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'Cloudsource to Ukraine' to Boost Country's IT Sector


FILE - A supporter of the pro-presidential Party of the Regions takes pictures of a rally to support EU integration, with riot police and Interior Ministry personnel blocking a street in the foreground, in central Kyiv, December 2013.

FILE - A supporter of the pro-presidential Party of the Regions takes pictures of a rally to support EU integration, with riot police and Interior Ministry personnel blocking a street in the foreground, in central Kyiv, December 2013.

Even before the current standoff with Russia, the nation of Ukraine has been in dire need of economic expansion.

Now, some leaders in Internet technology say they have a solution that could help lift Ukraine economically, and at the same time, knit it more closely to Europe and the U.S.

Called "Cloudsource to Ukraine," the plan is designed to convince major European and American companies to move their IT operations to Ukraine through the Internet.

“This is one of the booming sectors in Ukraine," Pavlo Sheremeta, Ukraine's minister of economic development, said earlier this month. Sheremeta said his goal is to turn the beleaguered Ukrainian nation into "the Silicon Valley of Europe."

Global IT

Global IT outsourcing is a thriving economic field, generating an estimated $250 to $300 billion dollars of activity each year. Historically, India and Brazil have been among the leaders in the industry, due to their large, well-educated populations and extensive IT infrastructure.

But Ukraine has these assets as well, said Alex Konanykhin, who heads the IT outsourcing firm Transparent Business.

"Currently, Ukrainian IT outsourcing sector amounts to roughly $1.5 billion, while just one Indian outsourcing company - Infosys - has revenues four times higher and employs 160,000 people," Konanykhin told VOA. "IT outsourcing in India is a $140 billion a year business. So, you can see that Ukrainian outsourcing sector has huge room for growth and we are determined to fuel this growth."

Konanykhin's firm is assisting Ukrainian officials in making the case that Ukraine is a good place to do business. Ukraine has long been known for having a very tech-savvy, young population.

Konanykhin believes multi-national firms can outsource their IT needs to Ukraine at less cost than well-established locations like India.

But with parts of Ukraine under siege from pro-Russian separatists, that could prove a difficult sell, analysts say.

Russian reach

In general, the conflict between Kyiv and Russian-leaning separatists has destabilized Ukraine's economy as a whole. The threat of possible military action by Russia doesn't help matters.

Jeffrey Car, CEO of the IT security firm Taia Global, said Russia installed and still may have control over large portions of Ukraine's data and communications networks.

"After the break-up of the Soviet Union, Russia made a point to organize and install the communications systems of the newly independent states," Carr said.

"They pretty much own much of Ukraine's Internet,” he said. “If they wanted to shut it down, or just significantly slow it up, it would be no problem."

Still, Ukraine - unlike Georgia in 2008 for example - doesn't run its electronic traffic through lines and servers to Russia. Much of Western Ukrainian data traffic flows through lines coming from Europe, which could prove much harder to shut down.

And analyst Konanykhin said that ultimately, economics will make the case for Ukrainian outsourcing, not geo-politics.

"Many business leaders are disturbed with Putin threatening political and economic stability of the world, but they don’t know how they can influence the situation," he said.

"Our message is that they can help simply by selecting Ukraine for their IT outsourcing needs,” he said. “They can increase profits and support democracy at the same time.
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    Doug Bernard

    Doug Bernard covers cyber-issues for VOA, focusing on Internet privacy, security and censorship circumvention. Previously he edited VOA’s “Digital Frontiers” blog, produced the “Daily Download” webcast and hosted “Talk to America”, for which he won the International Presenter of the Year award from the Association for International Broadcasting. He began his career at Michigan Public Radio, and has contributed to "The New York Times," the "Christian Science Monitor," SPIN and NPR, among others. You can follow him @dfrontiers.

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