The Ukraine-Russia War has shaken the world, distorted blockchains, unforeseen price hikes, blocked warehouses, and industry disruptions.
While many businesses were still healing from the damages caused by COVID-19 and trying to stand on their feet again, a new enemy seemed to have taken over. The infamous Ukraine-Russia war has thwarted various sectors: agriculture, food, automobile, banks, and steel, to name a few. The IT spheres are also far from immune from this uninvited havoc.
Ever since Russia invaded Ukraine on 24th February 2022, the general public and service providers have equally experienced inescapable price inflation and severely hampered blockchains. This ongoing chaos has put a temporary halt to the further recruitment of industry specialists in Ukraine and Russia from all over the world.
Impact of Ukraine Russia War on IT Sector
As the heat between these two nations is escalating, Indian Information Technology spheres have also stopped selling or taking any IT service from these two countries. India is in a wait-and-see mode to consider moving service or delivery locations in India from Eastern Europe and making strategic decisions, including business continuity plans.
Quarterly earnings reports of India’s ten top IT companies reveal that Europe is one of the most significant clients of India. A great percentage of the software services provided to Europe are from IT companies. With that being said, the rate might decrease in the near future because of the war between Russia and Ukraine. Along with that, various Eastern European companies, acquired by other nations to strengthen their trades, might also get affected due to the Ukraine Russia War.
Additionally, Ukraine has also been one of the preferred destinations for IT companies for both to sell IT services or hire full-time employees, particularly on a contract basis. The country has also founded and co-founded big companies like WhatsApp, Grammarly, PayPal, Affirm, etc. These companies have a large number of employees from other countries. Thus, if the Ukraine Russia War prolongs, many Ukrainian companies and their employees may suffer a significant amount of loss.
India’s one of the biggest IT tycoons, Tata Consultancy Services (TCS), had a word with a reporter about this chaos. The company explains, “In response to the unfortunate events unfolding in Ukraine, TCS wishes to inform us that we do not have employees or offices in Ukraine. We are monitoring the current situation with great concern. We do understand that some of our associates have family and friends in Ukraine and we are extending all support to them during this crisis.” However, Wipro, Accenture, Infosys did not comment on this topic.
Impact of Ukraine Russia War on Energy
Many countries are dependent on Russia for energy resources. This war has caused a significant interruption in gas supply to various other countries. Assumptions are that even if the war ends, the present economic condition of Russia may make it difficult for Russia to export gas.
Crude has jumped 15%. Many renowned oil providers have even mentioned that they will soon offload assets that they own in Russia. So, basically, all Russian and Ukrainian companies that owe money to other nations will struggle to get repaid due to war.
Moreover, pension funds are also not secured due to the economic breakdown in both countries. For instance, the Universities Superannuation Scheme group, the UK’s renowned pension scheme, wants to sell its assets and funds in Russia. It has around 500,000 pensioners and £90 billion in funds. These assets are worth approximately £450 million. The fall in the value of these funds will be one heck of a nasty hit.
Impact of Ukraine Russia War on Banking Sector
Russia owes approximately $100 billion to banks of other nations. Due to ongoing crises, the question raises about the possibility for a default initiation of a 2008-styled liquidity crisis, where banks panic about the state of solvency of other banks and stop lending to each other.
European banks are the most exposed assets to Russian sanctions, mainly France, Italy, and Austria. The reports of the Bank for International Settlements (BIS) disclose that Austrian banks have outstanding claims of around $17.5 billion on Russian debt, while Italian and French banks had $25 billion.
There is also a question of exposure to Ukraine’s potential default on its debt. The circa bond of $60 billion has been downgraded, increasing the risk of default from a feeble possibility to a real danger.
Many Industries Might be Hurt
Russia is one the major countries that supply unique and rarely-found minerals and metals like titanium (used in aeroplanes). One-third of the world’s palladium, a rare metal used in catalysis, is sourced by Russia. Its price has incredibly increased over the past few weeks over fears of a conflict.
Ukraine is the primary source of neon, an element used in semiconductors. Its price has also been disrupted due to the war.
Another industry that has been highly affected because of the war between Russia and Ukraine is agriculture. The prices of food products and agricultural fertilizers have seen a significant surge.
Markets in Asian countries have experienced a dip. The war sent the rates of traditional investments higher with gold raised to more than 1.5%. The US stock market has also significantly been affected in recent weeks, churning over inflation, resulting in the looming conflict in Ukraine.
Possibility of Launching Cyber Attacks
One of the ways Russia may fire back to US sanctions is through cyberattacks and influence cyber operations (ICOs).
All federal institutes have already been alerted of potential influence campaigns on targets, such as power grid operators and major financial sectors like banks. Also, there is a history of Russia conducting cyberattacks relentlessly on Ukraine in 2015 and 2016. However, a huge escalation moved its focus to the US targets.
Sedova pointed to the Russian attack on SolarWinds, an IT software agency, and a ransomware attack that halted the Colonial Pipeline for six days. Power grids, local banks, healthcare centres, etc., could all be adversely affected due to this invasion.
The impacts of this war are potentially massive, and there is a possibility to see more atrocities in the coming days and weeks. As the world is still recovering from COVID-19 and substantial inflation, all industry sectors have become highly volatile. The conflict has only worsened the situation, and finance is going to be on alert to witness how things unfold.
FAQ on Ukraine Russia War
The tension between Ukraine and Russia is not a new thing. The situation started getting out of control in early 2021 when Ukrainian President Volodymyr Zelenskyy requested USA President Joe Biden to let the country be a part of NATO. The Russian didn’t share the same interest and started sending troops near the Ukrainian border for “training practice” last year. The number of troops sent increased incredibly by the end of autumn. By December, Joe Biden warned Russia of the severe sanctions if they invaded Ukraine. Vladimir’s main concern is that the West gives Russia a legally binding promise not to include Eastern Europe and Ukraine in NATO because he believes Ukraine is just a puppet of the West and not an actual state.
As North Atlantic Treaty Organization, NATO, also known as North Atlantic Alliance, is an intergovernmental military alliance among 28 European nations and two North American nations. The treaty was signed on 4th April 1949.