Digital Planet > On the Record > Western Companies Can Help Ukraine by Sending Work

Western Companies Can Help Ukraine by Sending Work

Ukraine’s tech outsourcing sector, one of Europe’s largest, has adapted nimbly to the war.

By Bhaskar Chakravorti

May 12, 2022

The war in Ukraine, Western sanctions on Russia, and the resulting disruption to the supply of key resources, such as energy and grain, are set to cause the biggest price shock for the global economy since the 1970s. But nowhere is the war’s economic impact as deeply felt as in Ukraine itself. The World Bank expects the country’s economy to shrink 45 percent by year’s end. Almost 5 million Ukrainians have lost their jobs since the start of the war, according to the International Labour Organization. This comes on top of the devastation caused by the war itself. As many on the outside are wondering how to help beyond sending weapons, sending aid, and sheltering refugees, one critical option is still being overlooked: sending work to Ukrainian companies and contractors in order to take a bite out of the economic collapse. In particular, work from abroad could help Ukraine’s fastest-growing sector before the war—the technology industry—get back on its feet. With the land war now largely restricted to Ukraine’s east, the country’s tech workers are ready to return to work.

Sending work to a war-torn nation with flattened cities and millions of displaced people may seem counterintuitive, but there are good reasons to consider the idea. Restarting the economy is an essential priority for the Ukrainian government. On March 14, Ukrainian President Volodymyr Zelensky said, “The economy must be preserved and restored. … Pharmacies, trade, any business that can work. For the country to live. For the restoration of Ukraine to already begin.” Zelensky promised to remove as many obstacles as possible to getting businesses back up.

While Ukraine’s biggest exports, agricultural products and minerals, are stalled by the Russian occupation or blockade of Black Sea ports, Ukraine’s third-largest export—information technology products and services—has regrouped, thanks to a continued supply of electricity, uninterrupted internet services, and tech workers at safe locations. This industry, which grew 36 percent and employed 285,000 workers in 2021, can be put to work to jump-start an economy now surviving on aid. But to do so, it will need more work from outside Ukraine.

The good news is that before the war, Ukraine had already evolved from being a low-cost offshoring destination to a hub for higher-end value-added work. Its English-speaking programmers, located in a proximate time zone, are familiar with European companies and institutions, which gave the industry a distinct advantage for clients in the European Union and the United States. The industry boasted impressive rankings: first in Eastern Europe in outsourcing developers, first in all of Europe in the number of graduates from technical high schools, fifth in the world in the general quality of software developers. According to Ukrainian figures, 1 in 5 Fortune 500 companies has employed Ukrainian IT services, including Microsoft, Oracle, and Google. Much of that work was disrupted when the war first broke out and as international firms moved work and employees elsewhere.

Long before the war, the Zelensky government had prioritized—with timely foresight—digital infrastructure and digital public services. A newly established Ministry of Digital Transformation was tasked with putting all government services online by 2024. As well as making the delivery of public services more efficient, these investments also made it easier for Ukrainians to work remotely, prove their identity, transfer funds, pay their taxes, and so on.

Now, the Ukrainians have fended off the Russians sufficiently enough for the industry to be poised for a return. Even in March, as Russian forces were still threatening Kyiv, a survey by the European Business Association showed 52 percent of Ukrainian companies still working, with another 27 percent wanting to resume work. The percentages for tech companies were likely higher as they were better prepared: Just before the war, a survey by the IT Ukraine Association found that 92 percent of Ukrainian tech companies had or were finalizing an emergency plan in case of a possible invasion. On March 23, the association reported that more than 70 percent of IT professionals had relocated to safe regions of Ukraine and that 50 to 80 percent of specialists were involved in the implementation of client projects. “We don’t need a favor. We just need to continue our business,” said Andrew Maksakov, president of Kyiv-based software developer VIMAS Technologies, in a video interview.

Several factors contribute to the Ukrainian tech sector’s resilience. First, because of the strong digital infrastructure in much of the country—and backup plans in case something goes wrong—the internet was mostly operable, especially in cities. Despite occasional Russian missile strikes in the relatively safer parts of the country, electricity and internet services are functioning without major interruptions. Second, many companies had made contingency plans dating back to Russia’s 2014 invasion and annexation of Crimea—for example, sourcing internet service from multiple providers, installing backup generators, supplying workers with laptops with longer battery life, moving IT infrastructure into the cloud, or using virtual developer infrastructure hosted in Poland or Latvia. Third, the government helped by not drafting tech workers into the military. In addition, there are tax breaks for small and medium businesses.

After Russia’s attack in February, tech companies pursued various approaches to ensure worker safety and lower the risk of a total outage. Some moved their staff to western cities such as Lviv. Others moved workers out of the country entirely: Lviv-based Intellias, a software engineering and consulting firm, moved 350 employees to Krakow, Poland; Upswot, which specializes in digital banking software, relocated employees to Georgia. At Softjourn, another software development company, workers have stayed put in Ivano-Frankivsk, in the country’s west, where according to Managing Director Sergiy Fitsak, “We had several missile strikes, mostly on military infrastructure, but mostly it is usual life.” VIMAS’s chief technology officer, Igor Guryanov, lives in and works out of his office northwest of Kyiv after his apartment became too unsafe. It is a stressful situation, but as a former Ukrainian Air Force captain, he has been trained not to panic. Many other VIMAS employees have military backgrounds as well. Since the start of the war, many tech companies have quickly reorganized as distributed organizations, with employees spread out in different locations so that work can continue uninterrupted.

There are clear signs of a resurgence. Softjourn, for example, has seen its business grow in the past few weeks. VIMAS has signed three new software development contracts, including with Amazon and the British Council. VIMAS has even hired new employees to deliver the new work. The industry’s resilience shows in the numbers as well, which are remarkable, to say the least: The volume of IT exports has increased by 28 percent in 2022 so far over the same time in the previous year, according to the IT Ukraine Association, and for the first quarter of 2022, the industry brought in a record $2 billion in export earnings. Seventy-seven percent of Ukrainian tech companies have brought in new clients during the war.

Meanwhile, Ukraine’s tech workers have been key to the war effort. According to Fitsak, they have created apps for finding the nearest bomb shelters, engineered missile warning sirens that work through the internet, mobilized local resistance, supported refugees from war zones, and helped volunteers organize. As members of Ukraine’s self-described IT army, many tech workers have taken on tasks in the cyberwar against Russia. Fitsak says that these workers have been given special IT security training to ensure their participation in the cyberwar does not affect client work—for example, by creating firewalls and avoiding use of their work computing equipment in case of Russian counterattacks.

This may be the first war where sending work to a war zone might make as much sense as sending military assistance. If you are running a government agency, leading a business, or otherwise looking for world-class tech services at a time of a global technology worker shortage, there is a solution staring you in the face. Several sites have emerged to help companies find such Ukrainian tech talent, including UA TalentsEase WorkHire for UkraineEmployUkraine, and Imagine Ukraine.

“Right now in Ukraine, we have two fronts,” says Softjourn’s Fitsak. “The first front is the army. The second front is economy. You can help us on the second front. You can support us through our service by sending work to us.” With Ukraine staring into the economic abyss, every little bit of work counts.

 

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