Business as usual for Ukraine's outsourcers – but its IT workers are on the move

Political instability in the region appears to be inspiring Ukraine's techies to seek pastures new.
Written by Michiel van Blommestein, Contributor

While IT operations in Ukraine don't appear to have been significantly impacted by the political instability in the country, it does appear that the ongoing crisis could be spurring IT workers there to move abroad.

Poland has always been a popular destination for Ukrainians. According to Poland's labour ministry, more than 200,000 coming to work to the country each year through a special six-month workers' visa programme, and at least as many are thought to come to Poland illegally.

However, the ongoing situation in Ukraine appears to have spurred a jump in the number of Ukrainian workers being hired to work in Poland. For example, according to foreign workers' association EWL, so far this year 1,500 of its Ukrainian members have found staff positions in Poland — almost the same number as in 2013 in total, when 2,000 were hired in the country.

The increase is already noticeable in Poland's IT industry. "At the moment, we've got around 30 to 35 workers from Ukraine," said Radoslaw Szmit, business development manager at the Wroclaw-based custom software developer SMT Software.

"Before the crisis really started to heat up five to six months ago, we had two or three. And we are definitely not the only IT company seeing this happening."

While Poland is a logical destination for Ukrainian IT workers because of similarities between the two countries' languages, wages however don't figure in the equation.

"These are highly-educated people who know how to position and value themselves in the Polish labour market," Szmit said. "They get paid as much as Polish specialists."

The climate in Ukraine is having a clear effect on recruitment. "It used to be very difficult to get people from Ukraine to come to work for SMT Software," Szmit said. "But the past seven to eight months, that process has become easier than ever before.

"People from there tell us they want to work in more or less stable conditions without fear of being drafted into the army. What is happening in Eastern Ukraine affects their lives and makes them more willing to emigrate. And you see it at universities as well, as more students from Ukraine are enrolling now, especially in Krakow and Rzeszow."

As has been noted before, the Ukrainian IT sector as a whole seems to have escaped being severely affected by events there and the civil war unfolding in the east of the country, and it appears Western clients are sticking with their suppliers in the country.

Szmit said that his company, which has around 700 employees, hasn't seen any significant increase in the number of Western clients leaving Ukrainian developers in favour for Polish equivalents. "In our experience, out of all requests, the ones based on the situation in Ukraine is about five percent," he said. "We are noticing it, but I wouldn't say it is significant for us."

And, among those companies that are deciding to relocate operations, the change is mostly inspired by practical business reasons that predate the crisis, according to Szmit, for example, because Ukraine isn't part of the Schengen area, so Ukrainian workers have to obtain a visa to travel to a client located in a Schengen country. It can also be because of "factors like ease of travel and the stability of the currency", he said.

When Luxoft, a large multinational software developer with Russian roots, last month announced its intention to move 500 of its staff from Ukraine and Russia to other countries including to Romania, Bulgaria and Poland, it was thought the move was a result of the political situation in the country.

However, Luxoft VP Alina Plaia told ZDNet that the transition is part of a scheme the company put in place some time ago.

"We have an internal mobility program that was started several years ago," Plaia said. "It allows our personnel to relocate between accounts so they can build up their resumes and skillset internally."

For the company, staff working aboard can share cross-disciplinary skills and knowledge with their colleagues overseas. Such worker mobility also helps Luxoft's workforce balance across regions, Plaia said, as the company hopes to spread out its operations more. "At the same time, we can accelerate hiring in other regions as well, without having to hurt existing regions," she said.

The idea is not that jobs are lost in one country and created elsewhere, but rather that some workers can temporarily move to a new territory should they wish. The 18-month project will cover a maximum of seven percent of Luxoft's total headcount, according to Plaia. "We're still hiring in Ukraine, because we think the situation eventually will blow over," she said.

The exec confirmed that some clients have voiced concerns over the situation in Ukraine, but said queries from customers tended to be seeking information on Luxoft's plans for the region, rather than worries about the feasibility of continuing to do business there.

SMT's Szmit sees the same trend emerging, adding that US companies seem more concerned about Ukraine than their European counterparts.

"During recent trade fairs, I had a number of discussions with potential customers from both Europe and the USA," he said. "European countries are closer to Ukraine, and seem to understand the business case and seem to understand that it is better to wait before taking a decision to pull out of that country. The American businesses seem more concerned."

The few companies that he has seen switch from using a Ukrainian supplier, Szmit said, were US-based.

Would a troubled Ukraine mean better business in Poland due to a reduction in competition from its neighbour? Not so, according to Szmit, who said that the volume of new customers is so small that stabilisation in Ukraine would be in SMT's interest.

"If Ukraine joined the EU, it would mean that our market would become bigger," he said. "It would be even easier to get people from there to work for us. And don't forget IT is pretty big in Ukraine as well. We are considering establishing an office, in Ukraine or another country in that region. That would be much easier once the political, economic and legal situations stabilise."

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