Pandemics and Tech. How the Tech Industry Survived 2020

Every year, the Ukrainian tech industry shows positive growth and rapid development, but in 2020 effects of the Covid pandemic and crisis which followed were inevitable. The tech industry, however, remains one of the most promising in the country. Let’s learn how the pandemic has affected the tech industry’s development in Lviv, how the industry’s growth rates changed, and what the state of the industry looks like right now. 

In December 2020, Lviv IT Cluster presented the results of its fifth study of the tech market in Lviv ‒ IT Research. The study analyzed the work of tech companies during the pandemic, interviewed the leaders of local companies, tech specialists, as well as collected the latest data on revenue changes, etc. from tech companies.

As of the end of 2020, 45 companies closed their offices in Lviv, however, at the same time 78 new companies emerged, therefore, company growth rates in the city remained positive. The growth dynamics equals +17%. The increase in the number of tech specialists in the city also shows positive dynamics ‒ +1500 employees of the industry during 2020.

Tech companies’ work mode during lockdown

Speaking about work mode, most tech companies in Lviv showed incredible flexibility in shifting their employees to remote work mode in March 2020. Among the companies that took part in the survey, 100% shifted to remote work mode in the first half of 2020, out of which 22% – partly and 78% – fully. As of November 2020, in 78% of companies, a part of employees returned to office; on average, a third of the companies’ employees are working fully or partly from office.

“Back in early March, when the pandemic began to gain momentum in Europe, we at N-iX formed a working group to consider various scenarios and our next steps. This allowed us to shift smoothly to work from home mode when lockdown started in Ukraine. At the same time, we started thinking about how to help our employees protect themselves from the virus and support the communities where we live and work. At the end of March, we set up the N-iX Anti-Covid-19 Fund, which is still working. The biggest challenge for us in 2020 was to adjust all processes in the company to new realities and maintain our stable growth. And we succeeded – N-iX grew by 30%, which is a little less than we planned at the beginning of the year but more than the Ukrainian IT market overall,” comments Andrew Pavliv, Founder & CEO, N-iX.

27.8% of companies indicated that remote work mode had a positive effect on the company’s productivity, 55.6% indicated that nothing had changed, 5.6% considered the transition as negative. At the same time, at the beginning of the lockdown, according to the first edition of IT Industry Monitoring, conducted in early April, 15.5% of companies indicated negative effects of remote work. 11.1% of companies could not give an unambiguous answer.

New approaches to finding clients

Despite the adjustment of processes, the interviewed companies admitted that they faced financial difficulties at the start of the pandemic. The majority of companies (66.7%) indicated that they received refusals from clients to continue cooperation during the first half of 2020. According to their estimates, on average, companies lost 15% of their income due to this. 55.6% of companies specified that their clients asked for a reduction of workload (supply restrictions) during the first half of 2020. On average, they estimate a 14% decrease in income due to this.

44% of companies reduced their employees’ salaries in the first half of 2020, and almost 40% sent their employees on unpaid leave. 17% cut a part of the technical staff, and 39% reduced the number of non-technical employees in the first half of 2020.

However, companies were able to refocus on new market needs, change strategies and approaches to finding new clients. “Digital strategy plays an essential role in our marketing and business development strategies. This area had been critical for us even before the pandemic, and now it has strengthened its position. Lead generation has almost completely shifted to the digital mode, sales have increased, new projects have been launched, and existing ones have significantly expanded. Our clients are leaders in the field of network technology, and during the massive transition of the world online, market demand has increased enormously. Their innovation race generates new opportunities for PLVision as a developer with a clear, deep, and sought-after specialization in Computer Networking, Embedded Systems, and IoT. We analyze the market, follow our ecosystem’s trends and needs, update the value proposition, and offer today what the client will need tomorrow. The high-demand market expects even better quality of services and faster execution. It keeps us in shape, so we are continually looking for ways to improve, grow, and develop,” comments Olena Kozlova, Co-Founder & CEO, PLVision.

In addition, tech companies in Lviv report an increase in the number of vacancies and growing demand for new tech specialists since the summer of 2020. “Our company had to postpone salary reviews for several months; however, all financial arrangements, including bonuses, did not change. This temporary restriction was in effect for several months, and as soon as business activity went up in mid-summer, we lifted them. During the spring-early summer, external stang was also limited: we filled most of the new vacancies using the internal reserve. However, in July, we resumed all recruitment processes. In September and October, a record number of employees was hired – more than 500, and we continue to grow,” says Oleh Denys, Co-Founder & Executive Vice President, SoftServe.