The IT sector that grew while everything else argued

Between roughly 2010 and 2021, Ukrainian software services grew from a niche into one of the country's largest export categories. That happened during a period containing a revolution, a war, two currency collapses and a pandemic.

Why the sector was insulated

Because of what it needs and does not need. It does not need functioning ports, predictable customs, reliable roads, a stable currency for its inputs, or physical proximity to its customers. It needs connectivity, electricity, and people who can be paid.

Almost every problem that constrained the rest of the Ukrainian economy in that period was a problem this sector could route around. That is not luck; it is a structural property, and it explains the growth better than any policy did.

The tax question, stated honestly

For most of that period the sector operated largely through individual contractor arrangements taxed at a low simplified rate. Whether that was appropriate is genuinely arguable. It was clearly favourable, it was widely used, and it contributed materially to cost competitiveness.

Diia City, introduced in 2022, offered a defined legal and tax regime as an alternative — a formal framework rather than a grey area, with employment relationships, intellectual property rules and a settled tax position.

What I take from it

A lesson I apply elsewhere. When a sector grows in a difficult environment, look first at what that sector does not depend on. The Ukrainian IT industry succeeded partly because it needed less from the state than any other export sector, at a time when the state had less to give.

The reason this sector was insulated is that all it needs is connectivity and people — ports, customs, the exchange rate and the roads do not concern it. My own business is the opposite: attached to all of them at once. That contrast leaves me with a thought — the fastest-growing sector in a country is often the one that needs its infrastructure least. That is an achievement and also a diagnosis.