Ukraine-Russia Crisis: Impact on IT industry and outsourcing

russia-ukraine crisis

Ukraine-Russia Crisis: Impact on IT industry and outsourcing

On 24 February 2022, the news of the invasion of Ukraine by Russia shook the whole world. Many people fled their homes, and a lot of lives were lost. Many Ukrainians are left displaced, homeless, and refugees to other countries.

Beyond the humanitarian crisis, this conflict has also negatively affected the global economy in just a few weeks. Gas prices went up, commodities were unaffordable, and the once common goods are now luxurious. According to the International Monetary Fund (IMF), the conflict can cause a significant blow to the global economy. It will likely impede economic growth and faster inflation.

And one of the most affected industries in the Ukraine-Russia crisis is the IT industry. Ukraine is one of the top outsourcing destinations for technology and digital marketing globally. Many large corporates in the USA, Australia, and EU countries outsource their tech needs from Ukraine. This article will tackle the most tangible impact of the extended conflict and sanctions on these companies’ business processes.

What does this war mean to the IT and Outsourcing Sector?


ukraine-russia crisis
Image by Reuters

As mentioned earlier, Ukraine is one of the most significant sources of IT outsourcing agencies globally. According to PwC, Ukraine ranked 5th out of the top 25 country exporters of IT specialists.

The Russian invasion of the country already had impacted this sector with reduced operational capacity, companies leaving, technology blackouts, heightened prices, and more. Below are some of the most apparent effects of the Ukraine-Russia Crisis on the west.

1. Scarcity of Professionals

As Ukrainian and international employees scramble to safety, many companies have reduced operational capacity. This issue is substantial to those outsourcing their business to Ukraine and the global IT industry.

It is a known fact that with the increased need for technology, the world is facing a talent shortage of experienced and talented IT experts.

Ukraine is a crucial global IT provider in engineering, digital marketing, and software development. In addition, the government highly supports this industry. They have been upscaling their education in terms of technology and engineering. Moreover, IT professionals in Ukraine are expanding each year, producing about 20,000 tech student graduates from various Ukrainian universities.

And losing these incentives from Ukraine made the scarcity of IT professionals worst than it is today.

2. Disruption of Business                                   

As mentioned earlier, Ukraine has been a top IT outsourcing provider in the market, having more than 2.5 billion USD annual revenue in 2019. In addition, companies from countries including the USA, Canada, UK, Germany, UAE, and  Switzerland outsource more than 60% of Ukrainian IT talents.

But with the Ukraine-Russian conflict, the country’s top-performing IT outsourcing providers had to stop their operations to relocate their employees and vacate the warzone. This situation also equates to a slower delivery of service and fewer professionals to help with tech support, lesser bug fixes, and little to no security patches.

And without these updates and functions, your technology or software would likely face more errors and issues and disrupt your delivery of service and user’s daily life.

3. Increased Serving Pricing

Likewise, the decreasing supply of IT experts due to the Ukraine-Russia crisis also affects the price of talents. Other experts will pressure many IT providers and companies to increase their pricing due to the rarity of talent for specific skills. And together with the economic crisis and inflation, salary will build up and will directly affect the price of your products and services.

What can the IT companies, outsourcing agencies, and businesses do to help?

While we cannot directly stop the war from continuing, large companies can help Ukraine using compassion, understanding, and humanity. Here are some ways the IT industry can help Ukraine at these challenging times.

1.   Purchase or license Ukrainian products and services

Ukrainian software engineers made and maintained many well-known software such as Grammarly, Ajax System, and AltexSoft. And these products and companies are still providing their services despite the ongoing war in Ukraine.

One way to help the country’s IT industry is by continuously using and availing their products with your business. It can help them continue their revenue and help them provide jobs to the remaining or displaced Ukrainian due to the war.

2.   Continue hiring Ukrainian for Your IT Needs

Even when IT experts take refuge in another country, they are still a specialist with extensive experience in software development and engineering. Being a refugee does not affect their skill or capability.

Likewise, it would help if agencies or large companies continue to avail their development services or hire Ukrainians for their IT needs. By doing so, you will not only rescue Ukrainians escaping war but also help them from poverty and keep the supply of IT experts in the world from going down.

3. Donate

An extensive list of organizations focused on helping Ukrainian refugees have a better life. Most of these organizations assist the affected population in Ukraine and ensure that they have access to shelter, food, healthcare, and organization.

We are in this together!

The Ukraine-Russia Crisis will have long-lasting effects on the IT industry and worldwide. And the longer it lasts, the more significant these effects can affect the entire world. According to Vitaly Sedler, chief executive of Lviv, “If the situation is resolved and doesn’t lead to long-term military activities, the impact will be limited … we are looking at the situation and different scenarios,”

Likewise, we should hand-in-hand help everyone who is vulnerable and escaping the conflict.

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