THE ROLE OF EXTERNAL CONTECT IN THE M&A TRAJETORU OF UKRAINE’S IT SERVICES INDUSTRY

Abstract

This article analyzes how mergers and acquisitions (M&A) activity in the Ukrainian IT services market has been influenced by the broader external context during the period 2016–2025. The research integrates evidence from publicly reported transactions, press releases, and industry sources with macroeconomic, geopolitical, and sectoral data to provide a comprehensive view of the forces shaping deal activity. Ukraine’s IT services sector, while representing a modest share of the global market, has developed into a competitive and export-oriented industry characterized by a skilled workforce, cost advantages, and deep integration into global value chains. However, the trajectory of M&A in the sector has been strongly affected by shifts in the global IT services market, the impact of the COVID-19 pandemic, global macroeconomic cycles, and the unprecedented disruption caused by Russia’s full-scale invasion in 2022.

The study distinguishes three analytically significant phases: the pre-pandemic period (2016–2019), marked by steady expansion and inbound acquisitions from foreign strategics seeking delivery capacity in Ukraine; the pandemic-driven surge (2020–2021), which reinforced these trends under conditions of accelerated global digital transformation and abundant liquidity; and the post-2022 phase, characterized by market recalibration, weaker global demand, and heightened geopolitical risk, leading Ukrainian firms to pursue outbound acquisitions to diversify delivery geographies, access strategic markets, and strengthen resilience. Across all phases, the primary strategic rationale for deals remained the securing or expansion of delivery capabilities, although the means of achieving this shifted from inbound capacity-building to outbound diversification in response to the changing risk-return profile.

By situating M&A transactions within the interplay of global market cycles, macro-financial conditions, and domestic geopolitical realities, the article underscores the decisive role of context in shaping both the feasibility and the strategic direction of deals. The findings contribute to the academic literature by demonstrating that predictive models of M&A, particularly in emerging markets and volatile environments, can be significantly improved through the systematic incorporation of contextual variables alongside firm-level and industry-specific factors. These insights are of practical value to investors, corporate strategists, and policymakers seeking to anticipate and navigate M&A opportunities in the IT services domain under conditions of uncertainty.