical analysis. The essence of IT development centers in Central and Eastern outsourcing, its types, aims and main Europe (CEE). Professional expertise, cost advantages of use are revealed in the article. The effectiveness and high standard technical features of IT outsourcing industry trends both education makes this branch attractive in in Ukraine and the world practice are terms of use of its own intellectual resources researched. Competitive advantages of Ukraine within the country in particular (Komsa & in the world IT outsourcing market are Hrebennyk, 2017). identified. Challenges, obstacles, risks as well as potentials and prospects of IT outsourcing The research on the possibilities to lower development are determined and analyzed. Ukraine’s drastic brain-drain by ensuring Recommendations for the brain drain reduction appropriate institutional conditions for IT due to the IT industry progress are offered and professionals is of great importance. its impact on the potential GDP growth and

* The paper was presented at the 6th International Scientific Conferences ICEI 2019, held in Tuzla and published in the Proceedings. 1 Ternopil Ivan Puluj National Technical University, Ukraine, E-mail: [email protected] 2 Ternopil Ivan Puluj National Technical University, Ukraine, E-mail: [email protected] 3 Ternopil Ivan Puluj National Technical University, Ukraine, E-mail: [email protected] 41 /// ///. Nataliia Marynenko, Halyna Tsikh, Iryna Kramar .

The aim of the article is to characterize the outsourcing in Ukraine. Tropitsyna (2014) state of affairs and potentials for the formation revealed the stages and mechanism of using of Ukraine’s IT market, as well as to analyze outsourcing services to improve enterprise and evaluate the prospects for its develo- efficiency and analyzed the market for out- pment, including comparison with foreign sourcing services in Ukraine. Koshkarieva practice. (2016) studied distinctive features of outsou- rcing as a service and the purpose of its appli- cation. IT outsourcing in Ukraine as an activity 2. PREVIOUS RELATED RESEARCH was studied by Tonyuk (2016), who conside- red its trends and development forecasts. Features of IT outsourcing development are Sadchykova, Khomenko, and Gorobinska studied in the works of foreign and Ukrainian (2018) studied the essence of “outsourcing” as scientists. Significant contribution to the a concept and highlighted the features of development of the concept of outsourcing outsourcing in different types of economic belongs to Heywood (2001) who presented the activity. Dubovskyi (2018) modeled the coun- arguments for and against outsourcing. try’s labor potential in the field of IT outsou- Gottschalk and Solli-Saether (2006) focused rcing. their attention on the issues related to the However, in all those studies the IT-profe- strategy, structure, principles and methods of ssionals emigration issues were not disclosed. effective IT outsourcing management. Bravard This fact makes the proposed analysis to be and Morgan (2006) showed how to make distinguished among the others related to the efficient outsourcing-related decisions. IT outsourcing aspects. St. Amant (2009) covered business process outsourcing (BPO), government IT outsour- 3. RESEARCH METHODOLOGY cing, localization and offshoring, outsourced IT projects, trust in offshore outsourcing, etc. The methods used to achieve the aim of the Hirschheim, Heinzl, and Dibbern (2009) research are desk research, inductive, dedu- attempted to synthesize what is known about ctive, abstract, empirical and logical methods; information systems outsourcing by studying system approach; analysis and synthesis; and its three parts (traditional IT outsourcing, IT morphological and statistical analysis. The da- offshoring, and BPO). Beulen, Ribbers, and ta for GDP, total goods and service exports and Roos (2010) presented both research and pra- Information and Communications Technology ctical examples to explore how relationships (ICT) exports, budget tax revenues are provi- with external provider(s) have to be establi- ded by the State Statistics Service of Ukraine, shed and managed successfully. Willcocks, NBU, PricewaterhouseCoopers (PwC), the Lacity, and Sauer (2017) shared a report for World Bank, International Data Corporation the findings of 405 major research studies on (IDC), European Business Association (EBA), offshoring, and offered the analysis of emer- Eurostat, and the United Nations. Surveys of ging findings and practices for the future. The the Ukrainian IT professionals and a detailed work by Aubert and Rivard (2016) is devoted overview of the country’s IT market are to theoretical principles and modern trends of provided by the largest Ukrainian developer IT outsourcing. community DOU.ua, IT Ukraine Association, Better Regulation Delivery Office (BRDO), N-iX, Features of IT outsourcing in Ukraine were IDAP, ITCua, etc. studied by Ukrainian scholars Osadchuk, Yok- hna (2010), Matvii (2013), Herasymchuk (2013), Meshko, Yefremova (2015), Litoshe- 4. IT OUTSOURCING: NATURE, TYPES, nko (2017), Ilienko, Moroz (2014), who re- ADVANTAGES AND DISADVANTAGES OF USE searched the nature, types, advantages and disadvantages of outsourcing, and analyzed the Outsourcing refers to contracting third party dynamics of the IT outsourcing market in entities to do specific business functions for the Ukraine. Tyshchuk and Pavlova (2013) organization (Patterson, 2019). Informa-tion analyzed the potential and prospects of IT technology outsourcing (IT Outsourci-

/// 42 Economic Review – Journal of Economics and Business, Vol. XVII, Issue 2, November 2019 . Development of IT outsourcing Ukraine: a prospect of the brain drain reduction /// ng) involves tech-based functions such as so- The main disadvantages of IT outsourcing ftware and application development, network are identified as follows (Hrebeshkova & administration and web development, datace- Stel-makh, 2011): nter services, and infrastructure technology outsourcing (enterprise resource planning,  loss of complete control over the IT infra- customer relationship management, supply structure servicing company; chain management, e-commerce, enterprise  dependence on the outsourcer, especially in asset management, etc.). The types of outsour- security matters; cing services can be divided into: (a) onsho-  and decrease in labor productivity of own re/home shoring (outsourcing done within the personnel because of loss of motivation borders of a country); (b) nearshore (ou- during changes. tsourcing to a company in a neighboring cou- IT outsourcing is not the only way to tran- ntry); (c) offshore/services overseas (outsou- sform a business, although when properly ma- rcing to a country far away as a rule because it naged, it can act as a catalyst for change. is significantly cheaper) (What Is Outsour- cing?; Different Types of IT Outsourcing).

IT outsourcing advantages are (Deloitte, 2018; 5. IT outsourcing in the global dimension Meshko & Yefremova, 2015):  capacity optimization and ability to con- The global market size of outsourced services in centrate resources on core activities; 2000-2018 is shown in Figure 1a. According to the  lead time and cost reduction, profit incre- 2019 annual Global Services Location Index mentation; (GSLI), which measures the viability of countries as an offshore destination based on their financial  simplified organizational structure; attractiveness, people skills and availability, and  possibilities of activity diversification due business environment (The 2019 Kearney Global to the released production and intellectual Services Location Index, 2019), top 10 leading potential; countries in offshore business services world-  minimizing risks by transferring IT infra- wide in 2019 were India, China, Malaysia, Indo- structure to third parties; nesia, Vietnam, United States (US), Thailand,  gaining financial flexibility; (UK), Brazil and Philippines. Glo-  enabling competitive advantage, etc. bal services revenue across the regions and year- over-year growth are presented in Figure 1b.

120 104.6 99.1 95.0

91.3 93.1 88.9 88.9 100 87.5 85.6 76.3 80.5 82.9 77.1 76.9 70.0 80 64.8 60.1

Revenue in bln US $ US blnRevenuein 52.4 60 45.6

40

20

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009Year2010 2011 2012 2013 2014 2015 2016 2017 2018

a) The global market size of outsourced services in 2000- b) Global Regional Services Revenue (First Half of 2018, in USD bln. 2018, in USD bln) and Year-Over-Year Growth (in %).

Figure 1. The global market size of outsourced services in 2000-2018 (in USD bln) and Global Regional Services Revenue (First Half of 2018, in USD bln) and Year-Over-Year Growth (in %) Source: Statista, 2019a, 2019b, IDC, 2018.

Economic Review – Journal of Economics and Business, Vol. XVII, Issue 2, November 2019 43 /// ///. Nataliia Marynenko, Halyna Tsikh, Iryna Kramar .

According to Technavio’s IT outsourcing Kyiv held 75th position in the Top 100 Super report (2018), the Americas held the largest Cities rankings (Tholons Services Globali- share of the market in 2017, accounting for zation Index, 2019). Ukraine was ranked 20th in over 50% share, followed by the EMEA the Kearney GSLI of the most attractive out- (Continental Europe, the Middle East, and sourcing destinations in 2019 (The 2019 Kea- Africa) and APAC (Asia-Pacific) respectively. rney Global Services Location Index, 2019). However, during the forecast period, the EMEA region is expected to register the highest The statistics presented by different organi- incremental growth. The market will be zations such as the World Bank, PwC, IT accelerating and growing at a compound Ukraine Association, State Statistics Service of annual growth rate (CAGR) of over 4%, with Ukraine, and NBU vary in terms of different the incremental growth of USD 75.99 bln from methodology used. But according to all these 2017 to 2022, where 60% of the growth will sources, Ukraine’s IT industry demonstrates a come from the EMEA region. steep growth.

In 2016, EBA and PwC presented a compre- 6. IT MARKET IN THE STRUCTURE OF hensive analysis of the Ukrainian IT industry UKRAINE’S ECONOMY: RANKINGS, (Andrienko-Bentz, 2016). The Ukrainian IT TRENDS, CHALLENGES AND services market increased by 2.5 times bet- PERSPECTIVES ween 2011 and 2015 and it is predicted to reach USD 5.7 bln by 2020. Ukraine’s export Ukraine’s IT industry, in addition to its sig- proceeds from the IT industry are to increase nificant economic effect, has become an im- from USD 2.5 bln. to USD 5.1 bln in 2020 and its portant element in creating an image of the share in the total export will grow from 5.2% country nowadays. In 2018, Ukraine and its to 7.5%. The share in Ukraine’s GDP is also tech companies appeared among top positions expected to increase, from 3.3% to 4.5% while in many influential international rankings, budget revenues were estimated at 10.3 bln of more than 100 representatives of the Fortune Ukrainian hryvnias, UAH (UAH 27.2 bln in 500 list (Fortune 500, 2019) in the world are 2020). Bank deposits of IT specialists loyal customers of the Ukrainian IT businesses accounted for approximately UAH 5.8 bln, while The Global Sourcing Association has mandatory sale of foreign currencies was USD named Ukraine as the best IT services pro- 2.0 bln, and banks’ income from transactions vider to the UK (The Global Sourcing Asso- with foreign currencies was approximately ciation). In 2019, 11 Ukrainian IT companies UAH 1.7 bln. In 2018, the industry surpassed and 6 providers with development centers in 180,000 specialists and was projected to grow Ukraine were included in the Best of the Global to 200,000 professionals by 2020. As a result, Outsourcing 100 (IAOP, 2019). Ukraine has the tech industry created 420 thousand jobs in been chosen as one of their R&D facilities IT and related industries and 670 thousand are location for 20% of world leading companies expected in 2020 as one new programmer (Tech Ecosystem Guide to Ukraine, 2019, involved in the industry creates up to 4 Ukraine is one of the leading countries in the additional jobs in related industries (the Nati- field of IT outsourcing, 2019). In 2017, Gar- onal Association of Software and Services tner included Ukraine in the research on top Companies, 2019). According to the forecast offshore services locations in the EMEA region (the basic one), provided in the PwC research (Gartner, 2017). In the Global Innovation Index in 2017, in 2025 IT industry revenue will 2019, Ukraine was ranked 47th (The Global increase to USD 8.4 bln, the number of IT- Innovation Index, 2019). According to professionals by almost 2.5 times – to more HackerRank, Ukraine ranked 11th of 100 than 240 thousands, industry taxes paid – to among the top 50 countries with the best UAH 46.1 bln, and contribution to GDP may be software developers in the world (Hacker recorded at 4.65% (Pylypenko, 2017). Rank). Also, it was the 7th on the TopCoder rating of the best programmers (TopCoder ICT became the 3rd largest export service in- Ranking). Ukraine was the 33rd (42nd – in 2018) dustry, amounting to more than 20% of all in Top 50 Digital Nations and its capital city of Ukrainian service exports (State Statistics Ser-

/// 44 Economic Review – Journal of Economics and Business, Vol. XVII, Issue 2, November 2019 . Development of IT outsourcing Ukraine: a prospect of the brain drain reduction /// vice of Ukraine, 2019). According to the USC – by 31.4% to UAH 1.89 bln, respectively. dynamics of the balance of payments of Ukrai- The personal income tax paid by IT workers ne (National Bank of Ukraine, 2019), ICT expo- was 3.7 times higher than the national average rts increased by 31.4% during the first half of (Shelest, Kutovyi & Samokhodskyi, 2019; State 2019, to USD 1.64 bln, compared to the same Fiscal Service of Ukraine, 2019; IT Ukraine period of the last year (IT Ukraine Association, Association, 2019; The Price of the State, 2019; 2019). The vast majority of Ukrainian softwa- Ukraine. The country that codes. IT Industry in re development companies are exporting IT Ukraine, 2019). services and 60% of Ukrainian developers are currently employees in software development At the beginning of September 2019, a meeting outsourcing, 29% are engaged in product deve- of the newly appointed Prime Minister of lopment and 11% in outstaffing (N-iX). Ukraine Oleksii Honcharuk with the represe- ntatives of the IT industry was held. Honcharuk Most company employees and almost all pointed out the problem of the lack of staff in freelancers (with the obligation to register as the industry and proposed to establish a Hu- Private Entrepreneurs, PEs, Sole Proprietors) man Capital Development Fund – IT Creative. A are hired as independent contractors – a new tax to generate revenues for it was framework which provides substantial tax introduced: it should increase to 5% in 2024- advantages and easy reporting, benefiting both 2029 and this fee is not to be paid by com- companies and employees (Contact Ukraine). panies, but by PEs working in the industry. Under such agreement, the employer does not Additionally, such PEs have to pay doubled USC pay taxes on salaries and the employee, being and 1.5% of military fee (Karpus, 2019). taxed according to the simplified (unified) tax Ishchenko (2019), commenting on this, consi- regime and belonging to the third group of ders that relatively low cost of living and such taxpayers (among the four ones currently services, plus low taxes, are now the reasons existing), pays a fixed rate (single tax) of only for IT professionals to stay in Ukraine. If taxes 5% of his/her gross income if VAT is not paid are simply raised without providing anything (3% if VAT is paid). In addition, they are in return, it will only exacerbate the problem of subject to a United Social Contribution (USC) of the outflow of talents . The DOU.ua (Ippolitova, 22% of a minimum wage (around USD 155 as 2019b) carried out a research in which it has of 2019). According to the Ministry of Justice of been estimated that increasing the tax for IT Ukraine, 2019 and Ippolitova (2019a), the professionals can encourage them to leave number of IT specialists registered as PEs abroad. increased by 23% in 2018 to 154 thousand persons compared to 125 thousand in 2017, In Ukraine, 72% of employees in IT are under while the total the number of all PEs in Ukraine 30 years old (DOU, 2019a), there are more than increased by only 4%. 4,000 tech companies operating on the market and over 1,600 IT service companies (IT Uk- Revenues from single tax increased by an raine Report, 2018). Kyiv and Kyiv region re- average of 58.8% annually during 2013-2017 mains the leader in the number of IT specialists and amounted to UAH 3.2 billion in 2017 (USD (Unified State Register of Legal Entities, Indi- 118.5 mln). By contrast, the amount of taxes vidual Entrepreneurs and Public Formations, paid by IT companies during 2014–2017 was 2019; Ippolitova, 2019a). Comparison of steadily growing by 27% each year and in 2017 Ukrainian cities with the most developed IT it reached 4.1 billion UAH (USD 151.9 mln). In industry in terms of number of IT companies the first half of 2019, the amount of taxes paid and software developers, and the level of to the state budget of Ukraine increased by average salaries are given in Table 1. 28.9%, to UAH 6.1 bln, and the payments of the

Economic Review – Journal of Economics and Business, Vol. XVII, Issue 2, November 2019 45 /// ///. Nataliia Marynenko, Halyna Tsikh, Iryna Kramar .

Table 1. Number of IT companies, software developers in top-5 IT-cities of Ukraine and their average salaries City Kyiv Kharkiv Dnipro Odesa Number of tech companies 42 20 24 12 15 Number of software developers in top-50 companies 23061 8289 8536 2685 2883 Total number of IT specialists 45778 21847 15643 13213 7193 Level of the software developer Average salaries, US dollars (as of June-July, 2019) Senior 3900 3500 3500 3400 3600 Software Engineer 2100 1800 2000 1900 2000 Junior 750 700 645 600 650 Source: Compiled by the authors on the basis of (DOU, 2019b, 2019c, 2019d) and (Ippolitova, 2019a)

destinations. Its IT sector offers an impressive The positive dynamics has been recorded in diversity of tech professionals, developed the developers’ salaries for the last three years: infrastructure and provides a good educational average income per developer is USD 50,000 background (Anisimova, 2019). Compared to per year, average hourly rate is USD 34-64. In other countries in the CEE region with de- this context, it should be noted that the mini- veloped IT outsourcing services (see Table 2), mum wage in Ukraine currently is UAH 4173 Ukrainian competitive advantages are (Euro- (approx. USD 155) and the average salary in stat, 2018; IT Ukraine, 2016, Ukraine. The Ukraine is UAH 10783 (approx. USD 400) as of country that codes. IT Industry in Ukraine, June 2019 (Ministry of Finance of Ukraine, 2019; Ukraine Invest, 2018): 2019). - the cheapest and largest engineering One of the reasons why Ukraine occupies the labor force in Europe; leading position in the list of IT outsourcing - ease of recruiting and laying-off locations, is its strong orientation towards IT employees in the absence of strong as about 200 higher education institutions legal restrictions or trade unions; (HEIs) train IT professionals (The Unified State - highly educated population (99.7% Electronic Database in Education, 2019). literacy rate, 70% have a secondary or Antoniuk, the CEO of the largest Ukrainian IT higher education); company EPAM, considers that global compe- - European mentality; tition for talents is growing and that not the - novisa regime and easy work permit outflow of professionals, but the beginning of regime for foreigners from most coun- the outflow of students is urgent under the tries; current trends of migration (Shelest, Kutovyi & - favorable geographic position; Samokhodskyi, 2019). SoftServe, , - well-developed and developing IT in- , GlobalLogic are the companies actively frastructure, with a fast-growing cooperating with HEIs in the field of IT innovation ecosystem; professionals training and they launch their - lots of world-famous tech giants opera- own IT academies. ting on its territory; - one of the most promising startup scenes (Grammarly, Terra-soft, Petcu- be, just to name few); 7. PERFORMANCE OF UKRAINE’S IT - well-developed market of software OUTSOURCING IN THE CEE REGION development compa-nies for hire; - local offices in the USA and Western has established itself as one of Europe; the world’s best software outscorcing

/// 46 Economic Review – Journal of Economics and Business, Vol. XVII, Issue 2, November 2019 . Development of IT outsourcing Ukraine: a prospect of the brain drain reduction ///

- quality of developed products is not mating manual processes through artificial compromised despite the cost of hiring intelligence, and focusing less on reducing a Ukrainian developer being lower costs and more on delivering value (IT Outsourcing News from Central and Eastern when compared to western countries; Europe, 2019). - high English language proficiency level of developers.

Table 4.2 Comparison between Ukraine and Central and Eastern Europe countries in key indicators ICT Seervices export Criteria Population, mln. Number of software GDP nominal, volume, in bln. USD GSLI, rank (as of 2018) developers, thoous. in bln. USD Country (as of 2017) 38.0 279.8 6.4 581.3 24 Ukraine 43.9 184.7 2.8 132.9 20 19.6 116.1 4.5 248.8 28 Czech Republic 10.7 95.3 3.8 264.5 33 Hungary 9.8 80.1 2.2 164.5 31 Bulgaria 7.1 70.0 1.2 66.2 17 Belarus 9.5 54.2 1.5 60.0 n/a Slovakia 5.4 36.9 1.5 112.3 35 Lithuania 2.8 27.4 0.5 54.5 16 Estonia 1.3 20.7 0.7 31.2 12 Latvia 2.0 18.6 0.7 35.8 21 Source: United Nations, 2019; State of European Tech, 2018; Ukraine Invest, 2018; Infoshare CEE Developer Landscape, 2017; The World Bank, 2019a, 2019b; Statistics Times, 2019; The 2019 Kearney Global Services Location Index, 2019; The country that codes. IT Industry in Ukraine, 2019

Ukraine is among top IT countries not only in The key challenges facing Ukraine’s IT industry the region but worldwide as well, due to: successful development are identified in (Ata- mas, 2019; Shelest, Kutovyi & Samokhodskyi,  the growth rate of Ukrainian IT companies 2019; Hlova, 2019a, 2019b) as: which exceeds the total world rate by 5 ti- mes (Atamas, 2019), their year to year  most IT companies are not ready for faster international ranking improvement; growth due to underdeveloped manageme-  attracted investments in new startups; nt systems;  new signed contracts with world well-kno-  less focus on reducing costs; wn IT giants;  IT outsourcing market is saturated, com-  government’s involvement in the industry’s petition among the companies is increasing; development by using its successes as a part  customers shift away from a single IT of the state’s international public relations outsourcing provider; in particular, cooperation of industry repre-  the risk of losing customers; sentatives with Ukrainian universities,  European requirements for personal data creating demand for professionals and protection; adjusting educational programs by doing so.  possibility of restricting or prohibiting sub- contracting with PEs;  global IT skills shortage which limits gro- 8. DISCUSSION wth;  political and economic instability in Ukrai- Top 5 IT outsourcing trends in 2019 were ne, not always sufficient transparency and identified as: shifting away from single-vendor predictability of doing business; outsourcing, outsourcing core business ser-  abuse by public authorities. vice, increasing focus on cybersecurity, auto-

Economic Review – Journal of Economics and Business, Vol. XVII, Issue 2, November 2019 47 /// ///. Nataliia Marynenko, Halyna Tsikh, Iryna Kramar .

According to Shelest, Kutovyi, and Samokho- large numbers of foreign investors, and land dskyi (2019), IT industry trends and perspe- rent for free are required. ctives are discussed by the heads and repre- sentatives of Ukraine’s leading IT companies. Strategy and action plan to the IT industry de- Antoniuk is sure that in order to succeed, the velopment are also offered in (Andrienko- industry is in need of a predictable tax policy, Bentz, 2016) and they mostly coincide with the no regulatory barriers, human capital develop- views given above. pment, and growing demand for development This paper offers a comprehensive analysis of services in the domestic market, taking into the IT industry, IT outsourcing in particular, in account the risks posed by global competition terms of its impact on not relocating to other for skilled workers. Ukraine’s chance to stand countries by identifying share and contribu- out in the global market is to work on the tion in the country’s GDP, total and services creation of complex products and services with exports, tax revenues, salary rates, and prospe- significant added value. cts for further development. Lutskyi, the founder and CEO of Innovecs, also 9. CONCLUSION considers that added value should be empha- sized. Mostovyi, the CEO of AltexSoft and the Outsourcing is a powerful management tool Chairman of the Kharkiv IT Cluster supervisory and its proper use is a key in the processes of board, puts forward an idea that domestic IT transforming an organization and reforming companies have to foster the implementation its assets. The research results testify that the of public-private partnerships between univer- ІТ-industry is one of the most perspective, fast sities and businesses, and the corporatization growing and innovative sectors of the Ukrai- of universities. ne’s economy and the one that may stop the brain drain taking place in the country. IT com- Kushnir, Vice President of Luxoft Global Deve- panies in Ukraine ensure a steady capital in- lopment Centers, considers that human resour- flow into the country’s economy, attract ces should be a priority for both the IT industry foreign investments, assist in creation of a and the state. demand for consumer goods and services in Bieda, the CEO of the Ukrainian office of the fields of education, insurance, healthcare, GlobalLogic, believes that consolidation of all real estate, help create additional jobs in rela- industry participants is paramount: develop- ted industries, make constant foreign exchange ment of the education system and, higher earnings, assure that a significant amount of technical education in particular; tax legisla- taxes is paid, etc. Ukraine’s strong scientific tion reform; stronger Ukraine’s positive image and mathematical education system makes it in the international arena; internal market possible for programmers to become innova- development; and R&D – as Ukraine’s niche in tive technical leaders as opposed to function- the world market (Kulesh, 2016). ning as body-shop programmers. Therefore, the Ukraine’s ІТ-industry performs one of the Kitsmei, the co-founder of SoftServe Inc. and best in the CEE region and global market. There President of the IT Ukraine Association, agrees are all necessary prerequisites for its succe- that focus should be made on human and ssful growth and it will continue doing so un- organizational capital. der recommendations mentioned above to be followed. Chaikovska, the Chairman of the Board of STEM-coalition of Ukraine, adds that increasing the number of women in the IT sector can improve performance and further REFERENCES avoid gender inequalities in top management 1) Andrienko-Bentz, O. (2016) Export-orien- (Komsa & Hrebennyk, 2017). ted Segment of Ukraine’s IT Services Market: Sharma (2017), the CEO of BMC Software India Status Quo and Prospects. EBA and PwC Pvt. Ltd., points out that government regula- report [Online]. Available at: tion, special taxation regime for attracting https://eba.com.ua/static/export_it_indus

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