Ukrainian Tech – The State of Things Segment By Segment Q3 into Q4 2025

Q1-Q3 2025 been a ride so far for the Ukrainian Tech Segment, eh? Things happened but it is not like things ain’t happened before. That’s the best way you can describe this stretch of time without getting excessively flowery about it.

The biggest factor that weighs down over the entire Ukrainian Tech Segment is the global recession. It takes its toll both on product and outsourcing sides.

That’s what happens when you disregard your own market because “they have no money”.

• The dependency on either government participation or foreign market are the biggest defining factors of the modern Ukrainian tech segment and it is a bad thing because these are the extremes.
• The home market is what is supposed to be in the middle but it is barely there because it was always neglected for being too poor to afford “high profile services”. So now we’re paying for that disregard. Good job, y’all.

Let’s take a look at how things are product, outsourcing and startups parts of the Ukrainian Tech Segment. Lots of text incoming.

Here’s how things are on the product sector of the Ukrainian Tech Segment

The product sector overall is in a weird place due to market volatility in Europe, Asia, and the United States, and ongoing recession effects.

The biggest issue is the return on investment problem that plagues the entire Ukrainian Product Segment.

• Investors still have rather unrealistic expectations that their products will work out spectacularly and they will get a lot of money out of that.
• A part of that unrealistic expectation is fueled by the product companies themselves hyping up their business prospects in the volatile market with limited predictability.
• But you gotta hustle to get investments so it is part of the process even if it is becoming increasingly counterproductive.

Let’s take a look at the niches.

Artificial intelligence-related businesses chug along as the AI bubble continues to grow. At this stage, the products start to homogenize and become a variation of regular tools with an artificial intelligence gimmick to spice things up.

The cybersecurity niche is getting a spotlight, getting its fair share of reminders about why its services are in demand with a near endless stream of breaches and leaks starting with data centers and ending with government institutions.

• However, talent scarcity is still a challenge and mobilization doesn’t help nurturing new talent to handle incoming challenges.

eCommerce is staying afloat. Current players are doing their things. No new competition is in sight.

• The eCommerce platforms still dominate the market due to their friendly approach to retailers in terms of overhead costs and streamlined marketing pipeline. Brands still dabble in eCommerce presence but it is less of a priority right now.

GovTech and MilTech niches dominate the Ukrainian Tech Segment because war is big business. Still, due to their peculiar nature, both exist in separate realities apart from the rest of the segment.

Banking and fintech niches keep their head with consistent services while taking minimal risks due to market volatility and an overabundance of external factors.

• The microloan segment still burgeons in South Asia and African countries, and it helps with maintaining the overall momentum.
• The current top priority for banks is cybersecurity. Late 2024 and early 2025 saw deeper involvement between banks and cybersecurity firms, starting from employee training and security audits and going all the way to developing internal security solutions for banking operations on the backend and frontend.

Crypto can’t go away fast enough

The Crypto / Blockchain niche came back and went away over the last six months. That was fast.

• Blockchain had a huge resurgence during Q3-Q4 2024, and its momentum pushed forward other mainline cryptocurrencies, namely Ethereum.
• With that said, memecoin scams are still a thing, and they still do a lot of damage to the cryptocurrency reputation in general.
• A legislative solution is required to solve this situation. Currently, the crypto niche exists in a legal nether realm that is technically regulated but not in a way that can put brakes on downright scams.
• As of September 2025, Crypto is once again on the down low due to recurring scam overflow, but the cycle seems to be still intact, and the next resurgence is probably due mid Q4 2025 as per usual.

Gambling is a cockroach of the Ukrainian Tech Segment

The gambling niche fully recovered from a Parimatch debacle and remains one of the healthier Ukrainian Tech niches despite all the efforts to limit its exposure.

• Overall, that’s bad news for the Ukrainian tech segment, because gambling is a very shady niche with lots of uncertain characters that make a bad look for the industry overall.
• Gambling companies play fast and loose with legal regulations that involve taxes and this aspect makes them hard to assess at face value.
• The economic turmoil inside Ukraine and on the target markets of the EU, Africa, and Asia seems to slow down operations during late Q2 and early Q3, and it is still unclear whether this trend is just a bump in the road or a sign of things to come. Let’s hope gambling industry will crash and burn.

Gaming is a ray of light of the Ukrainian Tech Segment

The gaming niche still goes strong on the small-to-mid level.

• However, AAA companies significantly reduced their operations in Ukraine due to growing maintenance costs, mobilization reservation expenses and safety risks.
• During Q2-Q3, Unity-based small-to-mid-scale projects were gaining momentum, fueling the Unity C# talent demand.
  • With that said, the durability of small-time game development companies has significantly reduced.
• Q2 and Q3 2025 saw numerous indie studios and developer groups being bought out or absorbed by bigger companies to bolster their ranks and diversify their portfolios.
• The big sticking point is that games don’t generate enough revenue as a product for companies to scale their operations.
• In addition, current costs of marketing and influencer interaction slowly creep above the cost-effectiveness threshold as it seems to have more and more limited effect on product sales.

Manufacturing is a dark horse of the Ukrainian Tech Segment

The manufacturing niche suffers from consumer interest hampered by the cost-of-living crisis.

Added to that, the microchip production crisis also slows things down considerably and increases production costs, putting additional weight on overhead expenses.

• Industrial manufacturing is still going strong based on long-term contracts and bigger scope of operations.
• However, on the consumer level – the cost of living crisis will eventually hit the manufacturing business as hard as it gets.
• The backlash against brand overpricing and subscriptions for physical features is growing. In addition, the invasive nature of smart gadgets is an issue. The security and privacy concerns gradually turn away consumer for simple non high-tech solutions of yesteryear.

Here’s how things are on the outsourcing side of the Ukrainian Tech Segment

The outsourcing segment suffers from a lack of long-term projects to build their companies up for bigger things and diversify.

There’s a need for a stable client pipeline and the conclusion of at least year-long contracts.

• On the one hand, potential clients are still scared off by the ongoing military invasion. As a result, they are cautious about cooperating with companies operating in Ukraine.
• On the other hand, the global recession perpetuates a considerable slowdown in the outsourcing services demand. Fewer new projects get off the ground, and even fewer remain in business despite the fierce competition.

Historically, Ukrainian Tech started by outsourcing US and EU projects and slowly expanding into product niches. It is still a viable business model that enables building up a competent team, working out the operational kinks, and then leveling up with something of your own.

However, as of Q2-Q3 2025, this kind of strategy is becoming a fantasy. Companies can’t gain enough momentum from chugging on short-term, small-scale projects and tackling risky product ventures. As a result, they’re stuck in the loop of soliciting project after project but never establishing themselves enough to scale.

Things didn’t change that much during Q3 2025, but it didn’t get any worse either. The tariffs kind-sorta affect the segment. However, with no actual data on hand everyone keeps bullshitting each other about it. Because of that, it is very hard to tell whether the effect is detrimental or downright destructive for the segment.

What about Startups?

Meanwhile, in the startup realm, things are haphazard as always, but a tad different this time.

The unrealistic expectations conundrum has always been a thing in the startup community.

• It is the name of the game at this point even though it is a deeply misguided way of thinking.
• In practical terms, the unrealistic expectation conundrum causes startups to rise high and fall hard.

The overhyping of Artificial Intelligence technology and no-code solutions caused a lot of noise in the startup community. It brought in a lot of people with lots of spare cash looking to invest in the next killer app.

• Except the killer app is not coming. At this point, it is obvious that producing a killer app was never an intention in the first place.
• It was always about getting the bag for as long as possible. And after that – finding a good excuse to shrug off things not working out.

The problem with this kind of attitude makes things a lot harder for startups that try to do something worthwhile.

Realistic business planning just doesn’t look all that exciting. Given that you can’t get an ambitious project off the ground without significant starting investments. Consequently, it leads to projects getting smaller and more derivative of what is already on the market.

At the same time, most of the investments burn out on overhyped borderline sci-fi speculative potboilers.

The real action for Ukrainian startups is currently within MilitaryTech or DefenseTech segments. This means startups need to get cozy with the government which is never a good thing. But that’s where the money are at right now and you can’t argue with that.