LVIV – Ukraine’s largest IT association, the Lviv IT Cluster, draws international attention to Western Ukraine each fall by staging the IT Arena event, one of Eastern Europe’s largest tech festivals.

Now, the Cluster moves from words and networking into realizing concrete ideas.

Construction starts this year on Lviv’s Innovation District Park, known in town as IT City. With $150 million invested and a spacious 10-hectare building site, IT City will offer workspace for dozens of tech companies and thousands of workers. It’s also, say planners, a huge boost to Lviv’s growing tech ecosystem.

Tech Makes for Hot Real Estate

Promoters say that 100 percent of IT City’s 38,500 square meters is already pre-leased. It’s not a surprising statistic. The development will break ground as Lviv’s office rents grow faster than anywhere else in the nation. In a recent survey, 91% of IT CEOs in Lviv said they needed to relocate to better offices.

The real estate boom speaks to the strength of Lviv’s tech economy. It is surging by 20% a year—ten times Ukraine’s national GDP growth rate in 2017. This figure comes from the IT Cluster's own research. They now count 9,000 people and 60 companies among their members.

“IT and tourism have for a while now been identified as by far the two biggest drivers of Lviv's growing economy,” says Stepan Veselovskyi, CEO of the Cluster.

“The City Council wanted more input from the business community in implementing more IT projects, for the greater benefit of the whole city, [so] we all began to step forward and improve this cluster.”

Spread over 35,800 square meters, Lviv's $150 million IT City will provide space for entrepreneurs, workers and educators. (Art supplied).

Around 20,000 IT workers, drawn from all over Ukraine, now work in the city. Earning salaries denominated in dollars, this IT workforce generates another 72,000 jobs in Lviv.

“We calculated that every worker in tech creates another 3.6 jobs for the city,” says Veselovskyi. “So it's not surprising that the City Council wants more funding and investment into this area.”

Their data indicates that the average salary for an IT worker in Lviv is $1,500 per month, higher than the national IT average. Advanced specialists can command salaries that match those in some parts of the EU—up to $6,000 per month.

Clusters Generate Growth

The purpose of a cluster is growth. Ecosystems like Silicon Valley accelerate ideas and make collaboration smooth and effective. When their entrepreneurs reap dazzling successes, these ecosystems become talent magnets.

In Ukraine’s five biggest cities—Kyiv, Kharkiv, Odesa, Dnipro and Lviv—IT clusters, or industry associations, are bringing players in the tech industry together, according to Dr. Yaroslav Prytula, Dean of Applied Sciences at Lviv’s Ukrainian Catholic University. This means growth.

“Private companies are coming together, working together and bringing so many brains together for the good of the country's economy as a whole,” he said in an interview. “They are really helping to drive the success of this sector.”

Zenoviy Veres, an IT expert for software giant SoftServe and a professor at Lviv Polytechnic University, says Lviv’s IT Cluster brings significant benefits to the whole city.

“The cluster has many education programs in universities and schools around the city, where trainees are being mentored by active professionals,” he says. “They are also critically important in bringing all of the best talent and IT specialists into Lviv from around Ukraine.”

IT Arena Exposes Lviv IT to the World

Veselovskyi, CEO of the Lviv Cluster, echoes a common assessment: “Our annual IT Arena event—a huge conference with speakers and live music and events—is fast becoming the biggest tech event in Eastern Europe.”

Last fall, this forum drew 2,300 attendees and 100 speakers, many from such industry leaders as Facebook, Apple, Amazon and Google. In a snowball effect, these visitors generate more investment and more demands on infrastructure in a once quaint Hapsburg-era provincial city.

“Ten years ago, city authorities began to realize that there was a significant lack of decent office space in the city,” says Veselovskyi.

Growth pressures push the project from blueprints to ground breaking.

In addition to office space for 4,000 people, IT City will have a new Catholic University campus, supermarkets, hotels, and hundreds of apartments. With completion expected in 2020, IT City is to usher in a new growth era for a sector slated as an economic pillar of modern Ukraine.

For comments or story ideas please contact the author of this report, UBJ Managing Editor Jack Laurenson, at: laurenson.jack@theubj.com.

Posted April 11, 2018.

Antonina Tsymbaliuk, UBJ Assistant Editor, contributed reporting to this story.