Outsourced development teams are holding their breath in Ukraine

The situation between Ukraine and Russia is extremely tense right now, and IT outsourcing companies that handle the development of Danish companies’ systems in Ukraine are holding their breath.

“We are following the situation closely through the media and the over 200 employees we have there locally. If a war breaks out, it has major human and emotional consequences,” says Hans Henrik von Platen-Hallermund, CEO of software development company Conscensia.

The company is responsible for ongoing software development for Danish companies such as Spar Nord, Kamstrup, and Systematic, which also owns 25 percent of Conscensia.

The company’s Ukrainian branch is located in Lviv, which is in western Ukraine and almost as far from the Russian border as it can be. So Hans Henrik von Platen-Hallermund says that their Danish customers are currently asking more questions about the situation than the local employees. Therefore, plan A is that work continues as long as possible.

“We don’t know what’s going to happen right now. But if there’s a real war, our biggest challenge will be to maintain communication links and having our employees at risk of being called up for conscription,” the CEO says.

InterLogic, a company that has over 300 employees in Lviv, and works with, among others, Version2, Ingeniøren, COOP, and WHO as its customers, has the same line of thought.

“Many of our customers are nervous when they read Danish news, and an invasion can’t be ruled out,” says Søren Thomsen, owner and CFO of InterLogic, who personally does not believe in a major invasion.

“Firstly, it would cost Russia dearly, and secondly, a war with Ukraine would be unpopular in Russia. Finally, since 2014, Ukrainians have become so hostile to Russia that even if Kiev were invaded next week, it would be impossible to create stability. Ukraine is a huge country, it’s not Georgia, Transnistria, or Crimea, and Ukraine has come so far in its development towards freedom and democracy that it will not agree to turn back time 30 years and live like Russia,” he says.

Serious security crisis

After the revolution in Ukraine in 2014, Russia took over the Crimean Peninsula by force. In the West and Ukraine, Russia’s military annexation of Crimea was seen as a clear violation of Ukraine’s sovereignty and international law, and no Western country today recognizes Russia’s takeover of Crimea.

Yet the peninsula is still under Russian control, and the increased presence of Russian soldiers on the border with Ukraine is causing the West to fear that the conflict may escalate as it currently seems to be going in that direction. As recently as 31 January, Prime Minister Mette Frederiksen said at a press conference:

“Right now we see a very worrying situation unfolding at the Ukraine–Russia border. It’s the most serious security crisis for Europe since the end of the Cold War. This shows us that one can never take peace or freedom for granted.”

InterLogic owner Søren Thomsen himself lived in Lviv from 2004 to 2016, and he has during that time experienced two revolutions and the 2014 Russian invasion. So he has been through something similar and sees, like Hans Henrik von Platen-Hallermund, a risk of employees being called up or voluntarily wanting to take up the fight.

“But the Ukrainian army is already quite large with over 250,000 people in active service and another 250,000 reservists, so it’s probably relatively limited. Back in 2014, not a single person in InterLogic was conscripted,” he says.

Conscensia has had a development department in Ukraine for 15 years and was also present in 2014, when a single employee was called up for administrative work.

“But other than that, it has never been a challenge to be present in Ukraine, which is one of the countries with the biggest number of software developers,” Hans Henrik von Platen-Hallermund says, pointing out why it is a popular country for outsourcing.

Brain drain is a real threat

Each one of Conscensia’s developers is linked with a single customer, and they have a close and ongoing dialogue. Should there be a war between Russia and Ukraine, Hans Henrik von Platen-Hallermund hopes that customers will not really feel it.

“But of course, it depends on what’s going to happen. If we find ourselves in a situation where our people are not there because they have been mobilized, we have to resolve the situation directly with the customer,” he explains and says that most employees are currently working from home due to the coronavirus.

As Søren Thomsen from InterLogic sees it, in addition to the mobilization, there is another threat that is more likely, namely that many young people no longer see a future in the country if Ukraine ends up under Russian control in its entirety.

“So the biggest risk to deal with in relation to developers in Ukraine is probably the risk of them moving to a different country.”

Both InterLogic and Conscensia have development departments in Poland, which enables them to easily obtain a work permit in the country through a program called Business Harbour.

Therefore, both companies have offered their employees to move to Poland and to provide them with advice in the process should the need arise. So far, not much interest has been expressed neither at Conscensia not at InterLogic.

“So among the employees, there isn’t much concern either. But the most important thing is that they know that the possibility exists, so we can create security and make sure we don’t lose them,” Søren Thomsen says.