German business software giant SAP will be ending its maintenance service for customers in Russia and Belarus by the end of this year, according to a company letter cited by Kommersant business daily. SAP’s decision to exit these markets follows the lead of American tech companies Oracle and Microsoft, who announced their plans to leave the Russian market last year due to the Ukraine conflict.
A spokesperson for SAP confirmed that all maintenance contracts with Russian and Belarusian customers will expire at the end of 2023 and will not be renewed. SAP had already halted sales in Russia and was in the process of shutting down its cloud operations in the country. However, the company continued to provide support to customers with valid contracts, as prematurely terminating these contracts would result in contractual penalties for SAP.
The restructuring plan announced by SAP in June 2022 involves moving employees to other CIS countries such as Armenia, Kazakhstan, and Georgia. The company aims to maintain its presence in the region while withdrawing from Russia and Belarus, both of which have been subject to Western sanctions.
SAP, Oracle, and Microsoft were leading suppliers of software solutions for automating company activities in Russia. Many large Russian commercial and state firms rely on these companies’ products for their information systems. As of the beginning of 2022, SAP held a 60% market share in Russia’s industrial software sector, making it the country’s largest supplier in this domain. In 2020, SAP reported revenue of 35.8 billion rubles ($366 million) from its Russian operations.
The decision to end maintenance service in Russia and Belarus reflects the challenging geopolitical landscape that companies like SAP face. With ongoing conflicts and sanctions, multinational corporations must carefully navigate international markets to maintain compliance and protect their business interests. SAP’s exit from these markets may provide opportunities for local companies or competitors to fill the void left by the international tech giants.
It is yet to be seen how this withdrawal will impact SAP’s overall business and its relationships with other global markets. Nevertheless, it is clear that the company is taking steps to adapt its operations to comply with international regulations and align with geopolitical dynamics. SAP’s exit from Russia and Belarus marks a significant development in the ongoing reshaping of the global tech industry.