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April 2, 2019
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The Ukrainian IT Industry: An Interview with Ciklum’s Chief Delivery Officer

The Ukrainian IT Industry: An Interview with Ciklum’s Chief Delivery Officer

On March 7 2019, “Epravda”, one of Ukraine’s leading media outlets, published an interview with the head of CIklum’s Ukrainian office in which the current state of the Ukrainian IT industry in general and Ciklum in particular were discussed.

Ciklum is an international IT company that creates software and provides services and solutions in various areas of business and technology. Ciklum is one of the top 5 IT-companies in Ukraine by number of specialists.

Anna, how does Ciklum differ from other Ukrainian IT-companies?

Ciklum Company was founded in 2002 by Torben Maigaard, who saw the potential of Ukraine in the IT sphere and was ready to invest in our developers. Ciklum has become known for its simple and flexible models of cooperation. In a matter of weeks, we can create teams of developers in Ukraine who are part of the client’s company. They work as their team members. Ciklum has never been a typical “outsourcer” where the company’s  responsibility is only to provide office space for a fixed fee. We analyze our clients’ business goals, complexity and specificity of projects, efficiency of processes, their experience and, based on all this, we offer a solution to build an effective team.

We advise and help to implement methodology, processes, tools, help with selection, development and retention of people, and advise at every stage of development and team building. That’s where Ciklum’s uniqueness comes in. 

At certain stages of the client’s business development, the model of a dedicated team may not be suitable for the client. Therefore, we find a model of cooperation and the services that match their business plans. It can be turnkey application development, testing or consulting, for example. Ciklum is a fully equipped technological partner. We provide any needed digital solutions – from building teams in Ukraine or Pakistan to developing sophisticated heart monitors for babies in Uganda.   

In 2015, Ciklum received investments from the George Soros Foundation. How did this affect the company?

The Soros Foundation has become not just an investor, but a strategic partner of Ciklum. The company was the first investment by the fund in Ukraine. Thanks to this partnership, the company was able to increase its expertise and develop our own products, which will soon be introduced to the market.

Recent investments came from Dragon Capital and AVentures. Why did they decide to invest?

Such companies do not make decisions spontaneously. Dragon Capital is one of the largest and most successful investment companies in Ukraine. AVentures Capital is a venture fund that has been investing in R&D projects and companies in Ukraine and Eastern Europe since 2002. The decision to invest is made after a thorough study of the company itself and its processes.

The company’s financial statements should meet the principles of transparency – this is one of the main conditions for any investor. A comprehensive study of the company’s activities is carried out, as well as a thorough review of its financial position and market position. Ciklum is one of the leading companies in the IT segment, managed by a strong management team and has grown continuously since its foundation. It was these factors that were decisive for investors.

Will you go to the IPO? If so, when?

Torben Maigaard never stated that an IPO was one of Ciklum’s long-term goals. Ciklum has a good position, but this is not being considered at this point.

What are the features of the company’s corporate culture?

The company was one of the first to offer its clients a business model in which employees communicate directly with clients and work as part of their team. This enabled developers to influence the products and business approaches of the customers, to build a transparent relationship between the customer, the company and the developer. This model has created a corporate culture of trust, transparency, freedom and responsibility.

Photo from Ciklum Day 2018

The company’s outstaff model prevails at 70%, and outsourcing at 30%. Why?

Such breakdown existed previously, now the percentage of the team/projects changes in favor of projects. The “outstaff” model (creating client teams) is building development teams in Ukraine, Pakistan, Belarus, Poland or Spain and the client is responsible for the final result.

The client’s team is located in Ciklum’s office as well and works on the client’s projects, while clients have access to our internal products and frameworks. We help with recruitment, implementation of Agile practices, consulting and assisting with team management and development. This model can’t be called “outstaffing” anymore.

It’s not exactly beneficial to the company, is it?

If it was not profitable, Ciklum could not have grown to 3,500 people in 16 offices. We’re not standing still. We are constantly evolving, becoming a fully equipped technology partner across the globe and the percentage of turnkey projects is growing. Customers trust Ciklum to develop complex ERP or CRM systems, support IT infrastructure and innovative R&D projects.

The report, “Software Development in Ukraine, Poland, Belarus and Romania in 2019”, published by consulting companies AVentures Capital, Aventis Capital and Capital Times, says that the revenue of IT-companies in Ukraine is growing four to five times faster than the world average. What is driving this and how long will it last?

There are many factors that affect this growth. According to the report, the main clients of IT companies in Ukraine, Poland, Belarus and Romania are companies from the EU and the USA. These are countries with huge competition in any industry, which encourages local companies to review their processes and approaches.

Customers want to optimize processes, rebuild their business, make interaction with their brand as comfortable as possible for users. All this is possible through digitalization and companies in Ukraine, Poland, Belarus and Romania have the ideal balance of value and high level IT experts. The value of IT services exports and software development in Ukraine exceeds 2 billion dollars.

How long is this gonna last? According to our forecasts, demand will grow in the next five years because there are still many companies in the EU and the U.S. that have not had an internal digital revolution. From 2014-2017, growth was about 10%, and over the past two years the IT industry has grown in Ukraine by about 20%. In the absence of major external or internal crises, this pace will continue in the coming years.

From which countries do the majority of orders come?

The majority of our customers are in the UK, USA, Switzerland, Germany, Denmark and Israel.

How many projects are being implemented simultaneously?

More than 350 customers from 16 countries currently work with Ciklum. Some companies are running several projects at the same time. For example, there may be a dedicated development team that supports a customer’s main product, while we set up software testing processes in parallel, and our R&D team develops a proof of concept for a new device.

Ciklum is a technology partner for global companies such as Thomas Cook, Just Eat, Jabra, Zurich Insurance and Mercedes Pay.  

Describe an average IT specialist. How old are they? Do they want to emigrate?

The average age of a developer is 22-30 years. According to the research of the portal DOU for 2018, 67% of IT specialists in Ukraine live in Kiev, Kharkov and Lviv. More than 80% of specialists have a higher education. These specialists are constantly engaged in self-development, attend specialized events, take courses and trainings. About 10% of them are actively working on moving to another country, while a large percentage of those who think about emigration do not do anything for it, or they do not think about it at all – 44% and 34% respectively.

Ciklum is one of the top 5 IT companies in Ukraine in terms of the number of specialists. How many employees do you have in Ukraine?

About 2,800.

Is there a shortage of IT specialists?

The number of employed specialists in Ukraine is more than 172, 000. Annually about 23, 000 IT specialists graduate from Ukraine’s universities. At the same time, around 200-300 vacancies are opened each year in each of the top 5 IT companies in Ukraine, and there are more than 750 IT service companies as well as IT departments of non-IT companies and startups.

The market lacks middle-senior level specialists and developers specialised in certain technologies. For example, Ciklum has the largest number of job openings in JavaScript and .Net technologies.

Can anyone become a programmer?

Anyone can become a programmer. There are a certain set of qualities or character traits that will help you feel comfortable in this profession such as an analytical mindset, the ability to work with large amounts of data and tenacity.

IT-related higher education is useful in providing a theoretical understanding. However, there are also good developers who are self-taught through online courses, books and video lessons. They did a lot of internships and got a good job.

What qualities should the ideal candidate have for your company?

In addition to the basic technical skills, Ciklum has a portrait of the ideal candidate. They must be close to our EPIC ID values: excellence, passion, innovation, collaboration, integrity and diversity. The ideal candidate is passionate about new technology trends and ready to experiment.

Inside Ciklum, there is a strong support for employee initiatives, and about 100 events are held every month in all offices for training and development.

Ukrainian programmers have lower salaries than in the EU or US market. Why?

Ukrainian salaries depend on the exchange rate of the dollar, demand for particular technologies and the labor market. There are very high level candidates in rare technologies whose salaries are equal or close to those in the EU. If you figure in taxes in the EU, the net salaries of IT specialists in Bucharest or Wroclaw are close to the Kiev salaries.

Many developers in Ukraine came to the sphere less than five years ago, they do not have much experience. Accordingly, their value on the market and their salaries are not yet that high.

Photo from Ciklum Day 2018

How do you feel about the new draft law on TJSF?

Any draft laws related to the IT sphere should be developed with the participation of the IT companies. The draft bill is just a proposal. We are not talking about its approval yet as it’s supposed to be dramatically modified.

The government of Ukraine should be interested in supporting the IT industry because it brings about 10 billion UAH to the budget annually. Radical changes in working conditions of IT companies in Ukraine will be of no use for anybody.

The article was first published on March 7, 2019 at epravda.com.ua

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