It may come as a surprise, but many of the IT-majors have R&D and software development branches in Russia - among them Motorola, Intel, Sun, LG Electronics. This fact is not advertised but we at Outsourcing-Russia.com believe it confirms the talent of Russian software engineers. And let us be perfectly clear about it: these centers are not recruitment camps for software professionals; they are full-fledged branches with a staff which may exceed several hundred software engineers on premise.
Our guest today is Mr. Yuri (Jue Haeng) Lee, the head of LG Soft Lab, an R&D department of South Korea's LG Electronics situated in St Petersburg.
Outsourcing-Russia.com: Mr.Lee, first of all, we would like to hear about the history of LG Soft Lab. How was
Yuri Lee: It all goes back to 1990, when Russia and South Korea opened diplomatic relation. LG Electronics had long experience with cooperation in the R&D area. LGE opened a technology center (named LGTCM) in Moscow in 1991. The main role of LGTCM was and is to connect Russian technology and engineers with LGE's needs. We believed that we understood Russian technology more or less on the basis of our own experience over several years. In 1996, I found a large business opportunity here in S/W and in wireless communication H/W technology. Russia has very talented S/W engineers and such resources could not be simply transferred to the LGE side. It required a local R&D organization. On a trial basis, I proposed to organize a local S/W R&D branch, and it was founded in 1997 in St.-Petersburg. Later, in 1999, we launched our RF R&D branch in Nizhniy Novgorod. Now we have about 35 regular members and 20 partners.
Outsourcing-Russia.com: Why did you choose St.Petersburg?
Yuri Lee: At first I considered two possible cities; Moscow and St. Petersburg. I compared them according to several parameters, such as scientific potential, available resources, operational costs, R&D network, openness to foreign companies. St. Petersburg measured up in most of the parameters. And for some weak points I thought we could get support from our Moscow office if needed.
Outsourcing-Russia.com: As I know LG Soft Lab is a part of the overseas R&D infrastructure of LG. Are there
any differences between LG Soft Lab and other laboratories? What are the key considerations for choosing a certain R&D
center for a certain project.
Yuri Lee: In the case of digital TV technology, the Korean side distributes tasks to themselves, to us, to India(LGSI), to the USA(Triveni Digital) and to Japan(Tokyo lab) according to who can do it best of all in terms of technological superiority and quality, delivery and cost performance. They have no other special criteria for task distribution that are not known to us. These R&D branches, of course, differ from each other as the countries do in culture, working conditions, and so on.
Outsourcing-Russia.com: Which project in the LG Soft Lab was in your opinion the most prominent, remarkable for
you during these years?
Yuri Lee: We have developed our CASE tool for telecommunication and real-time embedded system development. You can find more information about it in our site(www.lgsoftlab.ru). This project was initiated by the consortium of LG Electronics, LG Information Communication(later merged into LG Electronics in 2000) and LG Industrial systems. This CASE tool supports SDL, UML, MSC standards and can generate code in C, C++ for Win32, Linux and VxWorks target platforms. Later we noticed that many other companies in this business area also have an interest in our tool. Now we are planning to share our tool with them. We have tested such a possibility at the SDL conference in 2000. I think there will be some visible results soon.
Another good example for your question is our three-dimensional display system. Of course it is not only a S/W product. It requires very high resolution LCD monitors, and it requires a very high level of optics technology. St. Petersburg has not only S/W potential, but also optics technology, as you know. So we have started some optics-related projects in 1998 for display purpose. One of them is 3D display by, so called, integral photography methods.
Outsourcing-Russia.com: You have mentioned that Russian software engineers are talented. What are their main
Yuri Lee: I believe the main advantages are their creativity and flexibility. And this is the main competitive advantage in comparison with programmers from other countries.
Outsourcing-Russia.com: OK, I hope that the talent of local developers is not questioned. But project managers
are believed to be the missing link. Many consider the lack of qualified project managers as one of the main problems in
the industry in Russia. Looking at LG, what is the situation with middle-level management?
Yuri Lee: You might be right. Yes, it was difficult to find well-trained managers, project leaders in the beginning. During our 5 year history, I think we have grown up to the needed level. Now we have a lot of Russian project leaders.
Outsourcing-Russia.com: And what are the career opportunities for the local staff in the lab?
Yuri Lee: LGE has R&D branches in many countries. Most R&D branches have local management, of course, including the head position. I think it will be the same situation in our case soon.
Outsourcing-Russia.com: Talent is scarce. Do you feel that local software development companies (especially offshore
software development) compete with LG Soft Lab on the local labor market?
Yuri Lee: Yes, I do, especially last year. But it helped us to catch up with the labor market situation.
Outsourcing-Russia.com: Do you have established relations with local Universities and other educational institutions?
What do you think about the Russian educational system? Do you feel a need for special educational programs to fully meet the
requirements of LG Soft Lab.
Yuri Lee: We have scholarship program set up with two universities. I think it will be spread to other universities. And also we have many partners for our S/W projects in several universities.
Outsourcing-Russia.com: We know that LGE is not the only international IT-major having R&D branches in Russia.
Among others are Sun, Motorola, Intel and so on. Unfortunately, we do not have full information about clients of Russian
software development companies, but we see a trend: majors prefer to open branches, not to buy services from local providers.
What, to your mind, is the main reason for this trend? Is it just a result of the policy of IT-majors or is the main reason
to be found in some weakness of local providers, like their comparatively small size and, possibly, their inability to
implement large-scale projects? Does it mean that offshore outsourcing to Russia is good for small and midsize companies only,
not for companies like LGE.
Yuri Lee: Well, I can not say for others, but I guess that if you see a steady demand for beer, you may want to make a beer-brewery. This way will be more profitable than buying beer from kiosks every time. Having talented engineers is not only for developing pre-determined tasks; they can give their contribution to IT-major's business in another sense. I think IT-majors are basically greedy for talents. And the talents - I mean creativity & flexibility - cannot be removed from the local R&D society. Human relation network also has strong influence in the development process. S/W outsourcing is a general trend already. I don't think IT-majors will not use this opportunity due to their own S/W development branches. In our case, the outsourcing contract or development in our lab is chosen on the basis of the features of the task.
Outsourcing-Russia.com: What do you think about the prospects and potential of Russian offshore software development
companies in today's tight outsourcing market. Do they have any chances vs. India?
Yuri Lee: Surely yes. The nearer to the market, the more chances there are for Russian S/W companies. Russian S/W companies can do what Indian companies cannot. Russia can be sold well in the S/W outsourcing market.
Outsourcing-Russia.com: So, you mean that Russian companies have to choose their own niche and focus on the services
in this niche?
Yuri Lee: No, I don't mean any niche in the S/W outsourcing market. Maybe the concept of S/W outsourcing is suitable for the Indian case. Russian S/W companies can make another value other than simple S/W outsourcing. LG Electronics appreciates very much the help and support that LG Soft Lab has provided for 5 years. LGE doesn't put much emphasis on low prices in S/W outsourcing. LGE values highly the Russian engineer's creativity and flexibility. India started S/W business from taking outsourcing jobs from western companies. We need to understand, in this case, that the western companies have created jobs for Indian S/W engineers because they were in the market. Now Indian companies try to locate themselves in the market. They started to create jobs for themselves. Russia doesn't have to follow the Indian case as it was. I think Russia find another way.
Outsourcing-Russia.com: And the last question, what are the future plans of LG Soft lab? Do you plan to open
branches in other Russian cities?
Yuri Lee: We are trying to spread our R&D organization in another cities. We have already opened our RF lab in Nizhniy Novgorod in 1999. But I think that it is not necessary to duplicate the same S/W labs in other cities. If we open another lab in some city, it is because the city has good potential for some technology area.
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