More than 50% of IT companies did not relocate, in particular due to the inability of IT specialists to travel abroad-study

IT companies see relocation mainly as a forced step during the war, or at least its active phase. No company intends to completely wind down its business in Ukraine, but 7% do not plan to return. This is evidenced by the data of the study " relocation. New IT landscape of Ukraine", which was held in July 2022 by the IT Ukraine Association and Sayenko Kharenko law firm. DOU tells key facts.

More than 50% of IT companies did not relocate: reasons

Most of the companies switched to remote work after February 24, and some have already partially returned to their offices.

The main factors that restrained businesses from relocation, the companies called:

inability of IT specialists to travel abroad;desire of IT companies to pay taxes in Ukraine;unwillingness of most of the team to move;higher costs of doing business outside of Ukraine.

At the same time, for a third of IT companies, the latter becomes the main deterrent to relocation. This group includes not only businesses with fewer than 50 IT specialists, but also those with more than 1,200 specialists.

However, 37% of companies consider relocation possible by the end of this year. If the situation in the country does not change significantly, we can expect that this indicator will grow, the study says.

Among the companies that were relocated, 45% chose other cities in Ukraine, and 42 % — foreign ones

Among IT companies that carried out Relocation, Relocation within Ukraine prevails — 45%. 42% of companies partially relocated abroad, of which only 5% closed some of their offices in Ukraine. None of the surveyed IT companies made a complete relocation abroad.

Relocation is mostly considered by businesses as a forced step during the war, or at least its active phase.

The main challenge for companies that still decided to take this step was the decline in competitiveness, as they are forced to increase the cost of work/services for customers due to increased business costs. This is also affected by the need to create a local company and increase the tax burden. The lack of sufficient housing for employees has also become one of the key challenges for both internal relocation and relocation outside of Ukraine.

At the same time, most IT companies have no difficulties understanding how to do business outside of Ukraine.

How companies choose countries for relocation

The survey results show that IT companies take a balanced approach to the issue of relocation, analyzing and calculating the consequences of each option. 43% of businesses prefer countries where they already have offices, while 22% rely on recommendations from lawyers or tax consultants. Another 22% make their own choice based on an estimate of the cost of doing business in the country of potential relocation.

At the same time, none of the surveyed IT companies intends to completely wind down their business in Ukraine, but 7% do not plan to return (carry out a return relocation to Ukraine).

Five steps that are necessary for the development of the industry according to companies

For greater stability of the industry and its further development, business representatives believe that it is important:

provide an effective mechanism for reserving IT specialists; resolve the issue of NBU policy on currency settlements;allow temporary departure of IT specialists on business trips outside Ukraine;liberalize tax legislation;support the industry for the maintenance of highly qualified specialists in Ukraine.

A May study by the Association showed that currently the largest percentage of relocated employees falls on companies that employ more than 1,200 people — 32%. In medium — sized companies, this figure is 24%, and in small companies-14%. The main countries of relocation were Poland, Germany, Spain, Romania, Portugal, Bulgaria, The Netherlands, Turkey, the Czech Republic, Moldova and Croatia.