Companies exit IT, BPO services from Ukraine amid war: Everest CEO
KYIV, UKRAINE — The IT and business process outsourcing (BPO) landscape is undergoing a significant transformation as companies move their service centers out of Ukraine due to the ongoing conflict with Russia.
Despite initial reluctance, the shift is now becoming more pronounced, with businesses seeking stability and security in other Eastern European countries and beyond.
Peter Bendor-Samuel, CEO of Everest Group, noted that while companies exhibited a strong sense of loyalty to Ukrainian service providers, the prolonged conflict led to a change in stance.
“There was a degree of loyalty that companies had to these firms. They believed that if they moved the work, they were undermining the war effort in Ukraine,” Bendor-Samuel explained. However, as the war drags on, companies are “starting to tire of the effort after two years.”
The goodwill extended to Ukrainian providers was bolstered by technological support such as Elon Musk’s Starlink, which provided the necessary telecommunications bandwidth.
However, the ongoing war has taken its toll, and companies are now looking for new opportunities in regions that offer a combination of cost-effectiveness and security.
This shift is impacting labor costs, particularly in Poland, where wages for high-skilled programming and engineering are rising significantly.
“The movement out of Ukraine is affecting the affordability of some Eastern European countries,” Bendor-Samuel stated.
Ukraine was previously lauded for its mix of high-quality engineering talent and favorable time zones for both Europe and North America.
Now, as companies move out, there is a surge in IT services and digital engineering in countries like Mexico and Brazil, which offer a rich talent pool and time zones more aligned with North American business hours.
Some work have also migrated to India, but this move presents its own challenges in a competitive labor market where talent retention is difficult.
“One of the problems with Poland is the intensity of the competition for resources now makes their talent less persistent,” Bendor-Samuel observed.
The trend of relocating IT and BPO services is expected to continue as long as the conflict in Ukraine persists and Russia maintains its aggressive stance towards its neighbors.
“We predicted that there would be significant shifts… and we now see it happening,” Bendor-Samuel concluded, indicating a new chapter for the global IT and BPO services industry.
