Mass layoffs hit Russian IT workers as businesses try to conceal cutbacks amid claims of a robust economy — The Bell
Layoffs of IT specialists in Russia have accelerated as 2024 draws to a close. According to reporting by The Bell in its subscribers-exclusive newsletter, the cutbacks have hit both tech firms and the IT divisions of companies in other industries. However, Russia’s wartime political posture has made it difficult to speak openly about economic setbacks, and businesses have labored to conceal or deny mounting troubles with IT personnel. Meduza summarizes The Bell’s report.
Multiple IT recruitment specialists told The Bell that businesses have tried to conceal information about the layoffs or denied outright that cutbacks are happening at all. One source explained that layoffs have been “quietly underway” all year, but the rate intensified in recent months. “No one is ready to make this public. They say, ‘Sure, we let some people go, sure, it was the whole department, sure, it was the entire project, but it’s not layoffs, come on,’” the source said. Another IT recruiter told The Bell that layoffs have become routine. “Entire teams are coming to us,” he explained.
On December 11, the Telegram channel “Non-Digital Economy” (which reports on the IT industry) also wrote about layoffs in Russia. A source told the channel that “top-earning staff” are being downsized “amid rising borrowing costs.” According to another source, companies are trying to enter the new year “with streamlined payrolls.”
The Bell reported layoffs at the social media conglomerate VK and the telecom giant MTS, though both companies deny it. The Bell’s sources also mentioned cutbacks to IT workers at the development group Samolet. (Samolet says it merely “streamlined” its IT department to eliminate redundant functions when creating a new division called Samolet Technologies.) Sberbank is also rolling back investments in testing and evaluation, reportedly by cutting contracts with outsourced IT product developers.
Additionally, the founder and former CEO of MyOffice (which designs office software intended to replace Microsoft Office products in Russia) revealed earlier this month that executives had laid off its entire senior management (who were appointed only two years earlier when Kaspersky Lab gained control over the company). The IT Workers Union has reported cutbacks at other firms, as well.
Sources told The Bell that financial difficulties are a key reason Russian companies began laying off IT specialists. For example, Samolet Group has seen a decline in real estate sales, MTS has experienced a sharp drop in net profit, VK and MyOffice are reporting significant net losses, and Sberbank’s net profits have slipped. The Central Bank’s high key interest rates have also slowed client consumer activity.
The Bell argues that Russia’s high key interest rate is the greatest problem facing the country’s businesses today. The rate has been climbing since the summer of 2023 and now stands at a record 21 percent (with forecasts suggesting it could rise to 23 percent). Companies are abandoning costly projects with uncertain profitability, resulting in “entire teams being cut.” “And it’s not just marketers but also developers who are being let go,” sources told The Bell.
Another source explained that Russian firms “overhired developers at high costs, but companies’ earnings didn’t grow nearly as much,” and many projects that invested aggressively in IT workers failed to “take off.” The same source told The Bell that he believes the market was previously overheated, and businesses have turned to “optimization.”
“The economy is screwed,” the source said. “IT specialists were supposedly in high demand, there was a labor shortage, and so on. But the market has no money for growth, and marketing instruments have failed. Sure, companies need marketers and IT specialists, but there’s no money [to pay them]. However, they’re hiding all this because, in Russia, the economy can’t possibly be screwed.”