Author — Svitlana Tuchynska
The only Japanese IT consultant in Ukraine. That is how Hiroshi Shibata can be described in short. CEO of Ago-ra IT consulting he is also in charge of Japan for the Ukrainian IT Association and was a matchmaker in the signing of the memorandum between Ukrainian and Japanese IT associations.
He spoke to DOU via Zoom from his apartment in Kyiv, discussing cooperation between Japan in Ukraine and his thoughts on advantages and disadvantages of Ukrainian IT.
A walk in Kyiv in 2019
— When we learned that the one person from Japan applied for the recently introduced IT residence permit in Ukraine we immediately thought about you.
No, that was not me. My wife is Ukrainian so I am on a spousal visa here. But I write for several Japanese media about Ukraine and I also wrote about this program. I was the only person covering this topic in Japan. As a result approximately 30-40 Japanese people applied. As far as I know, only a few of them got to the final stages of the process because of all the difficulties. This is the new initiative, and I think it is a very good one, but the process is not yet well organized. Even the immigration lawyers do not have the complete list of documents required. Some documents are very complicated to issue in Japan. For example it is very hard to obtain a criminal record paper which is required here. So I would say the initiative is very good, and the government does the right thing in trying to attract IT people to Ukraine. But the process must be much better organized and transparent.
— What main challenges do you face as an IT foreigner living in Ukraine?
Ukraine is the 8th country I live in outside of Japan. But it wasn't a smooth transition.
Most challenges have to do with having the deal with the government, all processes are very bureaucratic here. There are a lot of things that can be simplified if Ukraine wants to attract more entrepreneurs, have them invest in Ukraine. I registered the company here, it was not easy. Also, renewing my spouse visa is complicated. I have to visit immigration offices so many times! Last time they asked me about a document that they did not tell me to submit, and it took me several weeks to get that document. So now I have to go there again. It's a lot of pain.
Also, having to deal with the bank. Sometimes you get paid from the overseas entity, and you have to submit the contract, to prove that the money comes from this client. But the client's name may be different from the name on the bank account which is often the case jn Japan. It's even more complicated if the middle man is involved.
A trip to Paris in 2020
— How and when did you begin working with Ukrainian IT? Why Ukraine?
I arrived in December 2018 and the first thing I noticed was how safe the country is. I lived in California and I can truly say Ukraine is much safer to live in. Most people in Japan, when they hear about Ukraine they imagine that people are shooting each other on the streets. I guess this is because the only times we are getting any news from Ukraine they are about the war, Chernobyl, or some other disaster or scandal. I might be one of the few people writing something more positive about Ukraine in the Japanese media. And I always present Ukraine as the Eastern European technology hub, because this is what I truly believe. It is a very big country with a very solid Soviet tradition of engineering. That is how I present Ukraine in Japan.
I lived in San Francisco, but moved to Berlin in 2016. The cost of life in the Silicon valley has gone way up and the comfort and security went way down. Many of the friends have since relocated to Florida, Texas, or overseas. In Berlin I started working as an IT development consultant and offshore development consulting. I hoped that Berlin was the European Silicon valley. But after living there for a year I realized that German labor market is very rigid. It's very tough to hire people there because once the company hires people, it is almost impossible to lay them off. Another issue is long mandatory vacation and strict working hours management. The person must take at least one month of vacation per year. That is why even the German IT companies prefer to hire citizens of other countries, like Russians who work remotely. So I moved to Warsaw where I lived for nearly 2 years. Poland is becoming very big in game development. But they have the same problem because they have to comply with the EU labour laws, it's not very easy to overcome the challenges. In Ukraine they are still outside the EU so there is the competitive advantage. And the tax is 5 percent, which is the lowest in Europe.
So this prevents brain drain. Many talented engineers, easy to hire - this is why I am here.
— You opened your company Ago-ra IT consulting. Is the main office based in Ukraine? According to the web site, it worked with Google, Apple, Toshiba and other big names. What were the projects?
The main office was based in Ukraine, but we shut it down due to the corona virus situation. Now we went fully remote, but we operate out of Ukraine. We are currently doing offshore development consulting for Japanese companies and marketing for local IT companies in Kiev.
Mainly our projects have to do with Japanese companies hiring Ukrainian engineers or project outsourcing. We worked with one of the biggest Japanese tech companies in voice recognition software that they were developing at the time. For the other big names that you mention we do website localisation, face recognition, name recognition, and AI projects like these.
Ago-ra IT-consulting team in Kyiv in 2020
— What mentality difference have you noticed, if any, between Ukrainian IT and that in Japan and Western Europe?
I worked with engineers of so many nationalities. And I can truly say Ukrainian developers are very dedicated, they are committed to delivering. There is a task, and they find the solution. They are very autonomous. They can look into academic papers, they ask around - that kind of attitude is very hard to find, for example, among South East Asia engineers. A lot of my Japanese friends who work with Vietnam have a lot of problems, because they have to micromanage. While in Ukraine they can trust engineers. Another notable thing - I do not remember Ukrainian engineers that I work with showing any disrespect to people of other nationalities. So it's not only the strong skill sets, and the education, but also the attitude.
I can say that in their dedication Ukrainian engineers are more like American and Japanese. While in Western Europe they always value their private life more than deadlines.
I feel that some developers still have room to improve communication skills. Most of them speak good English, but sometimes they are facing the issue that we can help resolve - but they keep it to themselves. Even if they want to say something, they are often afraid to speak up. When it comes to Agile and the Scrum approach it's very important to be honest. But I feel like often they do not tell us the whole story, they omit the things that they should say. And it's not about the language but about the attitude.
— What difference have you noticed in the hiring process in Ukraine and Japan, Western Europe?
It is becoming extremely difficult to hire people in Ukraine. Especially when it comes to Python and artificial intelligence. The salary level has been skyrocketing and it's becoming very difficult for foreign companies. What can be done? We can focus on education, not only for the new people in the industry but also people can switch from other engineering fields. For example IT engineers can be taught skills that are more in demand like Python. This can be achieved relatively quickly. There are some private institutions that do this but there are still a lot of things that the private sector can do. We also try to look outside the IT clusters in Ukraine and work more with people from smaller Ukrainian towns.
IT Dnipro conference in 2019 with Emmanuel Lowe - French business consultant
— How competitive is Ukrainian IT market in the world, in your opinion? How is Ukraine viewed by the foreign partners and clients?
Still, despite the overheated market I think that Ukrainian IT is very competitive. EU countries certainly cannot compete, nor can the Asians. If we talk about salaries of juniors or mid level engineers, they are still much lower than in the West.
In Japan there are a few Ukrainian programmers, but they are very good. One guy from the company that I was working for was from Ukraine and he was really a genius. Recently I helped put together a government report about the lack of IT talent in Japan. Japan lacks 200,000 engineers! So the government tries to attract people and make it easier for people to come to Japan.
Most Ukrainian engineers know very little about Japan. And they imagine it would be very hard to work there, but that is not necessarily the case. We used to hire interpreters for projects that involve Japanese and Ukrainian staff. But we soon realized it was a waste of time and money. Even if their English is not advanced they can better communicate without a middle man who might not know all the technical details they are discussing. Engineers everywhere speak their own language and they can easily understand each other.
— What are disadvantages of working in IT in Ukraine?
I always speak about Ukraine's many advantages, praising the talent and low cost and the abundance of talent in Ukraine. But I also must warn Japanese companies about the disadvantages - Ukraine is only 64th in Doing business report, which is much lower even, say, Poland. Corruption still plays a role, so the business environment is different from what Japanese business is used to at home.
Ukraine has to study Estonia's experience closely, learn how they went to paperless e-government and created an IT hub. I was meeting with the head of the Ministry of Digital Transformation, as a member of the Ukrainian IT association, and I think the country is slowly moving in the direction, but a lot needs to be done.
— The bill on the Diia City program passed the second reading in the Parliament. What do you think of this initiative and do you plan for your company to join?
I have been using Diia application as a private citizen for a while. For example, for making an appointment for vaccination. I know the management of Diia city and now I am at a stage of learning more about this program.
— In 2019 you were seen as the matchmaker in the signing of the memorandum between Ukrainian and Japanese IT associations. How is Japan interested in the Ukrainian IT sector, and how do you see the two countries benefit from the cooperation in IT?
Japan has investments and projects - something that Ukraine lacks. And Ukraine has talent - something that Japan does not have enough of. So I think we can cooperate for the common benefit. When Japanese companies collaborate with Ukrainian IT companies, there is room for success not only in offshore development and outsourcing, but also in branding Ukrainian products in Japan and selling them to the world. I wish that more Ukrainian companies developed their own IT products in the future, like Grammarly and Amazon Ring. Both are registered in the United States, but most of the work is being done in Ukraine, and the founders are Ukrainians. They think the company might look more reliable if it is known as American. And I understand that. But sometimes I wish Ukrainian engineers were a little more patriotic, and created a Made in Ukraine brand. That would help Ukraine and the industry a lot.
Recently the news was that Hitachi acquired GlobalLogic, Ukraine's largest IT outsourcing company, for $9.6 billion. Also, in 2019 I helped put together a meeting between the head of the Rakuten company with president Zelensky. They might open a development center in Ukraine. Many Japanese companies are testing ground here in Ukraine so I think the Ukrainian IT industry will accelerate its movement to break into the Japanese market.
JASIPA (Japan System Integration Partners Association) and IT Ukraine Association signing MOU ceremony with the chairman of ITUA, vice chairman of JASIPA, and Japanese diplomats in 2019
— If you were investing in Ukraine, which industries or companies would you choose and why?
I would invest either in IT startups or real estate. For example, in GitLab - one of the three unicorn companies from Ukraine, as well as Amazon Ring and Grammarly. I met the founders and founding members of Skylum, Competera, Reface and they are all globally accepted Ukrainian product companies. Also I’ll add MacPaw, Petcube, People.ai, Preply, Ajax… There are so many. All are big and also global. And many of them brand themselves as Ukrainian companies.