Russian Outsourcing Russia

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RUSSIAN FEDERATION is an up-and-comer country for outsourcing, and a solid above-average player. Russia is developing a credible business environment, and could in the next five years emerge as a strong contender for outsourcing services. Meantime, Russia can be a good place to solve complex technical problems or provide risk mitigation, particularly at the larger, more developed companies, or provide low labor cost benefits for small IT companies and starups.

Business Climate

Geopolitical risk: Moderate
Infrastructure/Communications: Fair. Poor telecom infrastructure overall, but much better in technology centers. High cost of bandwidth.
English proficiency: Poor
Labor cost advantage (average IT programmer salary): $5,000-$7,500/year; $10-$40/hour
Pros: Rocket scientists for nearly rock-bottom prices. Russia has the third-highest number of scientists and engineers per capita, according to the World Bank.
Cons: Although Putin's government have stabilized rouble and the economy, the risk of instability is still high. Lack of managerial talent, and poor consumer protection and intellectual property laws continue to cause problems. Some talented IT workers flee to friendlier climes.
Cultural compatibility: Fair.
Government support/laws: Poor. Byzantine business laws and tax structures hamper growth, but there are signs of improvement such as the recently signed U.S.-Russia Double Tax Treaty.
Quality initiatives/CMM/ISO: Three Russian companies currently certified to CMM standards; 1,517 ISO 9000 certifications.
Size of industry: 100 companies employ 8,000 professionals; $60 million to $100 million.
Total labor force: 72.6 million.
Areas of expertise: Application development, migrating and porting, application maintenance, enterprise application integration, QA testing, packaged software implementation.

Information source:
Global Technology Index reports, cio.com, Outsourcing-Russia.com, Gartner, Forrester Research, Renodis

Outsourcing organizations:

Inforus (www.inforus.org)

National Software Development Alliance (www.russoft.org)

Major providers:

Fort-Ross IT Services (consortium; www.fort-ross.ru)

Luxoft (www.luxoft.com)

DataArt (www.dataart.com)

STAR SPB (www.starspb.ru)

Major centers of outsourcing:
Moscow, Novosibirsk (Siberia), St. Petersburg.

Alternative cities for outsourcing:
Kiev in Ukraine, and Minsk in Belarus.

Companies that outsource to Russia:
IBM, Microsoft, Oracle, DELL, Intel, Motorola, KPMG, Deutsche Bank

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