How a Ukrainian Entrepreneur Is Defying Wartime and Tapping into International Markets

Copy of DSC 0964 scaled - Global Banking | FinanceEarly last year, Ukraine’s IT sector was lauded as one of the most resilient industries in the country, contributing significantly to the economy of a country that was fighting off a larger invader against all the odds. The country’s IT companies managed to retain 95% of their contracts, the New York Times reported at the time, and pulled off the almost unthinkable — they grew their revenue by 5% year-on-year, to $7.34 billion. In a country marred in war, whose GDP fell by nearly 30% in the year the invasion started, it was an unbelievable success.

But 2023 wasn’t 2022, and it presented the Ukrainian IT industry with several significant challenges. On the international side, the tech sector saw increased layoffs and budget cuts. Some international partners probably saw continuing to work with Ukrainian countries as too risky in the face of a prolonged conflict — even though to others, Ukraine’s struggle for freedom might have been a motivating factor to renew contracts.

“We implemented the business continuity processes, which allowed us to keep delivering, and having these projects also had a great impact on our people because they could be distracted from the situation,” says Oleg Panchenko of FreySoft. “But for a new business, it’s much harder to sell or promote current Ukrainian developers because they see some potential risks.”

And even though the infrastructure held up enough to keep the sector going — despite blackouts and mobile network issues — Ukraine was still at war and needed people to fight it. The IT Ukraine Association named the low percentage of IT professionals shielded from the draft and the subsequent shortage of quality personnel one of the two reasons for 2023’s 8.3% decline in IT services exports.

As a veteran entrepreneur in tech who currently heads three companies — FreySoft, FreyStaff, and MakeDeal — Oleg Panchenko knew that Ukraine’s IT sector had what it takes to make a strategic change of direction. The circumstances only seemed to force its hand.

“The Ukrainian IT sector was more focused on the service model. Many of us were providing services to other companies outside of Ukraine, so they didn’t focus on developing their own product,” Panchenko explains. “Today, due to restrictions and circumstances, many businesses and projects paying for those services are without customers. So companies with expertise in specific areas are changing from service to product models.”

The shift is a significant one for several reasons. Creating a product requires fixing a problem for a customer with some extra value, which is always great for the customer. But for Ukrainian companies, it allows them to finally bank on the years and years of experience they’ve accrued working on projects for others. The startup scene can fill the hole left by the shrinking services sector. It’s already happening.

“Our team was present on a web summit in Portugal this year where we got to exhibit our product, and from where I was looking, it seemed like every third person and every third startup was from Ukraine, and it had a product,” Panchenko says, before underlining the impact of wartime migration to this trend. “Entrepreneurs who left the country and lived in different societies, inside of Europe, outside of Europe, they found things are pointers for improvement for Ukraine, how to be more efficient and how to provide more value.”

Panchenko himself is currently based in Warsaw, Poland. He got there via London — a city in a country where many of his business clients were found — but even that wasn’t his first foray abroad. Panchenko developed software in California and had always wanted to break the Scandinavian market. That’s why he named two of his businesses after the Norse goddess Frey.

But settled in Warsaw for the time being, Panchenko is using the business climate of Poland’s capital — a vibrant and diverse scene with room for product development — to continue building his businesses for an international market.

“In Poland, it’s still more a service provider, a business-oriented environment like in Ukraine. But many more companies provide product services,” Panchenko says. “They create products, they create some added value, and then just sell it to the global market. So it’s easier to find different types of partners here in Warsaw.”

As a serial entrepreneur from a war-torn country, Panchenko understands that he and his fellow entrepreneurs have a role to play in helping his country endure and rebuild after the war ends. He sees many people who have, like him, temporarily left Ukraine, returning and bringing their unique skill sets and knowledge to use for good, selfless causes. He’ll also have his own to add, with access to the international market and a product development know-how, which is just what the industry needs.