Russia's Assault Gives Indian IT Industry, Upcoming IPOs Cold Feet

The Indian parity markets are witnessing one of the biggest crashes in history as Russia launched an assault on Ukraine. 

As such, Indian markets, on Thursday, were wiping out $177 billions of investors’ money as Sensex plunged nearly 5 percent. 

Indian IT companies do not have significant operations in Ukraine; they have large centers in Eastern European countries like Romania, Hungary, Poland, and the Czech Republic, where business continuity plans are activated. 

Therefore, companies like HCL Technologies said they are currently assessing the situation to track employee and client dependency.   

In addition, there are about 50,000 tech workers and 200,000 technology freelancers in the battle-inflicted country, who will be affected by the hostile situation, according to research firm ISG. This will, in turn, impact operations across tech companies globally.  

ISG has also warned companies of disturbances related to the cyberattacks launched. 

“Cyber risk outside Ukraine increased significantly during the past 48 hours… All enterprises must be prepared, whether they use Eastern Europe as a technology delivery location or not,” it said in its advisory.  

It is worth mentioning that the Russia-Ukraine war added to the winding market some additional worry over high inflation and expectations of a hostile interest rate hike by the U.S. Fed. This has triggered losses in Indian markets as foreign institutional investors (FII) continued to reveal their money from here for five straight months.  

The company spokesperson said that “the safety of our employees is of utmost importance to HCL. We are also focused on maintaining the highest service delivery levels for our clients, and we closely monitored the situation and have already activated the required business continuity measures.”  

“The weak market sentiment resulted in the deferring listing of companies whose valuation may need to be reconsidered against the backdrop of sharp corrections in some recently listed stocks which were overvalued,” said Neha Khanna, director at ValPro.  

In a note on the Ukraine crisis, ISG said on Saturday, “based on discussions over the past 48 hours, it’s our view that, while some IT services employees have left the country, most are sheltering in place.”  

This is how the situation will remain for the near term due to internet disruption, which resulted in many roads being blocked, and air space has been closed to commercial air traffic.  

The other meaning for that is that delivery is being impacted and that short-term relocation out of the country may be impacted, ISG said.