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Computerworld, May, 2003
http://www.computerworld.com/managementtopics/outsourcing/story/0,10801,80852,00.html

Harvard event showcases Russia as outsourcing site

by Paul Roberts, IDG News Service

MAY 01, 2003 (IDG NEWS SERVICE) - Lower wages than in the U.S. and an abundance of highly skilled computer programmers make Russia a good fit for companies aiming to bolster research and development or lower development costs, according to representatives from major Russian IT outsourcing firms.

Officials from the Russian companies were at Harvard University in Cambridge, Mass., yesterday to raise the profile of Russia as a low-cost destination for high-quality software development. The second annual event, known as "Russian IT Seasons," featured short presentations by the companies in front of an audience that included representatives from major U.S. corporations and software engineers looking for career opportunities.

The sophistication of Russian programmers allows the country to occupy a "niche" in the IT outsourcing market, supplying customers with talent capable of more sophisticated design and development work, which often results in novel and patentable technology, according to Valentin Makarov, president of Russoft, a professional association for software developers in Moscow that helped organize the event.

A series of speakers from both U.S. and Russian firms reinforced Makarov's core message, painting a picture of Russia as a "more stable" country with tremendous human resources eager to help U.S. companies tackle difficult technical challenges.

Len Erlikh, chief technology officer at Russian IT outsourcing company BridgeQuest, said his company helped Relativity Technologies Inc. in Research Triangle Park, N.C., overhaul its signature product, which helps developers maintain and enhance Cobol code.

More than 90% of the 90-person R&D team used by Relativity was based in Russia, with just 10% based in the U.S., Erlikh said.

Contrary to the image of Russians as reluctant workers raised in a system that spurned private enterprise, Erlikh said that he found engineers there to be highly motivated. "You talk about fire in the belly, these guys have got it. They're very dependable," he said.

Derrick Robinson, speaking for major Russian IT outsourcing firm Luxoft, sang praises of "cosmopolitan" Moscow and said that, as with Indian outsourcing firms, U.S. companies that move development to Russia can save as much as 65% on development costs.

However, Russian programmers have a different mentality than their counterparts in India or other centers of offshore development. A greater emphasis on accuracy, thorough documentation and contingency planning could add to upfront development costs compared with projects managed in other countries, but that pays dividends "when things don't go right," he said.

Most of the speakers reported a strong interest from U.S. companies in outsourcing to Russia.

"The cultural barriers to outsourcing are breaking down," Erlikh said. "It's more common that major companies today are [outsourcing] or actively looking into it than that they're not, and companies that aren't considering it risk losing their competitive edge."

Robinson agreed, saying that there are a growing number of Fortune 500 companies opening R&D centers in Russia to tap into the country's deep pool of programming talent.

Luxoft, based in Moscow, runs offshore development centers in Russia for a number of major U.S. corporations including IBM, Dell Computer Corp. and The Boeing Co.

Still, speakers cautioned attendees about the potential pitfalls to business in Russia.

Robinson said companies interested in establishing their own offshore development center would be better off working through an established "trusted partner" such as Luxoft than going it alone. The organizational challenges and cost of setting up the physical and management infrastructure for such a center could be prohibitive, whereas working with an established company would give U.S. firms a head start on deployment, access to the talent necessary to build a working development team and an "easy exit strategy," he said.

Companies also need to set up a formal management structure and communications channel with their Russian development teams, Erlikh said. As in the U.S., procedures need to be in place that govern the design, development and release of new technology.

Project management and language barriers can also complicate development projects.

Outsourcing company EPAM Systems Inc. in Princeton, N.J., relies on a permanent staff of experienced project managers and consultants in the U.S. to act as intermediaries between the company's customers and development centers in Russia and China, making the process "seamless," according to Richard Osborne, senior vice president at EPAM.

The Russian IT Seasons event takes its name from an early 20th century program that sponsored exhibits of Russian artists abroad, said Makarov. Like that program, the technology roadshow was designed to promote Russia's homegrown talent, he said.

 
 
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