EPAM Systems Starts Exiting Russian Operations After Ukraine Invasion

EPAM a month ago said it would be exiting its Russia business in response to that country’s attack on Ukraine, and this week said it has begun. CRN looks at the risks EPAM faces in the region, including its financial stake and personnel.

Digital platform engineering and software development solution provider Epam Systems, which has thousands of employees in Ukraine, said in a regulatory filing this week that it has started executing on its planned move to exit its Russian operations.

Newtown, Pa.-based EPAM, in an 8-K filing, said it has begun the process of exiting its Russian operations, a move it expect to take about three months.

“This decision follows the Company’s previous announcement to discontinue service for customers in Russia in response to the ongoing unlawful and unconscionable attack on the people of Ukraine. This effort will be completed in phases over the next three months, in close collaboration with the Company’s employees, contractors, and customers,” the company said.

[Related: Lenovo, Acer, Asus Flout U.S. Sanctions Against Russia: Yale Report]

Prior to this, EPAM in early March issued a statement that it would discontinue services to Russia-based customers. EPAM at the time also unveiled an extra $100 million in humanitarian aid to support its Ukraine employees and their family, and said it would accelerate hiring in other areas to ensure continued operations.

EPAM, No. 23 in CRN’s Solution Provider 500, said on Thursday it is in the process of transitioning its Russia-based operations via active employee relocations, including its Russia-based employees.

“Currently, a significant number of employees have already relocated, and the Company expects that substantially more Russia-based employees will relocate to delivery locations outside the country. EPAM expects to continue operating in Belarus, while also progressing with Belarus specific business continuity plans,” the company said.

For EPAM, the Russian attack with the support of Belarus represents a large risk. The company in its SEC Form 10-K, filed February 25 reported that, as of December 31, 2021, it had 16.1 percent of its total cash and cash equivalents, or about $232.6 million, in banks in Russia, Belarus, and Ukraine.

“We place our cash and cash equivalents with financial institutions considered stable in the region, limit the amount of credit exposure with any one financial institution and conduct ongoing evaluations of the credit worthiness of the financial institutions with which we do business. A banking crisis, bankruptcy or insolvency of banks that process or hold the Company’s funds, or sanctions may result in the loss of our deposits or adversely affect the Company’s ability to complete banking transactions, which could adversely affect our business and financial condition. Cash in these countries is used for the operational needs of the local entities and cash balances change with the expected operating needs of these entities,” the company wrote.

EPAM has over 14,000 employees in Ukraine, according to Thursday’s SEC filing. The company declined to say how many employees it has in Russia or Belarus.

“The vast majority [of Ukraine employees] are in safe locations and operating at levels of productivity consistent with those achieved in 2021,” the company said.

In a separate filing, EPAM said it has three subsidiaries in Ukraine, three in Russia, and two in Belarus.