Nearshore Americas

Q&A: The Landscape Grows Complex for Ukrainian IT, But Not Because of the War

Two years into the war with Russia, Ukrainian IT firms fear little for the integrity and continuity of their business operations. True concern comes from better-known, comparatively mundane sources: global economic headwinds, customers who remain extra-cautious and a dwindling flow of projects in the pipeline.

Such is the view of Maxim Ivanov, Co-Founder and CEO of Ukrainian tech firm Aimprosoft. Founded in 2005, Mr. Ivanov’s company has grown into an organization that operates with 350 workers spread throughout Europe and specializes in more than 50 technologies. Even in extraordinary circumstances, Aimprosoft has managed to stay afloat, keeping several of its business relationships long-lasting. 

We had the opportunity to speak with Mr. Ivanov about the current state of Ukrainian and Eastern European IT in the midst of the war. He shared his experiences doing business right next to a war zone, how US and European clients are handling their partnerships in the region, what he considers the real threats to the Ukrainian tech sector and his thoughts on the role AI is playing in Europe’s nearshore. 

NSAM: We’ve heard that Ukraine’s IT industry is standing strong, despite the war, but there have been reports of companies moving away from the country to other locations in Eastern Europe, Western Europe and even South America. Two years into the war, what’s the actual state of the Ukrainian IT industry?

Maxim Ivanov: That’s true. Some companies –the bigger ones, for sure, which have the money to do it– have tried to establish offices abroad. The main goal, I believe, is to hire people locally in those markets. It’s not about moving resources outside of Ukraine; it’s more about expansion.

This is mostly connected to customers from around the world who might be a bit scared to source from Ukraine because of the crisis. Fortunately, not a lot of companies [sourcing from Ukraine] are doing that. We still have lots of customers who are fine working with Ukrainian firms. Since COVID, everyone began to work remotely. This helped us to break into the world. 

At the beginning of the war, our people in the eastern part of Ukraine had to move to the western part, where it was safer. Before the war, lots of companies established offices in western Ukraine; we also did. 

But even then, offices aren’t super necessary, because people can work remotely now. Lots of our people moved with their relatives, or to wherever area in the country they wished to be. About 30% of our employees moved abroad. The majority of them live in different countries around Europe. 

Maxim Ivanov, Co-Founder and CEO, Aimprosoft

We’re also thinking about opening an office abroad, but we have yet to decide about the location and what we’ll be doing there. It would be mostly, I think, to have our company represented in that area. A sales team, perhaps. 

Companies with the resources have been doing that lately. They move mostly to Eastern Europe because developers there are cheaper than in the west.

NSAM: Aimprosoft’s contemplation of another office outside of Ukraine has nothing to do with the war?

Maxim Ivanov: We have no big issues because of the war. Our main office was originally in Kharkiv, which is a part of Ukraine that was heavily shelled by the Russians. It wasn’t safe to be there, so we had to move. Almost all of the western part of Ukraine is safe; not that many rockets flying around, so you can live there. We have Internet, electricity, emergency generators, everything. 

Our main office in the western part is located in Ivano-Frankivsk, the second biggest city in the area. We also established what we call “resilience offices”, locations with generators, starlinks, safe networks. If something happens, like a blackout, we have five locations in five big cities in Ukraine. If people live near one of those, they can go there. We’ve never used them since the war began, fortunately. Except whenever our people want to meet to discuss something.

NSAM: Is the level of concern among your clients the same as it was at the beginning of the war? What’s their attitude now?

Maxim Ivanov: All of our customers stayed with us through the war, except those whose projects ended during that period. 

It’s true that some would rather not hire firms from Ukraine because of the situation. Some of them have risk plans that won’t allow them to work with a company located in the zone or near it. We can’t do anything about that. We still have a lot of customers, though, from both Europe and the US. 

I think that most of the impact hasn’t come from the war but from the overall crisis happening in the world. There have been lots of layoffs in the tech industry. That’s the main force influencing our company, like it would any other company in the IT sector.

NSAM: But I assume that some things have changed because of the war. We’ve read, for example, that the flight of companies from Ukraine to other Eastern European countries has affected wages in the region. Have you noticed those sorts of changes?

Maxim Ivanov: I see changes in the whole world. Hourly rates and salaries for developers are going down because we have lots of people in the market who lost their job. Before the war, it took a German company six to nine months to hire a developer in their local market. Now it’s much easier. 

I think that most of the impact hasn’t come from the war but from the overall crisis happening in the world […] For all companies doing what we do, outsourcing, it’s harder to find new clients. 

It’s normal market dynamics. Demand is lower because of the [economic] crisis, and there are more people in the [job] market. For all companies doing what we do, outsourcing, it’s harder to find new clients

It’s not connected to the war. It is connected in a way, in terms of economics, but not in the terms of resources. 

NSAM: You tell me some of your developers live in countries other than Ukraine. Where are they, for the most part?

Maxim Ivanov: The majority in Eastern Europe. Some are in Finland, others in the UK, in Germany. Some moved with their friends, with relatives. Others wanted to go to the seaside; I have several people working from Spain, from Portugal. They’re spread all throughout Europe. And they move around, too. A developer can be living this month in Spain and in Portugal the next. But the majority are in Poland, or near Poland.

NSAM: Is it difficult to manage a remote team in Europe? Because of the time zones. 

Maxim Ivanov: It’s only two hours, the maximum difference. Central Europe is one hour. The UK, which is farthest west, is only two hours. It’s not a big deal.

It’s another matter with our US customers. The difference is much bigger. 

NSAM: Now that you mention the US: do your customers have issues with time difference in those cases? What do they tell you?

Maxim Ivanov: They used to tell us about it, but we have relationships that have been in place for 10 or 15 years. Everyone’s used to it now. But it’s hard. We have an overlap of at least two or three hours for development. For example, if our customer is a development company, we usually meet for a scrum call or something, and that call has to fit into that two to three hour overlap. 

We never have [sourced from LATAM]. Because we have the same type of resources and almost the same pricing model. There’s no sense for us to go to Brazil or other Latin American countries.

It’s not a big deal, but for some people it is. Half of our clients are in the US, and the relationships have been long-term and successful, nonetheless.

NSAM: You have an office in the US, but it’s for sales only, right? For a moment there I wondered if you were sourcing devs from Latin America.

Maxim Ivanov: No, we never have. Because we have the same type of resources and almost the same pricing model. There’s no sense for us to go to Brazil or other Latin American countries. Only if we go there and open an office would we start hiring developers there. Some [European] countries have begun doing this.

NSAM: But you haven’t even considered it?

Maxim Ivanov: We’re considering the opening of a sales office in Europe, and we might start hiring people there. That would be us extending our company.

NSAM: Does Aimprosoft work with AI or offer services that have to do with AI?

Maxim Ivanov: There’s a lot of hype around the topic, right? What do you mean by working with AI? Adopting some functionality that works with ChatGPT or doing ChatGPT ourselves? There’s a big difference.

I was at a web summit last year. There were several thousand startups there, and almost all had just introduced the use of ChatGPT in their platform. The AI project is one, but everyone is trying to incorporate it into their own projects. 

It’s normal market dynamics. Demand is lower because of the [economic] crisis, and there are more people in the [job] market […] It is connected [to the war] in a way, in terms of economics, but not in the terms of resources.

Can we use ChatGPT in our own projects? For sure. But I don’t know any startup that is doing their own copy of ChatGPT. Microsoft, Apple and Google are the only others. Maybe you know about more. Everyone is trying to utilize the functionality, the same thing, in their apps, and try to adopt it to do something. 

ChatGPT is a very good thing, and has a bright future for sure. Our developers already use it to some extent. Some customers don’t like that ChatGPT can see their code, but if they’re fine with it, we use it in our development environment to generate some code. That’s easy stuff, and it can do the easy stuff for now, like converting parts of code from JavaScript to Java. But that’s all, at the moment.

You can sell a 10 dollar application for 15 dollars if you put ChatGPT on top of it. Why not do it, then? 

Answering your question more directly: we have data scientists working on different projects. It’s not AI; it’s data science.  

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NSAM: Does Aimprosoft offer services or solutions labeled as AI? I was wondering because we’ve heard and read that some European companies outright ban the use of AI internally, among their employees. We know European regulations on AI are stricter than in the Americas.

Maxim Ivanov: It happens, because they’re worried about data. There are stories of data being compromised by ChatGPT. In Europe regulations are very strict, especially those related to personal data. Fines are heavy. It’s a big deal.  

Using ChatGPT in development is like using any other API. We’re more interested at the moment in projects that have to do with data science, image recognition. A lot of stuff can be done using similar technologies. 

It’s not as hype as ChatGPT, but it’s still useful, and we’re seeing a lot of results. I use it in home surveillance, for example. It’s not AI, just normal data science projects. 

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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