IT firms ‘monitoring’ Russia-Ukraine conflict
Analysts say it is too early to access impact of war on IT firms
BENGALURU: It has been over 10 days now since Russia launched its attack on Ukraine, and uncertainty still reigns over the impact of the war on the global economy, especially among other European countries.
All major Information Technology (IT) companies have a strong presence in Europe. Infosys, which witnessed over 27% growth in Europe in the third quarter of this fiscal, has a presence in Russia, Finland, Latvia and Lithuania. In Ukraine, Wipro has a subsidiary- Wipro IT Services Ukraine.
Many IT companies said they are monitoring the situation. In a response to TNIE, Venu Lambu, Executive Director and President, Global Markets, Mindtree, said that it is too early to talk about the impact of the situation or how it would evolve.
“We do not have a presence in the involved countries and have not seen any impact yet on our operations elsewhere in the region. Our immediate priority is to provide business continuity support to our customers affected by the developments. We will continue to closely monitor the situation,” he said.
IT major Tata Consultancy Services (TCS) said that it doesn’t have employees or offices in the region. “We are monitoring the current situation with great concern. We do understand that some of our associates have family and friends in Ukraine and we are extending all support to them during this crisis,” TCS said.
According to Ukraine’s official website, the country employs around two lakh IT professionals, and it has over 4,000 tech companies. It also houses IT companies like Sigma Software, and start-up unicorns such as GitLab and Grammarly have Ukrainian origins.
HCL Technologies (HCL), which has a presence in Poland, Lithuania and Bulgaria, among others, said the safety of its employees is of utmost importance. A spokesperson from HCL said, “While we do not have a presence in Ukraine, we are committed to providing care and assistance to all of our employees and their families and continue to provide ongoing outreach to our people in neighbouring countries. We remain focused on maintaining the highest service delivery levels for our clients, and there has been no impact on client operations.” Both Infosys and Wipro did not comment.
Ukraine is top location for offshore
When asked about the impact of the war on IT services, Vijay Sivaram, CEO, Quess IT Staffing, told TNIE that Ukraine is one of the top locations for offshore and near-shore third-party services, particularly for engineering and IT skills.
“Russia’s invasion of Ukraine has a significant disruptive impact on American and European companies with service operations in the region,” he said. Industry pundits have stated that given the people who were previously employed in GBS (Global Business Service) centres and with third-party service providers in Ukraine, Belarus and Russia, services from nearly 1,00,000 highly qualified IT and technology workers have been disrupted, he said.
Moreover, there are significant concerns about business continuity and data security in the region. As the ongoing tensions in Eastern Europe impact IT service providers in these areas, their investments and benefits could in turn shift to global IT hubs such as India.
Many organisations have been lauded for relocating their staff to safer parts of the country or even to other countries such as Poland, Turkey, and Israel before the war started, to continue uninterrupted service delivery and protect employees, he added.
Many companies such as Apple and Ikea are now exiting Russia. Since economic sanctions have been imposed on Russia, the country’s Prime Minister Mikhail Mishustin has said that all IT firms in Russia will be exempt from paying income tax.
According to Statista, 3.75 million legal entities operated in Russia in 2019. The International Trade Administration says Russia’s IT market is one of the world’s largest and according to International Data Corporation (IDC), the value of the Russian IT market grew 7% to a value of $24.8 billion in 2019. In 2019, over 1.3 million people were employed in the IT sector in Russia.
In an email response to TNIE, Peter Bendor- Samuel, CEO of Everest Group, a research firm said, the resource-pool numbers alone paint a picture of disruption of services because of the war in Ukraine and the economic impact of the sanctions imposed on Russia.
He said there are over 30,000 people working for third-party service providers with clients in banking, retail, automobile and healthcare sectors, and 20,000 estimated people employed in GBS centres in Ukraine. “Services from 70,000 to 100,000 highly qualified workers (especially with digital engineering and IT skills) will be disrupted,” he said.
Tech in Europe amid war
HCL Technologies has a presence in Poland, Lithuania & Bulgaria.
Wipro has a subsidiary in Ukraine.
Infosys has a presence in Russia, Finland, Latvia & Lithuania.
Ukraine is a key global delivery location for IT and engineering R&D services.
10,000 people work in GBS centres in Belarus and Russia.
1 lakh IT and technology workers are disrupted due to the war.
Ukraine has over 4,000 tech companies.