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UKRAINE’S IT SECTOR AMID GLOBAL TURBULENCE: ECONOMIC CHALLENGES, ADAPTATION STRATEGIES, AND DEVELOPMENT PROSPECTS
Petro KUTSYK, Prof., PhD
Lviv University of Trade and Economics, Ukraine
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Nazarii TULIKA, PhD Student
Lviv University of Trade and Economics, Ukraine
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Universal Decimal Classification: 004:004.65+338.14(477)
JEL Classification: M20
Abstract
The article presents a comprehensive analysis of the transformational processes within Ukraine’s IT sector under the influence of global challenges and internal crisis factors, particularly the full-scale military aggression of the Russia against Ukraine. The study covers a multidimensional range of issues faced by the industry, including the decline in IT service exports, reduced international demand for outsourcing, contraction of venture capital investment, talent outflow, risks associated with martial law, and rising global competition amid a technological recession.
It is substantiated that, despite the crisis, the Ukrainian IT sector has retained substantial human capital, continues to generate foreign currency revenues and tax contributions, and demonstrates a high level of resilience and adaptability. The article examines the tools employed by companies to maintain competitiveness: large-scale relocation of personnel, decentralization of business models, transition to remote work, market diversification, organizational restructuring, shift from service-based to product-oriented models, and the implementation of innovative management practices. Particular attention is paid to the effectiveness of state policy in supporting the sector, including the Diia.City legal framework, tax incentives, educational initiatives, and startup support programs.
The potential of Ukraine for deeper integration into global digital value chains is revealed, and possible development scenarios for the industry in the medium- and long-term are outlined. Based on international experiences from countries that have faced similar challenges (such as Israel, India, and Ireland), the study formulates recommendations for strengthening the economic resilience and innovation capacity of Ukraine’s IT business. It is emphasized that, given appropriate policy support and stabilization of the security environment, the IT industry is capable of playing a leading role in Ukraine’s post-war recovery and of laying the groundwork for a transition to an innovation-driven digital economy.
Keywords: Information technology, Ukraine’s IT sector, global crises, economic turbulence, relocation, digital transformation, outsourcing, Diia.City, innovation, human capital, wartime risks, international experience
