Tag: Ukraine

Ukraine Crisis Puts Global IT Outsourcing on Edge | In the News

While first and foremost a humanitarian crisis, Russia’s military invasion of Ukraine has also become a concern for IT outsourcing customers with interests in the region — and those taking advantage of the global IT services market generally.

The conflict has had a significant impact on Ukraine’s IT outsourcing industry, which exports $6.8 billion IT services annually, approximately 4% of GDP, according to trade group IT Ukraine Association. Ukraine, together with neighboring nations, employs around half of the 1.5 million IT and business services professionals working in nearshore Europe, according to IT services and BPO research firm Everest Group.

Read more in CIO

 

Russia-Ukraine Conflict Creates a Whole Host of Supply Chain Challenges | In the News

When Russia invaded Ukraine, most of the stories on the economic impact of the war focused on energy and wheat. Gas prices, which were already high, have continued to spike, and while harvest time is months off, Ukraine, like Russia, is a major producer of wheat, especially to the Middle East.

Based on a call with Eric Simonson, Managing Partner with Everest Group, there may also be an impact on engineering projects and ongoing technology services.

Read more in Logistics Management

Russia’s Ability to Sidestep Sanctions via Crypto Is Limited | In the News

As the Russian invasion of Ukraine unfolded, crypto trade volumes for Ruble and Ukrainian Hryvnia trading pairs spiked.

“This means that money from outside Russia in other currencies cannot flow into Russia via conversion to cryptocurrencies,” says Ronak Doshi, Partner at Everest Group. “This is being monitored via enforcement agencies, and there might be heavy fines for non-compliance.”

Read more on Capital.com

Ukraine and the Supply Chain | In the News

When Russia invaded Ukraine, most of the stories on the economic impact of the war focused on energy and wheat. Gas prices, which were already high, have continued to spike, and while harvest time is months off, Ukraine, like Russia, is a major producer of wheat, especially to the Middle East.

Based on a call I had last week with Eric Simonson, Managing Partner with Everest Group, there may also be an impact on engineering projects and ongoing technology services. Everest Group is a boutique Dallas-based research and consulting firm. As of last week, Everest Group and Simonson were predicting that up to 100,000 technology jobs could be disrupted as a result of the Ukraine conflict – Remember that this is an incredibly fluid situation, so that number could’ve risen in the week since our conversation given the number of Ukrainians forced to flee the country.

Read more in Modern Materials Handling

How to Manage the Ukraine-Russia Impact on Service Delivery | LinkedIn Live

LinkedIn Live

How to Manage the Ukraine-Russia Impact on Service Delivery

March 10, 2022 |
8:30 AM CST | 9:30 AM EST | 2:30 GMT | 8 PM IST

The service delivery ecosystem has been disrupted in nearly every region of Ukraine and its bordering countries such as Poland, Romania, and the Baltic States in the Central and Eastern Europe (CEE) region. As businesses move into recovery mode, what do they need to know and what can be done now as the conflict persists?

Everest Group and the Shared Services & Outsourcing Network (SSON) hosted a LinkedIn Live event to discuss the effects of the Russia-Ukraine war on service delivery and actions global business services / shared services organizations, enterprises, and global services firms should take as they immediately recover and plan for the coming months.

Watch the replay of the LinkedIn Live session to learn:

  • Impacts of the conflict on service delivery in Ukraine and the broader CEE region
  • Key actions and measures for enterprises that already have or are considering investments in Ukraine
  • Recovery plans to address the various scenarios of the conflict

Our Panel

Herbert Julian Refresh gray square
Julian Herbert
Vice President
Everest Group
BarbaraHodge
Barbara Hodge
Global Editor-in-Chief
Shared Services & Outsourcing Network (SSON)
JD
Janusz Dziurzynski
Global Information & Digital Technology Manager
BAT
Deborah Kops 1
Deborah Kops
Principal and Co-founder
Sourcing Change
Simonson Eric Refresh gray square
Eric Simonson
Managing Partner
Everest Group

The Coder Supply Chain Runs through Ukraine | In the News

The maps that connect Lyft Inc. customers with their nearest driver, the grammar software that tells you when to use “whom” instead of “who” and the targeting system that helps players of the newest Assassin’s Creed video game aim a weapon, all owe a debt of gratitude to programmers in Ukraine. The country is among the largest exporters of information-technology services in Europe, known for its well-educated and affordable labor market.

Ukrainian code can be found almost anywhere in the world. It’s on Wall Street (Citigroup Inc. and JPMorgan Chase & Co.) and in international banks (Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG and UBS Group AG). It’s in manufacturers of airplanes (Boeing Co.), cars (Daimler AG and BMW), mobile networks (BT), and phones (Samsung), said Anurag Srivastava, a London-based Vice President at research firm Everest Group. “Clients are anxiously asking how bad it’s going to be, how long the crisis could last, and what action they should take,” he said. Everest isn’t especially optimistic: It elevated the risk rating of doing business in Ukraine to high, from medium.

Read more in Bloomberg

About 80,000 to 100,000 Tech Jobs Will Face Disruptions in Ukraine, Belarus, Russia: Everest Group | In the News

According to Everest Group, the Russia-Ukraine conflict may disrupt the services of 80,000 to 100,000 highly qualified professionals with digital engineering and IT skills from Ukraine, Belarus, Russia, and other neighboring countries in Eastern Europe.

“The resource pool numbers alone paint a picture of disruption of services because of the war in Ukraine and the economic impact of the sanctions imposed on Russia,” said Peter Bendor-Samuel, Chief Executive Officer at Everest Group.

Read more in The Hindu

After the Swift Ban, Can Russia Find Other Routes for Its Money — Including Crypto? | In the News

Russia is exploring a myriad of ways to reroute its currency after the US and European nations imposed financial sanctions on the country for invading Ukraine. These sanctions include a ban from the SWIFT financial messaging network.

Russia could explore emerging methods such as cryptocurrencies and other digital assets like private coins to try and avoid any conversion to US dollars, said Ronak Doshi, Partner at Everest Group.

Read more in Computer World

 

Services Delivery Risk in Ukraine and the CEE Region Rises Amid Conflict with Russia | Blog

The fresh armed offensive launched by Russia at the end of February has disrupted the service delivery ecosystem almost across the whole of Ukraine. Everest Group moved Ukraine’s operating and business environment risk rating to ”High” and recommends that global services firms intensify and accelerate contingency and business continuity plans to ensure resiliency and employee safety. Read on to learn more about the Ukraine-Russia conflict and its impact on the service delivery industry in Ukraine and the broader Central and Eastern Europe (CEE) region.

Origin and evolution of the Ukraine-Russia crisis

The recent crisis between Russia and Ukraine dates back to 2014 when Russia annexed the Ukrainian peninsula, Crimea, and backed pro-Russian separatists in the eastern Donbas region. Despite a 2015 peace treaty between Kyiv and Moscow, there have been several ceasefire violations resulting in many civilian deaths in both regions. Border tensions renewed in November 2021 when Russia started to amass tens of thousands of troops at the Ukrainian border as both NATO and Ukraine refused to commit to excluding Ukraine as a NATO member in the future. On February 22, 2022, Russia recognized the breakaway regions of Ukraine (Donetsk and Luhansk) as independent states and effectively breached the Minsk Protocol, which prevents war in the Donbas region. On February 24, 2022, Russia launched an invasion of Ukraine and started attacking major cities including, Kyiv, sparking an exodus from these cities. While until now, the conflict was localized in the east of the country and service delivery was unaffected in the other parts of Ukraine, the conflict has now spread to almost the entire country. Depending on how scenarios play out (see below), this could mean a disruption of service delivery across Ukraine as well as ripple effects on the rest of the CEE region.

Current and potential impacts on the services industry in Ukraine

For years, Ukraine has been a sought-after location for companies outsourcing software development and ER&D services. The Ukrainian services sector features deep expertise, and Ukraine’s large talent pool is well-positioned to serve the chronic shortage of global engineering and technology manpower while offering attractive financial arbitrage. During the 2014-15 conflict, most companies had already diversified the risks of operating in Ukraine to a large extent. The recent escalation since November 2021 had also forced firms to activate contingency/BCP measures.

Based on the evolution of the conflict across multiple scenarios described below (or beyond these), companies will need to actively watch and flex their contingency plans further.

We foresee the following scenarios playing out on the ground:

Scenarios Long-drawn conflict,
largely limited to the Eastern regions, but not impacting Kyiv and other large cities
Long-drawn conflict extending to key cities in North/West/South Ukraine Swift brokered peace, retaining the current Ukraine administration Swift and decisive victory for Russia followed by installation of a Russia-backed government in Ukraine
Description ·         Ukraine defense forces are able to counter the Russian attack, but not entirely repel decisively

·         Conflict largely contained in the Eastern and Southern regions of Ukraine, with limited disruption in the key larger cities of Kyiv, Lviv, and Dnipropetrovsk

·         Ukraine defense forces are able to counter the Russian attack, but not entirely repel decisively

·         Pitched battles for and around key Ukrainian cities such as Kiev, Odesa, Lviv, and Dnipropetrovsk

·         Large-scale exodus from Ukraine to neighboring countries in the region – such as Poland, Slovakia, Hungary, or Romania

·         EU/US/Turkey broker a swift ceasefire and provisional agreement, potentially through concessions such as a commitment for Ukraine not to join NATO and/or threat of further crippling sanctions on Russia

·         Current Ukraine administration retains power and authority

·         Eastern regions of Donetsk and Luhansk gain independence or autonomy and are not in Ukraine control

·         Russian forces do not encounter significant armed resistance and gain a decisive victory over Ukraine OR current Ukrainian administration capitulates to limit loss of life and infrastructure

·         Kyiv and other key cities are captured by Russian forces

·         Russia installs a puppet government in Ukraine

·         Some exodus likely to neighboring countries in the region, such as Poland, Slovakia, Hungary, Romania

Probability Medium Medium-High Low-Medium Medium-High
Likely impact on global services delivery from Ukraine ·         Temporary disruption spanning a few days in the key cities in the North and West of Ukraine; significant disruption in the South and East

·         Businesses will be able to operate with minimal disruption thereafter in the larger cities, however, those in Eastern (e.g., Dnipropetrovsk) and Southern (e.g., Odesa) centers will face significant disruption

·         Movement of people and operations to centers in the North and West of the country; contingency plans will need to be on standby in case conflict spreads to other regions of the country

·         Large-scale and crippling disruption to service delivery across the country, including in larger cities

·         Companies will need to move people and operations to other centers in their portfolios, especially to the CEE region

·         Limited disruption in the larger cities, especially those in the Northern and Western regions of Ukraine

·         Businesses will operate normally post some days/weeks of uncertainty

·         Clients still likely to demand diversification as regions in the East will continue to be under some uncertainty, leading to movement of people and processes to centers in the North and West of the country

·         Temporary disruption spanning a few days to a few weeks in the key cities in the North and West of Ukraine; significant temporary disruption in the South and East

·         Post installation of a Russia-backed government, disruption should subside gradually, and businesses will be able to operate normally and with some levels of certainty. However, this scenario raises a fundamental question of whether organizations are comfortable operating in an environment heavily influenced/controlled by Russia

Likely impacts on the broader CEE region ·         Some pressure on firms to diversify as a BCP measure will lead to growth in the CEE region and broader Europe region ·         Large-scale movement of personnel and operations to CEE countries

·         Likely need to de-risk operations in countries bordering Ukraine (e.g., Poland, Slovakia, Hungary, Romania, Moldova, and the Baltic States) given potential of a westward push of Russian expansionary tactics

·         Some pressure on firms to diversify as a BCP measure will lead to growth in the CEE region and broader Europe region ·         Lower impacts on the broader region, however, some personnel may want to move out from under a Russia-backed administration and want to migrate to other countries in the region or globally

·         Likely need to de-risk operations in countries bordering Ukraine (e.g., Poland, Slovakia, Hungary, Romania, Moldova, and the Baltic States) given potential of a westward push of Russian expansionary tactics

 

Ukraine is a key global delivery location for IT and Engineering R&D (ER&D) services, which brings widespread uncertainty and significant concerns for the many companies operating there. Companies such as Wix, Vistaprint, Ciklum, and Cimpress had already begun relocating their staff from east Ukraine to relatively safer parts of the country, such as Lviv, Ternopil, and Ivano-Frankivsk, in efforts to continue uninterrupted business processes and keep employees out of harm’s way. Some are even relocating to other countries, like Poland, Turkey, and Israel.

Approaches and recommendations for firms supporting service delivery in Ukraine

Everest Group has downgraded the operating and business environment risk rating of Ukraine (previously Medium) to High as global organizations continue to face uncertainty, and the threat of disruption is very high considering likely further deterioration in the situation.

Amid these uncertainties and rising tensions, Everest Group recommends the following to global services players with operations in Ukraine:

  • Intensify/accelerate contingency plans: Global services firms should intensify and accelerate contingency and business continuity plans. These measures could include arrangements for relocations of employees and their families, backing up data to servers based in the US or other locations, developing backup options with independent internet providers, establishing emergency satellite communications, identifying alternative suppliers, and stockpiling supplies
  • Monitor cybersecurity, especially data security: Firms should strengthen their network infrastructures to insulate themselves against potential cyberattacks and/or a takeover of data infrastructure by Russia or a Russian-backed administration. The conflict raises the vulnerability of companies to cyber-attacks on Ukrainian firms and data assets – and will need to actively consider measures to protect data residing in servers in Ukraine – especially in the event of a Russia-backed administration taking over
  • Flex talent models and workforce strategy: Businesses impacted by disruption in Ukraine will need to flex talent models and workforce strategy creatively and aggressively to minimize the impact to operations – measures could include cross-training workforce in other centers, hiring contingent talent, expanding remote delivery, provisionally insourcing critical work packets, and rebalancing work across a global/regional delivery portfolio
    • Centers in the European region will be ideally suited to support work that is/was being supported in Ukraine; however, given proximity with Ukraine, some of the CEE countries may not be obvious choices. Companies may need to redistribute work to other global centers, including in Western Europe, Asia, and Latin America
    • Smaller companies and startups will be much more exposed compared to the larger global/regional players as they will struggle to rebalance work and people outside Ukraine – these contracts will require urgent attention from sourcing executives over the next few days
  • Evaluate and identify impacts on broader service delivery portfolio:
    • Countries neighboring Ukraine and Belarus will need to be reevaluated for delivery risks stemming from expanded Russian influence/control over the above two countries. Further westward expansion plans of Russia could significantly downgrade the geopolitical stability of countries such as Poland, Slovakia, Hungary, Romania, and the Baltic States
    • The crisis has the potential of destabilizing a decades-long peace in Europe for a long term. With its existing influence over Belarus and Moldova, if Russia gains control over Ukraine, its neighbors will all be NATO members, thus setting the stage for a long-drawn tussle over Western vs. Russian influence in the region
    • Further, other countries in the CEE region and broader Europe are also likely to see the impacts of migration of Ukrainians. For example, Moldova and Lithuania have already declared a state of emergency to deal with refugees that have already started arriving
    • The crisis may also create stress on other locations within the global delivery portfolios of companies – both enterprises and their service providers – as they try to ensure continuity by flexing alternative locations, providers, and even sourcing models (e.g., provisionally insourcing work with providers heavily exposed in Ukraine). Given the significant talent crunch already being witnessed by companies globally, this rebalancing may create further stress in existing systems and impact other critical initiatives
    • Finally, service delivery in Russia and Belarus is also likely to suffer significantly as a result of strong sanctions imposed by the US and Western Europe

To hear more recommendations on this topic, watch our LinkedIn Live event: How to Manage the Ukraine-Russia Impact on Service Delivery

Stay updated on the Ukraine-Russia Crisis and the impacts to the global services industry as we track this fast-moving conflict and develop further insights.

Ukraine Crisis to Move Work to India, Slow Down Eastern Europe Expansion in Short Term for IT | In the News

The Russia-Ukraine conflict could force IT companies to pause on their investments in Eastern Europe and bring more work instead to India in the near term. According to Everest Group data, close to 70,000 to 100,000 highly qualified workers in digital engineering and IT will be disrupted.

Everest Group noted that because this disruption is coming during a global talent shortage, it will also impact pricing.

Read more in Money Control

 

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