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Ukraine’s service industry is one of the most promising branches of the country’s economy today. More than 45% of the country’s workforce is in this sector. The service industry’s share of GDP domestically is equal 55%.

Over 2004-2015, this sector demonstrated an impressive pace of growth and strong profit margins. Annual turnover is currently US $38bn and growth has been averaging 6.4% per year. Moreover, a growing rate of services rendered can be seen across all regions in Ukraine, mainly a result of a steady rise in real disposable incomes.

More than one third (33.8%) of the total volume of the provided services were provided by transportation, warehousing, postal and courier activity; almost a quarter of the volume (27.5%) are information and telecommunications services; 13.5% - services related to professional, scientific and technical activities; 9.3% - various real estate transactions.

Almost a quarter of the services (69 billion UAH) was provided to the population. The information and telecommunications services account for the largest volume (22.4 billion UAH). Transport services, warehousing services, postal and courier services are next by the popularity among the population. The amount of services provided for the population was 19.1 billion UAH whereas this figure for the services in art, sports and entertainment and recreation was 8.9 billion UAH.

Ukraine’s main competitive advantages in services, especially on international markets, are its relatively inexpensive but skilled and educated workforce, and its convenient location. Ukraine’s geographic advantage is mainly important for transport networks, such as highways, railways, ports, airlines, and oil and gas pipelines.

Transport and Logistics

Crossed by four out of the ten Pan-European transport corridors (III, V, VII, IX) and by other major transit routes (Gdansk-Odessa, Europe-Caucasus-Asia, Europe-Asia), Ukraine has a very dynamic transport and logistics sector. Both freight and passenger transportations have been growing since 2001.

The main transport networks are:
•    Road: 169,400 km of roads to be further developed to absorb the growing demand for road transportation (vehicle fleet +5% per year, traffic volume on highways +20% per year);
•    Rail: 2nd biggest system in Europe after Russia (over 20,000 km of railways), accounting for around 80% of freight traffic and 60% of long-distance passenger traffic;
•    Maritime: 20 state-owned seaports along the Black Sea (passenger and cargo vessels operated mainly in Odessa region) and Azov Sea coast as well as a number of river ports on Dnieper and Danube;
•    Air: 30 airports (Boryspil airport in Kyiv handling almost 70% of all passengers in Ukraine) and 7 helicopter pads.

The country offers significant potential for transit operations due to the insufficient investment in infrastructure maintenance and development after the fall of the Soviet Union.

In addition to its weight in GDP (more than 11 percent), transport is a key actor of the Ukrainian economy, which heavily relies on the sector for the movement of goods and people. As a result, efficiency improvements in the transport sector are particularly critical to raising competitiveness. The country generates far more transport movements and volumes relative to its GDP than any other country in Europe, due to its reliance on agriculture and heavy industry. This implies that transport costs make up a much larger part of the final price of many goods. Consequently, the transport system has a substantial potential to improve aggregate productivity and regional competitiveness.

Less than 10 percent of freight traffic (in ton kilometers) is by road, while rail and pipelines account almost equally for most freight volume. However, this situation is changing quickly, and due to steadily increasing commercial and passenger traffic, some strategic sections of the road network are already functioning at peak capacities. Yet, substantial portions of the network need upgrading to European technical and safety standards.

Moreover, due to continuous underfunding of the sector, the road network has progressively deteriorated to a point where 40–50 percent of all state roads do not meet adequate standards. Similarly, less than half the roads and overpasses in the country are in an acceptable condition. In 2017, the budget allocation for road maintenance and development amounted to UAH 29.2 billion –  a value reported to be two times larger than the previous year.


E-commerce retains its place among Ukraine’s attractive sectors. With a population of slightly more than 42.5 million and an urbanization level of 69.5% in 2016, Ukraine is the second largest consumer market in Central and Eastern Europe after Russia. E-commerce in Ukraine demonstrated sustainable growth in spite of a low Internet penetration ratio (44% to 51% as compared to 80% to 90% in the USA and the EU). The low share of online purchases in the total retail market in Ukraine (2% as compared to 6.3% or 13.0% in the EU countries and the UK) is evidence of high market growth potential. Electronics, home appliances, clothes and tickets are the most popular products to buy online.

Based on finding of experts, 50% of Ukrainian citizens use internet in everyday life with over 19.7 million permanent users, 3 million of which make purchases online. In addition, based on latest researches, e-commerce market is expected to increase several times to reach US$10 billion in 5-year time frame. Finally, sell of 3G licenses to major mobile operators in Ukraine in February 2015 ensures additional opportunities for e-commerce via mobile gadgets. This will give software developers more work, starting from the creation of user-friendly web sites for online retailers to the development of smartphone applications and online payment systems.

It outsourcing

Ukraine has the largest IT outsourcing and software development industry in Central and Eastern Europe. In addition, the country has been among the top 30 outsourcing destinations since 2007 according to the Gartner Group. Around 95% of the industry’s revenue comes from external markets, mostly from the USA and European Union countries. IT, telecommunications and financial companies are showing high demand for software development and testing, application management, application user support and database administration.
IT outsourcing services are mostly provided in English, and less commonly in German and Russian. A Ukrainian IT specialist generally knows at least Java, C/C++ and C#/.NET and has expertise in mobile technologies (iOS, Android).

Ukrainian IT market size was estimated at USD 3.4 billion in 2016 and accounted for approximately 3.8 per cent of the GDP (in 2012, it accounted only for 0.8% of the GDP). The IT outsourcing market demonstrated a 28% annual growth rate during 2008-2013. Experts forecast that the Ukrainian outsourcing services market will reach USD 10 billion by 2020. The market’s drivers are tax exemptions, provision of government financing for development of IT and innovation parks in Ukraine, growth in software development orders for clients in the USA and European Union and improved IT education as a result of the establishment of corporate training centers by IT outsourcing companies.

Unlike many industries that experienced a sharp decline in performance during 2014, Ukraine’s IT sector managed to largely persevere through political and economic turmoil.

Nowadays, Ukraine is the world’s fifth biggest exporter of IT services and has the highest outsourcing market by volume in Europe. The country’s IT sector is showing the fastest-growing rates; more than 1,000 IT companies operate in Ukraine today, mostly in offshore software development. 30% have been doing business in this market for more than 10 years. In addition, there are over 250 small companies and independent programmer groups whose share of the market is estimated at 40%. Majority of companies operate in Kyiv, Kharkiv, Lviv, Dnipropetrovsk and Odessa. Uzhhorod is becoming a new promising region. The average salary of workers who work in the IT product and services export business ranges from US $300 to $1,200 a month in Ukraine, while managers make US $800–$2,000. These companies are mainly oriented towards developing vertical decision-making systems in healthcare, manufacturing and commercial services. However, according to the annual review of IT outsourcing markets in 16 Central and Eastern European countries conducted by the CEE Outsourcing Association (CEEOA), Ukraine’s exports of computer software was already over US $1bn in 2011, representing to 10% of the total figure for the CEE region.

Ukraine may also boast of its Research and development centers. Their number exceeds 100 with more than 5,000 software engineers employed. The annual growth rate is 30%-40%. The Leading companies – Samsung, NetCracker, Wargaming, Magento, Crytek, Yandex, ABBYY, Siemens etc. Ukrainian eCommerce market value is estimated as USD $2 billion while the software development market value is around USD $1 billion. Ukraine’s investment market is assessed at $50 million, which is 5x increase from 2010.

Ukraine is #1 in Central and Eastern Europe by IT outsourcing market size and IT Talent pool. However, the cost of software development in Ukraine is 20% lower than in Belarus and Russia

While the amount spent on each project generally decreased, the number of deals struck continued to grow, including market development initiatives, investor associations, angel investments, industry conferences and globally oriented projects.

Major international telecoms companies are already represented in Ukraine. In April 2004, leading Ukrainian software developing companies «Miratech», «SoftLine», «Mirasoft», «ProFIX», «Ukrsoft» and «SoftServe» made a decision to create Association "Informational technologies of Ukraine" . Company founders of the Association are the leading Ukrainian software developers who have accumulated successful experience in sales and licensing services in the developed markets of North America and Europe. The development of fiber-optic communications lines with the introduction of CWDM and DWDM technologies and the growth in broadband access networks remain among the highest priority areas in the expansion of telecoms networks.

Annual turnover in the telecoms sector shows that it continues to lead this branch. The highest growth was in mobile communications, radio and television broadcasting, radio communication, and computer communication. The mobile sector remains the most interesting segment in Ukraine’s telecoms market. The total number of mobile subscribers in December 2016 was 57.1 million.
Internet access has increased dramatically in Ukraine in less than a decade. As of December 2016, nearly 19.68 million Ukrainians over the age of 16 used Internet services daily (Internet Penetration Rate increased from 42% in 2014 to 44%). A further increase is expected in future with the introduction of 3G Wireless standard. As of May 2015, 900,000 second and third-level domain names registered under Ukraine’s “.ua” internet domain.

Education services

Ukraine is distinguished as one of the top five countries in its Global Innovation Index in Postsecondary Education. With almost 1.6 million universities and colleges students during the 2016 – 2017 academic year Ukraine represents an attractive market for education services. Currently, only 9% of students study at private universities in Ukraine.

English is the third most popular language of study in Ukraine. English studies are a niche that is to be filled – only 12,000 out of 64,000 Ukraine colleges` students who were capable of studying English, did so in the 2015-2016 academic year. There is an increased demand for Ukrainian higher education among foreign students as evidenced by the increase in absolute numbers (there was 50 per cent growth from academic year 2010/2011 to academic year 2015/2016 –  from 37,800 to 63,900 students respectively).

Ukraine is a popular place to study for students from Azerbaijan, Turkmenistan and India. Most foreign students study at universities in Kharkiv, Kyiv and Odesa. The main reasons for choosing to attend university in Ukraine are the relatively low cost of education and the friendly incoming policy.

There is high demand in Ukraine for higher education with Western educational standards. During the 08/09-12/13 period more than 156,000 Ukrainian students left Ukraine to study abroad. Engineering (with 164,000 undergraduates) and public governance and economics (with 152,000 undergraduates) are the most popular courses of study. In 2015/2016 academic year, about 68,000 students were studying abroad.