The crisis in Ukraine has recently escalated to what William Hague, the UK Foreign Secretary, has called “Europe’s biggest crisis in Europe in the 21st century”. This announcement came after Russian troops moved across the border to occupy several military bases on Ukrainian soil. The Western powers, including the USA and major partners in the EU, have jumped to express their support for the new Ukrainian government, and have strongly criticised the aggression shown by Russia. In response to the occupation by Russian troops, Russia has been threatened with economic and political actions with the aim of isolating it from the international community. Despite mobilisation of troops by Russia, military intervention does seem unlikely, although not impossible.
As the crisis gradually unfolds, it is becoming easier to see how Ukraine will be affected. One area which may suffer is the country’s IT outsourcing industry, which has a value of roughly £1 bn per annum. For several years now Ukraine has been a technology hub, although relatively unknown to Western Europe, with its first ventures into IT taking place under the former USSR. Over the years this has been built into a skilled workforce, with 30,000 students graduating in IT related subjects each year, and a good infrastructure across the country, for example broadband speeds are similar to the UK’s.
The billion pound industry is helped by several incentives, such as low corporation tax for IT companies, lower wage demands by the Ukrainian workforce and several organisations, such as the Ukrainian HI-Tech Initiative setup with the purpose of promoting Ukrainian IT interests. As well as a high number of IT graduates, Ukraine already has a large skilled workforce, with 25,000 specialised IT workers and 1,000 outsourcing companies.
Ukraine has recently announced that conscription has been initiated, presumably in preparation for a conflict with Russia. This could pose a very real problem for the IT workforce in Ukraine, as many of the employees are the type of person that would be conscripted (young male adults). However unlikely, if a conflict between the Ukraine and Russia did break out, it could have a detrimental effect on the IT outsourcing industry.
What is certain is the longer this crisis goes on, the longer Ukraine will suffer as a whole. As military action is not preferred, the main weapons available to the West are diplomatic and economic sanctions against Russia. However, any economic action will surely affect the IT industry in some form. Hopefully, the IT industry will be able to withstand whatever comes as a result of this crisis, one way or another.
