Until last month, the chief executive of Russia’s Alfa-Bank had always assumed he was the only person employed at the lender who hailed from Tarusa, a small town of just 9,000 people.
Now he knows of three others; all hired in the bank’s IT development department over the summer as part of a major pan-national recruitment spree that, as a result of Covid-19, no longer relies on the talent pool in Moscow and a handful of other big cities.
The pandemic’s enforced shift to remote working has unlocked the opportunity for many Russian recruiters to tap far more of the country’s 145m strong population, the majority of whom are based thousands of miles from businesses in Moscow or St Petersburg, across a vast country spanning 11 time zones.
“[Tarusa] is a lovely town but either you get out of there and move to Moscow for a job, or you are stuck,” Vladimir Verkhoshinskiy told the Financial Times.
“So much development in Russia is blocked due to the huge distances in this country,” he said. “[But] we are entering a completely new reality now.”
Before this year, Alfa-Bank hired all of its programmers, IT developers and data scientists from just five cities where it has large offices.
But this year, Mr Verkhoshinskiy said two-thirds of new recruits have been hired from places outside those cities, many without ever meeting a human resources manager from the bank in person. The lender recently opened a call centre notionally based in a small city in southern Russia for 50 employees. Only two of them work from a shared office.
“Covid-19 has accelerated this trend, which is creating positive regional employment prospects for talent based outside Moscow and St Petersburg,” said Semyon Yakovlev, senior partner at McKinsey & Co in Russia.
“Several [Russian] companies have already announced plans to shift to a hybrid or completely remote working model after the pandemic,” he added. “Turning remote working into a competitive advantage involves quite a few components, and designing an effective structure and instilling a caring culture may be as important as harnessing the power of technology.”
A legacy of the Soviet Union, most Russian cities boast universities, technical colleges or other educational institutions for students after high school. The majority of places are free of charge, according to government data.
The OECD estimated in 2016 that 54 per cent of Russian adults have tertiary education, the second highest level among the OECD’s members and partner countries.
But the country’s vast size has meant that unless they emigrated to Moscow or a handful of other large cities, many of them were cut out of the big corporates’ potential hiring pools.
While many countries are embracing a rapid rise in the number of people working remotely, the long-term impact from the coronavirus pandemic on Russia’s employment market could be one of the most significant.
“Russia is uniquely positioned in this domain, with its well-educated population and strong educational institutions, for example, in Siberian cities, especially in the technical field,” said Mr Yakovlev.
While the pandemic’s enforced shift to remote working created the opportunity, its impact on an overhaul of outdated government regulations has also made regional hiring far easier.
Russian executives have long bemoaned the country’s high level bureaucracy and red tape, and the state’s demand for decisions to be chronicled on reams of paper documents, with official stamps and signatures.
Covid-19 helped to spur a modernisation of those regulations. A physical “employment record book”, a Soviet-era holdover that is mandatory for any citizen being hired — and must be stamped and signed by all previous employers — was this year permitted to be replaced by a digital version. Digital signatures are now legally recognised on documents.
Both those decisions, said Mr Verkhoshinskiy, were critical in allowing employers such as Alfa-Bank to broaden their geographical hiring horizons.
“We can hire people online. We can train people online. We can fire people online,” he said. “Beforehand, all that would have been impossible.”
“It’s not only about the regionalisation of our workforce,” Mr Verkhoshinskiy added. “It’s more about humanising work. Even people in small places can find good work, a good salary. If you have elderly parents, you no longer need to leave them to go to Moscow to get a job.”
The failure to increase economic development and living standards in the country’s south and east, and address yawning inequalities between regions has long been a concern for the Kremlin, and an area of rising discontent in poorer parts of the country.
Moscow’s official unemployment rate stood at 2.3 per cent at the end of July, with St Petersburg at 3.2 per cent. Across Siberia, that rises sharply to 8.2 per cent, and many of Russia’s individual regions have unemployment rates in excess of 15 per cent.
There are also significant economic benefits for employers who are able to shift jobs out of Moscow. The average monthly salary in the capital, at about $1000, is roughly 80 per cent higher than the national average.
The average salary in the Novosibirsk region is a little over $500, meaning that if a Moscow employer is simply able to find and hire someone from there before they get on a train or plane to emigrate to the capital in search of work, they can save significantly on wages.
“Of course, we also save money,” Mr Verkhoshinskiy said. “It also makes total economic sense. It’s a win-win situation.”
Unsurprisingly, other Moscow-based Russian corporates are looking well beyond the capital for their new hires.
“You are only as good as your people and we have made sure to search across the whole of Russia for the best tech talent” said Oliver Hughes, chief executive of Russian online bank Tinkoff. “We are fortunate in that Russia has tons of tech talent.”
Even before the pandemic, Tinkoff set up virtual development hubs in southern Russia and Siberia “to appeal to developers who generally prefer to work remotely,” Mr Hughes added.
X5, Russia’s largest food retail group, says that 15 per cent of its new hires this year were from Russia’s regions — a figure it expects to grow in the future.
“We began to realise that Moscow has a finite number of IT professionals, so this year we turned our attention to the regions,” said Denis Kuznetsov, a group spokesman. “Larger towns, especially those with places of higher learning focused on technology and related subjects, have a fairly large number of developers.”
And executives say that the trend is likely to long outlast the effects of the pandemic.
Almost all of Alfa-Bank’s 17,000 non-branch staff are at present working from home, and by the end of next year, Mr Verkhoshinskiy is preparing for just over a third to work from an office full-time — and almost 25 per cent of them to never have to visit one.
“When all this Covid-19 started, we had 800 [software] licenses for remote work, and 17,000 people who potentially needed them,” he said.
“It was a very intense time . . . but within three weeks all of them were working remotely,” he added. “In the last seven to eight months we have developed more new products than in the whole of 2019 . . . there has been absolutely no loss in productivity.”