Israeli tech firms have much to lose in Ukraine

Opening of WalkMe's Ukraine development center Photo: Valentina Rostovikova

Israeli companies that have invested heavily in development centers in Ukraine are drawing up business contingency plans for a Russian invasion.

Computer programmer Peter Kolomiets, a Russian-speaking Israeli who is currently living in Kharkhov, Ukraine, is concerned. In recent days, people in the border city in the east of the country have stocked up with canned foods, toilet paper and some are planning fleeing westwards to Kiev, or Poland, or even to East Asia. "When you see on TV, 100,000 Russian troops massing on the border, 30 minutes away from you, it's very stressful," he told "Globes."

Kolomiets said that Kharkhov's residents are divided between residents who are worried and businesspeople and tech entrepreneurs who feel sure that it's all just a muscle flexing exercise by the Russians. Kharkhov is 42 kilometers from the Russian border but according to Kolomeits life is carrying on as usual and the restaurants and bars are full at night.

Kolomiets's software company IdeaSoft serves Israeli companies and he is eager to convey the 'business as usual' message, to calm both his employees and customers. As a former officer in the IDF's Dudevan commando unit he says that he understands military conduct and the Russians would not want to invade heavily populated areas, where they would sustain major losses, as happened to them previously in Georgia.

Israel's proxy

In recent years Ukraine has become a type of proxy for Israel's tech sector, as companies struggle to hire staff. There are no official figures but IT outsourcing giant Ciklum VP Eran Cohen, who has been working with Israeli companies in Ukraine over the past 10 years, estimates that there are 15,000-17,000 employees there serving Israeli companies. This makes Ukraine a critical factor in the growth of Israel as unicorn nation.

These employees divide up into several categories: those working for large outsourcing companies like Ciklum, Aman Group and Globalogic, which serve Israeli companies; workers employed directly by Israeli companies like Playtika, Plarium, Wix and MoonActive; and everything in between including freelancers, or those employed by hundreds of local outsourcing companies. Some 5,000 Ukrainians are employed directly by Israeli companies, according to conservative estimates, with gaming software company Playtika alone having 1,000 employees in Ukraine.

The plan: Evacuation to Poland

In Ukraine it is understood that these 17,000 employees of Israeli companies are in danger, although a distinction is made between cities like Kharkhov, Mariupol and Dnipro, which would likely be in the path of any potential Russian invasion, and cities closer to the Polish and Belarus borders like Kiev, Odessa, and Lvov, which are considered safer.

An analysis by "Globes" on LinkedIn found that many Israeli companies are in the more dangerous eastern region including gaming software company Plarium, which has 816 developers living in Kharkhov. Other Israeli companies with development centers in Eastern Ukrainian cities are Playtika, Wix, and Fiverr.

"We assessed the situation and charted four scenarios of different invasions and reached the conclusion that an invasion in the east is the most likely possibility," said an Israeli IT manager in Ukraine, who manages employees in Dnipro and Kharkhov, and has asked to remain anonymous. "We have plans for business continuity and in an emergency situation, we will evacuate workers to an office in Gdansk in Poland. Our business continuity team, which is responsible for the subject at a corporate level, has been equipped with satellite telephones."

Peter Kolomiets, who manages projects in Ukraine for Israel's Aman Group, has also prepared a plan including assistance in evacuating workers and their families to Kiev, funding for hotel accommodation and food supplies brought ahead of time, as well as assistance with EU representatives in evacuating workers to Poland, if necessary, and buying satellite phones. "We have seen that the shutting down of the Internet is something that the Russians have repeatedly done," said Kolomiets.

Verbit, an Israeli unicorn with 30 employees in Ukraine, has also prepared a business continuity plan, which includes assistance in evacuating employees to Poland, the UK and Israel, and preparing employees for remote work, and paying salaries in the event that the banking system in Ukraine is shut down and the economy disrupted.

Verbit VP HR Dikla Edlis said, "When you ask the employees about the situation, they usually respond dismissively. Nevertheless, we are in constant contact with the employees and whoever asks for assistance for their families or help in moving to another city or country will receive it from us."

Not only salaries, in Ukraine it is much easier to hire employees

Israeli tech companies have been active in Ukraine since the start of the Internet era. But over the past year, the appetite of Israeli companies to hire employees in Eastern Europe has grown in Serbia, Bulgaria, Belarus, Poland, and above all Ukraine.

"Covid sharpened the understanding that there is no difference between an employee working from home in Tel Aviv or sitting in Ukraine," explained Alon Ben-Nun, global high-tech division manager of Aman Group. "In addition, hiring talented employees in Israel is difficult with the growth of unicorns and the capital flowing into local industry. Companies need more employees and aren't getting them, so they need to find a solution. If in the past, hiring good Israeli employees took two to three months, it can now take eight to nine months."

Chipmaker proteanTecs cofounder and VP software development Yuval Bonen said that over the past six months the company has enlarged its Ukraine development center to 50 employees. "We needed to hire talented employees, and after we opened development centers in Haifa and Tel Aviv, we understood that in order to continue growing we have to do something overseas. In Israel out of every 100 CVs that we received, we hired perhaps five, in Ukraine we received excellent candidates and almost everyone we chose to interview was eventually hired for work."

Noa Menko, VP HR of Blend which provides translation and content services, employs 45 people in Kiev and Lvov, is continuing to hire employees despite the situation. "If a year ago, employers could hire workers at low salaries, over the past year there are no few employees in the country that have doubled and even tripled their salary. Although there is a gap of 40% between the average salary of programmers in Ukraine and their Israeli counterparts, there too appetites have been increased. They see many US and Israeli companies coming and the salary demands have risen."

Rising salaries have not deterred Israeli companies from bypassing outsourcing companies and setting up their own development center in Ukraine. WalkMe, which was also working with an outsourcing company, also decided to strengthen its direct presence in Ukraine. WalkMe EVP engineering Ofer Karp said, "Today you are competing with unicorns that opened centers in Ukraine. What is special about Ukrainian programmers is that they are similar to Israelis - give them a task and they run with it."

Published by Globes, Israel business news - - on January 27, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Opening of WalkMe's Ukraine development center Photo: Valentina Rostovikova
Opening of WalkMe's Ukraine development center Photo: Valentina Rostovikova
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