Situation in Ukraine Puts Outsourcing Customers at Risk
According to the Everest Group, Ukraine’s IT outsourcing industry has been growing by more than 10% annually, and now has more than 25,000 full-time employees. This growth is at risk, however, due to the situation in Ukraine, which is putting outsourcing customers’ services and data in danger of disruption and loss.
The United States and the European Union have taken actions to forge closer economic ties with and support Ukraine. However, outsourcing customers should remain vigilant regarding risks in Ukraine and keep this situation in mind when structuring or amending outsourcing agreements.
The primary risk facing outsourcing customers is delivery risk, but an outbreak of violence could lead to destruction of data centers and theft of servers. Christine Ferrusi Ross at Forrester recommends that customers with IT outsourced to Ukraine should promptly put a risk plan in place. Such a plan would include discussions with existing providers about shifting work to other countries and discussions with alternative providers, if necessary.
When negotiating outsourcing agreements, customers should consider accounting for geopolitical risk by including data center redundancy and relocation provisions. Customers should also consider termination and cooperation rights that would allow them to move data to alternative service providers without disruption or penalties.