Indian IT software services giant Infosys said on Wednesday that it has started to “transition” all of its work in Russia to centres outside the country and it doesn’t work with Russian clients. In simple terms, Infosys is moving out of Russia amid the Ukraine-Russia war that is nearing two months now.
But the question remains – why Infosys is moving out of Russia? That too, when there are no Russian clients nor its business has been impacted by the war situation. It appears the company has taken a precautionary call under some external pressure. And that possibility can’t be ruled out.
Concerns over Ukraine-Russia War
“Infosys as a company very much would like to see that the two sides come together and come to some agreement on peace,” said CEO and MD Salil Parekh during a media briefing on the Bangalore campus on Wednesday.
The Bangalore headquartered company said it is “very much concerned” by the ongoing situation and has even launched a $1 million fund to help in humanitarian areas.
“Given what is going on in the region, we have started to transition all of our work from our centres in Russia to our centres outside Russia,” said Parekh
“We have less than 100 employees in Russia. We work with no Russian clients and the work we do is with a small number of global clients in Russia,” he informed.
Eastern Europe presence
Interestingly, Infosys doesn’t have a local business in Russia nor has Russian clients and it serves a small number of global clients with less than 100 employees.
However, Infosys has a good presence in Europe and Eastern Europe region. It has offices across major East European countries including Austria, Belgium, Bulgaria, Croatia, Czech Republic, Hungary, Latvia, Lithuania, Slovakia and Russia.
No business impact but concerns remain
The company hasn’t been impacted by the war situation. “At this stage, we have no impact within our business given what is going on from Infosys’ perspective,” CEO Parekh replied when asked about the impact of the situation on the company’s business.
But he continued to raise concerns about the ongoing situation. “Once again we are very much concerned with what is going on, on the ground and are doing everything, we can, to help,” added Parekh.
Boycott of Russia
Even when there’s no impact on business, the Indian IT company remains worried about the situation there. Not only that it even said it has “no plans to do business in Russia” in future.
“We don’t do any business with Russians clients today and we have no plans of doing business going ahead,” stated Parekh.
Does this mean, Infosys is boycotting Russia like the companies and businesses from the western countries? And what compelled CEO Parekh to say that Infosys have no plans of doing business in Russia going ahead raises some doubts.
Yes, there could be reasons. That may have forced Parekh to make such a statement that sounds like a diplomat or politician. And less like a former member of Capgemini‘s Group Executive Board with more than 25 years of leadership experience.
External pressure and tactics
Plausibly, the US and UK based investors and shareholders may have put some pressure on Infosys management over the past month to exit Russia. Because Infosys stocks are listed and traded on New York Stock Exchange (NYSE) under ADR, besides on BSE and NSE in India.
In addition, a big chunk of the clients from the US, North America and European markets may have threatened to cut ties with Infosys, since their governments have already imposed economic sanctions on Russia.
And mind well, Infosys earns over 60% of its revenues from North American markets and certainly, it can’t afford to lose those clients and let business suffer.
Pressure tactics from these foreign investors and clients along with their governments can’t be ruled out. As it remains evident that since the war broke out nearly two months ago, the US, Europe and its allies have imposed tough economic sanctions on Russia.
Exit Russia call from the West
Following those sanctions, the majority of US and Europe based companies including Google, Amazon, Microsoft, Oracle, SAP, Polycom and several more have halted their business operations in Russia and exited the country.
They have tried to decouple the Russian economy and businesses from the west to put pressure on Russian leadership to end the war against Ukraine. In fact, SWIFT – the financial transaction and payments communication provider between banks globally has removed some seven Russian banks from its system denying them access to international markets.
Further, they have been supporting Ukraine and its people with essential supplies along with special funds for humanitarian work. Even Infosys has followed in its footsteps and launched a $1 million fund for people in Ukraine.
Infosys’ decision not to do any business in Russia in future falls very much in line with what those US and European companies have said and done so far. With that Infosys probably becomes the first major Indian IT company to exit Russia in wake of the Ukraine-Russia war.
From geopolitics and diplomatic relationship per se, unlike the Indian government’s neutral stand, Infosys has taken a different stand. Yes, it’s not any government-owned company.
But is a listed entity driven by investors, having very hefty stakes in the company and commercial interests in international markets. And that gives every reason for Infosys to act in interests of its investors and clients.
While Infosys is moving out of Russia, back home the company could have to deal with some implications ahead.
(Image credit – Vemaps)