A new wave of young business people and graduates, working within both government and entrepreneurial circles, is emerging in Ukraine, bidding to modernise a war-torn, ailing economy.

Typical of the start-up generation is Oksana Borysenko, CEO of Enable Talk, a small firm that has developed sensor-equipped gloves that allow deaf people to use sign language that is then automatically translated into text on the mobile phones of those they are communicating with.

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Ms Borysenko clearly has her hands full. Not only is she soon to give birth to her first child, but as she sips camomile tea in a café on Institutskaya Street, close to the place where snipers killed nearly 100 anti-government protestors in February 2014, she talks about the myriad challenges that she and Ukraine’s digital entrepreneurs are wrestling with.

Enable Talk has just sent 10 pairs of prototypes to schools for deaf children in the UK and US. Next, her developers must improve the algorithms used to recognise and translate words.

Business know-how

Ms Borysenko's efforts have already captured the imagination of Ukraine’s reform-minded authorities. She has been appointed as an adviser to the Ministry of Economic Development and Trade, tasked with helping train young entrepreneurs in business skills, such as acquiring clients and preparing documentation for setting up firms. “Our young people are fixated on technology and that is everything for them,” she says. “They do not yet have the necessary business mentality.”

These initiatives are linked with Ukraine president Petro Poroshenko’s broader 'de-oligarchisation' policy, which encourages small and medium-sized hi-tech enterprises at the expense of government-subsidised heavy industry.

Start-up hubs have so far been established in Lviv, Kharkiv, Dnipropetrovsk and Odessa, in addition to the capital city of Kiev. The initiatives are modelled on similar projects in Germany, the Netherlands and the US, and also incorporate start-up boot-camps pioneered in Spain and Austria.

Kiev already boasts 30 private co-working hubs, where users pay rent to landlords, according to Alexander Kubrakov, an adviser to Kiev city mayor Vitali Klitschko. “The IT sector is growing fast, notwithstanding the poor state of the Ukrainian economy, mostly due to outsourcing from firms in other countries to Ukrainian programmers,” says Mr Kubrakov, who co-ordinates the capital’s 'smart city' initiative. This includes the Seed Forum Ukraine project, housed on the city’s main thoroughfare of Khreschatyk, backed financially by the Norwegian government with an initial investment of €700,000, to be followed by further tranches.

“As a city, we want to support the IT sector, so that our talented youth can move from start-ups and convert their ideas into real businesses, in the same way as Israel and Silicon Valley support start-ups,” he says.

Gathering pace

The current thinking is to help Ukraine shift gradually from its successful role as a centre for outsourcing, to a hub for innovation. South Korea’s Samsung has 1300 employees working in R&D in Kiev, business support systems provider NetCracker from Massachusetts in the US has 750 staff, and Californian software company Aricent employs 700.

There is hope that more foreign investors will come in to back local initiatives. “There are many IT workers in Kiev, but few of them are focused on new product innovation,” says Mr Kubrakov. “The start-up trend has been gathering pace in recent years, but it is not yet a mass movement. We are still at the beginning of this process.”

In terms of start-ups, Ukraine has much catching up to do with nearby Belarus, Poland, Slovakia and Russia, he says, but he hopes the Norwegian money and eventual support of Californian investors will give the sector the impetus it needs.  

Yet well-advanced plans to create the Bionic Hill IT business park on the forested outskirts of Kiev were mothballed soon after the Ukraine crisis erupted at the end of 2013.

“I am sure that through out projects, we will create a better atmosphere for big investors,” says Mr Kubrakov. “Regardless of the crisis, the IT sector will continue to grow. The park may be frozen at the moment, but this and other projects will definitely happen.”

Innovate to survive

Evidence of a mini IT boom in Ukraine comes from rising salaries in this sector. “My business is suffering. I am losing so many IT people,” says Peter Chernyshov, CEO of leading Ukraine mobile operator KyivStar, with a rueful shake of the head, blaming both start-ups and foreign employers able to pay staff in euros and dollars, rather than in the floundering domestic hryvnia.

This demand for higher quality, trained IT staff is filtering through to educational establishments. The Ukrainian Catholic University (UCU) in the western city of Lviv, one of the country’s most innovative institutions, has already enrolled 45 students in a new computer science programme. “These students come direct from the IT cluster in Lviv, where there is a formidable concentration of computer tech workers,” says UCU president Borys Gudziak. “But a number of companies were not fully satisfied with the quality or quantity of programmers being introduced to them, so they came together and approached us, asking ‘Could you create a new programme for us?’ This means our students know they are studying in a programme, which responds to the needs of employers.”

Many talk about using Israel, also affected by territorial disputes with neighbouring states, as an example in creating a hi-tech economy against the odds. The land on which the state of Israel was founded, according to the country’s former president, Shimon Peres, speaking to delegates at the 2015 Yalta European Strategy summit in Kiev, consisted of “swamps in the north with mosquitoes” and an arid, drought-prone south.

With an absence of local allies and natural resources, Israelis were forced to innovate to survive, he said, urging Ukrainians to move towards cleaner industries of the future. “We all became scientists. Every farmer looked for a way to cultivate the land and improve agriculture through hi-tech processes,” said Mr Peres.

Critics believe such changes are not happening fast enough to save Ukraine’s war-ravaged economy from deep economic crisis and call for an accelerated pace of development.

“We need serious moves towards an IT economy,” says Vadym Karasyov, director of the Kiev-based Institute of Global Strategies think-tank and a former presidential adviser. “We have a lot of mathematicians and technicians, products of an educational system, which is our one decent legacy from the Soviet days. But the top graduates of mathematical and technological disciplines either emigrate or work here on a consultancy basis for foreign tech firms, which don’t pay taxes in Ukraine.”