Microsoft, SAP, IBM under fire over stance on Russia

Microsoft president Brad Smith wrote to Ukraine’s leader this month with a clear message: despite Kyiv’s calls for it to sever all ties with Russia, the US software behemoth would continue doing business in the country with non-sanctioned clients, including schools and hospitals.

“Depriving these institutions of software updates and services could put at risk the health and safety of innocent civilians, including children and the elderly,” Smith said in the previously unreported 14 March letter.

Smith told President Volodymyr Zelensky that Microsoft was “mindful of the moral responsibility” to protect civilians. However, he said the company was discussing with US, British and EU governments whether “to halt any ongoing services and support” in Russia and would move “in lockstep with their sanctions and other economic goals”.

Asked about the exchange, spokesmen for both Microsoft and Ukraine said a constructive dialogue was under way about actions to support the country.

The decision by some leading Western business technology makers — including Microsoft, German software multinational SAP and US giant IBM — to maintain operations or staff in Russia despite Ukraine’s appeals have angered their workers in several countries.

Small groups of employees at Microsoft, SAP and IBM have called for management to withdraw fully from Russia in the wake of its invasion of Ukraine, according to comments on internal discussion forums and interviews with 18 workers familiar with the companies, who sought anonymity because they were not authorised to speak publicly.

The employees – echoing Ukrainian officials – have urged the companies to go beyond ending new sales and dropping sanctioned clients in order to increase economic pressure on Moscow. They want their companies to suspend every deal in Russia, including for software clients may use to track sales, supply chains and workforces.

Stopped short

Asked about the internal criticism, IBM said it has ceased working with Russian companies anywhere in the world — though it has stopped short of layoffs or suspending support of foreign businesses in Russia.

SAP said it was complying with government actions and even going beyond them, and it would “welcome new sanctions currently under discussion”. SAP responded to Ukraine’s requests to cut all ties in Russia with a previously undisclosed letter this month to President Zelensky saying that it was supporting essential Russian services, including “hospitals, civilian infrastructure and food supply chains”.

The three companies have not ruled out further pullback. But for now, their employees in Russia are getting paid and accessing workplace tools, colleagues said. Local phone numbers are active for all three, Reuters found.

Questioned about the demands on Western tech businesses from their own workers and the Ukrainian government to quit Russia, a Kremlin spokesman said that “some companies are leaving, others are staying. New ones will come in their place.” The spokesman noted that companies had legal obligations to employees that must be fulfilled, such as paying wages.

Russian prosecutors have warned some Western businesses that their staff could face arrests if production of essential goods was stopped, according to media reports. The Wall Street Journal named IBM among those warned. The Kremlin spokesman denied the reports about pressure on companies from prosecutors: “The part about arrests is a lie.”

Ukraine vice Prime Minister Mykhailo Fedorov, one of the leading campaigners for a digital blockade, said Russia was already feeling the impact as some technology companies exit, such as developers of digital payment and Web development tools. But he is pushing for a complete departure. “We will keep trying until those companies have made the decision to leave Russia,” he said.

Fedorov’s team said last week that a “huge number” of Russian organisations have contracts for SAP’s software, including major banking and energy companies. Reuters could not independently confirm SAP’s customers in Russia, and SAP said it was in full compliance with sanctions.

Russia’s ministry of digital development, communications & mass media did not answer requests for comment on the impact of departures by Western technology companies, nor the extent of SAP’s footprint in the country.

Mirroring the Ukrainian government’s message, SAP’s five salespeople for Ukraine told regional managers on a call 18 March that the company must end support for remaining Russian clients, according to a person familiar with the discussion.

Fedorov said on Friday in a tweet, citing a conversation with SAP CEO Christian Klein, that the company would “gradually stop supporting” products in Russia. A day earlier, SAP had said it was shutting its Russian cloud business, which two sources described as a small operation.

At IBM, hundreds of workers criticised the company’s response to Russia’s invasion

In a 23 March letter sent to customers in Russia, SAP asked cloud clients to advise whether their data in the Russian cloud should be deleted, handed back to them or moved outside the country. SAP confirmed the content of the letter, and said that Fedorov and Klein spoke. It declined to comment further.

At IBM, hundreds of workers criticised the company’s response to Russia’s invasion, three people with knowledge of internal messages said. CEO Arvind Krishna on a 2 March call with employees that IBM had taken no sides on the war, one of the sources said. In a now-public message to workers the previous day, IBM had referred to what it described as the “deteriorating situation involving Ukraine and Russia”.

One comment on an internal discussion forum called on the CEO to read a book on IBM’s work during the Holocaust describing how the company designed punch-card machines that Nazi Germany used to track Jewish people: “Think carefully and do the right thing — pull IBM and IBMers in Russia out of Russia,” the employee wrote.

IBM declined to comment on the remark.

Responding to the outcry, Krishna announced in a 3 March post a suspension of sales in Russia and condemned “the Russian war in Ukraine”. On 7 March, he went further, saying that IBM had suspended “all business” in Russia – without elaborating.

An IBM spokesman said on 24 March that the business suspension meant the company is no longer providing “goods, parts, software, services, consulting and technology” anywhere in the world to Russian clients.

Several Microsoft workers on internal chat tools have also demanded the company exit Russia altogether, with some even telling senior management they would quit otherwise, an employee said. Microsoft declined to comment.

Some workers said they have not joined the calls for full exits due to doubts over harming civilians and how strong an impact the companies’ withdrawal from Russia would have.

For instance, the US on 24 February sanctioned Russian Railways, a state-owned company operating passenger and freight trains. IBM that day placed the company on its “Denied Parties List” and stopped tech support, according to an IBM letter to Ukrainian minister Fedorov dated 5 March.

Denied parties cannot access official replacement discs, adapters and memory for mainframes that a former IBM salesman said need swapping every two years. But a person familiar with operations at Russian Railways said it can run for years without aid. Russian Railways did not respond to requests for comment. IBM declined to comment.

SAP also said that because some clients have its software installed on their machines they can keep using it regardless of the company’s decision not to provide support.  — Paresh Dave and Jeffrey Dastin, with Nandita Bose, Foo Yun Chee and Supantha Mukherjee, (c) 2022 Reuters