Far From The Front Lines, Ukraine Conflict Affecting Local Tech Industry

Russia’s invasion of Ukraine has upended the world order seemingly overnight. While the dire threat to the freedom—and very lives—of the Ukrainian people are of course the most pressing issue, ripple effects from the conflict are spreading across the globe. One place that the impacts are being directly felt: the local tech industry.

After all, Ukraine has over 166,000 software developers, the second largest number in the Eastern European region after Poland. Many are outsourced and working for companies across the United States, including in the Triangle.

According to Pitchbook data, there are 126 startups with primary or secondary offices in Ukraine that have raised venture capital funding since the beginning of 2021. These include unicorns like Grammarly and Github. But closer to our own backyard, several North Carolina companies rely on outsourced developers in the region as well. 

Many of these developers are now living in a war zone, which obviously makes time for coding far less of a priority than day-to-day survival. According to recent reports, many residents have fled west—more than a half-million have already become refugees—and hundreds of Ukrainian civilians have died.

Charlotte-headquartered data analytics startup Fairfax Intel exclusively works with Ukraine-based development partner RBC Group. As of Sunday morning, everyone was safe and accounted for, said Fairfax Intel’s CEO and Founder John Fitts. RBC runs a daily call every morning, and so far they still have Internet and telephone access.

The head of RBC Group fled his home—located just miles away from the airport where Russian troops destroyed the world’s largest airplane—alongside his wife, daughter and dog. The journey out of Kyiv was arduous, Fitts said, as the family faced significant roadblocks and debris. But they made it out safely and have been keeping in touch along the way.

Over the past 72 hours, the entire Ukrainian team built an application for automatic notifications to employees and friends. As a business leader, Fitts said he is sharing the fundraising efforts as he becomes aware of them, the main one being to donate to the Ukrainian military directly.

The head of RBC Group lived just miles from the airport where the world’s largest plane, the AN-225 “Mriya” (Dream), was destroyed this week by the Russian military

“I was there in September and could tell their passion and commitment and their pride in what they’ve been able to achieve since the fall of the Soviet Union,” Fitts said. “They’re like family to me now.”

Beyond raising funds, though, Fitts said the main way Fairfax Intel can support their Ukrainian developers is by continuing to provide them work.

RBC Group is actively moving projects and keeping the developers busy, Fitts said. It would not be helpful for them to stop, he said. Fitts believes that for many of them, this time of struggle has only exacerbated the need for economic opportunity.

WorkDove, a Durham-based workplace management tech startup, also utilizes a developer service in Ukraine. Through this, two full-time developers work for WorkDove on a daily basis. The relationship WorkDove has had with the service has always been good, said WorkDove CEO Melissa Phillippi, and the developers are very much part of the team.

One of their developers has moved to west Ukraine, while the other has stayed in a riskier area. The business continuity plan is to relocate all the employees to Poland and surrounding areas if things get worse.

In addition to showing compassion and understanding, Phillippi also said that continuing to provide a source of income is one of the ways WorkDove is working to support the developers during this time, especially as other tech companies might consider pulling back entirely from using Ukraine-based services.

“It’s going to slow some work down for a period of time, but I think that’s O.K.,” Phillippi said. “We’ve got to care more about the people than we do sometimes about the output. And when you do that, in these times, it takes care of itself. You take care of the people, people will take care of the product and the customers, which will then take care of the business.”

Raleigh-based activity planning platform PlanMyKids likewise relies on five people at a Ukrainian development company called Codica. As of Friday, 35 percent of the Codica staff moved west, but everyone was safe, said PlanMyKids Founder and CEO David Watkins. It is far from a typical work environment however, and those still in Kharkiv are spending hours of their day in bomb shelters.

Learning of the conflict in Ukraine has become deeply personal for Watkins, who said the development team is akin to his friends and family. The primary concern is for their safety right now, but PlanMyKids’ sprint cycle has been delayed. 

“It didn’t happen,” Watkins said of the latest planned sprint. “Who would have thought that the invasion was going to happen so quickly? At this point, we’ve got a sprint that’s incomplete, and we’ll just work around it right now and just need to do what we can. They’ve got other things to worry about right now, other than writing some code.”

Phillippi said the conflict could cause tech companies with the resources to do so to shift away from hiring in Eastern Europe. The low cost of development is the primary reason startups look to countries like Ukraine, but now other areas like South America could prove more attractive.

“There’s a level to which certain companies with more resources might shift away, but I think if you’re bootstrapped or scrappy or you just don’t have a ton of extra money lying around you, you might just need to take that risk,” Phillippi said. “We’re going to continue to take the risk but not just because it’s a good economical choice. They do good work. They’re [committed to] our core values and what we’re doing here, even though they’re thousands of miles away.”

Corevist, a Raleigh-headquartered B2B ecommerce software startup, employs around 30 developers in Eastern Europe, specifically in Belarus, Georgia and Poland. Corevist originally brought the developers on after finding it was the most cost-effective solution for their development team.

Since the entire Corevist development team is located in Eastern Europe, it’s a difficult balance to ensure employees and clients are getting what they need right now, said Corevist’s COO Susan Wall.

Wall anticipates the conflict will delay a lot of work. Because of this, like many other tech companies, Corevist has begun discussing what the right strategy will be as a business in growing the development team down the line.

“We have a wonderful team,” Wall said. “We don’t want to lose a single person. Every one of them are just phenomenal. We want to keep all of them on. But we are thinking about, as we continue to grow, should we grow in that area?”

Depending on how long the conflict lasts, Watkins said he will have to start looking at other development company options. He doesn’t want to abandon his current developers, and he would prefer to continue with that part of Europe where he said the talent and culture is so great. But in a situation of extended guerrilla warfare, he will ultimately have to look elsewhere, he said.

“At that point, you just have to call a spade a spade and still hope that everything works out,” Watkins said. “When they’re ready for me to come back, I’ll definitely come back because I want to support them. But I can’t go without moving things forward forever.”

In these turbulent, ever-changing days, Wall’s priority is having compassion for the impacted employees. Their mental and physical health is the most important thing, she said. And as a U.S.-based tech company, continuing to provide jobs is the No. 1 thing they can do to help.

“While we have businesses to run, we need to have compassion for our colleagues, who are in these very difficult, unimaginable situations,” Wall said. “We need to do what we can to support them and understand what they are going through and continue to provide the opportunities we can.”

For Fairfax Intel, Fitts said the past few days have increased his commitment to using his Ukrainian developers.

Even amid the war, the team is getting their work done. Fitts sees the Covid-19 pandemic as almost a set of training wheels that enabled a distributed, virtual community to still make significant accomplishments during a period of global strife. Establishing safety and communication protocols on a daily basis became normalized on team projects during the pandemic. If team members have the ability to be online, they are open and available to contribute.

Fitts said his Ukrainian developers are looking beyond the war, not seeing the conflict as a finality but instead as something to overcome and then emerge stronger from.

All of the North Carolina-based startups praised the work ethic and dedication that Ukrainian developers displayed, and Fitts believes their performance right now is actually going to raise their tech profile on the world stage.

“This has affirmed the decisions we made starting in 2016 that the people we chose to partner with were the right people,” Fitts said. “It even gives me more faith in them and their capability than I knew of in 2016. I think the world is actually watching this in amazement and is somewhat humbled, if not inspired, by watching what the Ukrainian people are doing.”

About Suzanne Blake 275 Articles
Suzanne profiles startups and innovation for GrepBeat. Before working at GrepBeat, Suzanne attended UNC Chapel Hill, obtaining a degree in journalism and political science. Previously, she wrote for CNBC, QSR Magazine, FSR Magazine and The Daily Tar Heel.