Ukraine has the second highest number of artificial intelligence (AI) and machine learning (ML) companies in Central and Eastern Europe (CEE), the Ministry of Digital Transformation reported, citing joint research with AI HOUSE, Ukraine’s largest AI community, and investment group Roosh.
AI encompasses a broad field of technologies that simulate and mimic human cognitive functions using machines, while ML is a branch of AI that focuses on the use of algorithms that allow machines to autonomously generate outputs by analyzing and learning from large sets of data.
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Oleksandr Bornyakov, deputy minister of digital transformation for IT development, said Ukraine has applied the technology in the defense, education and government sectors.
Since at least 2023, reports have surfaced of Ukrainian drones capable of autonomously identifying targets using AI and onboard optics.
Bornyakov added that the report provides an overview of the ecosystem and aims to establish the strengths and weaknesses of Ukraine’s domestic AI development.
AI/ML specialists in Ukraine
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According to the research, Ukraine had 5,200 professionals engaged in AI and ML development as of January 2024, of which 36 percent were aged 21-25. Among all specialists, 63 percent were data scientists and ML engineers.
“Notably, these fields offer the highest average salaries among all IT specializations in Ukraine,” the research said. It also noted Russia’s ongoing invasion has led to a talent bleed from Ukraine, with many specialists relocating outside of the country.
Among the specialists, 13 percent work with natural language processing (NLP), a field that focuses on understanding and generating human-like responses through ML. It’s the foundation of AI models such as ChatGPT.
AI companies in Ukraine
The research established that Ukraine had 243 AI companies by the end of 2023 – which grew from 97 over the last 10 years and placed it second in all of the CEE at present.
“Compared to other European countries, Ukraine has a higher concentration of AI startups in the fields of marketing, gaming, and business software,” read the ministry’s press release.
The research also noted an increase in Ukrainian defense tech startups with AI integrations since the 2022 invasion started.
Over the last 10 years, there has been a significant increase in product-based AI companies in Ukraine as opposed to service-based, the research said.
In terms of location, most of the AI developments are concentrated in Kyiv, with 177 company offices, followed by Lviv with 43 offices.
“Kharkiv, Odesa, and Dnipro also stand out among all cities with an average of 21 companies,” according to the press release.
Prospects and challenges for Ukraine’s AI system
To support the ecosystem, there is also a growing number of institutions offering courses on AI and ML – a total of 174 and 106 respectively.
Mykhailo Federov, Ukraine’s minister of digital transformation, also noted the importance of education in boosting Ukraine’s AI ecosystem in a Telegram announcement.
“A key step in training strong specialists is establishing cooperation between universities and AI companies so that students have access to practical knowledge and experience,” said Federov.
The ministry’s press release also highlighted the main challenges faced by the AI ecosystem in Ukraine.
“The key challenges of the AI sphere in Ukraine according to AI specialists: interaction with other industries, competition and ethical challenges for companies, transformation of talent and education, financial constraints and loss of talent due to the full-scale invasion of Russia in Ukraine,” it read.
The full report in English and Ukrainian is available on the site of AI HOUSE.
Issues with classifying AI companies
Federov, as well as the research, cited a number of companies that integrated AI into their products, though whether they should be considered AI companies is debatable.
“Ukraine is home to world-famous AI startups such as Grammarly, Preply and People.ai. Since 2019, two Ukrainian AI companies have become ‘unicorns’ [ed. – a term used to describe startups valued at more than $1 billion], and the three largest Ukrainian AI startups are valued at more than $14.5 billion,” read Federov’s Telegram update.
“The combined value of the three largest Ukrainian AI startups surpasses $14.5 billion, and two Ukrainian AI companies have become unicorns: Grammarly and People.ai,” read the research, which also incorrectly labeled Preply’s valuation at $440.8 billion as of 2023, as opposed to the million cited by other sources.
The research also listed digital bank Monobank and security system manufacturer AJAX Systems as some of the AI startups in Ukraine.
For a company to be considered an AI company, AI or ML should form the basis of its products. This would include companies such as Open AI, which develops ChatGPT, Palantir Technologies, which specializes in data analytics for enterprises and governmental agencies, or, to a lesser degree, Tesla, which has dedicated AI development for its autopilot feature.
By that logic, companies like People.ai, which offers business insights by consolidating a vast amount of data, can in fact be considered an AI company. While for others, such as Monobank or online education platform Preply, it’s more ambiguous.
Most companies mentioned in the research have some form of AI and ML capabilities, be it Preply’s lesson summaries feature or Monobank’s ML-based risk management feature, but it’s likely that not all every company listed develops the technology in-house and utilized third-party services, such as generative AI commonly seen in chatbots and text generation.
If a company utilizes third-party services and employs AI and ML specialists to help it maintain and tailor said services to its products, whether it can be considered an AI company only becomes more ambiguous – since by that logic, a shipping company that hired an AI specialist to maintain a third-party chatbot might also be considered an AI company.
Classification issues notwithstanding, the AI talent in Ukraine is highly skilled and plentiful.
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