IBM winding down its Russian business

Three months after IBM suspended its business in Russia following the country’s invasion of Ukraine, its CEO has announced it is winding down its operations there.

IBM CEO Arvind Krishna told the tech giant’s staff that, following a period of evaluation, it has decided the risks are too high and it will not continue its operations in Russia.

“Our focus for months has been on looking after the safety and security of IBMers and their families in impacted regions,” said Krishna. “We chose to suspend operations so that we could evaluate longer-term options while continuing to pay and provide for our employees in Russia.”

In a letter, which was sent to staff on 30 May but revealed this week, Krishna said the process of closing down the business has begun,

“As the consequences of the war continue to mount and uncertainty about its long-term ramifications grows, we have now made the decision to carry out an orderly wind-down of IBM’s business in Russia.”

He said the move was “both right and necessary”, and a natural next step following the business suspension. Krishna committed to continue offering support for staff affected in Russia, who he said “through no fault of their own, have endured months of stress and uncertainty”.

“We recognise that this news is difficult, and I want to assure them that IBM will continue to stand by them and take all reasonable steps to provide support and make their transition as orderly as possible.”

IBM’s decision mirrors that of other IT suppliers and individual IT professionals. In March, Microsoft announced the suspension of all new sales of its products and services into Russia.

The Russian Association for Electronic Communications, one of Russia’s public associations in the field of IT, recently reported that about 50,000-70,000 IT specialists left the country in March, with another 100,000 people leaving in April. The figures for May are currently unavailable, but according to some industry sources, they will be comparable to those of previous months.

The Russian government has already initiated its plan to replace foreign technology used by its public sector. President Vladimir Putin recently signed a decree which bans state authorities and other state customers from using foreign software in their infrastructure. In addition, since 31 March, state-owned companies in Russia have been prohibited from purchasing foreign software.

Peter Schumacher, CEO of management consultancy The Value Leadership Group, said: “Exiting the country without finding a way to retain its Russian staff might place the company at a disadvantage. IBM’s departure from Russia is yet another wake-up call for Russian IT talent that their best opportunities are now abroad.

“While many countries stand to benefit from the Russian tech diaspora, including Germany and the US, Israel is likely to be a particular beneficiary. The country’s new fast-track immigration process, the fact that 17% of Israelis are Russian speaking, and the country’s reputation as a technology powerhouse all stand to make the country an important destination for Russian programmers and data scientists. Following the collapse of the Soviet Union, Israel’s technology sector benefited more from Russian talent than any other country.”