How Ukraine's IT outsourcers are keeping it business as usual in the face of the country's crisis

How Ukraine's IT outsourcers are keeping it business as usual in the face of the country's crisis

Summary: Before the current crisis, Ukraine was fast establishing a reputation as a rising IT outsourcing hotspot. How is the industry coping now?

TOPICS: Outsourcing
The view from the town hall in the city of Lviv. Image: Shutterstock

While the crisis in Ukraine continues to disrupt life for the country's citizens, it appears its fledgling outsourcing industry is yet to be tangibly affected. However, concerns exist over a possible military escalation and its impact on the sector, while IT workers, like everyone in the country, have been affected by the tensions on a personal level.

Worth well over €1bn, the outsourcing sector in Ukraine has grown rapidly in the last decade, with the western Ukrainian city of Lviv featuring in consultancy Tholons' top 100 outsourcing destinations since last year.

However, the financial crisis preceding the protests and the violence that followed in the capital Kiev have disrupted exports to the country and many companies in Poland, for example, have already temporarily ceased their operations (worth around €4.5bn) in Ukraine due to the inability of their suppliers and clients there to fulfil their financial obligations.

The Ukrainian IT industry remains, however, in a comparatively good position, as it's delivering (rather than buying) products and services to companies outside the region.

And customers' concerns over instability in the country have so far failed to impact outsourcing businesses, says Oksana Dyminska, a project manager at SoftServe, a large software development company serving American and European customers.

According to Dyminska, clients didn't flinch much when the protests at Kiev's Majdan Square flared up, leading to the departure of pro-Russian president Viktor Janukovich. However, attitudes changed when the current crisis in Crimea took off, as the conflict began to deepen to international levels and Vladimir Putin's Russia became involved.

"Clients voice their concerns in one of two ways," she says. "They ask our programme managers or portfolio managers about our contingency plans and about the general situation at our end. But they also contact us at an individual level, saying they hope we are doing well and voicing support."

She added that everybody knows at least someone that got wounded or killed during the violence in Kiev last month, leaving everyone affected. "I myself lost a friend. He was 29, working at the university as a history teacher."

Forced flexibility

For the most part, it's still business as usual, Dyminska says. "At our locations everything is stable, and there have not been any major issues there. We have been able to deliver normally."

Dyminska herself is based in the city of Lviv, the largest offices the company has in Ukraine. "The company has not involved itself at all in the politics here, and has not issued any declarations of support for one side or the other in the conflict." Backup plans are ready, she says, mostly covering emergency power and networks, and possible measures to ensure engineers can carry on working.

However, the situation is different for individual employees of the company. The Lviv area is the heartland of the protest movements and many citizens had grown fed up with the situation in the country. "Many went to Kiev to protest, taking up vacation days," she says. "They would rent an apartment there, work from there for a couple of days a week and spend the rest protesting. Then they would come home again to their families. I myself would have done it that way, were it not for my small daughter."

The Crimea

The worst case scenario is that the crisis in Crimea results in war between Ukraine and Russia.

For Ukranian companies that would mean that employees being called up to serve in the military, either as officers or reservists. "Then it would be a completely different thing we are talking about," Dyminska says. "We would need to defend our country. This would of course be a worst case scenario, but on the level of IT companies this would be a huge problem as well."

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Topic: Outsourcing

Michiel van Blommestein

About Michiel van Blommestein

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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  • Ukraine crisis

    AFAIK armed confrontation over Crimea has been ruled out, but what if Russia tries to seize other parts of the country not previously formally Russian territory?
    • That's one of the problems

      And that would also have commercial spillover to the West, as there are outsourcers located there too (and some western companies have offices there).

      And I'm not convinced that war over the Crimea is avoidable. We should try to resolve the issue peacefully, but that's not always possible.
      John L. Ries
      • The west does not have the will to confront

        Russia on this. You can bet China is watching very closely what happens here as they consider their options regarding taiwan.
  • Where will Putin stop? Not with just the Crimea - why should he?

    I'm sure war over Crimea is avoidable. The Russians have now an (improbably) 95% success in the ballot and a similar control over everything except a few hold-out bases. If they stop there, then there will be no war - not even with Ukraine - since no one is going to dislodge the Russians from a well-entrenched position.

    The flashpoint - if it comes - will be Eastern Ukraine, especially Donesk and Kharkhov. Here I fear the worst, since apparently intelligent people, in touch with the outside world, have fallen prey to the Russian propaganda about the bogey-men Neo-Nazis who have taken over Kiev.

    Here is someone from the outsourcing industry in Karkov, posting on Facebook in response to a suggestion from a UK contact about British sanctions against the Russians

    "What could be this help? To support the existing regime? Or British tanks here? I would prefer the second case. Now people with guns have real power in Kharkov (last night news from Kharkov). They are right-wing forces. This is a real danger. I could not imagine such a nightmare situation six months ago.

    Kiev regime is leading the country into the abyss. I see the possible real help from Europe - it is stopping supporting right-wing forces in Ukraine."

    Now I don't believe that Neo-Nazis are stalking the streets of Kharkov, waiting to drag them into the power of some Dark Lord in Kiev. Julia Timoshenko is no saint, and I doubt that those around her are much better, but they are not, I think, nearly that bad.

    So the "Evil powers" in place in Kiev and waiting to pounce on innocent Russians in Eastern Ukraine are either the sort of rumour that spreads naturally in difficult times, or a piece of black propaganda being spread deliberately and maybe even backed up with some suitable dramatic effects. I incline to the latter view and point the finger at Putin as the puppet master - he has the character, the motivation, the resources and the background for this sort of "black op". It's classic "de-stabilisation" work - straight out of the CIA playbook!

    So now I hope that the Russians will be content to have got the Crimea - whose loss has been a sore point ever since the collapse of the USSR. Judging, however, by what is coming out of Eastern Ukraine, they have decided that they can get away with grabbing that also. They may reckon that the Ukrainian army is no match for the Russian one - especially when they do have some popular support in the East. And so if they decide that they can cope with any fallout (metaphorical, I hope), then I think it is hard to see them being dislodged.

    So, the last question is - will they try for the rest of Ukraine as well? And if I were sitting in Putin's company right now, then the answer I would come up with it - "Why not?" If the Americans did not want to defend the Syrians being bombed out of their homes, then why try to "defend" a bunch of East Ukrainians who are being frightened into believing the Russians are their only hope against the Big Bad Wolfgang? And how many sane Americans want a shooting war with Russia - especially after we'd all decided that the Cold War was over?

    The British have enough Russian resources in London to make life difficult for Putin's tame oligarchs, but the British government knows that the City of London would not be at all pleased to have some of their best customers upset. And there is no appetite in Berlin for another round against the Red Army. And that's before you take into account the small matter of half of Europe being dependent on supplies of Russian oil and gas.

    So, I do not see who is going to stop Putin's army walking all over Ukraine and declaring that it is saving fellow Slavs from the evil Nazis backed up by the ever-sinister CIA and the decadent (homosexual / feminist / Catholic) Europeans.

    After which I can see that Moldova and Belarus will see that they *really* want to be part of the greater Russian Federation and have the referendum straight away without waiting for the "Nazi invasion" and the "Russian rescue" to encourage them.

    Let's hope that the (genuinely oppressed) Russian minorities in the Baltic states don't get any ideas. Lithuania, Latvia and Estonia are part of the EU and NATO and Russian troops on their borders would be very bad news for everyone (except the Chinese). The Russians walking all over Ukraine will be the cause of much clucking in Europe and not much else.

    Unless, of course, there are problems with Russians being outsourcers for IT.