Interview IT and electronics

To enable investment flow to Ukraine, we need to create attractive conditions for investors and reform the judicial system so that it could ensure intellectual property protection

Valery Krasovsky, CEO and co-founder of Sigma Software, an IT consuting company, told us about the specifics of onboarding and training of specialists in the field, cybersecurity in the life of every citizen, development of venture funds in Ukraine, and the reasons why our legislation is not able to meet the needs of the IT industry.

: How did you come up with an idea to start an IT company?

V. Krasovsky: There were five founders and almost all of us “came out” from programmers. Back in the 1990s, we all worked together in an IT company that was one of the first in Ukraine. Later, we decided that we want to open our own firm. We devised a concept of making a company of programmers and for programmers, constantly solve the problems of our clients with the help of the best technologies and help society. Basing on these ideals, we built our company in 2002. At that time 17 years ago there were five of us. Today the company unites almost a thousand specialists.

: Sigma Software is a service company. Do you have your own products? Tell us about them.

V. Krasovsky: The focus of our activity is technological services. It is difficult to engage in product development and service providing businesses within one company: approaches are too different. From time to time, we start spin-off businesses and some of them go through incubation within the company. I can tell about several spin-offs that took place. One of them grew from our augmented and virtual reality lab — it is a Mixed Reality space shooter. The idea of this game had emerged even before Pokemon Go came out, and its entry into the market will occur pretty soon.

: Do you already know the exact date when the game comes out?

V. Krasovsky: At the moment, I can not say for sure, but I think it will definitely happen this summer. Another very interesting product we are working on is from the cybersecurity field. Among the founders of this product are Sigma Software and several American partners. Maybe you have faced a problem when you click on a banner, and the link leads you to a completely different resource than you expected. This business is very well developed on the Internet, it is harmful advertising which steals traffic. According to data from open sources, such a business brings hundreds of thousands of dollars a day. Accordingly, there is a big market for dealing with this harmful advertising — which we do with the help of our product called Clean Creative. This is a product of the American company, which we co-founded; it is quite successful, it develops and grows in the American market, there are a lot of references on the Internet. The work is very interesting not only in terms of cleanliness of the Internet, but also in terms of challenges our specialists face, because this is a constant struggle between white and black hackers. We are looking for ways to block them, and they are looking for ways to get around us. It is a continuous development, constant growth, when you always need to think up new things at a very low level, at the level of protocols and browsers. Basically, this is a very interesting job for real engineers.

: Do you have research centers: what are they engaged into, what investments do they receive and in what volume?

V. Krasovsky: It’s hard to talk about the volume, but it`s quite significant. At least 10 people are engaged in R&D activities each month. We have R&D labs in our every location. What is it about? We work in the service sector in various business domains, including automotive, e-commerce, aviation, construction, finance, advertising, gaming, and more. When you work in a certain domain for a long time, you are able to notice unresolved problems, and see if there is a place for a new product, a new startup. This is an advantage for a business that works with a huge number of industries.
When our engineers come up with ideas, they can implement them in our R&D centers. For example, we have an AR/VR lab equipped with the latest AR/VR devices on the market. Our engineers can test them, write software, run it, and see how it works. If it seems that the application can succeed, we contact venture funds we are working with around the world. We already had cases, when some idea received funding and a separate startup came out.

: Where do you get investments?

V. Krasovsky: Our business does not require investments. From the beginning, we have been investing part of the money we earned in our business, so we do not have any loans or funds that sponsor us. When it comes to individual startups, there are early stage funds that invest a small amount of money into interesting ideas. There are funds that invest in ideas at a later stage, when startups already have products and their customers. We work with these venture funds primarily as a service company. Firstly, we make joint projects for their startups, and secondly, we can invite them to co-invest some projects, which we consider interesting.

: What markets do you work in?

V. Krasovsky: Traditionally, our main markets are Europe and the United States. We are actively developing Dubai. Also, Israel, the UK, Australia.

: Why are you interested in Israel?

V. Krasovsky: This is an amazing country. They rank second after the Silicon Valley in the number of startups in the world. They have a huge amount of startup sales for very big money. Despite the fact that the country is small, there is a phenomenal number of IT projects there. You need to know how to work with each geographic unit, but Israel is close to us, because a lot of people emigrated there; there are a lot of flights, they are relatively closely located, we have a similar mentality.

: How many people work in your company`s offices?

V. Krasovsky: Our largest office is in Kharkiv for now with over 500 people. There are about 200 specialists in Kyiv, 100 – in Odessa, and 100 – in Lviv. Small offices are operating in Sumy, Vinnytsia, Dnipro.

: How do you choose team members? What are the required qualities for job seekers and do you feel any shortage of skilled staff?

V. Krasovsky: We have 118 open vacancies: do you think we feel the shortage of qualified personnel? (smiles). We have a large team of recruiters, so we are quite active in hiring specialists – from 20 to 35 specialists per month. As to quality, I would note soft skills: it’s teamwork, adoption of the culture we have, mutual support, mutual assistance. Because hard skills – knowledge of certain methodologies, programming languages are definitely important, but it is possible to improve them, while changing soft skills is not possible. Many people say that it is hard to get a position in our company. We have very qualified specialists working on delivery manager positions, and responsibility for the implementation of the project for a Western client is quite high. Any fail immediately affects the image of the company. Therefore, we always approach specialists recruitment responsibly, because we must be sure that the work that we entrust them with will be completed successfully. At the same time, we are always trying to give an opportunity to those who want to join us, but has no required experience yet. We work with universities, students do an internship in our company. Many universities have classrooms we equipped, our experts hold courses and electives — and not only in engineering fields.

We have our own educational platform — Sigma Software University. It helps to train professionals outside and inside the company. For example, a specialist comes to us, but we see that there are some gaps in his/her knowledge that need to be filled up. So, we lead this specialist through an internal training program. Outside, our university works in two directions: partnership with universities and student training as well as courses and trainings for those who already have experience in IT — specialists of Middle and Senior levels.

: How long does the training last? Is it paid?

V. Krasovsky: If we hire a person and this is internal training, then it is free. Sigma Software University offers external paid courses, which are mainly courses for experts. Our leading experts hold them. By the way, this is the main difference between our educational platform and other corporate universities: they focus more on internal trainings and training of Junior-level specialists. In addition to these two directions, we offer courses for experienced professionals. Such courses and trainings enable Senior engineers to learn new programming languages, new technologies, share experiences with each other.

: For how long has your university been functioning?

V. Krasovsky: In general, it has been functioning for a very long time, more than 10 years – since we have introduced internal education programs and partnerships with universities. Sigma Software University as a separate brand and concept of “experts for experts” appeared three years ago.

: IT companies often employ people as Private Entrepreneurs. How do you work?

V. Krasovsky: It is important to understand that the main issue here is not the model, but the fact that such an approach allows us to establish contractual relations. The model provided by the Labor Code is outdated and hardly applicable in our business. We have modern contracts with our customers, there are certain obligations. For example, according to the Labor Code, a person, in case of dismissal, gives the employer a two weeks notice. If a Senior specialist leaves the project two weeks before its release, it would be a phenomenal failure, fines, loss of image. In contracts with a private entrepreneur you can specify legal conditions, under which the company provides a person with certain benefits and the employee complies with his or her obligations. This is a modern model of work, which functions perfectly in this context. We have specialists who work remotely, which would be difficult to arrange based on the Labor Code. We do not have fixed working hours. For example, a person can work on American projects with a time shift. This approach is flexible, has significant advantages, and is widely used in our business.

We have been in a dialogue with the government for a long time, proving that this “company-specialist” interaction model, which is completely legitimate by the way, is the best for both business and people.

: Describe the Ukrainian IT market. How developed is it now?

V. Krasovsky: IT is a whole ecosystem, which includes, among other things, service companies. This segment is now the most developed. It is easy to check: there is a list of the largest IT companies in Ukraine (most of them are service ones) on DOU.ua portal, up to 5-6 thousand specialists work in the top ones, and the whole market numbers up to 200 thousand specialists. Our company is in the top 20 largest companies and ranks in the top 5 as one of the best employers based on the evaluation of IT specialists.

: Are there any prerequisites for emerging of the national Silicon Valley?

V. Krasovsky: There are all prerequisites for this. We already have quite a large number of startups. Probably, you have already heard about Viewdle, a face detection system. This technology appeared in a Kyiv university, later it was transformed into a commercial product, and eventually sold to Google. It was the first commercial success of such a scale. Another example is Ring startup that Amazon bought for $1 billion.

In general, the environment is developing, but there is still a lack of proper motivators. Venture capital investment is only beginning to develop in Ukraine. There are funds that invest money. Also recently, under the leadership of the President of Ukraine, a working group was formed to create a grant fund of $10 million that will be used to finance early stage startups. By this fund, the state intends to give the triggers that the industry needs for development. We, in our turn, bring venture funds to our country, many are ready to develop and invest in Ukrainian startups, and they are already doing it. We also try to develop the whole ecosystem in general.

: Information technologies are actively developing all over the world. How does this threaten us and can we feel safe?

V. Krasovsky: We cannot feel safe at all. It is good at least to the effect that there is always a job for programmers, and the number of jobs is only increasing with time. Especially in the field of cybersecurity, which is developing most actively today. I have seen several surveys of investors, including those conducted at conferences. According to them, most are now investing in such areas as healthcare, alternative energy projects, and cybersecurity. Various new devices with complex functions appear in growing numbers. For example, you buy a camera, install it at home, and do not change the password. Many people do so: they buy a device, connect it, download the app to the phone, and that is all. Several years ago, there was a massive attack on such devices: many of them were affected, and intruders gor access to the information stored on them. Over time the number of such situations will only increase. Just imagine that someone got access to your digitalized car and can affect everything, even traffic safety. So, this area will develop further. By the way, spamming technology is now developing incredibly fast, involving such advanced technologies as artificial intelligence.

: What are the challenges IT companies face in the Ukrainian market?

V. Krasovsky: We face a lot of challenges. Every political shift is a challenge. We are already working with the government, we started to do it actively in 2010, and together with the leading companies on the market, we created an IT committee of the European Business Association (the Assiciation now unites more than 1,000 companies in Ukraine).

The challenges are diverse: the desire to improve tax legislation of the game in the market for business… And this is what we go through with each new administration. What is important for business? Quietness and confidence that conditions will not change at least in a ten-year term. Then you can invest money. Another important aspect – you can often hear that service companies are bad, that we “sell” brains abroad, while products and startups are good. There is one key thing that is forgotten. When a venture fund comes and sees that there is a cool startup in Ukraine, they invests in it. However, they don’t invest in a Ukrainian company, but create their own, for example, in the state of Delaware or somewhere in the UK or Israel, where investments are protected. To enable investment flow to Ukraine, we need to create attractive conditions for investors and reform the judicial system so that it was able to ensure protection of intellectual property and give confidence in the future.

: What do you expect from the new administration?

V. Krasovsky: I know what I would like to expect: a constructive rather than a revolutionary approach for business development in the country.

: How do you see the future of the IT industry?

V. Krasovsky: It depends on the previous question. Every year the Ukrainian IT industry grows by 20 %. I think it will continue to grow: we have all the prerequisites for this. The IT industry has now come to the second place in exports (in 2010 it took the fifth place). Of course, we can’t reach the level of agriculture, the grain is sold abroad in large volumes, but IT is already becoming a significant factor, which affects the country’s economy. What we still lack for increased and enhanced development is transparent and clear conditions for a term of about ten years, the judicial system, which protects intellectual property, and the creation of educational centers, the emerging of which we hasten. We need more and more professionals, but they have to be trained. This is a very important part of the development of the industry.

Please read: Doing business in Ukraine during the period of political instability: what to focus on

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