The Russian invasion of Ukraine has opposed crippling sanctions, resulted in incalculable human and economic costs, and made it a pariah.
However, one of the most damaging long-term consequences may simply be the depletion of the country’s vast pool of technological talent.
Up to 70,000 data generation (IT) employees have fled the country and 100,000 are expected to leave next month, the Russian Association of Electronic Communications told the Duma this month.
This equates to about 13% of the sector’s workforce, making an inordinate contribution to the Russian economy.
Fearful of being cut off from foreign platforms and unable to pay foreign customers’ bills, software developers are heading to neighboring Armenia and Georgia, as well as Dubai, where Russians don’t want visas. Most likely, many will end up in Germany, the United Kingdom and the United States.
Thousands of engineers joined the teams on Telegram, a messaging and streaming app, to exchange tips on locating homes and paintings in new areas. More than six hundred are part of an organization called “VC and startups, welcome to Armenia,” where the main rule is: “Don’t talk about politics. “
On Saturday, a player asked for a recommendation on how to reinstate a new Russian company in Armenia. Another member of the organization responded with a photo of a lawyer’s business card and said, “They will help. “
Another organization called “The Ark,” with more than 38,000 members, posted the names and email addresses of other people in Spain and Montenegro who came forward to check CVs or locate smart local schools.
Famous for being among the most productive hackers in the world, Russian engineers are also among the most productive for coding and designing a set of rules: the science of creating the mathematical steps that are used to calculate and process data. almost on par with China as the most sensitive developer country in the world and the most sensitive ratings in the rule set category.
In a country governed by oil and fuel exports, Russia’s IT industry accounts for a smaller percentage of national employment, yet it increasingly contributes to the economy. The sector contains about 1. 7% of its workforce, representing almost 5% of its GDP. Software exports from more than 2000 Russian generation corporations in total around US$9 billion, usually from outsourced development corporations such as Artezio LLC and Auriga Inc.
While the loss of such a skill pool does not affect Russia’s GDP as much as the suppression of energy exports, the genuine effect will most likely be felt for years as the country tries to rebuild itself after the war and regain its position in foreign markets.
By that time, entire groups of engineers will have left and corporations will likely have moved or closed their doors.
This could spread to other industries as they try to modernize, adding banking, oil and fuel exploration, and manufacturing. It would also thwart Russian President Vladimir Putin’s attempt to control reliance on foreign technology.
In a primary policy paper published on the Kremlin’s website in September 2009, then-Russian President Dmitry Medvedev denounced the low power and productivity of the country’s companies, as well as the lack of interest from top leaders. As a result, Russia’s influence on the world economy is not in keeping with its stature.
“Achieving leadership depending on oil and fuel markets is impossible,” he wrote.
Their response to building a wise economy that would create and export new technologies and decrease dependence on raw materials.
Putin, who was then prime minister and would soon assume the presidency, seemed to embrace the perception of a “new economy,” but was then given bloodless eyes. In the face of mass protests in 2011 and 2012, he abandoned those plans and returned to the old structure, with its more punctual benefits for the bottom line.
“Putin fully understands that a broad diversification of the economy and a physically powerful economic expansion would also lead to a diversification of wealth and strength with uncontrollable actors,” researchers Alena Epifanova and Philipp Dietrich wrote for the German Economic Council. Foreign relations.
So he staggered the other. Over the next decade, Putin pushed for the separation of the Russian Internet from the global one and expanded autarkic knowledge in the fields of semiconductors, cybersecurity, and networking.
It only partially worked. Russia is notoriously talented at cybercrime and cyber defense, and is about to create a Splinternet, but it’s far off when it comes to chips and other electronic devices.
However, the country’s leading global coders and more than 4000 IT corporations have sprung up to meet local and foreign demand.
The war in Ukraine may end this last global advantage, and the government turns out to be well aware of this. Russian Prime Minister Mikhail Mishustin last week announced subsidies of up to 1 million rubles ($12,232) in a bid to convince young traders to stay in the country and start new businesses.
In addition, government oversight of technology corporations of all sizes should be reduced and the source of income taxes should be eliminated for 3 years.
Some Russian patriots allow themselves to be influenced, not through loyalty to the government, but through confidence that their country wants them once Putin is gone.
For the thousands who have already fled, and the many others heading for the exit, the truth is that the maximum may never return, and they are the skill that Russia would want maximum when the fighting nevertheless stops.
Tim Culpan is a generation columnist for Bloomberg Opinion. Based in Taipei, he writes about Asian and global corporations and trends. In the past he covered the pace of Bloomberg News.