The U.S. issued sanctions against Russia in response to its military invasion of Ukraine. If the conflict continues, it could cause severe disruptions to IT service delivery.
The U.S. sanctions on Russia for its invasion of Ukraine will severely limit its access to technology from the United States, including some from large U.S. companies.
Separately, the military attack in Ukraine could cause severe disruptions to IT services delivery. Many American businesses depend on IT service firms from Ukraine.
The U.S. and NATO have imposed economic sanctions against Russia on Thursday. They are expected to reduce Russia’s financial competitiveness and to cut Russia’s access to technology imports.
According to the U.S. International Trade Administration, Russia’s IT market is the largest globally and has “significant potential,” according to an October report. The U.S. is also a leading supplier of IT products to Russia. According to the Trade Administration, Google, Apple, and IBM are U.S. participants in the Russian market.
Experts say that Russia’s sanctions will not be effective immediately.
Professor at James Madison University Pam Drake said that Russia knew exactly what they were doing and what they were up to. She said they must have prepared for some of these events and stockpiled. “They’re likely fine in the short-term and won’t be greatly affected. Their close ties to China may even protect them longer.”
The United States hits Russia with sanctions.
Although Russia can access products from China in the short term, it could become self-sufficient over a long time. However, Russia cannot access the most up-to-date information technology necessary to modernize its economy. This is according to Nicholas Rostow, Cornell Law School professor.
He stated that “the unity in these sanctions is important for Russia to deny new high-tech materials to Russia, which could have an important impact.”
Rostow stated that one of the main goals of the sanctions was to show Russian President Vladimir Putin that Russia is against the international consensus on Ukraine. The price Russia will pay for this violation will be “very high” and “very painful.”
Russia’s current policy has not been affected by sanctions. Rostow stated that Russia could benefit from demonstrating unity and tightening its economic screws.
“I don’t think Putin will change. Rostow stated that the question he has is how strong he is in Russia. He has a firm grip on the government. But I don’t know what effect this will have on ordinary Russians.
Ukraine’s IT services delivery: Impact
On Friday, the Russian military began attacking Kyiv, Ukraine’s capital. This is where most of the country’s IT service delivery firms are located. Anurag Srivastava (Vice President of Global Sourcing at Everest Group), a Dallas-based research company, stated that 70% to 80% of the IT service delivery market had been affected.
He said that a significant number of U.S. businesses and countries within the European Union outsource IT tasks to Ukraine.
He stated that companies would need to relocate people and work to other Ukraine centers or move people, processes, and people outside Ukraine. “We already see refugees entering [countries such as] Poland, Romania, and Latvia.”
Srivastava stated that two scenarios could occur and impact IT services delivery in Ukraine.
He said that a long-running conflict could cause a significant disruption in IT services delivery. It isn’t easy to move people and processes out of Ukraine. If IT workers cannot leave Ukraine, it could lead to a shortage of talent.
Ukrainian businesses created business continuity plans in case of an invasion by Russia in 2014. These plans also include the possibility of relocation to other centers.
Srivastava stated that businesses would not have been prepared for such an invasion as the one now taking place.
He said, “This is unheard of.”
Russia could launch an attack on Ukraine and install a Russian-backed government quickly in Ukraine. However, this would cause some disruption to services. Customers and businesses would still have to deal with the reality of doing business in Russia.
Makenzie Holland works as a news reporter covering federal regulation and big tech. Before joining TechTarget, she was a general journalist at the Wilmington StarNews, and a crime reporter at the Wabash Plain Dealer.