Russian IT Quarterly 2007: The World Is Not Enough

Another calendar year has elapsed and everyone is busy making predictions for the IT services industry in the year to come, and summarizing what has happened in the year gone. Russian IT Quarterly will not be an exception to this rule, and will take a stab at outlining four major trends in the software outsourcing market in Russia.

Product development is the next Big Thing for Russian outsourcing companies

First of all, we need to admit the ever increasing popularity of sending work to Russia for product development. Russia has always had a special set of service capabilities, being well suited for high-end software R&D and product development. It will most likely never outperform India in the cost aspect, but the combination of a vast talent capital with its pronounced aptitude for creative reasoning and strong technical background, allows Russia to do product design better than any other country on the market. Apart from the immediate access to R&D talent of the country, benefits from outsourcing NPD to Russia include the cost savings on product development life cycle starting at 30%.

Emergence of Russian ESPs’ delivery centers in Europe

The growing importance of Western Europe is reflected in the changing channel and delivery strategies of top Russian service providers. We can see it - more and more companies are setting captive operations in the European markets. This trend is already setting in, but the year 2007 will see more of Russia-based companies opening up delivery (and not just rep and sales) offices all across Europe. This will bring Russian IT services providers closer to their customers and function as a warning to their Eastern European counterparts.

UK-nization of customer portfolios

UK has always been an appealing market for outsourcing providers - it stands second to the US absolute leadership. However, there was virtually no “Russian” presence on the island. For the most part, this phenomenon may be attributed to the fact that British enterprises felt rather comfortable in receiving services from Indian vendors. Last year, UK companies started looking at diversifying their provider portfolios, and in particular, considering the nearshore zone as a place to get quality work, and to lower expenses. Some Russian companies have already signed up with UK-based clients and judging by the interest the UK enterprises show, more deals will follow in 2007.

Changes in the personnel mix in IT companies in Russia

And to wrap up, here is a trend that might seem insignificant or unimportant, but which in fact brings a whole new kind of nourishment to the Russian IT market: more and more women assume IT jobs in Russia. I personally believe that this is a sign of growing maturity and overall attractiveness of the IT industry in the country. Aside from the clear advantage of women joining - an augmented workforce - the achieved gender diversity is also good for IT providers allowing them to present a balanced personnel mix to customers. For instance, at Reksoft the implemented HR policy grew the number of women from the tiny 5% back in 2001, to the significant 30% by the beginning of 2007.

This phenomenon is contrary to the trend in both the US and Europe: the Garner Group analysts warned the CIOs at the end of last year that more women would leave IT jobs by 2012 and that IT organizations risk to face failure in many global initiatives, if they don’t attract and retain talented women in the nearest future.

Svetlana Vronskaya

Editor, Russian IT Quarterly