Looking back over the year of the industry in-between ROSS 2005 and 2006, let’s see what kind of analytical coverage has Russian IT Export received? Nearly all of the key research agencies such as Forrester, Gartner Group, and IDC have included Russia into consideration set of attractive sourcing locations.
While the largest Russian outsourcing companies are well under way to clearly articulating the country’s competitive advantages and strategic positioning, the industry analysts have already stepped forward with their interim verdicts. This leaves the industry with the need to face the perceptions formulated, and realize where they might fit into the corporate strategies. Moreover, there are certain ideas ripe for picking by industrial buyers as well.
Researchers have identified some of the primary attributes of a generalized services proposition from Russia. When looking at them, one gets the feeling that the industry, in general, is quite immature (that holds true still, but is changing - see the "Russian IT Export: A View on the Annual Progress"). Therefore, most of the advantages are related to ‘the basics’ – the labor force (size, technical and linguistic skills, European culture, low attrition, low cost) and the overall attractiveness of location (infrastructure, domestic market, distance, stability). All these factors combined lead to a relatively low Total Cost of Engagement factor, especially in deals with Western Europe.
When it comes to the Top 10 outsourcing companies, the outlook is much brighter than it is for the industry in general. Russian players have managed to deliver strong messages and offerings that translated into major contracts signed and serious industrial benchmarks claimed, such as "The Top Offshoring Providers" and "Global Services 100".
Finally, the year 2005 was marked by a serious turnaround in the perception of IT infrastructure in Russia by B2B purchasers (this is especially true for major centers like Moscow, St. Petersburg and a number of other cities with population exceeding 1 million). A series of reports, including the well known AT&T research on Russian infrastructure, have destroyed the old and evil myth on problematic infrastructure in the country.
When it comes to talent sourcing, HRM in particular, there is harmony of unison in the voices of analysts and industry leaders:
"The Russian Federation offers a favorable economic environment, highly trained technical workers and excellent educational institutions," said Rod Adkins, Vice President of Worldwide Development, IBM Systems & Technology Group.
Pascal Matzke from Forrester Research:
Forrester sees several strong differentiators of Russia as application development sourcing destination. Those include the superbly educated engineering workforce of Russia, low attrition rate in Russia-based technology companies. He also mentioned good infrastructure and outstanding dynamics of the market.
IDC’s Barry Rubenstein pointed out a number of proven strengths of outsourcing to Russia and CEE. Among others, he named access to talented and still low-cost workforce, with superior engineering and scientific training, combined with grater economic and political stability in the region, and continued major investments into telecom and infrastructure. The availability of multilingual skills and low employee attrition, combined with Russia’s geographical positioning as the gateway to Eastern and Western Europe, and to emerging markets - topped off the list of outsourcing benefits.
Historically, the Russian IT Export industry evolved around the R&D and Application Development areas. That is true - since the early 90's, Russian companies are accumulating software development expertise in various domains. And now, this trend is recognized by the industry researchers - when it comes to Application Development, Russian companies should be considered first.
The Outsourcing Institute
"This expertise has allowed Russian companies to develop a strong skill set in solving large scale, complex technical problems. To help promote these and other capabilities, Russia is developing a stronger national software association".
Drawing strength on this foundation, Russia has grown into a major IT outsourcing player. This statement becomes even more lawful when Russia's share in the Nordics’ (mainly Denmark, Finland and Sweden) and Continental Europe’s direct offshoring market is reviewed. It is even more striking, when taking into account the fact that European companies have been quite slow in embracing the practice of offshoring. Russian vendors are going strong and Russia's Central and Western regions pretend to have become the destination of choice for European outsourcing.
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