The last few months have been witness to the Ukraine crisis, with antigovernment demonstrations in the wake of former President Viktor Yanukovych tightening ties with the Kremlin, his fleeing the country following a rebellion against him, and the annexation of Crimea by Russia. Tensions continue between Ukraine, which plans new presidential elections for May 25, and Russia. Just today, the mayor of Kharkiv, reportedly an opponent of the pro-West protests, was shot in the back, while the U.S. is imposing new sanctions on Russian government officials, including two members of President Putin’s inner circle and 17 companies linked to that inner circle.
Obviously, there are big issues at stake here about sovereignty and nation destabilization, but the situation also has implications for the IT sector. That includes the advancement of semantic projects around the world.
The Semantic Web Blog, for example, recently heard from a contractor working on a semantic project for a website that the effort has fallen a bit behind schedule due to, among other things, geopolitical events. One of its developers was a Russian national working in Ukraine who left the country when Putin annexed Crimea, he said.
Another source who preferred to remain anonymous, and whose semantic technology and IT outsourcing company is located in another Eastern European country, said that his company has already been contacted by a few businesses in the U.S. that had been securing services from software companies in both the Ukraine and Russia. Because of the situation, he said, these companies told him that they are now exploring their options in Eastern European countries that are members of the European Union. In such locations, including his home country, they can find great engineers and still quite competitive rates on the labor side, he noted.
That said, it was clear that that wasn’t the road to new business that this semantic tech executive prefers to travel down, as he noted that World War II and the Soviet occupation of Eastern Europe is still within the living memory of people in these countries.
Eastern European Outlook
But companies that are interested in outsourcing the development of semantic projects or any other software efforts would be hard-pressed not to be concerned. In a report for sourcing and vendor management professionals issued in March, for example, Forrester Research said the “situation in Ukraine provides a clear example of why risk tracking isn’t enough, and that effective vendor management means planning contingencies before risks occur.”
The IT outsourcing industry in that country in fact is a $2 billion market, with 50,000 engineers, more than 500 firms, and a 25 to 30 percent growth rate, according to statistics in a presentation from the national project Innovative Ukraine (see image above). Its prominence in the IT software and services industry isn’t something the company is taking lightly: In response to industry concerns and with an eye to drawing support for the country, the Ukrainian Embassy in the U.S. just launched a campaign, Supportukraine.us, to encourage outsourcing there to help it withstand what it says is Russia’s attempt to destabilize Ukraine’s economy, start a new Cold War, and lead to global economic recession. It touts outsourcing to Ukraine as offering cost savings from 40 to 75 percent as well as its government’s support of the IT industry through tax exemption. It also highlights that outsourcing to Ukraine gives companies the ability to play a role in supporting democracy against totalitarianism.
Meanwhile, the latest round of sanctions by the U.S. against Russian companies appears to target banks, construction and transport firms, but the Russian software development industry has a lot at stake when it comes to global IT outsourcing business, too. Last year it increased export almost by 15 percent, with an export volume of $4.6 billion dollars, according to the RUSSOFT 10th annual survey of the software export industry in Russia. Five Russian companies this year made the list of the International Association of Outsourcing Professionals (IAOP) 2014 Global Outsourcing 100.
On the software front, Ukraine also is the home of more than 1,000 tech startups, including companies such as Newsmate, which develops semantic data analysis, aggregation and recommendation services, and SemanticForce. a multilingual sentiment analytics service for monitoring of mainstream media, social media and competitive intelligence. Russia equally is home to vendors with semantic roots, including IntelQ, which provides methodology and consulting services related to recognizing and assigning semantic value to master data at all stages of information governance, and of course semantic search engine Yandex.
Yandex itself is potentially facing greater scrutiny by Russian president Vladimir Putin in the midst of the crisis, according to this article by Bloomberg. Reporter Halia Pavliva writes that, “Putin, speaking at a conference in St. Petersburg, said Russia should protect its information in a market dominated by U.S. technology. The comments suggest Putin may try to gain more control of Russia’s online industry as his push into neighboring Ukraine fuels the worst standoff with the U.S. and its allies since the end of the Cold War, said Ian Hague, founding partner of Firebird Management LLC.”