Russia’s invasion of Ukraine has been met with crippling sanctions, brought an untold human and economic cost, and turned it into an international pariah.
However, one of the most damaging long-term consequences might be the resulting hollowing out of the nation’s vast pool of tech talent.
As many as 70,000 information technology (IT) workers have fled the country and another 100,000 are expected to depart over the next month, the Russian Association for Electronic Communications told the nation’s Duma this month.
That is equivalent to about 13 percent of the sector’s workforce, one that makes an outsize contribution to the Russian economy.
Fearful of being cut off from foreign Internet platforms and unable to accept payment from overseas clients, software developers are heading for neighboring Armenia and Georgia as well as Dubai, where Russians do not require a visa. Many are likely to end up in Germany, the UK and the US.
Thousands of engineers have joined groups on Telegram, a messaging and broadcasting app, to swap tips on finding accommodation and work permits in new regions. More than 600 are in a group called “VC and Startups Welcome to Armenia,” where the top rule is: “Don’t discuss politics.”
One participant on Saturday asked for advice on how to reincorporate a Russian start-up in Armenia. A fellow group member replied with a photo of a local lawyer’s business card, saying: “They will help.”
Another group called “The Ark,” with more than 38,000 members, has posted the names and e-mail addresses of people in Spain and Montenegro who have offered to check resumes or find good local schools.
Infamous for being among the best hackers in the world, Russian engineers also routinely top rankings for coding and algorithm design — the science of creating the mathematical steps used to compute and process data. Talent assessment and recruitment provider HackerRank puts Russia almost level with China as home to the world’s best developers, and at the top of the charts in the algorithm category.
In a country dominated by oil and gas exports, Russia’s IT industry accounts for a minor part of national employment, yet it is a growing contributor to the economy. The sector comprises about 1.7 percent of its labor force, although that is close to 5 percent of its GDP. Software exports from more than 2,000 Russian technology firms total about US$9 billion, mostly from outsource-development companies such as Artezio LLC and Auriga Inc.
While losing such a talent pool might not dent Russia’s GDP as much as cutting off exports of energy, the real effect is likely to be felt for years to come when the nation tries to rebuild after the war and regain its place in international markets.
By that time, entire teams of engineers would have left and companies are likely to have moved offshore or closed down.
That could ripple through to other industries as they try to modernize, including banking, oil and gas exploration, and manufacturing. It would also stymie Russian President Vladimir Putin’s attempt to cut the nation’s reliance on foreign technology.
In a major policy paper published on the Kremlin’s Web site in September 2009, then-Russian president Dmitry Medvedev decried the low efficiency and productivity of the country’s businesses, and the lack of concern of most executives. As a result, Russia’s influence in the global economy did not befit its stature.
“Achieving leadership by relying on oil and gas markets is impossible,” he wrote.
His answer was to build an intelligent economy that would create and export new technologies, and reduce reliance on raw materials.
Putin, who was then prime minister and soon to retake the presidency, appeared to embrace the notion of a “new economy,” but then he got cold feet. Facing mass protests in 2011 and 2012, he abandoned those plans and went back to the old structure, with its more immediate benefits to the bottom line.
“Putin perfectly understands that a broad diversification of the economy and robust economic growth would also instantly lead to a diversification of wealth and power with uncontrollable actors,” researchers Alena Epifanova and Philipp Dietrich wrote for the German Council on Foreign Relations.
So he lurched in the other direction. Over the next decade, Putin pushed to split Russia’s Internet from the world, and develop autarkic semiconductor, cybersecurity and networking know-how.
It only partially worked. Russia is notoriously proficient in cyberoffense and cyberdefense, and is on the way to creating a Splinternet, but is far behind in chips and other electronics.
Still, the nation’s coders remain world leaders, and more than 4,000 IT companies popped up to feed local and foreign demand.
The war in Ukraine could bring an end to that final global advantage, and the government appears acutely aware of it. Russian Prime Minister Mikhail Mishustin last week announced grants of up to 1 million rubles (US$12,232) in a bid to convince young entrepreneurs to stay in the country and start new businesses.
In addition, government oversight of technology companies of all sizes is to be reduced and income taxes abolished for three years.
Some Russian patriots might be swayed, not by any loyalty to the government, but by a belief that their country could need them once Putin is gone.
For the thousands who have already fled, and the countless more heading for the exit, the reality is that most might never return, and they are the talent that Russia would need most when the fighting finally stops.
Tim Culpan is a technology columnist for Bloomberg Opinion. Based in Taipei, he writes about Asian and global businesses and trends. He previously covered the beat at Bloomberg News.
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