Ukraine, Central Europe To Experience Strong IT Growth

KIEV, Ukraine -- Ukraine’s information technologies sector is set to experience strong growth over the next four years and will be worth nearly $3 billion by 2011, according to a recent study commissioned by Microsoft Corporation.

The study was conducted by International Data Corporation (IDC), an IT research firm.

It also found that Ukraine’s IT sector will generate more than 41,000 new jobs over the next four years and account for the creation of over 850 new companies working with information technologies.

IDC’s Economic Impact Model, which studied the impact of IT in 82 countries in 2007, was presented at a conference in Budapest on Oct. 18. Central and Eastern Europe (CEE) was represented in the survey by 21 countries.

In terms of projected worldwide IT spending growth rates for 2007-2011, CEE will grow 13 percent annually – one of the fastest rates in the world – surpassed only by Russia (15 percent) and India (19 percent).

While there is strong growth, IDC Senior Vice President of Research Stephen Frantzen noted that IT spending in CEE is still relatively small. In contrast, France spent more than $60 billion on IT in 2007 compared to around $45 billion in the entire CEE region, Frantzen explained.

The study said that Ukraine’s IT market has the profile of an emerging economy, with 84 percent of IT spending concentrated on hardware in 2007. Although software spending accounted for only 7 percent, software-related employment in 2007 is expected to be 32 percent of total IT employment in the country.

Ukraine’s software spending is expected to grow at 17.4 percent annually, with overall IT spending reaching $2.8 billion and 15 percent growth per year until 2011.

As a percentage of GDP, Ukraine’s IT spending for 2007 reflects the worldwide average of 2.5 percent for the year, up from 2.2 percent in 2006. For the entire CEE region, IT spending as a percentage of GDP is 1.7 percent.

“In 2007, these countries in CEE will account for 6 percent of the total GDP of the countries studied, 4 percent of total IT spending, and 2 percent of total software spending,” the study concluded. The study also described the profile of the IT market in the CEE region as resembling that of a developing economy, with 62 percent of IT spending in 2007 on hardware and 13 percent on software.

IDC’s study also measured Microsoft’s share of the IT market in what it referred to as the “Microsoft ecosystem,” which includes companies that sell, service and distribute products that run with or on Microsoft software. Microsoft-related employment totaled 52 percent of Ukraine’s total IT employment of more than 72,100 employees.

“For every one [hryvnia] of Microsoft software revenue in the country, 26.33 [hryvnias] are generated through the Microsoft ecosystem of hardware OEMs, software companies, and channel and service firms,” IDC’s report said.

Source: Kyiv Post