Co-founder and CEO of Vyriy Industries Oleksiy Babenko explained how the war economy, long contract cycles, and the volunteer origins of companies put pressure on salaries in deftech and why developers in the Ukrainian defense industry often earn less than their colleagues in the classic IT segment.
Co-founder and CEO of Vyriy Industries Oleksiy Babenko explained how the war economy, long contract cycles, and the volunteer origins of companies put pressure on salaries in deftech and why developers in the Ukrainian defense industry often earn less than their colleagues in the classic IT segment.
He spoke about this in an interview with DOU, where he shared his experience building one of the largest deftech companies in Ukraine and revealed the inner workings of defense R&D.
According to Babenko, the key reason for lower salaries is the turnover and structure of money in deftech. Companies work with large contracts and a long turnover cycle: to close production several months in advance, hundreds of millions of hryvnias of working capital are needed. Under the conditions of fixed margins and a war economy, there is significantly less real «free cash» left than in product IT companies, which can scale internationally faster.
Another factor is the origin of most Ukrainian defense players. A significant part of today’s companies grew out of volunteer teams working on unstable budgets, often «on wheels» and without long-term financial planning. This way of thinking persists to this day: businesses used to survive, not compete with top IT employers for seniors with salaries of several thousand dollars.
Vyriy Industries is trying to change this model through transparent KPIs. Some bonuses are limited, some are not, so developers' income is tied to the result, not just the rate. According to Babenko, the company’s «fork» for developers now ranges from about UAH 35,000 to $8,000, and competition with the classic IT market is already beginning in the upper segment.
Babenko emphasizes that current salaries are a result of a transitional period. Deftech remains an industry with very high risks, dependence on government procurement and the need to develop production, R&D and exports in parallel. But with the stabilization of the rules of the game and the emergence of longer contracts, in his opinion, the market will gradually approach the level of remuneration familiar to IT, while preserving the main difference, namely the direct impact of engineers' work on the outcome of the war.
Previously, dev.ua wrote about how CEO and co-founder of the Ukrainian product engineering company Dwarf Engineering, Vladislav Piotrovsky, spoke about the future expansion of the development team and the biggest difficulties the company faces when hiring specialists.
