Prohibition of the Russian IT-Business in Ukraine

Sanctions restrictions

For all legal entities of the sanction are expected three-year term and eight limiting points include:

• Assets are blocked;
• Trade operations are limited;
• A ban on removal of means out of borders of Ukraine is imposed;
• Execution of economic and financial liabilities stops;
• Providing telecom services and use of networks of general purpose is limited or stops;
• Public procurements at legal persons in whom there is a share of state structures of the Russian Federation, or participants of the sanctions list are prohibited;
• Issue of licenses, import permits and export from Ukraine of currency values and restriction for issue of cash on the payment cards emitted by foreign banks stops;
• It is forbidden to transfer technologies, the rights to intellectual property items.

For some companies like Mail.ru Group or "Yandex" additional restrictions are provided. In addition to the general eight prohibiting points it is also required to block access to homepages of these websites from Internet service providers of Ukraine.

The IT companies which fell under sanctions

The sanctions list included the Russian and Ukrainian legal persons of the known software developers, integrators, Internet companies.

Under a ban there were Russian and Ukrainian legal persons of developers of ERP systems. In particular, Russian and the Ukrainian legal persons — 1C and "Multimed_a Ukra§n's 1C" and also a number of their large distributors and representatives in Ukraine: Evrosoftprom, Skaylayn Softver, SUNLINE, "1C-Telur Module", "Alpha Côme Soft", "Soft's 1C-Rarus of Ukra§n", Pershy of b_t of 1C.

Also Parus developers (26 legal persons connected with the company, including the Russian legal person) and Galaktika (the Russian and Ukrainian legal persons) got into the list.

Office ABBYY in Kiev

From product companies are also present at the list Abbyy, Ascon and Ukrainian "Ascon - kr", Letograf, Corus Consulting CIS, cybersecurity developers of products Kaspersky Lab and Dr.Web. The last two are the old residents of the Ukrainian sanctions list who for the first time were included in it in 2015.

Among IT integrators and the consulting companies – Ukra§n's Asteros, I-Teco Projects and Ukra§n's I-Teco, Softline Group and "Softline Group of Ukra§n, "Ukra§n's Saprun" and Saprun Group, a number of legal persons of NVision Group, Optima-Ukra§na, "_ntal¾v Ukra§na" and some other.

Software of 1C in Ukraine enjoys popularity

Under a ban also popular social media and portals, among which – the Russian legal person of Mail.ru Group company and its Ukrainian subsidiary "Ukra§n's Мейл.ру", Russian and the Ukrainian legal persons VKontakte and Odnoklassniki.

In the same place - the Russian and Ukrainian legal persons of "Yandex" and a set of its services. The Ukrainian Internet service providers will need to block services of "Yandex" on the Russian domain .ru and the Ukrainian .ua. In the list there were also popular portals Kinopoisk and "Авто.ру" which belong to the company.

Scales of disaster and effect

In 2014-2015 IT market of Ukraine endured drama collapse. According to the analytical agency IDC, its total amount in 2014 was $2.24 billion after reduction for 43%, and in 2015 - $ dollars 1.4 billion that means decline by 42%^[1].

In 2015, according to IDC, the segment of the equipment was reduced by 43% and made $643 million, software segment — for 50%, to $106 million, IT services — for 38%, to $112 million. The only segment which showed growth — the market of public clouds. In 2015 it grew by 10% and made 9 million dollars.

For comparison - the volume of the Russian IT market in 2015 in dollar expression dropped by 38% and was $17.4 billion, and in 2014 was reduced by 16% to $29.3 billion.

IDC did not publish assessment of IT market of Ukraine for 2016 yet, but earlier predicted that in relation to 2015 it can grow by 5-10%.

The National Security and Defense Council of Ukraine notes that in the conditions of military operations Ukraine is not able to afford financing of "country aggressor" by purchase of the corresponding software products in volume not less than 1 billion hryvnias a year (about 2 billion rubles at the rate of for the end of May)^[2].

TAdviser communicated to representatives of a number of the companies which were placed on the sanctions list. Those from them who as of 2017 does business in Ukraine while are in thoughts what to do in this market in connection with current situation. Many companies which fell under sanctions in Ukraine have big customers.

In Abbyy told TAdviser that learned about the decision of the Ukrainian authorities from open sources and study potential impact of this solution on the company.

At the Kiev office ABBYY about 170 people who are responsible for work in the markets of Ukraine, Moldova, Turkey, Israel and all Eastern Europe work. It is the only office ABBYY which, in addition to promotion of own products, is engaged in development of solutions for accounting automation, distribution and software implementation of 1C, it is told on the website of the company.

Among clients of the company in Ukraine – bodies of judicial authority of Ukraine for which Abbyy created the Unified state register of judgments, Public service of employment of Ukraine, Raiffeisen Bank Aval, the Main data processing center of the Kiev administration, Kiyevgaz, etc.

The situation is studied so far also by Ascon CAD developer. The company told TAdviser that in Ukraine it has no employees, sales in this country her independent partner conducts ASCON-KR on the terms of franchizing. It was also placed on the sanctions list.

According to the website ascon.kiev.ua, products of Ascon in Ukraine use about 200 organizations from the different industries, many of which – in Donetsk. Among clients – about one hundred engineering enterprises, a number of Ukrtatnafta affiliated enterprises - the state operator of the petrotransport system of Ukraine, "subsidiary" of Ukrgidroenergo, "DTEK", "UkrZhD" and Energoatom, Poltavagaz company, Arselormittal Kryvyi Rih iron and steel works and others.

Ascon told TAdviser that in general the Ukrainian market occupies a small share in their business. In total in Russia and the CIS countries products of Ascon use more than 10 thousand organizations.

Did not decide so far what to do against the background of current situation, and in the Saprun company specializing in implementing solutions based on the SAP platform. Saprun in Ukraine has an office at which, according to the representative of the company, about 50 people work. In the Ukrainian market at Saprun about ten clients, among which – the large companies, such as DTEK power holding, Vodafone Ukraine, etc.

Refused comment on a situation and the further plans in Ukraine in 1C. According to one of the largest franchisees of 1C in Ukraine – Evrosoftprom companies, in the country the product "1C: Enterprise" use about 300 thousand companies. The regional development manager of TotalSoft company Roman Kifyak is sure that nearly 80% of small business in Ukraine are used by 1C.

On the Ukrainian website of 1C it is said that the decree of the president of Ukraine concerns only separate legal entities and that the 1C: Enterprise program is completely efficient, the technical support operates normally, all information and methodological resources are available to use. Partner franchisees of 1C continue to render services in updating of products and user support of "1C: Enterprise".

In the SSU after a release of the sanctions decree of the president reported what will lock programs of 1C does not concern the private sector, and affects its uses in state structures^[3].

On the website of the Ukrainian branch of Parus company the message in which the company calls getting into the sanctions list illegal is published, regards it as pressure and says that it will appeal against it. On the website it is also said that Parus is a group of the Ukrainian companies, and authors of its software products are citizens of Ukraine.

Some companies entered in the list say that business in Ukraine is not done. I-Teco, for example, noted that their company has no projects and office in Ukraine for a long time. How long and why, in I-Teco preferred not to specify.

In Corus Consulting CIS, entering into group of Sberbank, told too that do not do business in Ukraine, and the employees the company has no office there.

Softline told TAdviser that else before signing of the sanctions decree of the president their company sold the Ukrainian asset, understanding instability of an economic and political situation in Ukraine. The new owner is the company which in no way is not connected with the Russian Federation, speak in Softline.

The Galaktika corporation told TAdviser that developments under its brand are implemented in Ukraine since 1997. According to the local legislation independent local partners, including Galaktika Corporation, Kiev are engaged in their development and completion. Users of products of Galaktika are the largest state companies and the enterprises in Russia and the CIS countries, including Ukraine.

In 2014 in connection with political events on the Maidan Galaktika suspended cooperation with local partners, including sales of licenses, promotion, development and support of local versions of products in the territory of Ukraine. Independent regional partners whose high level of competence does not raise doubts are engaged in it now.

Among the companies which were included in the list - Asteros Ukraine with which at Russian Asteros is the general individual beneficiaries^[4]. Asteros said that about 3 years the Asteros group does not do with the last joint business and does not perform any project activity on partner or other bases. Asteros Ukraine is an independent legal person who has no relation to the legal person to Russian Asteros any more and is not connected with it uniform management, operational, production or other corporate processes, said in the official statement of the company.

Among clients Asteros Ukraine is division of Sberbank in Ukraine, company "Ukrtelekom", "Prikarpatyeoblenergo", "DTEK Dneprooblenergo", Boeing Ukraine, the Ukrainian telecom operator of FreshTel, etc.

• • 1 XLIFFService: Sequence contains no elements

The Russian IT products use many companies in Ukraine. On replacement with it the Ukrainian authorities intend to develop development of own products. Against the background of sanctions also in this market some foreign vendors are activated. So, for example, SAP together with the partner - BDO - announced an output to the Ukrainian market of a new product – the localized version of the SAP solution Business One. Believe in BDO that SAP Business One can reach a dominant position in a segment of ERP for small and medium business in Ukraine, up to 60% of the market in 5 years^[5].

Read Also

• Sanctions of Ukraine against Russia
• Sanctions of the USA and the EU concerning the Russian oil and gas sector
• Foreign sanctions against the Russian citizens and companies
• IT blockade of the Crimea
• IT market of Ukraine

Notes