IBM ‘Unsure’ How Long It Can Keep Paying Russian Staff

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IBM chief executive Arvind Krishna says company unsure how long it can continue to keep Russian staff on payroll as impact of sanctions bites

IBM’s chief executive has said he is unsure how long the company can continue paying the staff it continues to maintain in Russia due to increasing sanctions.

The firm in March suspended all operations in Russia, but has continued to employ staff there, amounting to more than 1,000 workers, according to LinkedIn.

Chief executive Arvind Krishna told Reuters that as Western sanctions continue to bite in Russia its ability to continue paying workers in the country “may go away”.

He added that IBM’s employees in Russia “didn’t create any of this. They should not suffer any harm as a consequence.”

An IBM Z mainframe. Image credit: IBM
An IBM Z mainframe. Image credit: IBM

Russian staff

Krishna spoke as IBM launched its annual Think conference on Tuesday as the conflict in Ukraine continues into its third month.

The company is one of several multinationals, also including SAP and Microsoft, who have maintained staff in Russia, a decision some of their workers have protested.

IBM suspended its Russian operations following internal criticism, at around the same time that Microsoft, Oracle and SAP took similar actions.

The company says it has ceased working with Russian companies anywhere in the world, but has stopped short of layoffs.

SAP in April said it would completely withdraw from Russia and was planning an “an orderly exit from our operations” in the country.

Russian prosecutors have warned companies including IBM of arrests and seizures if they exit the country or criticise the government, the Wall Street Journal has reported.

Revenue hit

Krishna said the government “has not really taken our assets”.

He said IBM is “reasonably confident” it is not engaging directly or indirectly with sanctioned indivduals, based on due diligence about who is financially backing its business partners and projects.

He added that “a long road” was ahead before IBM could resume normal operations in Russia.

Last month the company said it expects to hit the top end of its revenue growth forecast for this year, in spite of a $300 million (£243m) hit to its revenues from the suspension of its Russian business.

IBM, Dell and HP Enterprise dominate the market for business servers in Russia.

The loss of that business represented less than “half a percent” of IBM’s total revenue last year, said IBM chief financial officer James Kavanaugh, but said the loss would nevertheless remove $200m from IBM’s 2022 profits.