As Ukraine Crisis Unfolds, Companies Prepare for Higher IT Costs

March 11, 2022
Intel IT

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As the crisis in Ukraine unfolds, we’re reminded of the connectedness of the global economy and how it impacts all facets of business – including IT and the IT supply chain. While the world keeps a close watch on gas prices, the conflict could impact much more. Ukraine accounts for over 90% of the world’s neon production, a rare noble gas that is a crucial component in the semiconductor and other important industries. We could very well see another computer chip shortage in the coming months.

Ukraine has also become a center for remote developer and R&D work, as companies like Corsair warn their personnel operations (which are in the country) are hugely in question at the moment. If Kyiv and other major cities like Odessa become occupied by invading forces, it’s likely that overall costs for offshore outsourcing will see noticeable increases as well.

To assess the impact of the conflict in Ukraine on enterprise IT operations, NPI recommends looking at the following areas:

Consider Bulk Purchase of Business Standard and Main Developer Workstation Configurations Built on 12th Gen Intel CPUs

If you’re behind on or considering a refresh of PC assets in the near term (this extends to servers and other major IT hardware categories as well), we recommend customers move forward. The 12th Gen Intel Chips (Alder Lake) feature a number of improvements and can help support longer than usual lifecycles on PC assets.

Lead times are constantly increasing around PC assets, and two-week lead times on standard configurations are now becoming two months in some instances. More robust configurations requiring discrete GPUs can take even longer. This is in line with servers, networking gear and storage. Making advanced buys would not only increase leverage but could help stave off any truly atrocious lead times (6+ months) down the line. If supply constraints get too bad, using n-1 (or even n-2) generations of PC hardware could become a necessity, which can impact the performance of custom applications in use within the enterprise.

Identify Any Offshore Labor Exposure in Affected Regions

Ukraine and other Slavic countries account for a good portion of the outsourced labor market. With major cities at risk, reliable operations do come into question. NPI recommends assessing risk exposure in any current outsourcing contracts and identifying alternatives where needed.

As shifts in these markets continue, it will be important to also assess the premiums applied to any new locations, something NPI tracks benchmarks for clients extensively.

Review Cybersecurity Guidelines

At the moment, Congress is trying to pass the Strengthening American Cybersecurity Act of 2022, a bill that would significantly increase the requirements for protection against cyberattacks. As it stands, this would likely increase spend on information security protections as well.

NPI strongly suggests companies get ahead of any existing security gaps as it’s likely security vendors will increase prices once these new requirements hit U.S.-based companies. This includes items like ransomware mitigation, DDoS protection and SSO/2FA considerations. We also recommend reviewing pricing in areas like authentication tools, endpoint security and next-gen firewalls. Volatility in the market breeds volatility on the price sheet. Companies that don’t proactively ensure they’re paying a fair price for critical IT security infrastructure will overspend.

How will/is the conflict in Ukraine affecting your IT operations? We want to know.