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'A Nail In The Coffin': Tech Workers Are Fleeing Russia And The Impact Will Last For Years

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An exodus of tech workers from Russia since Moscow's invasion of Ukraine last month could have a major impact on the country's economic prospects and cybersecurity. (file photo)

After more than two years of hard work and tens of thousands of dollars invested in his startup, Russian technology entrepreneur Sergei Krupnik began to see a glimmer of light at the end of the tunnel.

His company, Travers, which connects individuals with sports trainers, had a healthy winter season, with about 150 ski and snowboard instructors and thousands of people hoping to enhance their skills on the slopes signing up, he wrote in a March 16 post on a website dedicated to technology and venture capital.

The project -- which has successful analogs in the West like SkiBro -- had begun to look economically viable and he was preparing to seek investment to grow the business, he wrote. Russia’s invasion of Ukraine on February 24 changed everything.

Western governments imposed crushing sanctions on Russia for its unprovoked attack and foreign companies began pulling out of the country, setting its economy reeling and making investments in the technology sector unattractive. Three days later, Krupnik froze his project, and on March 9 he fled to Turkey, seeing a bleak future back home.

“Imagine the result of ten years of honest, hard work in Russia and in a developed country. In which case would you be better off? I don't want to run anymore just to stand in place. I will not spend my next 10 years in Russia,” he wrote, adding that emigration had long been on his mind due to the country’s poor investment climate and lack of free speech.

Krupnik is just one of tens of thousands of Russian IT workers and entrepreneurs who have fled their homeland since the start of the war. The exodus continues -- and it could have deep repercussions for Russia’s long-term economic growth and cybersecurity, experts say.

Artyom Saprykin, a 28-year-old software developer from Ufa, the capital of the Bashkortostan region on the Volga, fled to Armenia on March 15, following in the footsteps of many friends, he told RFE/RL’s Idel.Realities.

“I don’t see prospects for myself in Russia anymore. With such a set of sanctions, [the West] has essentially put a nail in the coffin of Russia’s IT industry,” Saprykin said. “It will not develop, only stagnate.”

Some of the sanctions imposed by the European Union, the United States, and others target Russia’s banking and high-technology industries, including banning the export of microprocessors critical for computing.

Meanwhile, top technology firms such as Apple, Samsung, Microsoft, Oracle, and Cisco -- whose goods and services are essential for the technology sector -- have announced they will withdraw or halt operations in the country.

100,000 Next Month?

Between 50,000 and 70,000 tech workers have left the country since late February, Sergei Plugotarenko, the head of the Russian Association of Electronic Communication, told a parliamentary hearing on March 22 dedicated to helping the IT industry weather the economic crisis triggered by the war and sanctions.

He warned that a “second wave” of as many as 100,000 IT specialists could leave next month.

According to a report published in September 2020 by the Moscow-based Association of Computer and Information Technology Companies (ACITC), Russia had about 1.8 million IT workers, such as programmers and cybersecurity specialists.

Demand for IT specialists has been growing in Russia for a number of years. (file photo)
Demand for IT specialists has been growing in Russia for a number of years. (file photo)

Russia, like many developed countries, has experienced a growing demand for IT specialists as fifth-generation mobile technology rolls out, allowing more devices to be connected to the Internet, and as artificial intelligence becomes more pervasive, the ACITC said.

Elina Ribakova, the deputy chief economist at the Washington-based International Institute of Finance, said in a report earlier this month that the large emigration of educated Russians, including IT specialists, will have long-term effects on the country’s economic growth.

“This ‘brain drain’ is one of the reasons why we believe that [Russian] productivity and potential output growth will decrease further from already-low levels,” she said.

There are signs the government is worried about the outflow.

President Vladimir Putin has signed several economic measures, including a three-year tax holiday and subsidized loans for IT companies. He has also approved subsidized mortgages for IT workers and granted a waiver from army service to all tech experts of draft age.

Meanwhile, Concord, a company controlled by Yevgeny Prigozhin, a Kremlin-linked businessman who is believed to have run an infamous “troll farm” in St. Petersburg, reportedly called for limiting the emigration of IT talent to protect Russia’s “strategic interests.”

In a social media post that was later deleted, Concord said it was proposing legislation to require IT workers to get permission from the Federal Security Service (FSB) before leaving the country, Russian media reported. Such a move would hark back to the days of the U.S.S.R., when emigration and travel abroad were severely restricted.

In addition to the effects on the economy, whose future has been badly clouded by Putin’s decision to launch a large-scale invasion of Ukraine, the exodus is expected to undermine Russia’s cyberdefense capabilities.

“The outflow of techies from Russia is a disaster for the economy and will hurt Russia’s cyberdefense capabilities,” said James Lewis, an expert at the Washington-based Center for Strategic and International Studies. “A shortage of cyberdefenders is a problem everywhere, and the outflow puts Russia in a bad spot.”

Lewis said the departures will not curtail cybercrime emanating from Russia or affect Russia’s ability to carry out state-sponsored cyberattacks, which have become a key concern of the West, because the people involved in these activities can’t leave the country “without risking arrest.”

Outsourcing Shift?

While some, like Krupnik, are leaving on their own to escape the effects of the sanctions and the increasingly authoritarian state on their livelihoods and their lives, many who work for Western firms are being asked to relocate to other countries.

Over the past two decades, more and more Western firms outsourced technology work to Russia, Ukraine, and Belarus, where there have been large pools of tech talent available at a fraction of the cost in the United States or Europe.

A senior IT specialist based in Russia’s regions may make from a third to a quarter of the salary of a person with the same qualification in the United States, according to experts.

Research firm Gartner said there may be as many as 250,000 IT professionals in Russia, Ukraine, and Belarus who work for consulting or outsourcing firms that serve clients outside of the former Soviet states.

U.S.-based technology companies such as EPAM and DataArt, founded by immigrants from Belarus and Russia respectively, have relied heavily on IT workers in the region to grow their businesses in the United States and globally.

EPAM, a Pennsylvania-based software engineering firm, employed more than 30,000 IT workers combined in Russia, Belarus, and Ukraine prior to the war.

A manager at the company who spoke with RFE/RL on condition of anonymity said EPAM is asking Russia-based employees to relocate, with some going to Georgia and Armenia due to ease of travel.

In a March 4 statement, EPAM said it would discontinue service to Russian companies but did not directly comment on the fate of Russian employees, saying only that it was “accelerating hiring” in Central and Eastern Europe, Latin America, and India.

Programmers at EPAM's offices in Minsk. One manager at the firm says the technology company is asking employees based in Russia to relocate outside of the country. (file photo)
Programmers at EPAM's offices in Minsk. One manager at the firm says the technology company is asking employees based in Russia to relocate outside of the country. (file photo)

New York-based DataArt, which had offices in at least four Russian cities, said it has “stopped all investment, hiring and business development activities” in the country and “will fulfill all obligations to our employees and clients.”

DataArt’s website no longer lists offices in Russia. Anni Tabagua, a company spokeswoman, did not respond to e-mails for comment about whether it is relocating Russian workers abroad. After the initial publication of this article, however, DataArt sent RFE/RL a statement saying that it was “committed to exiting the Russian market in a manner that is definitive, strategic and consistent with our values and commitments to employees and clients.”

The exit will “take time” and the company is seeking “to relocate talent and redirect cash flows out of Russia in a way that will allow us to avoid unintentional consequences that could benefit the Russian government through a half-planned exit,” it said. “As we work through ending our operations in Russia, we are encouraging relocations to other countries and expect that several hundred employees will have moved by this summer.”

Social media accounts of some of DataArt’s Russian employees indicate they are now working from other countries.

DataArt on March 21 announced it had opened a new office in Serbia that will be fully operational next month; the office currently has 40 employees and will more than double that to 100 in the next few months. Serbia has been a popular destination for Russian IT workers due to Belgrade’s warm ties with Moscow.

DataArt is also seeking IT specialists in Georgia and Armenia, according to its job postings.

Those two South Caucasus states, along with nearby Turkey, have been even more popular destinations for Russian tech workers fleeing their country, Nikolai Shevchik, an IT-entrepreneur and blogger from St. Petersburg who created the Telegram channel Udalyonka i Relokatsia, which means Remote Work and Relocation, told RFE/RL.

The countries have relatively low living costs and lenient visa regimes, and offer regular flights to and from Russia, he said -- Russians can live visa-free in Georgia for one year, Armenia for six months, and Turkey for two months. Russian is spoken by many people in Georgia and Armenia, which are former Soviet republics, and in Istanbul.

Shevchik created the Telegram chat on February 28, four days after the invasion to help Russian, Belarusian, and Ukrainian IT workers find jobs abroad or remote work in their home countries paying in euros or dollars.

The chat already has more than 40,000 subscribers and is one of many dedicated to emigration from Russia that have been set up since February 24.

Armenian Economy Minister Vahan Kerobian said on March 1 that “about a dozen” Russian companies mostly involved in the tech sector have relocated to the country to evade U.S. and European sanctions.

Georgian officials have also said that thousands of Russians, including many tech workers, have relocated to their country over the past month.

Venera, a tech worker from the Tatarstan region who had been living in St. Petersburg, told RFE/RL earlier in March that she planned to move to Georgia “because it is the easiest way to leave Russia with minimal losses.”

'The Last Straw'

Venera, who asked not to use her last name for fear of repercussions, said she and her family had been talking about leaving Russia for a decade and “the invasion of Ukraine and the sanctions…were the last straw.”

Many Russian -- as well as Ukrainian and Belarusian -- IT workers are also moving to Israel, which has a strong technology sector and one filled with many Russian speakers.

Sophia Tupolev-Luz, a Moscow-born citizen of Israel who had been working in communications and investor relations for software companies in Tel Aviv, said she received texts from a few acquaintances in Russia and Ukraine shortly after the invasion began to say they were relocating to Israel.

Realizing it was more than a trickle, she soon co-founded The Reboot Startup Nation, a nonprofit initiative to help match IT workers fleeing the region with Israel tech companies in need of technology specialists. Israel has a “chronic” shortage of tech workers currently estimated at 15,000, according to Globes, a local daily financial newspaper.

More than 11,000 Russian immigrants arrived in Israel during the first four weeks of the war and thousands more have arrived daily since then, Globes said.

Tupolev-Luz told RFE/RL that she has received more than 600 résumés from tech workers in the region since launching The Reboot a few weeks ago and is connecting them with more than 130 Israeli companies who have expressed a willingness to hire those fleeing the fighting.

Russian companies are also relocating employees to Israel. Globes reported that Yandex, sometimes called the Google of Russia, is considering transferring some of its employees to Israel, where it has an office.

Tupolev-Luz said one Russian company relocated its entire staff to Israel and Armenia.

Shevchik said he expects many of the Russian IT workers who quickly left to return “when everything calms down.” As for himself, he plans to leave Russia “for a long time or for good” once he and his girlfriend get all their documents ready.

Krupnik, meanwhile, said he is hoping to land work in the United States or Europe. If that doesn’t work out, he will seek а residence permit in Turkey.

RFE/RL’s Idel.Realities and Siberia.Realities contributed to this report.
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    Todd Prince

    Todd Prince is a senior correspondent for RFE/RL based in Washington, D.C. He lived in Russia from 1999 to 2016, working as a reporter for Bloomberg News and an investment adviser for Merrill Lynch. He has traveled extensively around Russia, Ukraine, and Central Asia.

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