Business in times of war: A Ukrainian perspective

Over the past 25 years, Ukraine has established itself as a significant player for those looking to outsource. Whether it be IT services, finance, payroll or customer support centers, Ukraine has much to offer international companies.

The current war with Russia, though, has ravaged the country in ways not seen in Europe for almost 80 years. While its effects on the millions of people who have been displaced is clear, SMBs across the country have also been heavily impacted.

We surveyed over 4,200 Ukrainian SMBs to identify how they have so far been affected by the ongoing crisis, how they and their staff have responded to it, and how the war has impacted their plans for future growth.

As our findings show, like the Ukrainian armed forces on the front line, Ukrainian businesses are also displaying extraordinary resilience in the face of great pressure. Such resilience is highlighted by the 70% of Ukrainian businesses that are continuing to operate, despite the invasion of their country. 63% of businesses have also been able to retain most, if not all, of their staff.

But resilience is not the only strength on display. Agility is also in abundance among Ukrainian SMBs, for despite having to face two unforeseen events, first the Covid-19 pandemic and then the war, 72% of businesses did not have a crisis management plan in place before war broke out, and yet were still able to pivot and adapt.

Most inspiring of all, there is every intention among Ukrainian SMBs to continue investing in growth, with 38% of them planning to hire more staff this year. So, although it may seem hard to look beyond the current situation, Ukrainian business leaders are still full of hope, optimism, and confidence, that a bright future still lies ahead, and the best is yet to come.

Key Takeaways

• 70% of Ukrainian SMBs are continuing to operate during the war
• 38% of Ukrainian SMBs intend to hire more staff this year despite the war
• 43% of SMBs were able to retain all their employees. A further 20% retained most of them
• 32% were able to retain all their customers. A further 32% retained most of them
• 72% of SMBs did not have a crisis management plan in place before the war broke out
• 58% think the Covid-19 pandemic gave them experience in terms of adapting quickly to the war
• The biggest challenges SMBs faced in adapting to the war situation was financial issues (35%) followed by high levels of stress among employees (29%)
• 84% think employees volunteering in the war effort has helped increase company team spirit

The war’s impact on the Ukrainian tech industry

The Ukrainian tech sector has grown tremendously over the last 25 years to become one of Europe’s largest exporters of IT services, topping the country’s list of service exports and contributing around 4% of the country’s economic output. The country boasts around 5,000 IT companies, including 1,400 startups, and employs around 285,000 people. The war that broke out in February this year, though, has had an immediate impact on it.

While many were conscripted or volunteered to fight, those who continued with running their business had to quickly adjust and re-assess if, and how, they would be able to do so. For example, Software development outsourcer N-iX evacuated 600 of its employees, most of whom were in Kyiv, in the space of just two days.

At the start of the war, the security situation was certainly unstable and unpredictable. However, this did not necessarily translate into panic and instability for the IT sector and many other industries. Instead, business activities have not only continued but, in many cases, even increased. Many businesses are very supportive of the army and the war effort, with many pivoting their product lines to provide what is most needed by the army and those fighting.As a result, 70% of SMBs have been able to continue to function during the war and it became a vital part of the war strategy to protect communications infrastructure to allow them, and others, to do so. Indeed, while it was necessary to fight the aggressor militarily, it was also of great importance to maintain business activity for the sake of the Ukrainian economy.

Resilient and agile

Not only have Ukrainian SMBs shown resilience by continuing to work under such extreme stresses, many have also been able to do so without losing many customers or employees.

As seen by our survey participants’ responses, 43% of SMBs were able to retain all their employees, with a further 20% retaining most of them.

Retaining employees is only one side of the coin though. Retaining customers and revenues is more important and, currently, one of the biggest threats to the tech economy is panic from clients, both in Ukraine and outside, who may believe their Ukrainian business partner won’t be able to provide them with the goods and services they purchased. Due to this concern, much is being done to reassure clients that it’s ‘business as usual’ – contracts can continue, and even extended.

The results of these efforts are reflected in our survey which show that 32% were able to retain most of their customers, with a further 32% able to retain all of them. Only 12% were unable to retain any of their customers.

“In early 2021, we began to regularly update our Business Continuity Plan. In January 2022, we began moving specialists to safer regions of Ukraine or abroad, covering the costs of relocation. Direct and open communication with our specialists, clients and investors was the key to the success of this project. We regularly briefed the teams on the current security situation in various cities and organized webinars on countering anxiety and learning emergency skills. We also launched our own mental health program which helped us keep a cool head when war did break out. Times of crisis have proven once again that flexibility and humanity can help even in the most turbulent of times.”

Andriy Oksenyuk,
CFO of Ciklum

Ukrainian resilience is certainly an impressive and admirable value the world is taking note of. But in addition to their resilience is their ability to be agile. While many businesses in eastern Ukraine had been working under various stresses since the invasion of Crimea in 2014, the vast majority of businesses, 72%, did not have a crisis management plan in place before the war broke out.

The war clearly caught a lot of businesses off guard and yet most have still managed to salvage large parts of their businesses and retain customers and employees.Having said that, 58% of respondents did find the disruption caused by the Covid-19 pandemic useful in terms of giving them experience in adapting quickly to the war that followed. Many have also found Diia.City, an app set up by the Ukrainian government during the pandemic that help citizens handle their legal and tax issues online, to be very useful during the current war too.

While many have managed to stabilize their businesses, having a crisis management plan in place is essential for any business and a guide to building such a plan can be found at the end of this report.

Future growth

To highlight Ukrainian SMBs’ resilience even further is the fact that, despite the huge hit the war has had on the country’s economy and physical infrastructure, 38% businesses are still intending to grow their businesses and hire more staff to do so.

These intentions could be a result of many high tech employees fleeing the country at the outbreak of the war, with many unlikely to return for the foreseeable future. While these employees may still be working remotely, with a shortage of local human resources, some businesses have no choice but to hire more people to make up for the shortfall.Additionally, it could be the result of some companies relocating their Ukrainian staff to countries such as Montenegro, Spain, Portugal, and Turkey and hiring more staff locally in those countries. Such has been the case with companies like Nasdaq-listed Cimpress, who evacuated its 500 staff members out of the country, online gaming companies, Evoplay and Aristocrat, and adtech company, AppsFlyer, which offered to relocate its Ukrainian staff and provide a monthly stipend to help them relocate.

“I am extremely proud of the resilience of our people. Even in the darkest times, Ukrainians find the strength to do business, support the economy and the army, and actively volunteer. We are clearly aware of our main goal at the moment and are doing everything to achieve it — through thick and thin, bravely, and most importantly — together.”

Liubov Danylina,
Ukraine Acting Country Manager, Payoneer

Team spirit

Not surprisingly, due to the nature of the Ukrainian people, SMB tech employees are involved in volunteering efforts, whether they be in the armed forces or providing help with humanitarian aid. According to a survey by the Association of Ukrainian IT Businesses, tech companies donated around €25 million to humanitarian aid and the Ukrainian military in the first ten days of the war alone.

Interestingly, 84% think volunteering to help their country also helps increase company team spirit. Of course, once the war is over, there will be a tremendous amount of work to do, on multiple levels, to rebuild Ukraine. With this in mind, businesses should not only allow employees to express their altruistic nature but also encourage them to get involved. It will be good for their country and their business.

Payoneer keeps you going in times of war

Payoneer is committed to democratizing access to economic opportunity, to ensuring the security of our customers’ funds and data, and to being the world’s go-to partner for digital commerce as we provide our continued support throughout the affected region.

For our Ukrainian customers, they can access their funds regardless of where they are in the world. Our platform has also opened up to make it easier for customers to fund organizations providing aid to Ukraine.

We are committed to doing everything possible to continue supporting Ukrainian businesses. Currently, most Payoneer customers can continue to use all Payoneer services as usual:

• Receiving payments – You can continue receiving payments from marketplaces and clients as normal. The funds will land in your Payoneer currency balance where they are safe and secure.
• Bank withdrawals – You can continue withdrawing funds from Payoneer to your bank account. Once you have withdrawn them, access to your funds will depend on the level of service offered by your bank.
• Supplier payments – You can continue to make payments from your Payoneer account to other Payoneer customers as well as directly to their bank accounts.
• Card payments– You can continue to use your Payoneer card as usual. There may be some limitations set by local banks on how much you can withdraw from the ATM. Due to logistics challenges, we are unable to deliver a new card into Ukraine currently. We recommend requesting a virtual card instead.

For more details on the services currently on offer to Payoneer customers in Ukraine, Donetsk or Luhansk, please visit our Ukrainian update blog post.

Some final words

It is hard to overstate the devastating impact the war in Ukraine has had on the people there. At best the situation has led millions to lose their homes and way of life. At worst, it has caused many to have, tragically, lost life itself.

It has also given Ukrainian businesses a huge blow and forced them to rapidly adjust and be highly resilient to the new realities. Testament to this quick adaptation and resilience is that 70% of Ukrainian SMBs, despite everything, were largely able to achieve business continuity, 83% were able to retain all or most of their employees, and 38% are looking to hire more this year. And all this, despite 72% not having a business crisis plan in place before the war broke out.

No-one knows what the future holds for Ukraine or when the current war will end. What’s for sure, is that the Ukrainian tech industry, thanks to its strong roots established over the last 25 years, is likely to continue to prove its resilience and agility and will prevail, whatever comes its way.

Creating your crisis management plan

Despite two black swan events Ukrainian business have had to deal with over the past two years, first the pandemic and now a war, they have done well to maintain their level of business continuity as well as they have. But whether it’s a war that threatens to disrupt business continuity, a global pandemic, or economic pressures such as high inflation, business leaders should understand that they operate in an increasingly unpredictable world.

As a result, having a crisis management plan in place should be an essential part of your business strategy. Below we provide you with an outline of the elements you need to take into account to ensure business continuity in times of emergency.