Russia’s tech industry faces ‘brain drain’ as workers flee

In early March, days later Russia invaded Ukraine Starting to suppress dissent in the country, Konstantin Senyushin, a venture capitalist in Riga, Latvia, helped charter two planes from Russia to help people flee.

Both planes departed from Moscow with technology workers from the Russian capital, as well as from Saint Petersburg, Perm, Yekaterinburg and other cities. Together, the planes smuggled about 300 software developers, entrepreneurs and other technology professionals out of the country, including 30 Russian workers from start-ups supported by Siniushin.

The planes flew south across the Black Sea to Yerevan, the capital of Armenia, where thousands of other Russian tech workers had fled in the weeks after the invasion. Thousands more traveled to Georgia, Turkey, the United Arab Emirates and other countries that accept Russian citizens without a visa.

By March 22, a Russian tech industry trade group estimated that 50,000 to 70,000 technical workers had left the country with 70,000 to 100,000 soon. They are part of a much larger exodus of workers from Russia, but their departure could have a lasting impact on the country’s economy.

Mass immigration will fundamentally change the Russian tech industry, according to interviews with more than two dozen people who are part of a tight-knit community of Russian tech workers around the world, including many who have left the country in recent weeks. An industry once seen as a growing force in the Russian economy is losing large sections of its workers. You are missing out on a lot of bright young minds building companies for the future.

“Most Russian tech workers are part of the global market. Either they work for global companies or tech entrepreneurs trying to create start-ups for the global market,” Senyuchin said through an interpreter from his office in Riga. “So they are leaving the country.”

The recent mass exodus reflects 10 to 15 years of momentum in the Russian tech industry, said Konstantin Sonin, an economist at the University of Chicago’s Harris School of Public Policy who immigrated to the United States from Russia. “Now it’s like in the ’90s, when anyone moves they can move out of the country,” he said.

Zvartnots International Airport in Yerevan, Armenia, on March 14, 2022. The country has become a landing place for technology workers leaving Russia. (Darrow Sulakuri/The New York Times)

Technology is a small part of the Russian economy compared to the energy and metal industries, but it is growing rapidly. Economists said the loss of many young, educated, and forward-thinking people could have economic repercussions for years to come.

“The long-term impact may be more significant than the short-term effect,” said Barry Ecks, chair of the Department of Economics at Penn State University who specializes in Russian economics. Ultimately, Russia has to diversify its economy away from oil and gas, and it has to accelerate productivity growth. Technology was a natural way to do that.”

The workers left the country because they opposed the Russian invasion of Ukraine, they no longer wanted to live under Putin, and they feared that they would not be able to express their opinions if they remained. By working in technology, a relatively profitable industry, they had the money to flee the country. And like other tech workers globally, they can continue their work from anywhere with a laptop and an internet connection.

Others left because their companies kicked them out.

After foreign governments imposed sanctions on Russia and many American and European companies stopped selling products there or blocked access to banking and the Internet, some Russian tech workers didn’t have the tools to do their jobs. Companies struggled to pay it.

Some worked for companies based in Russia and others for companies based elsewhere. Many start-ups in the United States and Europe, including many founded by Russian entrepreneurs, have relied on programmers, engineers, and other tech workers in Russia. For Russian businessmen living abroad, these workers were a known number and not quite as expensive as specialists in Silicon Valley and other parts of the United States.

Dasha Krushkina, the founder of the Russian-born company, said StudyFree, a startup in San Francisco that helps students find college scholarships and grants, employed about 30 workers in Russia, but keeping them there became a burden, so the company moved them.

“We will not be able to attract that much funding if we still have employees in Russia,” he said.

In March, the number of members of the group that provides advice and other assistance to people moving from Russia to Yerevan through the online messaging app Telegram grew to 18,000 members. On weekdays, Russian tech workers packed cafes and other public spaces, and as they competed for places to live, rental prices skyrocketed, according to several who worked on finding apartments through the Telegram group.

“We don’t have enough quality apartments for highly educated people with high salaries and high standards,” said Aram Shahbandarian, a former Google employee in Yerevan who helps many Russians relocate to the city. Yerevan cracks.

Vahan Kirupyan, Minister of Economy of Armenia, said in an interview that as a country with a strategic relationship with Russia, he was not promoting himself as trying to get companies out of Russia, but if the companies decided to move, he would work to absorb them. .

“The Armenian tech community gives support to its Russian friends, and the government is very concerned about giving Russian companies a nice, not very expensive place where they can work,” he said. Korobyan estimated that 43,000 people have moved from Russia to Armenia, half of whom have Russian passports and the other half hold Armenian passports.

Kirubian said, the US software company Miro, had chartered flights to Yerevan for its Russian employees and moved them to two hotels in the heart of the city. He said X-tensive, a software development company in Russia, had moved its employees to the Armenian city because its main client, ServiceTitan, was founded there.

Miro said publicly that he was taking his workers from Russia. X-tensive did not respond to a request for comment.

Many of these workers will eventually be able to relocate because visa restrictions require them to leave their current home after a certain number of days. Many are not sure where they might go. Others plan to move to promising technology centers further afield, such as Dubai, United Arab Emirates; Lisbon, Portugal.

Artem Taganov, founder and CEO of a Russian startup called HintEd, said he knows about 70 Russian company founders who, like him, fled to Armenia. He said that if the entrepreneurs remained in Russia, their companies would only be able to serve the domestic market.

“Before all this began, Russia had such a strong technological base,” Taganov said. “We now have a brain drain that will continue for the next five to 10 years.”

Russia has a tradition of producing talented software engineers and web developers. Prominent companies such as Telegram and Yandex came from the country. As sanctions isolate the country from the global economy, tech companies will have to follow the lead of China, a much larger country where companies have successfully served local customers.

The Russian government wants to keep tech workers in the country, offering lower tax rates, preferred mortgages and even a promise not to enlist them in the military, according to state media. Last week, Mikhail Mishustin, Russia’s prime minister, called on Russian technology workers to create our “ecosystem”.

“The Motherland has given you everything you need to do your work,” Mishustin said in his annual address to Parliament. “You will be able to work reliably and calmly for your country, for your company, earn ordinary money and live here comfortably.”

Many will remain in Russia to work in state enterprises. But they will face other obstacles.

They may have to rebuild many of the basic tools needed to build modern Internet software and services. It can become difficult to find critical computing devices because sanctions limit their availability.

Stepan Pachekov, who was seen by many as one of Russia’s first successful tech entrepreneurs after setting up Parascript, a company that makes handwriting software for Apple devices, said the smartest tech workers have been leaving the country for years. above.

Since Pachekov has seen Russia isolate itself economically from the world and become more constrained at home, he is not very optimistic about the future. “It’s devastating,” he said. “If you lose a lot of blood, this is death for the body. Russia has lost a lot of blood.”

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