Ukraine’s IT outsourcing industry threatened by Russian invasion

Russia’s invasion of Ukraine is having a wide-reaching impact on the global IT industry. Driven by its strong technology education base, Ukraine is well-known in Europe as a technology powerhouse and a key provider of IT outsourcing services; in fact, prior to the conflict, its IT sector accounted for around four per cent of the nation’s total GDP.

As of March 2013, it had the fourth-highest number of certified IT professionals globally, behind the U.S., India, and Russia. The IT Ukraine Association reported that over 20,000 IT students graduate every year, and according to the N-IX IT Market Report 2019, Ukraine is a leading exporter of IT services in Europe, and a top choice for software development. Ukrainian outsourcing companies also boast excellent compliance with international IP protection laws.

The disruptions caused by the conflict put the organizations that outsource IT support to Ukraine in jeopardy. As both Ukrainian and international companies scramble to protect their people, the reduced operational capacity can mean fewer bug fixes, less customer support and fewer security patches. Ukraine also saw communication blackouts as internet outages blanketed the country, further threatening safety and productivity.

For outsourcing customers, it’s not simply a matter of quickly switching providers to fill the gap. Michael Hart, managing partner of Merit Outsourcing Advisors, explained that switching IT providers takes months of planning and discussions, and usually can’t be done at the drop of a hat.

“Many outsourcing agreements take a year to 18 months to procure and select the service provider, and then take several months to negotiate a contract suitable to both parties that are consistent with the original sourcing plan,” said Hart.

The situation is already impacting Canadian businesses. One company that did not wish to be named told IT World Canada’s CIO Jim Love that it had to cancel a “mission-critical” project when its talent in Ukraine left their jobs to join the military.

“It’s not only that the work has stopped,” the person said. “We have four months of developing specifications and educating the developers on how the system works. That’s all lost now.”

 

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Jim Love, Chief Content Officer, IT World Canada

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Tom Li
Tom Li
Telecommunication and consumer hardware are Tom's main beats at IT Business. He loves to talk about Canada's network infrastructure, semiconductor products, and of course, anything hot and new in the consumer technology space. You'll also occasionally see his name appended to articles on cloud, security, and SaaS-related news. If you're ever up for a lengthy discussion about the nuances of each of the above sectors or have an upcoming product that people will love, feel free to drop him a line at [email protected]

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