Jeffrey Dastin and Paresh David

OAKLAND, Calif. (Reuters) – Microsoft Corp (NASDAQ) This month, President Brad Smith addressed Ukraine’s leader with a simple message. Despite Kyiv’s demands that it cut all ties with Russia this month, the U.S. Software behemoth would keep doing business in Ukraine with other clients such as schools, hospitals, and universities.

Smith stated that “Depriving such institutions of software updates or services could pose at risk the safety and health of innocent civilians including children, the elderly, and others” in the March 14 letter seen by Reuters.

Smith informed President Volodymyr Zilenskiy Microsoft was mindful of their moral responsibility to safeguard civilians. But, Smith said Microsoft was in discussion with the U.S. government, British, and EU governments over whether they would “stop any ongoing services and support to Russia” and that they would “follow their economic sanctions and goals.”

When asked about the exchange, representatives of Microsoft and Ukraine stated that a constructive dialog was taking place about how to help Ukraine.

Some leading Western tech companies, including Microsoft and the German software giant SAP SE (DE) as well as International Business Machines Corp (NYSE:) Corp, have decided that they will continue operations or hire staff in Russia despite Ukraine appealing to them. It has upset their employees in many countries.

Microsoft and SAP have small groups of employees. IBM According to comments made by Reuters in internal discussions forums and interviews with 18 employees familiar with the company, they have called on management to fully withdraw from Russia following its invasion of Ukraine. They also asked for full transparency because they weren’t authorized to talk 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. Their companies should suspend all Russian deals, even those with software clients that may track their sales, supply chain, and workforce.

When IBM was asked about internal criticisms, IBM stated that it had stopped working with Russian businesses anywhere on the planet. However, it did not stop short of suspending or laying off support for foreign companies in Russia.

SAP stated to Reuters that it is complying with all government actions, even exceeding them. It also said it will “welcome any new sanctions currently being discussed.”

SAP responded to Ukraine’s requests to cut all ties in Russia with a previously undisclosed letter this month to President Zelenskiy – reviewed in part by Reuters – saying that it was supporting essential Russian services, including “hospitals, civilian infrastructure and food supply chains.”

These companies are not ruling out further pullbacks. However, the Russian employees of these companies are currently getting paid and using workplace tools. Reuters has found that each of these phone numbers is active in local areas.

When asked about Russian demands for Western tech companies by their workers, and from the Ukrainian government, the Kremlin spokesperson stated that some are moving on, while others will remain. They will be replaced by new ones.

According to the spokesperson, companies have legal obligations to their employees. These include paying wages.

Media reports claim that Russian prosecutors warned Western firms that employees could be detained if they stop producing essential goods. The Wall Street Journal identified IBM as among the ones being advised.

A spokesperson for the Kremlin denied reports that prosecutors had pressured companies. “The part regarding arrests is a lie.”

UKRAINIAN LOBYING

Mykhailo Fedorov (Vice Prime Minister of Ukraine), is one of the most prominent campaigners against a digital blockade. He said Russia felt the effects of some tech companies leaving, including developers of web development tools and digital payment systems. However, he insists on a total withdrawal.

He stated, “We’ll keep trying till those companies decide to leave Russia.”

Fedorov’s staff told Reuters that a “huge” number of Russian companies have SAP software contracts, which includes major banks and energy firms. Reuters couldn’t independently verify the Russia customers for SAP software, while SAP claimed it is in compliance with all sanctions.

Russia’s Ministry of Digital Development, Communications and Mass Media declined to comment on requests from Russian media for information about Western technology company departures and the presence of SAP in Russia.

The message from the Ukrainian government was echoed by SAP’s five Ukrainian salespeople, who told the regional managers of SAP on March 18, that it must cease support for Russian clients. According to someone familiar with the discussions, the call was recorded.

Fedorov tweeted Friday, citing an exchange with SAP Chief Executive Christian Klein that said the company will “gradually cease supporting” Russian products. Two sources said that SAP had already announced it would close its Russian cloud business a day before.

SAP requested that cloud customers advise whether the Russian cloud data they had stored in Russia should be erased, given back, or relocated outside the country in a March 23rd letter. This was reviewed by Reuters.

SAP acknowledged receipt of the letter and stated that Fedorov had spoken with Klein. The company declined further comment.

Three sources with access to internal messages revealed that thousands of IBM workers criticised the company’s response in Russia after it invaded.

Sources said CEO Arvind Krsna had no opinion on the war during an employee call on March 2. IBM addressed workers on March 2nd with a message that was now public. It spoke out about the “deteriorating circumstances involving Ukraine” and Russia.

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

IBM did not respond to the comment.

Krishna responded to public outrage by announcing in March 3, a suspension in Russian sales and condemning “the Russian war on Ukraine.” On March 7, he went further, saying that IBM had suspended “all business” in Russia – without elaborating.

A spokesperson for IBM told Reuters on March 24, that IBM had suspended business operations to stop it from providing any “goods, parts or software,” consulting, technology, and services anywhere in the world to Russian customers.

Many Microsoft employees using internal chat tools demanded Russia be expelled altogether. Some even told top management that they’d quit. Microsoft did not respond to requests for comment.

DOUBT

Reuters spoke to workers who said they were unsure if the call for full withdrawals would harm civilians or have any impact on Russia’s exit.

The United States, for example, sanctioned Russian Railways on February 24th, which is a state-owned freight and passenger train operator. 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 March 5, seen by Reuters.

Official replacement disks, adapters and mainframe memory cannot be accessed by denied parties. An IBM salesperson once stated that they need to swap out the discs every two years.

However, a Russian Railways employee said that it is capable of running for many years on its own without any assistance.

Russian Railways declined to comment on requests. IBM refused to comment.

Reuters was also informed by SAP that some customers have SAP’s software on their computers and can continue to use it, regardless of whether or not the company provides support.