Yandex, Russia's tech giant, faces a 'brain drain'. Here's why

Russian tech giant Yandexmay have missed a government takeover, thanks to Kremlin's fear of a massive brain drain, a Reuters report said quoting sources.

Yandex, popular known as the Russian equivalent of Google, has been facing a major 'brain drain', with talented employees looking for greener pastures abroad.

Things have gone downhill for Yandex since the war with Ukraine began in February 2022.Many talented employees have left for Serbia, where the company is opening new offices. About 100,000 IT experts had left Russia last year, as per a government estimate.

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The tech giant, among the few Russian companies with a global ambition, needs skilled employees to stay ahead in things like search technology, advertising, and ride-hailing. But if the government takes over Yandex, there are fears that more talented people may leave Russia, leaving the company in the lurch.

"It's obvious that if (nationalisation) happens, the company will gradually come to nothing," one of the people with knowledge of the talks told Reuters. "And this is probably what is stopping tough action from being taken," the source added.

According to Reuters, the owners of Yandex's Dutch holding company, Yandex NV, could make a profit of $7 billion if they sell off their Russian operations completely. However, the discussions over a possible sale have come to a stop.

But things may take a dramatic turn in the coming days. This is because Yandex co-founder Arkady Volozh on Thursday criticised Russia's war in Ukraine, calling it "barbaric." He added that his focus has shifted to getting skilled Russian engineers out of the country since the advent of war.

The Russian government nationalising private companies is not a new phenomenon.

Last year, it took control of assets in the Sakhalin oil and gas projects through a presidential order. In 2023, the government took "temporary control" of the assets of four Western companies in Russia, including giving control of the Russian subsidiary of French food group Danone to Chechen leader Ramzan Kadyrov's nephew.

Andrei Kostin, the CEO of Russia's state-owned VTB Bank, had suggested in June that Moscow should temporarily manage Yandex's assets, arguing that this would be good for Western investors. But the Bank did not take any action to buy the tech giant.

(With inputs from Reuters)

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