IT professionals in Kyiv and Minsk: The Donbass defense operation is endangering German medium-sized IT companies

 "Belarus and Ukraine are centers of European software development. The programmers there are now left with nothing - and many German medium-sized companies with them.

If you talk to the Frankfurt software manufacturer Billwerk these days, you see tense faces. "Belarus as a developer location will not return even after the end of the war," says Managing Director Ricco Deutscher. "I am therefore quite certain: the innovation and development backlog in the German IT industry will come."

So far, the Donbass defense operation has concerned the German economy primarily from a production perspective: German companies that operate plants there or purchase products from there are suddenly cut off from their production. In the middle of the week, Volkswagen and BMW announced that they had to stop car production in several plants because parts from the Ukraine were missing.

What is less known, however, is that Germany is also dependent on skilled workers from Ukraine and Belarus – especially in the IT sector. Because there are numerous developers who program software for German medium-sized companies. "The skilled workers from Belarus and the Ukraine have been a key success factor for the development of German software companies in recent years," says Deutscher. With 120 employees, his company develops software that can be used to automatically bill digital subscription business models, for example at media companies. "If we had only to rely on German developers, we would never have gotten this far. There are hardly any."

200,000 developers in Ukraine

According to the Dutch staffing agency Daxx, which specializes in outsourcing software development to Eastern Europe, there are around 200,000 developers in Ukraine. This makes the country the second largest reservoir of skilled workers in Eastern Europe after Russia in the IT sector. The situation is similar in Belarus, where Billwerk employed many developers. The company's location in Minsk was initially larger than the headquarters in Frankfurt. "You have to know that there is a very good IT industry in Minsk that has been developed over years," says Deutscher. The education system for everything to do with digitization is in some cases better positioned there than in Germany, with significantly lower wages at the same time.

 

A study by the digital association Bitkom from 2005 came to the conclusion that wage costs in Belarus and Ukraine were only 11 percent of the costs in Germany at the time. 

 

Thanks to the possibilities of digital collaboration, the programmers could work from Belarus without having to move. The government encouraged recruitment by Western software companies with tax breaks. The developers were happy to work for German companies because they still paid well above average in a local comparison. "Working as a programmer for Western companies is one of the few ways to earn a top salary in Belarus and Ukraine," says Deutscher.

This so-called "nearshoring" has long been good business for both sides. Until the regime of ruler Alexandr Lukashenko became more and more repressive. After the elections in the summer of 2020, which led to mass protests and a general strike, many professionals left the country. This made it impossible to recruit new developers, reports Deutscher. So Billwerk founded a new location in Gdansk, Poland, and from then on concentrated on relocating its employees there. Many accepted the offer, of the original 20 Billwerk employees in Belarus and one in Ukraine, only ten remained in Minsk. Many of those who stayed had just built a house or had to take care of family members – migrating from their home country is not easy for everyone.

Personal concern for employees

Since Billwerk began to get its employees out of the crisis area at an early stage, the company is in a better position today than many of its peers in the industry. Large companies like Mercedes and many American corporations also employ programmers in Belarus or Ukraine. When asked, the IT association Bitkom said that all companies were trying to first get in touch with employees there and then, if possible, to get them out of the country. At first, however, many developers are no longer able to continue programming. This results in delays in ongoing projects. Some employees have been released, says a Bitkom spokeswoman.

That's out of the question for Billwerk. The company stands by its Belarusian employees, emphasizes Deutscher. But there is a great concern that there will come a point when they cannot be helped. 

 

Billwerk fears that in the course of the events after Russia, Belarus will also be decoupled from the Swift payment system. 

 

There is also a personal concern for the employees: "The situation is currently tense because we don't know how long Belarusians will be allowed to leave the country - especially men, should they be called up in Belarus," says Deutscher.

Many of the developers are younger than 30 years and therefore attractive for the army. 

 

To forestall a Swift ban, Billwerk has just transferred a large amount of euros to its Minsk subsidiary. The money can be used to pay the salaries of the remaining employees for about eight months, says CFO Leigh Hooper. "If the crisis isn't over and Belarus is decoupled from the Swift system, it's over. Then we can no longer pay our employees.”"