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How Will Unrest inUkraine Affect ITOutsourcing There?Posted by Tony Clarey / December 13,
2013 / onDevelop / 1 Comment
Daily we in the West read of thegrowing unrest in Ukraine. Ukraine has a multi-billion dollarIT outsourcing industry whichsupports customers around theWorld. On the minds of many isthe question: how will this affectcurrent and future ITrelationships with providersthere?The current (December 2013) reminds one of
September 2004 during the Orange Revolution
after rigged elections caused the current
President of Ukraine Viktor Yanukovich to step
down and concede the election to reformers.
This author was involved in service work on the
ground in Ukraine during that time and since
that time has spent a great deal of time in
Ukraine. As this post is written, the author
literally has friends on the streets there.
Reply
Following are some thoughts.
Some background: Ukraine is like Belgium on
steroids. There is approximately a 60-40
difference in terms of the two large language
group speakers. In Belgium, there are the
Flemish (Dutch speakers) and the Walloons
(French speakers). Their dispute paralyzes the
operations of government, creates culture wars,
etc. Similarly, Ukraine has an approximately 60-
40 Ukrainian vs. Russian speaking ethnic
breakup. Broadly speaking, one can say that the
Ukrainian speakers are in the West and Central
parts of the country and the Russian speakers
are in the East and South.
The current prime minister of Ukraine is not
Ukrainian and he gives his speeches in Russian,
not Ukrainian. Even Mr. Yanukovich has had to
learn to speak passable Ukrainian. The external
influence of Russia, Ukraine’s historic external
master exerts political pull in one direction,
while the prosperous EU to Ukraine’s West offers
a different and to most, more appealing future
vision. Adding complexity is the fact that Russia
is the gas supplier to most of Eurasia.
What can we say with confidence about the
current situation and its effects on the Ukrainian
IT outsourcing industry?
No Dispute About IT Outsourcing – The current
disputes concern Ukraine’s future political
direction. They do not concern whether IT
outsourcing is good for Ukraine or not. The IT
outsourcing industry generates two very vital
things for Ukraine that neither side in this
dispute would want to forego: good jobs and
hard foreign currency. Ukraine needs both and
it is safe to say that all parties on the ground
will go out of their way to try to ensure that in
this branch, business goes on as usual.
Tendency Toward Non-Violence – Because of
the asynchronous military relationship between
Russia and Ukraine, the demonstrators and their
leaders wisely use non-violent methods to
pursue their goals of convincing the authorities
to either resign or call early elections. No one
wants to tempt Russia into a Georgian-style
intervention. The Orange Revolution which
toppled the then government was a peaceful
one, at least a macro-level.
Travel to Ukraine is Still Safe – Companies are
beginning to ban travel to Ukraine. On one
level, this is fairly standard corporate procedure.
On another, however, one ought to remember
that the main areas of strife are in the city
center of Kyiv, whereas IT outsourcing players
are spread out through Ukraine. In the western
Ukrainian city of Lviv, for example, there is little
dispute. Virtually everyone there supports
tighter integration with the EU. Conversely one
can assume that in places like Donetsk and
Simferapol, which are dominated by Russian
speakers, there is also little strife because their
views are largely supportive of Yanukovich.
Where the two camps meet is in a very small
area in the center of Kyiv (and even that is far
from the airport). So effectively, one can
probably safely to travel to virtually all of
Ukraine without running into manifestations of
this dispute. This is unlikely to change in this
author’s view.
Distraction – Whatever else we say about this, it
is certainly a distraction for anyone involved.
Ukrainians wonder about the future direction of
their country and their friends and loved ones
outside Ukraine wonder about the same.
So: do the masses on the streets mean that
Ukraine’s IT industry will suffer? Should new
entrants to IT outsourcing skip Ukraine until things
settle down? Should current customers pull out?
Short-term Windfall for Other Destinations –
Given that businesses – especially large ones –
prefer settled environments, it is likely that
countries like Poland, Romania and even Belarus
may benefit in the short-term as new entrants
wait to see how things will play out in Ukraine
and other entities shift business elsewhere.
There is currently an exodus away from India
for various reasons. This could help slow some
of that temporarily.
The Windfall May Be Limited – Some factors can
limit business displacement. EU destinations
are more expensive than Ukraine. Doing
business in Belarus is no picnic and that country
has some lingering political issues. Moreover,
current Ukrainian IT providers have system
knowledge and personal relationships that are
not easily or quickly transferable. That should
also help Ukrainian providers hold onto their
current business.
Volatility – Despite the likelihood that things
will remain peaceful in Ukraine, stuff happens.
There are local examples of how simmering
ethnic differences can lay dormant for decades
and centuries only to to erupt into shocking
violence when given some external stimulus. In
this region, the examples of 1943-1949 along
Poland and Ukraine’s border as well as the
disintegration of former Yugoslavia provide
sobering reminders of how things can go off the
rails. FUD – fear, uncertainty and doubt – will
keep the cautious away. Again, this will mostly
be on new business.
We will be following developments closely and
likely updating this space as the situation
develops.
Tags : Belarus Blog IT Outsourcing
Poland Standard Ukraine
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Why I Enjoy Working in the OffshoreIT Outsourcing Field
Civil Unrest and Russia’s Move IntoCrimea Beginning to Affect ITOutsourcing in Ukraine
Posted By : Tony Clarey
International Technology ProgramManager: It Takes a Special Type
One CommentRussia’s Move Into Crimea isBeginning to Affect IT Outsourcing inUkraine
March 25, 2014 at 12:03 pm
[…] centers in that country. This is not to
mention those providers themselves. We
blogged about this topic earlier. This was
before former President Viktor Yanukovich was
ousted, resulting in a change in […]
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