In a bid to secure their business flows in the current tense international context, two major Russian IT industry players – outsourced software developer Luxoft and game publisher Game Insight – have announced their partial move to other countries.
One of the most impressive success stories in the global mobile games industry, Game Insight announced the transfer of the company’s headquarters from Russia to Lithuania, Russian business daily Vedomosti reported last week.
The main office of the company will be located in Vilnius and will be responsible for the entire international operation, marketing, games development and relations with platforms, and business development in all the regions of the world.
Game Insight was founded in 2010 by Alisa Chumachenko. Besides her, the company is owned by Igor Matsanyuk’s IMI.VC investment company and several individuals whose identities are have not been made public. According to data provided by the company, it has an audience for its games of 250 million people around the world. Game Insight’s revenue last year exceeded $100 million.
There are several reasons for the move, Chumachenko says. “Relations with the owners of the application platforms for our games – Apple, Google, Facebook, Amazon and so on – are very important for our business, specifically personal contacts and meetings,” she explained to the Russian business daily Vedomosti, “and that’s the whole problem: continually having to send people on business trips from Moscow to London, Dublin and Luxembourg, where the European headquarters of those companies are located. It is easier to fly out of Vilnius or take a train from there to Western Europe, of course. Now it will be easier for representatives of the platforms to come to our office for negotiations and join us for conferences.”
Salaries in Vilnius are, on average, half of what they are in Moscow, and many Lithuanians speak at least two foreign languages in addition to Lithuanian and Russian, so it won’t be necessary to overpay for specialists like that. That’s very important when hiring personnel for a company that operates all over the world, Chumachenko says.
Another practical reason is that Vilnius is much more comfortable and ecological than Moscow. Perhaps the only drawback of the move is higher taxes, Chumachenko adds, but the difference is not so great, since the company carries out its business in Russia completely above board.
Negative “Russia label”
“In reality, we stopped being a Russian company long ago, and became a global company. Less than 10% of Game Insight’s revenue comes from this country,” she says. But in the eyes of private funds that are potential investors, even having headquarters in Moscow has big risks, she adds. “Because of the Russian label, we unfortunately take rather heavy losses in Game Insight’s value. It happens for objective reasons connected with doing business in this country, and because of obvious prejudices.”
More than 900 people currently work in Game Insight, and the majority of them are in Russia. There are about 250 employees – producers, marketers, financial and other kinds of analysts, lawyers and various managers – at the headquarters in Moscow. It is unclear which employees will move to Vilnius and which will be replaced there, as the transfer of the main office will take a year or two, Chumachenko says. The executives and key management of Game Insight responsible for platform relations moved to Vilnius right away. Another 50 employees of the company will be working there by the end of the year.
Game Insight is not the first IT company in the CIS that has decided to move its head office to Europe. Belarusian Wargaming, one of the biggest game developers in the world using the free-to-play model, moved to Cyprus and issued stock on the local exchange, reported CNews.ru, an online publication covering Russia’s IT industries.
Last week Dmitry Loshchinin, CEO of the major software development services provider Luxoft (part of the IBS Group), stated that the company is transferring about 500 of its most experienced employees from Ukraine and Russia to development centers in Bulgaria, Romania, Poland and possibly Vietnam.
Loshchinin explained that the move has political reasons behind it: Luxoft’s clients, large international companies, are alarmed by events in Ukraine and the sanctions against Russia, and they are worried that those could create risks for their bsuinesses.
Loshchinin added that the company planned to move its personnel any way. The long-term goal is to see to it that no more than a quarter of the company’s employees work in any one country. The total number of Luxoft employees exceeds 7,000 people, with about 2,750 in Ukraine and just under 2,000 in Russia.
Another example of relocating outside Russia – for totally different reasons – was offered recently by Pavel Durov, the founder of social network Vkontakte, following his departure from the position of CEO. He left Russia for “a country that will allow us to develop our projects with privacy and freedom of speech in mind.”
Durov was “fleeing lawsuits not politics,” replied UCP, a Russian investment fund which acquired last year an important stake in Vkontakte.
