Russian IT brain drain accelerates dramatically as economic collapse threatens industry

Russian IT brain drain accelerates dramatically as economic collapse threatens industry
An estimated 50,000-70,000 Russian IT professionals have left their country since the start of the #UkraineRussiaWar #Ukraine #UkraineWar #Russia #bneTech #bne #EmergingMarkets / wiki
By East West Digital News in Moscow March 25, 2022

Since the war in Ukraine began, triggering unprecedented international sanctions against Russia, some 50,000-70,000 Russian IT professionals have left their country, reports the Russian Association of Electronic Communications (RAEC), reports East-West Digital News (EWDN).

This is only a first wave, says the association, which expects up to 100,000 additional IT workers to leave in April.

“The only things holding back the second wave are the high costs of tickets and housing in the countries of destination, and the fact that it’s now almost impossible to make international financial transactions” [or withdraw money in hard currency from Russian bank accounts], said RAEC head Sergey Plugotarenko on March 22 at a meeting at the Russian parliament (Duma).

The war and the economic collapse have dramatically accelerated a pre-existing trend. A 2020 report by Natalya Kasperskaya and Valentin Makarov, two figures of the industry, warned about a looming massive brain drain due to the degradation of Russia’s economic climate.

The total number of IT professionals in the country is estimated at around 1.8mn. Even though some 80,000 young specialists graduate every year from universities, they are far from fully addressing demand, with the shortage of talent estimated at 500,000-1mn.

Resisting the crisis and retaining IT workers

As the Russian economy is collapsing, the Ministry of Finance has a plan to support the IT industry. In particular, as reported by Interfax, IT companies will be exempt from income tax and inspections for three years, and their employees engaged in software development will receive a deferral from conscription.

In addition, developers of mobile applications and organisations engaged in the implementation, installation and testing of domestic solutions will enjoy tax preferences. IT companies will be able to get preferential loans at a rate not exceeding 3%, and their employees will be able to obtain preferential rate mortgages.

On its side, the Ministry of Digital Development, Telecom and Mass Media has proposed spending RUB14bn (around $1.6bn at the pre-war level, $1.3bn now) on additional support measures. These include grants for small high tech businesses through the Bortnik Fund, the Skolkovo Foundation and other organisations.

Telegram channel Kremlevskaya Prachka (“Kremlin Laundress”) believes there is “a built-up system for pumping out trained specialists in the field of information technology, which Russia has begun losing at an indecent rate. Our companies today are not just unable to compete with foreign ones in terms of salaries.”

Russian online publication TAdviser provides an example: last year Cisco reportedly poached a top IT telephony engineer from Russian company Iva Technologies, offering a €20,000 monthly salary and an attractive welcome package to have him move to Holland.

IT professionals’ patriotism might be weakened by the fact that “these guys and girls do not watch TV and do not listen to the radio,” suggests Kremlevskaya Prachka. Controlled directly or indirectly by the authorities, these media channels are heavily supporting the Kremlin’s propaganda effort in the current conflict.

“The point of no return is approaching, and if the dialogue [between the state and] the [IT] industry is not established in the near future, the Baikal and Yotafon processors will remain the main achievements of the Russian technology industry in the XXI century,” concludes Kremlevskaya Prachka.

This article first appeared in East-West Digital News (EWDN), a bne IntelliNews partner publication.