Ukrainian IT Recruitment in Early 2023 – What’s Going On?

2022 was a challenging year for Ukrainian IT Recruitment. The term “challenging” gets thrown around quite often for lesser things. This time, that’s the word that best describes what IT Recruitment in Ukraine went through in 2022. 

It was the year of adapting to wartime realities, hiring freezes, reorganizations, layoffs, salary cuts, bracing for impact, relocation, and many more. However, it is crucial to comprehend the 2022 experience to move forward and prepare for anything that the future holds. 

This article will explain what’s going on in Ukrainian recruitment and how things might turn out during 2023.

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The State of The Ukrainian IT Recruitment Coming Into 2023

It was quite a rollercoaster ride for Ukrainian IT recruitment – the domain was in a weird place in 2022. 

• On the one hand, tech recruitment remains as in-demand as always, as companies from Ukraine and abroad are looking to hire high-profile specialists to drive growth and scaling. 
• On the other hand, recruitment was arguably less appreciated and prioritized than ever before because there were other things to be concerned about, namely keeping the business afloat.

In-house recruiters

As a result, the Ukrainian IT recruitment workforce took a big hit during the year. Numerous in-house specialists lost their jobs due to the following factors:

• The companies closed down due to business operation collapse (widespread during Q2 2022);
• Specialist’s relocation (mostly during Q2 2022) or refusal to relocate later in the year (became more common later in the year, especially during Q4 2022);
• Company-wide layoffs (recruitment, HR, and marketing departments went through significant layoffs during the year);
• Company reorganization or merging (which led to departments combining or getting disassembled in the new configuration);
• Lots of specialists switched to other domains after losing their jobs in recruitment. 

Recruitment Agencies

At the same time, it didn’t seem like recruitment agencies had it much easier.

• Due to mass layoffs of the recruitment workforce, companies started to use their services more frequently. 
• However, the companies focus more on retaining the existing personnel than making new hires due to the challenging and unpredictable economic situation. Because of that, the overall scope of recruitment is significantly reduced in scale.
• Instead, companies turn to recruitment for high-profile positions that can impact the company, which is double the challenge. 
• But, with the labor market in disarray, high-profile specialists from in-demand domains are hesitant to change jobs due to financial stability concerns, company reputation, work-life balance, and other factors. 

Because of that, selling only recruitment services is an unfeasible business model for recruitment agencies. As 2020 and 2021 showed, recruitment agencies need to further diversify their business models to survive. Consulting and research services seem like an obvious choice. 

• For instance, with the massive layoffs of in-house recruiters, some companies turn to recruitment process outsourcing to handle their recruitment needs. 
• Switching towards executive search can be an option as it is not something companies can handle on their own in addition to hiring for top management positions in the market turmoil period.
• HR consulting is also on the rise because of the lack of experienced specialists on the market. Companies often turn to agencies to fine-tune their employer value proposition, employer brand, HR process, handle hidden hiring bias, and other aspects.
• Market research is another niche recruitment agencies can handle due to their wide networking in the tech community. Due to recruitment activities slowing down and becoming more calculated. Companies need thorough market intelligence to make well-informed decisions regarding hiring and retaining tech talent. 

But that was then. Let’s talk about what’s happening right now.

What To Expect In Ukrainian IT Recruitment During 2023

As of January 2023, there are several significant challenges facing Ukrainian IT recruitment. Let’s look at them a bit closer.

Decreasing Active Recruitment Workforce 

Layoffs, domain switching, and relocation greatly decreased the active recruitment workforce for recruitment departments and agencies. The current economic situation drives the reasons for that. 

• The companies still need to hire new talent to drive growth (even though the current focus is on retaining employees more than recruiting new ones). 
• However, the companies also need to stay afloat during rough times. 
• This situation means cutting costs, optimizing spending, and restructuring the company accordingly. 
• Unfortunately, there’s a human cost to keeping the business afloat, and it has long-term consequences. 

As a result, as of early 2023, many experienced professionals are left unemployed, needing help finding a new job, being forced to take on a smaller salary, or leaving the domain altogether. 

The long-term consequences of professionals leaving the domain can be drastic. 

• For instance, the lack of high-profile specialists can lead to a technological innovation that reinvents the domain to mitigate business needs. We can see it now with interview chatbots and AI-driven CV analysis. However, high-quality recruitment is based on reputation and networking first, and that is something no AI can replace. 
• A lack of high-profile recruiters can also lead to domain degradation with lower-profile talent and lower-quality results. This degradation can lead to less efficient recruitment workflows, less cost-effective operations, and a lot of time wasted only to start again. High-profile specialists will eventually emerge from this mess, but it will take time until the field levels up.
• We can see an example of this in Digital Marketing. The 2008-2009 economic crisis wiped out many Ukrainian marketers. It took over six years for the domain to fully recover and move forward with the new generation of high-profile marketers with successful track records. 

At this point, it is hard to predict when the active recruitment workforce will recover to at least 2021 levels.   

Labor Market Depletion

Brain Drain and Relocation

The other significant trend affecting Ukrainian IT recruitment is the “good old” brain drain. The concept itself is nothing new – brain drain has been a thing in Ukrainian IT since the mid-90s, and its influence was greatly diminished with the rise of the Ukrainian IT segment 2015-onwards. 

The COVID-19 pandemic and full-fledged acceptance of remote work as the new normal further diminished brain drain factors as more foreign companies started hiring in Ukraine. This situation perpetuated the competition for talent, which led to significant salary growth for all sorts of tech talent.

And then – the impending russian invasion kickstarted the new wave of brain drain with companies relocating their employees to nearby countries in late 2021 and early 2022. The next wave started immediately after the invasion, although the mobilization-related border-crossing ban for a significant portion of the Ukrainian male population greatly disrupted it. 

Mobilization

Mobilization is another significant factor in the depletion of the labor market, albeit temporary. The thing is – modern warfare is tech-driven. Because of that, a substantial segment of Ukrainian tech talent is still involved in their respective domains, although now in the military tech niche. 

Such niches as machine learning, cybersecurity, cloud computing, robotic process automation, drones, and embedded software have immense potential in military technology. These developments, sooner or later, will feed into the civilian consumer sector. But at this point, it is a long-term perspective. 

Today, a significant portion of the tech talent pool is unavailable due to mobilization. This situation complicates recruitment, especially for high-profile senior and lead talent. 

Inconsistent demand for recruitment services

As mentioned in this article, the demand for recruitment services is currently in a downturn due to companies trying to make it one piece through the rough economic situation.

There are two sides to this situation.

• On the one hand, companies suffer significantly from the recession in the European, US, and Asian markets.
• On the other hand, foreign clients have concerns regarding working with Ukrainian companies due to rocket strikes and blackouts. 

Here’s how it affects recruitment in different company types:

• Outsourcing companies suffer the most from this situation. Most big outsourcing players went through several waves of layoffs due to reorganization. Lack of demand for outsourcing services, in turn, leads to a lack of demand for recruitment services.
• Product companies fare a bit better, but not so much. Investor interest is lower due to uncertainty regarding the war and its impact on handling business in Ukraine. 
• The recession greatly limits the product’s growth prospects in the western markets. As a result, product companies are very cautious regarding recruiting new talent and try to make a calculated decision regarding hiring with maximum impact. 
• Due to the global recession, investor concerns, and overall market cautiousness, startups are pressured to succeed with a “less is more” approach. Because of that, similarly to product companies, they take on a more calculated approach to recruitment which often doesn’t require an in-house recruitment team, mainly working with recruitment agencies or freelancers.

Then there’s a problem of the relatively small and underdeveloped Ukrainian IT Segment’s internal market. 

• The fact of the matter is that the Ukrainian business demand for tech solutions is many times lesser than the Ukrainian tech segment’s supply. 
• Many high-earning Ukrainian economy niches are out of reach for the Ukrainian tech segment. This situation greatly limits their business potential within the Ukrainian market. 

What’s next?

As long as the tech industry stands, there will be tech recruitment. It may change shape, but it always needs to hire high-profile tech talent. The bad news is that the current period of uncertainty is taking its toll on the domain. This toll will have long-term consequences. 

However, the period of turmoil also presents an opportunity to regroup and figure out something new. Let’s hope that the new game-changing idea is already brewing somewhere in the Ukrainian IT recruitment community.

In our next article, we will talk about recruitment business client-related challenges.