On the morning of Feb. 24, 2022, Russia invaded Ukraine, escalating a years-long conflict between the two countries. In the year since those first pre-dawn attacks, hundreds of thousands of troops and civilians have been wounded or killed, millions of Ukrainians have been displaced, and cities have been shattered.\n\nThe previously rapidly growing IT industry in Ukraine was also rocked by the invasion. In 2021, the country\u2019s computer services exports had more than tripled over the previous five years to $6.9 billion \u2014 38% of the country\u2019s gross domestic product \u2014 and the sector employed 289,000 professionals, according to IT Ukraine Association. The IT sector in Ukraine had stabilized after the 2014 Russian incursion with growth accelerating beginning in 2017 and \u201csupercharging\u201d in 2020 and 2021, says Katie Gove, senior director-analyst in Gartner\u2019s Technology and Service Provider Research division.\n\nIn the weeks following the invasion, IT services providers in Ukraine worked quickly to relocate thousands of workers or set them up for remote delivery where necessary. One year later, the industry\u2019s remarkable resilience is clear. As Konstantin Vasiuk, executive director of the IT Ukraine Association wrote in a recent report: \u201cIt remains the only export industry in Ukraine that operates to its full capacity in wartime.\u201d\n\nIndeed, by the end of 2022, the Ukraine IT industry had delivered $7.35 billion in computer services exports, an increase of 5.8% over the previous year. \u201cEven during the most negative scenarios, they\u2019ve been able to show some growth,\u201d says Gartner\u2019s Gove. \u201cIt\u2019s a pretty substantial statement that they\u2019ve been able to not only scrape by, but also make some gains.\u201d\n\nThat continued business expansion was made possible by the efforts of IT service providers with delivery centers in Ukraine to first take care of their people, and then to put them in positions to continue to perform their work \u2014 largely software development \u2014 whether in another part of Ukraine, another country, or remotely at home. But the growth is also attributable, in large part, to global goodwill for the country as well as an ongoing global shortage of highly skilled technology talent.\n\nImmediate response and recovery\n\nIn the weeks leading up to the invasion, IT companies with operations in Ukraine, read the writing on the wall and put their business continuity efforts into effect. \u201cThis has been a combination of setting up delivery centers elsewhere in Europe, expanding delivery centers in India and other alternative non-European countries, and, finally, leveraging remote work using Starlink for employees who could not leave Ukraine and were not drafted,\u201d says Peter Bendor-Samuel, CEO of IT and business services research firm Everest Group.\n\nWhile smaller firms or startups may have had only one delivery center, most application development firms, which make up 80% of Ukraine\u2019s computer services export market, have numerous delivery locations. \u201cThe pattern has been to establish multiple redundant delivery teams and locations,\u201d says Gove. \u201cAll the big companies have been doing this for ages at scale, but even midsize providers have multiple delivery locations.\u201d\n\nEPAM Systems, for example, which had 14,000 employees working in Ukraine, moved about 10% of its Ukrainian staff out of the country and has relocated hundreds more employees and their families to safer parts of Ukraine. The company, initially founded in Belarus with headquarters in the US, also began accelerating hiring at its other locations in Central and Eastern Europe, Latin America, and India.\n\n\u201cThey offered all of employees that wanted it,\u201d says Gartner\u2019s Gove. \u201cEPAM had already been invested in expanding talent pools in Latin America and they supercharged that.\u201d (EPAM Systems also ceased doing business with Russia and moved its Belarus operations to Uzbekistan.)\n\nThe COVID-19 pandemic had provided companies with extensive experience enabling remote work, which also helped during the transition period. \u201cIt was a jumping off point for the ways we work to continue to be viable,\u201d Gove says.\n\nIt was a remarkable pivot amid an unspeakably difficult time for the country. \u201cWe saw their resilience very early on,\u201d says Gove. \u201cDuring the first couple of weeks after the invasion, clearly a lot of SLAs were not able to be met. But within several weeks, those SLAs had gone right back up into the 90s.\u201d\n\nLeaving Kharkiv: One provider\u2019s story\n\nKharkiv-based Aimprosoft, a software development firm with US and European customers across industries such as ecommerce, healthcare, automotive, and telecom, had been in high growth mode throughout 2021. The need to do more work digitally during the pandemic drove demand for greater business process automation, sending revenues 61% higher. \u201cBusinesses were going online en masse, and everyone needed specialists who could implement e-commerce solutions, reduce overhead by automating routine tasks, launch telehealth solutions,\u201d says Aimprosoft CEO Maxim Ivanov. \u201cWe had even more work to do.\u201d\n\nA month before the invasion, Aimprosoft opened a new office in Ivano-Frankivsk in Western Ukraine near the Polish boarder as a business continuity measure. Some employees transferred immediately while others waited. \u201cEverybody hoped to the last that the new office would become our branch office in the context of business expansion,\u201d Ivanov says.\n\nIn 2020, the company had developed robust processes for remote work. \u201cIt may sound paradoxical, but COVID gave us the advantage. We\u2019d had enough time to get our processes up and running for delivery from anywhere,\u201d says Ivanov. \u201cThe pandemic taught us to be flexible and work effectively remotely. The war showed we could make internal moves across Ukraine without losing productivity.\u201d\n\nThe company\u2019s cloud-based infrastructure is hosted in Germany, with its infrastructure and customer code stored in one data center and backups of both in another. \u201cAn old rule of thumb, \u2018to make a copy regularly,\u2019 has proven to be excellent,\u201d Ivanov says. \u201cThis distribution is reasonable and helps protect your business from force majeure accidents like war, natural disasters, or fire, which are less predictable.\u201d\n\nReliable access to power was also a consideration. Aimprosoft set up its office in Western Ukraine with everything necessary for continuous delivery: Starlink internet terminals, power generators, and fuel reserves. \u201cHaving autonomous power facilities will make you more resilient,\u201d Ivanov says.\n\nThe biggest challenge was explaining to customers outside the country that the company could continue to work at the same level of productivity \u201cwhen there is a full-scale war in your country, how we could work when bombs are flying, and we are promised conquest in three days,\u201d says Ivanov. But the company\u2019s leaders had confidence, having even signed a contract with a new customer the day of the invasion. \u201cI never stick my head in the sand. Being a leader means being able to be responsible and having a contingency plan,\u201d Ivanov says. \u201cI was lucky because our team is made of people who can be relied upon and have lived up to their expectations. Some employees worked standing in traffic jams while relocating to safer regions of the country.\u201d\n\nThe first month was the hardest. \u201cWe all had to come to terms with the fact that what we all feared and didn\u2019t want to be had already happened,\u201d Ivanov says. \u201cHowever, we had a plan B, and we took advantage of it, took a breath, and quickly adapted to the new reality.\u201d The safety of employees and their families came first. \u201cWe didn\u2019t force anyone to work at 100% capacity in the first days,\u201d says Ivanov. \u201cBut the demonstrated responsibility illustrated that our team was incredible. No one gave up and ran away. We didn\u2019t fire anyone.\u201d\n\nWithin a month, the company was recruiting new hires. And twelve months later, the company\u2019s service levels give little indication of the ongoing turmoil in other parts of the country. \u201cThe war changed us,\u201d Ivanov admits. \u201cBut what remains unchanged is our responsibility to our relatives and clients.\u201d\n\nGood will and a global talent shortage\n\nIn the early days, there was some impact to new business for IT providers in Ukraine. \u201cClients moved work to other destinations and often other firms,\u201d says Everest Group\u2019s Bendor-Samuel. \u201cHowever, there has been a strong sentiment amongst the clients to support these firms, and much of this work has now returned.\u201d\n\nThe impact of good will for Ukraine \u2014 not just from customers but from the broader global community \u2014 can\u2019t be understated. \u201cThere\u2019s been a lot of stickiness and lots of support for Ukraine,\u201d says Gartner\u2019s Gove. \u201cIt\u2019s been pretty remarkable.\u201d\n\nThe impact of positive sentiment for Ukraine is reflected in the fact that the IT industry in Belarus and Russia, which has a similar profile to Ukraine, has not fared well.\n\n\u201cBelarus and Ukraine have similar talent pools with both IT service providers and enterprises sourcing there for tech talent for a long time because of their academic tradition and focus on math an engineering,\u201d says Gove. \u201cBut Belarus has taken a dip because they\u2019re so connected with Russia.\u201d\n\nThe US and UK are by far the largest market for Ukrainian IT services, following by Malta, Israel, Cyprus, Switzerland, and Germany, according to the IT Ukraine Association. \u201cMost [clients] worked to hedge their bets and set up alternative delivery, but if the Ukrainian providers proved they could continue to deliver, they tried to keep the work with them or returned the work or added other work as the new delivery came online,\u201d says Bendor-Samuel.\n\nAimprosoft has been working with some customers for more than a decade and others for a much shorter time when the Russian invasion took place. Swedish ecommerce consultancy Koalitionen had been working with Aimprosoft for two years. \u201cOur main concerns prior to the conflict was of humanitarian sort: Would the company be able to provide safety to their employees?\u201d says Koalitionen CEO Amir Mofidi. \u201cFor us, the uncertainty of not knowing if the staff were safe was the most difficult part. We were relieved when we found out that the people that we work with were safe.\u201d\n\nAimprosoft felt supported by its customers. \u201cOur clients are amazing,\u201d Ivanov says. Some paid the company\u2019s developers on their days off. Others offered personal bonuses to Aimprosoft employees. Others sent pics of their children baking cookies to raise money for Ukraine. \u201cIt touched us to the core,\u201d Ivanov says. \u201cThis empathy once again underscores the fact that business is built not only on numbers but also on human relationships.\u201d\n\nStill, performance is critical. \u201cThen and today, customers\u2019 biggest concerns are that the work process may be disrupted because the employee does not get in touch for some reason, data security caused by power supply issues, which impacts whether their business would work tomorrow if a conflict escalated,\u201d says Ivanov, noting that healthcare and finance customers have the highest requirements for availability and continuity. But Aimprosoft has been able to maintain its service delivery and retain all of its more than 100 clients.\n\n\u201cWe were surprised that the downtime was only for a couple of weeks and since then they have been working without any interruptions,\u201d says Mofidi. \u201cThe staff are working as any of our other partners \u2014 if not more.\u201d\n\nThe global shortage of experienced, high-quality engineering and IT talent has also enabled Ukrainian firms to continue to grow even in the most difficult circumstances.\n\nUkraine has a long tradition of tech leadership, even in uncertain times. The first computer in continental Europe was built in Kyiv in 1951 during the years of post\u2013World War II reconstruction and closed borders. It was developed in a building that had been restored following significant damage during the city\u2019s liberation in 1943.\n\nThe country remains a hotbed of talent in part due to a strong academic tradition that nurtures skills in engineering and software development to the tune of more than 31,000 graduates entering the IT labor market annually. (That total dropped to 27,000 last year as some students were forced to suspend their studies during the full-scale invasion.) Prior to 2022, the Russia-Belarus-Ukraine region accounted for about 5% of the global talent pool, according to Gartner.\n\nThe availability of skilled engineers and other professionals in Ukraine led a number of global technology firms to set up software development and R&D centers there, including SAP, Snap, Fiverr, Wix.com, Amazon\u2019s Ring, and Nvidia. Developer platform and services company GitLab started in Ukraine before moving its headquarters to San Francisco.\n\n\u201cCompanies want and need this talent,\u201d says Gartner\u2019s Gove. \u201cBusinesses lives and dies based on IT. Both providers and private enterprises have been willing to have an increased risk profile because the tradeoffs have been acceptable. It may not be as safe and straightforward as getting talent from Boston, but it\u2019s highly desirable.\u201d\n\nLooking forward\n\nOperating in Ukraine remains challenging, but providers have been able to keep a significant core of Ukrainian talent safe and working while also standing up new delivery options. \u201cClients continue to seem pleased with the work, and while some are careful of creating too much concentration in Ukraine, they seem comfortable with the new arrangements and willing to continue to support these firms by giving them work,\u201d says Everest Group\u2019s Bendor-Samuel. \u201cIt looks to me like the worst is over and the Ukrainian engineering and IT industry is surviving.\u201d\n\nAimprosoft CEO Ivanov notes that new customers may be less willing to hire specialists in Ukraine than they were a year ago. That\u2019s diminished the country\u2019s previous growth trajectory.\n\n\u201cIt\u2019s hard to see Ukraine returning to the same role it played before the war anytime soon. That said, if the war ends soon, it is likely that it will still be a viable destination for the services industry, and over time it may reclaim some of its standing,\u201d says Bendor-Samuel. \u201cHowever, it has clearly lost momentum, and the establishment of other eastern European centers due to the movement of work will affect the overall picture.\u201d\n\nThe global shortage of engineering and IT talent works in Ukraine\u2019s favor. \u201cGiven the need for these scarce resources, if Ukraine can rebuild its university programs it will find itself with an attractive export market for services and reestablish itself as a premiere country for delivery centers both with the outsourcing community as well as for global in-house centers,\u201d says Bendor-Samuel.\n\nGartner forecasts no end in sight for the global talent crunch. \u201cThe willingness for companies to take on more risk [to access that talent] isn\u2019t going away,\u201d Gove says. Neither is the good will for Ukraine in the marketplace. \u201cThat\u2019s substantial,\u201d Gove says. \u201cIt will sustain them and allow them to grow.\u201d\n\nStill, Ivanov prefers to focus on winning the war and beginning reconstruction quickly. Aimprosoft\u2019s employees, forcibly resettled to other parts of the country or abroad, are eager to go home \u2014 a sign, Ivanov says, that the IT sector has strong roots. Technology workers donate an average of $270 a month toward the Ukrainian cause, says Ivanov.\n\n\u201cEvery day I see how hard and selflessly our employees work, volunteer, and donate. If these people have not abandoned the country now, they are unlikely to do so after the victory.\u201d In addition, Ivanov says, the industry is attracting even more workers with its flexible, remote work model.\n\n\u201cWe have been through some of the toughest times. Last year showed that the Ukrainian tech sector is incredibly resilient,\u201d Ivanov says. \u201cThe whole world saw that Ukrainians are a nation that adapts quickly to difficult circumstances, and we are an example of that, and so is our business. Modern Ukrainian IT people are successors of their heritage: being hard workers with passion in their hearts.\u201d\n\nFor more on how Ukrainian IT professionals and organizations are navigating through conflict, see "Cybersecurity in wartime: how Ukraine's infosec community is coping."