IT Lviv

In a relatively short period of its development, the Ukrainian innovative technology market has split into several distinct spheres of influence. Even today it is quite obvious which cities will become, in a way, leaders of the domestic IT industry. According to the past year’s Innovation Cities Index, Ukraine’s most innovative cities are Lviv (350th place), Kyiv (361st), Odesa (397th), Kharkiv (400th), Dnipropetrovsk (402nd), and Zaporizhia (420th).

The Day decided to explore Ukraine’s IT map, so we launch a new project, “Geography of Innovation.” Within its framework we will visit the hubs of information technology industry in Ukraine.

We decided to start our journey from the westernmost IT center, the city of Lviv. Today it has more than 140 firms, with over seven thousand people working in the industry. Over the past year, some 20 companies opened their offices in the city. Among them there are quite a few “migrants” from Ukraine’s east.

COOPERATION WITH LOCAL BODIES

The main feature which distinguishes Lviv from the country’s other IT hubs is that it is the only city with own competitiveness strategy, dating back to 2010. According to this strategy, information technology is one of the two priority guidelines of the city’s economic development.

LVIV HAS ALWAYS BEEN GOOD AT COMBINING TRADITION AND INNOVATION. SINCE 2013 FIRST ULTRAMODERN DOMESTIC TRAMS HAVE BEEN RUNNING IN THE CITY / Photo by Vitalii HRABAR

Thus, in 2011 the Lviv IT Cluster was created. Its primary goal was to unite companies, universities, and local government for successful implementation of various projects. Today the cluster includes more than 25 firms, including Global Logic, SoftServe Inc., ELEKS Software, and Intelex.

“Despite the local character of our community, we are Ukraine’s largest organizations to develop IT industry. The municipality helps us in our mission,” shares Stepan Veselovsky, executive director of the Lviv IT Cluster.

Over several years the organization initiated English language courses for IT students on the basis of local universities. Together with the business school at the Ukrainian Catholic University the cluster has developed an MS program in technology management. Past fall the organization held Western Ukraine’s biggest IT conference, “Lviv IT Arena,” with more than 800 participants from Ukraine and abroad.

This year the Lviv IT Cluster is planning to start construction of houses for Lviv’s IT specialists and to work in the sphere of legislation. Besides, the IT Cluster will hold “itinerant” conferences in Kyiv, Kharkiv, Dnipropetrovsk, Vinnytsia, and Odesa, and share Lviv’s know-how on developing IT industry. In a month or two a presentation of the IT market research will be held. According to Veselovsky, many IT hubs face the problem of lack of concrete information on market situation.

IT DEVELOPMENT

Historically, in Lviv (as everywhere in Ukraine) outsourcing prevails over development of ready products. First, outsourcing firms appeared here, and later their reps started outsourcing business in the city.

The first such company, which was founded in Lviv in 1993, became SoftServe Inc. Today it is Ukraine’s biggest software firm with more than 3,500 staff.

THIS SUMMER BETAPLACE WAS LEARNING TO WORK WITH A 3D PRINTER, BUT SOON IT WILL PRESENT AN OWN VERSION, WHICH WILL ALLOW PRINTING OF LARGE OBJECTS, SUCH AS CHAIRS / Photo from BETAPLACE’s Facebook page

In 1999 another company with international renown appeared here, ELEKS. Its range of services includes software development, consultations, quality control for market leaders and for firms striving for excellence in technology.

Somewhat later, in 2007, EPAM Systems appeared in Lviv. Today this firm, which develops, tests, and supports the commissioned software and business applications, employs more than 9,000 workers worldwide.

Meanwhile, the history of ready product development in Lviv is relatively recent. Nevertheless, Lviv’s startups were able to set a national record. This is the birthplace of the “smart clock” LaMetric, which raised 370,000 (!) dollars instead of the necessary 69,000 with the help of Kickstarter, a crowdfunding platform. Besides telling the time, the clock shows news, temperature, important dates, and any other notifications for life and business.

The project was developed by Smart Atoms. Soon the buyers at Kickstarter will receive their first LaMetrics. “Now we are busy getting the smart ticker to Amazon.com,” tells Smart Atoms CEO Nazar Bilous.

After LaMetric the team is planning to launch a range of products on the existing platform, says Bilous. By the way, today nine experts are working on the project.

Actually, the smart ticker is only the first project by Smart Atoms. Before that, most of the team members had worked for Lemberg Solutions, a web and mobile development agency, also founded by Bilous.

“Speaking of service companies, Lviv is indeed a hub. Speaking of ecosystems, Lviv is lagging behind. Here we do not have any startup incubators or investment sources. And product firms are also few,” explained Bilous to The Day. According to him, one of the reasons is that product companies, sadly, do not have the necessary support in Ukraine.

Also, Lviv has companies which work on two fronts, in a positive sense. That is, they are busy in outsourcing and use their profits to develop own products. One of them is Rebbix, a firm founded by Serhii Oplakanets and Oleksii Rak. Over its three-year history the team has tried out several variants and now is planning to launch a service for travelers.

“For outsourcing companies own production is a very complicated thing: you need to create a product which would earn at least as much as you can earn by outsourcing,” explained CTO Oplakanets.

Besides, Ukraine’s venture capitalism is very weak. “Here everyone is used to borrowing from private persons rather than to bank investments. Moreover, Western capital is hardly accessible,” adds the company’s CEO Rak.

Ukraine’s typical startup investors are individuals who have a rather dim view of startups and who gained their capitals in obscure ways, says Oplakanets. “These are not smart investments. A smart investor will not only provide you with funds for the development of your project, but also help you promote your product, because he understands that this can bring good profits later.”

Rak adds that the only hope is the investments brought to the country by domestic startups which earned their capitals abroad. They already know what it means “to obtain investments in Ukraine,” and they know the people who work here.

STUDY AND TRAINING

Every year more than 1,800 IT specialists graduate from Lviv universities. However, it turns out that university knowledge, including that of English, is mostly enough only to land a job in an outsourcing firm.

ACCORDING TO DMYTRO MALIEIEV, DIRECTOR OF LVIV CODE SCHOOL (CENTER), LVIV ATTRACTS IT BUSINESS WITH ITS REASONABLE PRICES AND COOPERATION BETWEEN BUSINESSES AND LOCAL GOVERNMENT /  Photo from Lviv Code School’s website

Creating a successful own product requires additional knowledge and skills which could be gained at various pro courses, like, for instance, Lviv Code School. “We differ from an average profile corporate course: our graduates can work virtually anywhere. We inform them about the pluses and minuses of all jobs, and it is up to them to decide where they would like to work,” tells Dmytro Malieiev, director at Lviv Code School.

Over six months the school held a course which now has six graduates. Two of them have launched their own project. One went to work for another company, another became a freelancer, and the other two already had jobs, said Malieiev. At present Lviv Code School is training another 12 students.

“Lviv is the city of outsourcing. It has big firms, good universities which provide quality math education, and companies that began to teach their own students. But outsourcing is a programming-oriented approach, while a startup is already business. This is what is not taught at school. You have to think about the users, about selling your product, and this has really to be taught,” concludes Malieiev.

However, anyone who ventures into creating an own product, can test its viability and gain the necessary know-how at Startup Depot. This is the first local business incubator and coworking, aiming at increasing the number of product developers in Lviv.

The organization was created only a year ago with the help of the Lviv City Council. Since then, the founders have held 2  startup schools and some 40 startup-themed events for nearly 2,000 participants, says project leader Maksym Lysak to The Day. “The essence of our project is to let people see if their business idea is valid, if there really are problems, how to handle them, and if the market is deep enough for this product to find its user,” adds Lysak. According to him, most projects cannot find their niche in the market. However, their authors gain the precious experience which later helps them create successful product.

“Now we are planning to launch a university-format startup school, with sessions for some 200 students at a time. We will begin at the Lviv Polytechnic University and the Ivan Franko National University, and we have already contacted their presidents,” said Lysak sharing his plans with us.

Meanwhile, there are groups in Lviv which perform all functions at the same time: help developing own products, help with outsourcing tasks, and do this themselves. One of them is Betaplace coworking. Officially, the organization was founded in September 2013.

Like in a classical coworking, it rents out a workplace for a month and offers space for holding all sorts of events in the IT branch, from presentations to master classes, and so on. “The idea is that any business or individual with a need could meet it at Betaplace,” tells one of the founders Anton Yatsenko. “We have already seen joint projects which were launched by people who met when they came to work here. Or a project needed a specialist with certain skills, and we happened to have exactly such a person who came to work with us.”

These outsourcers also invest a part of their profits in the development of own projects. “But so far our startup attempts have not been very effective. We are just learning,” adds Yatsenko.

The ground floor of his office is a real workshop, a sub-project called “Hackerspace.” “These boys are working with their hands. They work on commercial orders and develop own projects at the same time. For instance, a large 3D printer,” explains the founder of Betaplace.