The Odesa IT sector made headlines this autumn when Snapchat purchased Odesa-based IT company Looksery for a reported USD 150 million. This attention-grabbing deal was the latest success story for the Odesa IT industry, which has long thrived on the city’s international connections and cosmopolitan outlook together with its entrepreneurial traditions and impressive academic pedigree.
The Looksery sale was the latest in a series of exciting events in the Odesa IT sector. Summer 2015 saw the foundation of the ‘Odessa IT Cluster’ – the latest regional cluster to emerge in Ukraine as the country’s vibrant IT sector continues to consolidate. The Odessa IT Cluster currently includes 18 companies: Luxoft, AB Soft, Intersog, VertaMedia, WannaBiz, Netpeak, KeepSolid, Provectus, Ciklum, Augmented Pixels, Looksery, HYS Ent., Ice Ent., DataArt, NXC Group, 111 PIX UA, Clickky and Beetroot. Together they employ nearly 3,000 people in the city. Coordinators of the project hope membership will rise to 30 companies by the end of the year. Even this would be a small fraction of the city’s overall IT industry, which features over 200 companies employing more than 8,000 people.
With the Odesa IT sector booming but youth unemployment in the port city also on the rise, there are hopes that the new cluster will be able to attract more people to the IT industry. The participation of Odesa’s four largest universities in the cluster initiative will certainly help provide the training required. There should be no shortage of candidates: average wages in Odesa currently hover below the USD 200 per month mark, while within the IT industry employees can expect to make an average of USD 1,500 per month.
Business Ukraine magazine spoke to Odessa IT Cluster CEO Yulia Sulimova about the IT industry in Ukraine’s Black Sea capital and discussed why she sees education as the priority for the sector’s future growth.
What are the main functions of the Odessa IT Cluster?
The key purposes of the Odessa IT Cluster are to organize, support, maintain and implement IT sector development in the city and region in all areas of education and business. Educational projects are our first priority. We are creating a new form of partnership and cooperation between business and education. The educational process will focus on practical tasks similar to real business projects. In this way, business will be able to affect the quality of education. Odesa has about 120,000 students, and we want at least 10% of them to obtain an IT education.
What are the unique selling points of Odesa’s IT sector?
Branch offices of large companies that operate on international markets and set standards with first-rate professionals. And, naturally, the city’s start-ups which are our pride and joy - Kwambio, Augmented Pixels, Clickky, and, of course, Looksery, with its sensational recent USD 150 million dollar sale. This union is unique and we have been able to create it.
How will the Odessa IT Cluster differ from other Ukrainian IT clusters?
The main difference is that we aim to create a framework that facilitates the development of the IT sphere via the concept of co-competition. Outside of the cluster, companies can and should compete with each other. Within the cluster, we unite to solve common problems.
We want to create an environment where no one can say: “this cluster represents top-level managers promoting the interests of a few companies.”
Do you plan to develop ties with IT industries in other Ukrainian cities?
Definitely. We have already made several steps in this direction. At the Lviv IT forum in early October, during a panel discussion with representatives of Lviv, Dnipropetrovsk, Cherkassy, and Kharkiv clusters, Odessa IT Cluster officials proposed uniting the efforts of these clusters to solve common problems and improve the development of IT in Ukraine as a whole.
Many Ukraine-based IT companies prefer to register abroad in order to avoid the burdens of existing Ukrainian legislation and market regulations. What steps would you like to see the Ukrainian government take to improve the business climate for the IT sector?
The first step would be simplification of the system of registration and business management. We would also like to see the creation of attractive taxation conditions where all market participants enjoy the conditions for business development. Research has shown that less than 0.5% of Ukraine’s workforce are employed in the IT sector, but they produce 3% of GDP. In other words, if our government encourages the development of the IT business in Ukraine, it will lead to an increase in jobs and GDP growth.
Ukraine has a wealth of IT professionals, but demand is growing at such a pace that staffing shortages are a constant feature of the Ukrainian IT marketplace. What steps will the Odessa IT Cluster take to help bridge the gap and create a new generation of IT professionals with the right skills for the global marketplace?
Our main task is to change IT education. We are starting to work with schools to teach pupils programming languages. Odesa universities and institutes are already conducting specialized courses for undergraduates where experts from different areas of the IT sector talk about their work and explain what skills are required to enjoy a good career in IT.
We are also working to encourage companies to end the policy of working exclusively with graduates. Many undergraduates have the requisite skills and we try to highlight this. It is important to support entrepreneurial and innovative activities among the emerging generation, and we are seeing more and more young Odesa students embarking on their first IT initiatives.
Ukraine’s IT industry is attracting increasing amounts of global attention. What can be done to generate greater international awareness of Ukraine’s IT potential?
We need to maintain a constant presence in the global informational space. For example, in September, there was a big international IT conference in Odesa where our cluster was an information partner. The conference brought together over 600 participants from a range of different countries. Odesa can and must present itself on the global IT market as a city with a prominent and rapidly growing IT industry. The Odessa IT Cluster will participate in the Balkan and Black Sea ICT Clusters Network, which has 19 member clusters from nine countries. We are also currently conducting negotiations to participate in a large-scale conference in California.