'Ukraine unrest not affecting us,' says local outsourcer Luxoft, but it's transferring jobs west anyway

Summary:As Ukraine's troubles continue, the effects are being felt in the country and further afield.

Odessa, one of the cities where Luxoft operates, pictured before the recent troubles. Image: Shutterstock

While IT outsourcers based in Ukraine have reported that the situation there is not hampering their operations, the country's crisis is starting to have tangible effects on its IT sector.

Luxoft, a large Russia-founded IT service provider officially based in Switzerland, has announced it will move 500 jobs from Ukraine and Russia to the west.

According to Bloomberg, the Russian provider is planning to relocate the jobs because of concerns raised by Western customers.

It's expanding its operations in Poland, Bulgaria, and Romania in a bid to reduce exposure in Russia and Ukraine, even while CEO Dmitry Loschinin told Bloomberg that there has so far been "no disruptions in...  operations" and that customer concern is "all sentiment". Expansion in Vietnam is also being considered. Loschinin told the publication that Luxoft is planning to institute a policy whereby no more than 20 percent of its 7,500 workers are based in one geographical location.

That would have a profound impact on Luxoft's operations in Ukraine, and a lesser impact on those in Russia.

Around 29 percent of its employees are based in Russia, while almost half of Luxoft's staff of 7,500 are based in Ukraine, specifically in the cities of Kiev, Dnepropetrovsk, and Odessa, Bloomberg said. Odessa saw violent clashes early May in which more than 40 died, most of them in a fire in an occupied trade union building.

With the Russian annexation of Crimea and unrest in the east of the country where Russian political and cultural influences are much stronger than in the west, there have also been fears for the country's promising IT outsourcing sector. Western countries have put in place limited sanctions against the Russian government that may not have impressed may, but did have effect on Russia's economy as the ruble tumbled.

So far, outsourcing companies in Ukraine including Luxoft have been signalling that they have not been affected by the situation in the country, which began with protests in Kiev that escalated to violence and the fleeing of president Viktor Yanukovich.

In March, one project manager at one local software development company told ZDNet that customers have voiced concerns and asked for more information on contingency plans, that the main effect of the troubles have been team members taking days off to go out and protest and that there is always the risk of employees being drafted for the military. So far, that has not happened.

However, rumours in the industry suggest that while Ukrainian outsourcers' existing customers of may not immediately feel the effects troubles in the country, there have been issues attracting new clients as a result.

Read more on outsourcing

Topics: Outsourcing


Michiel van Blommestein is a Dutch journalist who has been living in Poland since 2010. He worked as a technology journalist in the Netherlands before moving to Poland to work as a regular correspondent for various news outlets. He still loves the bits and bytes though.

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