The Ukrainian IT-industry lost $199 million in revenues in the second and third quarters of 2020

11-11-2020

The economic crisis caused by the Covid-19 pandemic has slowed the growth of IT services exports. According to BRDO experts, the industry lost almost $200 million in the second and third quarters this year.

The main reasons include:

  • reduced demand for services due to the financial problems of customers;
  • the inability of workers to perform their duties due to illness;
  • reduced productivity due to quarantine restrictions.

The export of Ukrainian IT services has shown positive dynamics over the past nine years. However, the growth rate slowed in the second quarter and became the lowest one since 2014. According to preliminary data of the NBU, the figures for the third quarter indicate a partial recovery of export growth rates.

In general, continued export growth (even with declining growth rates) is a very positive result, given some negative forecasts of the Covid-19 pandemic impact.

Forecasts

The optimistic scenario assumes that the negative pandemic impact on the IT services export volume will be reported for the second and third quarters. The export growth rates will return to 25.8% in the fourth quarter as it was in 2016-2019. As a result, exports will amount to $1.5 billion in the fourth quarter and $5.1 billion for the year. That is, it will increase by 23%.

The pessimistic scenario assumes that the negative pandemic impact will continue in the fourth quarter. Therefore the decline will continue and will be 2% for the previous quarter. As a result, exports will amount to $1.2 billion in the fourth quarter and $4.6 billion for the year. That is, it will increase by 11%.

We consider the preserved traditional seasonality for the industry (the increase by 14% for the third quarter in 2016-2019, but with a decreasing ratio based on the second and third quarters) as a realistic scenario. As a result, export volumes will amount to $1.3 billion in the fourth quarter and $4.9 for the year. That is, it will increase by 19%.

The analysis was based on the external balance credit volume published by the National Bank of Ukraine. The “Computer services” item data were included in the IT export category for this analysis. A small portion of “Information services” and “Research and development services” exports include IT services, but it is impossible to single them out

Partners