Ukraine Agencies Turn Up the Volume on IT Offshoring Promotion: Seriously?

When the news from eastern Ukraine worsened, with the local Russian-speaking population occupying government buildings, Ukraine’s embassy in Washington shifted into high gear to assure companies that their …

Alex Konanykhin, CEO, TransparentBusiness

When the news from eastern Ukraine worsened, with the local Russian-speaking population occupying government buildings, Ukraine’s embassy in Washington shifted into high gear to assure companies that their outsourcing and shared services investments were secure.

“The Ukraine embassy has taken this kind of communication very seriously,” says Alex Konanykhin, CEO of TransparentBusiness, who is helping the embassy with their communications strategy. “On April 29 they had a reception attended by the ambassador, the head of the economic section and other top diplomats, as well as U.S. Representative Eliot Engel.”

That reception was specifically part of an initiative called “Increase Profits. Support Democracy. Cloudsource to Ukraine.” The strategy is intended to link investment in Ukraine with support for democracy, while also securing profits. The campaign’s web presence, SupportUkraine.us, is a single page that claims Ukraine is “not asking for donations or risky investments.” Instead, the initiative is “proposing a mutually-beneficial program to organizations that outsource IT jobs.”

In effect, Ukraine is trying to turn the situation on its head, and to use the international attention to its advantage. With strong support from the United States and the European Union – and with Russia being given the cold shoulder – Ukraine wants investors to take a closer look at the country, confident that they will like what they see. The website states outright:  “We believe that you will find Ukraine to be a superior option to most outsourcing destinations.”

Communications Needs a Voice

The April 29 reception at the embassy in Washington followed on from a statement made a week earlier, on April 23, after U.S. Rep. Ed Royce (R-CA), chairman of the House Foreign Affairs Committee, and Rep. Engel (D-NY) completed three days of meetings and travel within Ukraine. At that time the representatives confirmed that Vice President Biden and other U.S. officials were unified in their concern over Russia’s perceived destabilization of eastern Ukraine.

From the perspective of Ukraine’s outsourcing and shared services industry, however, the challenge is that political events are overtaking the commercial communication’s strategy. This is understandable, given that political insecurity, and the fear of military conflict between Ukraine and Russia, have taken top priority. The hope is that the larger public relations push will act as an umbrella for commercial concerns.

“The share of IT services in Ukraine’s overall exports is quite small when compared to metallurgy and agriculture,” says Tatiana Shalkivska, the embassy’s press secretary.  “However, the pace of growth in the Ukrainian IT market during recent years is 30% annually.”

The problem with such a campaign – and this is no fault of the embassy – is that it is hard to stay ahead of such a volatile, changeable situation.  Instead, it looks more like a rearguard action to protect the country’s outsourcing industry, which contributed more than US$1.5 billion to the Ukrainian economy in 2013. The embassy itself could offer little information with regard to the nascent program.

“As soon as new developments unfold in this project, we will be more than happy to keep you informed,” Shalkivska told Nearshore Americas. “I can keep you updated on this initiative.”

That said, support from businesspeople like Alex Konanykhin, a Russian-American who ran afoul of the Kremlin some years ago, helps provide credibility while also adding more resources to the communications strategy.

“The territory unlawfully occupied by Russia is not known for IT outsourcing,” says Konanykhin. “So far, the impact has been minimal. We don’t know of any major outsourcing contracts cancelled based on fears of expansion of Russian aggression.”

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Konanykhin is correct, and is proving his value as an embassy partner. With staff stretched to the limit dealing with the international crisis, and with lives on the line, having strong business partners willing to get the word out to the media makes a huge difference.

“U.S. news media has been doing a good job showing the strong support of Ukraine by the U.S. government, G-7, UE, NATO and UN,” says Konanykhin. “Our job is to concentrate on the advantages of outsourcing to Ukraine: the extraordinary tax law of just 5% for IT companies, the high educational and professional level of Ukrainian specialists, and on efficiency of cloudsourcing versus traditional outsourcing.”

Konanykhin and SupportUkraine.us are also appealing to those organizations considering cloudsourcing to Ukraine on the basis of a desire to “contribute to preserving political and economic stability of the world.” That’s a noble goal, but not one often mentioned by organizations looking for workable outsourcing solution.

Easy to Say, Hard to Hear

One advantage that Ukraine has, and something that helps its message immensely, is that the crisis is not of its making. In no way do the present circumstances reflect the country’s intention to be a reliable location to outsource IT services. This compares to countries like Argentina and Venezuela which, some might argue, have made foreign investment more difficult due to interventionist polices resulting in currency crises.

“Ukrainian universities currently produce more than 30,000 IT graduates each year,” says Konanykhin. “Major companies are using Ukrainian IT talent. “

Konanykhin supports his argument with examples of big outsourcing and shared services high-tech presences in Ukraine. For example the South Korean giant Samsung Electronics alone has 1,100 employees in Ukraine. Then there is a raft of other companies, many from the gaming industry. Examples include: US-headquartered NetCracker, SysIQ, EngagePoint, Magento, and Serena Software; the Danish companies Sitecore and SimCorp; Russia’s ABBYY and Yandex; Crytek and Siemens from Germany; as well as Wargaming (Belarus), Playtech (UK), Gameloft (France), Huawei (China), Playtika (Israel), and Adstream (Australia).

That’s an impressive and diverse list, suggesting that Russia may be feeling pressure from a range of commercial interests – some of them even inside Russia itself. And Konanykhin is not about to let up.

“Shortly after the Washington event,” he says, “we will have a similar event in the Consulate General in San Francisco.”

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