An Unlikely Victim of Russia’s Ukraine Border Warmongering: Israeli Tech

Up to 20,000 Ukrainians work for Israeli tech. As a possible Russian invasion looms, employers urge calm, say situation there is ‘reminiscent of Israel - from afar everything looks horrific’

Corin Degani
Corin Degani
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Members of Ukraine's Territorial Defense Forces, volunteer military units of the Armed Forces stay in line before training in Kharkiv, Ukraine, Saturday, Jan. 29, 2022. Some people in Ukraine's second-largest city are preparing to fight back if Russia invades. Kharkiv is just 40 kilometers (25 miles) from some of the tens of thousands of Russian troops massed at the border. (AP Photo/Evgeniy Maloletka)
Members of Ukraine's Territorial Defense Forces, volunteer military units of the Armed Forces stay in line before training in Kharkiv, Ukraine. January 2022.Credit: Evgeniy Maloletka/AP
Corin Degani
Corin Degani

More than 100,000 Russian soldiers are deployed on the borders of Ukraine, and they could invade the country at any moment. Around the world, developments in the region are being followed with concern. Those in the Israeli high-tech sector are also wondering whether they have reason to worry. The reason: Israeli high-tech companies employ an estimated 15,000 people in Ukraine.

It's not by chance that Ukraine has been in the sights of the Israeli industry when it comes to recruitment of personnel. It has a skilled workforce and low wages. It’s also a short flight away from Israel and in the same time zone. That’s a rare combination of enticing factors that’s hard to find.

“Our employees in Ukraine don’t think Russia’s current threat will ultimately lead to anything – or whatever happens will be of a limited scope, and they are acting accordingly. At the moment, there’s no effect on ongoing work,” said Rachel Shehori, the VP for research and development at Optimove, a firm which develops products for marketers and has a staff of about 20 in Ukraine.

For his part, Eran Cohen, a VP at Ciklum, an outsourcing firm that employs about 3,000 people in the region, said the mood in the country is surprisingly calm.

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Such comments echo the stance of the Ukrainian leadership. While the West has been warning of the danger of a Russian invasion, the government in Ukraine has been downplaying the threat, perhaps for practical reasons, to head off panic and instability in the markets, and perhaps out of a realization that since 2014, ongoing conflict with Russia is simply a looming fact. It was that year that open hostilities began between the two countries.

Most Israeli high-tech firms with staff in Ukraine prefer not to comment publicly at the moment, but behind the scenes, the issue is being discussed.

An outsourcing company that operates in Bulgaria and Macedonia and for which Israeli customers represent a major chunk of its business and others like it says it has been getting a growing stream of requests to transfer groups of developers to their part of the world – meaning from Ukraine to other countries in Eastern Europe.

Ciklum’s Cohen, which works with about 70 Israeli high-tech firms including prominent ones such as Payoneer and Similarweb says, “Clients remember what happened in 2014 and are asking a lot of questions.” There are companies whose management is asking to see business continuity plans that would ensure that the business continues to function in case of the worst, he added.

Relocation and cyberattacks

Several years ago, recruitment of Ukrainian workers, which initially began at gaming firms such as Playtech and Playtika, became very common – and has been accelerating as the industry has grown. Wix, the website customization firm, which has had operations in Ukraine for a decade, has become the largest and best-known Israeli employer in the country. And many other firms have followed its lead.

Wix's offices. Wix is only one of a number of Israeli firms with employees in the UkraineCredit: Ellen Chechkin

“Ukrainian workers are very good fit for integration into Israeli high tech from a cultural and technological standpoint, but in recruiting in Ukraine now, the market is crazy. Over the past year, the demand for workers has tripled and salaries have gone up by 20 percent,” Cohen said.

Ciklum’s employees in Ukraine are mainly engaged in development, technical support, software quality assurance and other tech positions. The company uses several employment models, but generally it’s responsible for the contractual relationship with staffers and related matters such as setting their salaries. The high-tech companies that receive them have professional supervision of them and integrate them into their own workforces.

Eran Cohen says Ukrainian tech workers are a perfect fit for Israeli techCredit: Smadar Kafri

Israeli firms employ about 800 workers via Ciklum. “Half of them are in Kyiv, and the other half in other major cities such as Kharkiv, Lviv, Dnipro and Odessa,” Cohen explains. “According to an unofficial estimate, the entire Ukrainian market has 200,000 developers and it has grown rapidly. Up to 10 percent of this market is employed by Israeli firms. This industry, which supplies quality development services that are nearby, is part of the fuel that makes it possible for the Israeli high-tech engine to move.”

“In the past weeks, we have been dealing with it intensively,” Cohen said regarding the security situation in Ukraine – “what to do, how to communicate it to clients and workers. We have a business contingency plan in place because we have a lot of clients.”

“The business continuity plan has always existed. We activated it in 2014, and also with the coronavirus outbreak,” Cohen noted. “It has two parts. The first deals with the workers’ well-being – their health, and emotional and physical security. Its second part is related to work continuity. With the coronavirus, we’ve seen that it’s an important part of the workers’ mental health, and we completed the transition from working in the offices to home within 48 hours.”

“The possibility of a massive invasion isn’t high,” Cohen speculates, “but we need to be prepared. Through outside consultants, we have determined the possible scenarios for an invasion and ranked them based on probability. We are also taking the possibility of a cyberattack into account that would paralyze the country. That’s a Judgment Day scenario as far as we’re concerned.”

“We are prepared for a situation in which we have to evacuate people, with or without their families, and organize alternate workspaces,” Cohen said. “A year ago, with the tensions in Belarus, we implemented a business continuity plan on a limited basis at our branch there, and among other things we provided alternative communications and looked after relocation to Poland and Kyiv. Most fled from Belarus for a week or two and then returned – and a small number remained on relocation. There was a client who asked workers to remain in Kyiv and they chose to move their families and stay.”

“There are workers who are afraid, for one or another personal reason,” Cohen said, referring to staff reaction to the tension with Russia. “But all told, it’s reminiscent of what happens in Israel. From afar everything looks horrific. From the inside, it looks different, and that’s how they look at it.”

Cohen adds that “from the standpoint of growth and future clients, I believe that Poland will become more attractive.”

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