In the last few years in Ukraine, just like in many other countries, artificial intelligence (AI) and machine learning (ML) have become the most trending areas of the IT industry. The market is overflowing with demand for AI and ML products and the investment in these industries is increasing by millions of dollars every year. Sergey Kartashov (Sergejs Kartasovs), the Senior Partner of technology company Roosh, describes the difficulties for the Ukrainian IT business in these areas, how to solve the problems, and why Ukraine can become the leader in Eastern Europe in the AI sector.
Demand is higher than supply
The first problem faced by the Ukrainian IT market is the lack of qualified developers. Paradoxically, with more than 200,000 IT workers in Ukraine, in 2020, IT companies had 30% vacancies they could not fill. The Ukrainian IT market has become too big and has engaged almost every specialist. This, in turn, has led to significantly increasing labor costs and increasing competition between companies for experienced personnel.
‘There is also a shortage of experienced CEOs who can get a team together from scratch, set the right KPIs, and bring the product to the market,’ notes Kartashov.
According to Sergey Kartashov, this problem has several reasons. First, the Ukrainian market for IT projects has grown significantly in recent years. Second, there are many foreign companies that actively open offices in Ukraine and recruit employees. Third, local universities and courses cannot train the required number of high-quality specialists.
‘As for businesses, they know this situation way too well. Ukrainian IT companies have already started looking for solutions to this problem,’ says Sergey Kartashov.
This year alone, several Ukrainian IT companies announced creating IT universities. One of them, which follows the example of American Stanford, is opened by Roosh founder Sergey Tokarev together with the president of the Kyiv School of Economics Tymofiy Milovanov.
A new approach to education
According to Sergey Kartashov (Sergejs Kartasovs), one could explain why businesses create new educational institutions with an important drawback of classical education.
‘IT trends are changing rapidly. Ukrainian universities cannot afford to change programs so intensely. As a result, once graduating, a young specialist has to retrain at specialized courses. Quite often, the expense for such training is covered by the company that hires the developer,’ says the Roosh partner.
Apart from that, technical university faculties teach students programming but not creating startups, doing business, learning legal aspects, and other applied subjects. As a result, many founders have an idea but do not know how to promote it, develop it, and present it to investors.
‘And there are a lot of cases on the market when founders attract funding and due to the lack of simple financial and legal literacy, they lose control over their project, they sell it yet still have obligations to investors. What motivation can we talk about in such situations?’ says Kartashov when explaining the need of introducing applied subjects in training developers.
New investment culture
Once Western investment culture arrives in Ukraine, it is also expected to help develop Ukrainian startups. For example, there is a margin of error in the United States, i.e., startup founders can create several unsuccessful projects before their next product hits the market, and investors are ready to pay for it.
‘The economy is interested in creating a new Apple, Amazon, or something completely new out of a million experiments, as it will become a new key driver to the system,’ explains Sergey Kartashov.
Moreover, in the United States, it is considered okay for 8 out of 10 funded startups to fail. Angel investors do not worry about this situation. After all, they can still make money on two out of ten. Apart from that, failed startups can also be useful: they will give young teams an opportunity to try their hand, gain experience in creating their first product and attracting investment. Technical specialists can use this experience to develop their technical skills, future CEOs get skilled in communicating with investors, and lawyers get their chance to work with legal companies and officials. In other words, with every failure, everyone becomes more experienced.
‘It’s hard to accept such a culture. Psychologically, we are not ready for this way of thinking. But without it, it is much more difficult to raise specialists who will create unique teams of professionals of the future,’ said Sergey Kartashov (Sergejs Kartasovs), Senior Partner in Roosh.
Another type of investment that is still unfamiliar to Ukraine, according to Kartashov, is a so-called SAFE agreement or agreement on future shares. Such an agreement is made between a company and an investor so that the investor provides the project with instant money to implement an idea, and when the startup issues shares, some of them will go to the investor. In Ukraine, this type of investment is just emerging and can contribute to the great development of the startup market.