The other day, the Ukrainian government and the EU signed a new eGovernment and Digital Economy Support Program in Ukraine for 25 million euros. 100% of public services will be digitized by 2024. In 2020, 80% of the most popular government services are planned to be digitized.
These plans, as well as the introduction of digital technologies in the business sector, also affect the development of the IT market. How is this process happening now and about trends and prospects for 2020 told Mind regional director of Oracle in Ukraine Sergey Yanshishin.
Last year, the Ukrainian IT market, like the entire economy of the country, slowed down somewhat, which led to a number of projects being frozen. On the other hand, the government’s announced course on digitization and implementation of the State in Smartphone program is the most important long-term solution for the country and the Ukrainian IT industry.
The most significant changes in the corporate market in 2019 can be seen as a growing demand for digital transformation and awareness of customers. They are becoming more aware of what their business goals are and how they can achieve it through IT.
Otherwise, the situation has evolved in the context of previous trends, such as the shift of IT infrastructure and business processes to the cloud, the special rate on cybersecurity after large-scale cyberattacks, the increasing use of big data (Big Data), artificial intelligence. and machine learning.
About the IT market in numbers
The real size of the IT market in Ukraine is not easy to calculate, even on the basis of official data. This is due to the fact that over 80% of IT services in the country are created for foreign customers, which is a key indicator of export of IT services.
According to the State Statistics Service, exports of computer services in the first nine months of 2019 amounted to $ 1.35 billion, an increase of 14.6% compared to the same period of the previous year. In 2018, this figure reached $ 1.58 billion (+ 20.3%). However, according to the NBU, this same figure is significantly higher than in the State Statistics Service. At the National Bank, IT export revenues in 2018 were estimated at $ 3.2 billion (+ 29%). Estimates of the volume of the Ukrainian IT market for 2019 in various studies vary from $ 3.5 billion (+ 30%) (export of IT services) to $ 5 billion (+ 11%).
Thus, we can say that the volume of the internal IT market in 2019 is estimated at $ 1.5-2 billion, and annual growth is not less than 15-20%. At least one of the drivers of its development – the public sector – has not reduced the volume of purchases. Thus, according to experts of the DX Agent project, in 2018-2019, public procurement in the IT sphere was at the level of 15.7-15.9 billion.
However, compared to 2018, the growth of the IT internal market has slowed. Due to the 2019 parliamentary and presidential elections, part of the IT projects has been frozen. However, the pending demand has not disappeared anywhere, and it will be realized in 2020.
Last year, the corporate IT market was dominated by well-known trends: in Ukraine, with some time delay, what is already happening in the world is being realized. We can talk about strengthening the already known trends: increasing demand for various cloud services and cyber defense, increasing the demand for complex solutions, raising the level of customer awareness and more.
The main trends of 2019 in the Ukrainian market of corporate technological solutions:
Increasing demand for cloud-based IT solutions: data warehousing (infrastructure as a service, IaaS) and subscription software (Software as a Service, SaaS), virtualization of office solutions.
Companies are becoming more aware of what they want from IT. They are convinced that to maintain competitiveness, they need to implement integrated digital transformation projects. This can increase business process efficiency and productivity by 15-20%.
The digital transformation of companies determines the further development of such areas as big data, artificial intelligence, machine learning, the Internet of Things, data security and cybersecurity in all its manifestations.
Customers of IT solutions are increasingly concerned with numbers – the economic effect and payback period. If a customer cannot afford complex digital transformation, he or she automates and optimizes individual business processes.
Many companies are increasingly resorting to integrated cybersecurity prevention measures. This is much more efficient and cheaper than the large financial and reputational losses after cyberattacks.
Many analysts forecast a slowdown in the global economy in 2020 and a possible start of the recession, but even such negative expectations will not significantly affect companies’ investments in the latest technologies, although their dynamics will slow down somewhat.
According to Gartner, IT spending in the world is expected to reach $ 3.77 trillion (+ 3.2%) in 2019, reaching $ 3.88 trillion (+ 2.8%) in 2020. The main drivers of growth will be IT services and enterprise software, including cloud SaaS services, which correlates vendor results. For example, Oracle’s cloud revenue grew by a third in the world in a year, and infrastructure services consumption nearly tripled.
In 2020, the IT industry in Ukraine expects an upward trend to continue. Possible increase for the current year will be 15-20%. Certainly, the internal situation can not be reflected in the deterioration of the financial status of industrial enterprises, but agro-industrial complex will be the driver of innovation.
If the economic situation does not bring dramatic negative changes, then the number of corporate digital transformation projects will increase. Ukraine is still far behind the developed countries, but there is a prospect of faster adaptation of business processes to new technologies than in other countries. IT implementation is an important competitive advantage and a tool for reducing costs / increasing profits in an unstable market environment.
The trends of the corporate IT market in 2020 will be within the existing areas – cloud services, artificial intelligence, machine learning, cybersecurity.
It is expected that the emergence of new free cloud services, such as Always Free, will accelerate cloud development. In addition, adopting laws that will simplify the use of cloud services should drive demand for them, especially in the public sector.
An important promising trend is government projects in the field of digitization. And this is the end of the year 2021, which may not so much revitalize the IT industry as raise the level of computer literacy and the prevalence of technology as such.