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InfoWorld, June 11, 2001

Offshore outsourcing

By Loretta W.

VIVEK WADHWA hires very few programmers -- at least from the United States.

Wadhwa is the CEO of Relativity Technologies, a software and systems developer in Research Triangle Park, N.C., and one of the increasing number of IT executives turning to Eastern Europe for outsourcing and systems development needs.

Should that worry you? Yes, but for reasons other than those that naturally leap to mind. Think skills.

Significant economic issues are at play. For Wadhwa it's cheaper to have 80 contract programmers in Russia than it is to maintain that talent pool stateside. "It costs less than 20 to 25 percent overall to do the programming in Russia," Wadhwa says.

Other companies also work with programmers residing in the former Soviet republics. San Mateo, Calif.-based Mirantis acts as the U.S. outsourcing manager for IT talent in Russia. Intel and others have research and development laboratories in St. Petersburg.

IDC projects that the trend of sending outsourcing offshore is rising. According to a recent report from the Framingham, Mass.-based research company, spending on offshore development by U.S. companies will increase from $5.5 billion in 2000 to more than $17.6 billion in 2005. E-commerce and Web-based application development is projected to be the fastest-growing segment of offshore outsourcing.

Len Erlikh, Relativity's CTO, likens the potential for growth of a Russian IT services market to India's rise to prominence in the IT and call-center sectors. But he sees an important distinction between the markets of the two countries. "The bulk of the work in Russia is not comparable to India's in volume. The work being done in Russia is scientifically intensive," Erlikh says.

And therein lies the rub. Intertwined with the economic issues is another problem, one that is harder to grasp. What are Relativity's executives and others saying about the state of technical training and education in the United States?

The mathematical training that Russian programmers receive is superior to what is available in the United States, according to Wadhwa. The emphasis in computer science in Russia, says Erlikh, is the application of mathematics to computer science and specifically to programming. And that, he and others claim, is not happening enough in the United States to satisfy complex development needs.

Wadhwa and Erlikh say that this emphasis in mathematics is due to how the former Soviets aligned state goals, universities, and computer science. Relativity's contractors in St. Petersburg work for a professor at one of the city's universities.

Unfortunately, the "state-of-education" issue at home doesn't inspire the IT community as much as can the pocketbook issue. Yet is the projected increase in offshore outsourcing due strictly to economics? Not entirely. Some believe it's due, in part, to better mathematical education for high-tech professionals in Eastern Europe.

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