|Aviram Eisenberg speaking at |
Ukrainian Software Development Forum 2.0
Maybe it’s time to create competitive micro climate for developers and make a move from IT services to High-Tech products. Homeland and cyber security, medical devices industry, personal surveillance control and scientific researches – in all these spheres Israel is ranked second only to the USA. But how did it start? Military industry originated developments that were able to compete on global software markets by 1980s. Israeli IT experts could find empty niches, left by U.S. companies, and make a real takeoff in software export.
How had Israel built this successful IT ecosystem?
1. The needs of Israeli Army created a thriving IT community – as a small, yet sophisticated Army that always strives to keep military supremacy over the neighbouring countries, the Israeli Army invested a lot in High-Tech weapons.
2. The cancellation of the Israeli Fighter Aircraft project (Lavie project) drove a lot of these IT experts to the private market.
3. The big international High-Tech companies head-hunted these experts and opened R&D centers in Israel.
4. The Israeli entrepreneurial spirit eventually drove some of these experts to open their own companies, creating clusters of expertise around Telecom, Medical devices, Homeland security and Cyber.
The peace agreement in Oslo gave a "security bill" for foreign investors. Tax incentives and government funds for foreign VC investments, low-rate loans brought the main Fuel of the High-Tech industry – money. Small domestic market forced the Israeli companies to focus on selling to the U.S. and EU markets. The global companies came again to Israel, this time not shopping for the Israeli brains, but shopping for interesting Israeli High-Tech products.
The Challenges for Ukraine
On the face of it, Ukraine has similar potential to succeed like Israel, yet the Ukrainian IT industry, while being a very significant vertical, did not fulfil its potential yet, and did not mature from IT to High-Tech.
The legal, business and financial environment in Ukraine does not encourage foreign investors to invest in Ukrainian High-Tech products, and without these investments, the Ukrainian IT machine cannot change its face. The corruption, the lack of legal protection for foreign investors’ rights, the lack of governmental support, the unstable and fragmented financial market are chasing away the foreign investors.
On the other hand, the good news for Ukraine is that the private IT sector is thriving, in spite of all the business difficulties, and already became the number 1 export vertical in Ukraine. The individualistic spirit of Ukrainians and the vast IT talent pool had created an IT market with 1000+ IT companies developing cutting-edge technologies and products for companies from the U.S. and the EU.
Will the Ukrainian government have the vision and power to help this vertical to mature and unleash its potential to the fullest? I don’t think so. It will be enough for me, if the Ukrainian government will not interfere and will let the private IT sector to help itself. The answer for the Ukrainian IT model lays in private initiatives and support from the EU.