Russia presents case for offshore glory
Jun 23, 2005
Russia's leading IT outsourcing vendors are facing a 'rapidly closing window of opportunity' to establish themselves as genuine offshore providers for western European customers due to growing competition from CEE and China, and increased M&A activity in the industry. That's the stark warning given to attendees at this year's Russian Outsourcing and Software Summit (ROSS) held in St. Petersburg earlier this month.
However, with the offshoring market rapidly moving towards a global delivery model, many analysts still believe Russia can become the second-choice location after India for outsourcing software development and other complex IT services operations. 'Russia has the best opportunity of all the new outsourcing arenas to build a sustainable and cost-attractive offshore market for the long-term,' claims Pascal Matze at research house Forrester. 'It has the greatest domestic maturity and price stability. The country also has the most dynamic vendor landscape, home to a plethora of IT services providers which ensures the market is driven forward by price competitiveness and the need to provider efficient services.'
Elena Klyeueva, international marketing director at 600-strong Russian software developer Digital Design, admits Russian companies can't compete with the Indians in terms of experience and cost-saving, but she still paints a positive picture: 'With the market becoming global, price and quality will become comparable across the world, and we believe our close cultural and historical links to Europe, and similar time zones, will work in our favour,' she says. 'More businesses will consider Russia in the future, especially those based in continental Europe. Scandinavian companies have worked with the Indians for a while and are now interested in seeing what we have to offer, either because they want to tr y a different approach or to compare our services to the Indians.'
She claims Digital Design is seeing its software development business grow by more than 50pc annually and is a shining example of the capabilities the top Russian providers can offer. 'Our growth is strong, but more importantly, it is sustainable,' she says. 'European customers are still surprised at the quality of solution we can deliver and amazed at the price.'
But the news is not so good for all of Russia's offshore outsourcing providers. A lack of government support, economic instability and high export taxes are all hampering the industry's growth and giving its eastern European rivals a chance of gaining ground. For an in-depth look at whether Russia can overcome its current obstacles and snatch India's crown, catch the next issue of IT Europa.
However, with the offshoring market rapidly moving towards a global delivery model, many analysts still believe Russia can become the second-choice location after India for outsourcing software development and other complex IT services operations. 'Russia has the best opportunity of all the new outsourcing arenas to build a sustainable and cost-attractive offshore market for the long-term,' claims Pascal Matze at research house Forrester. 'It has the greatest domestic maturity and price stability. The country also has the most dynamic vendor landscape, home to a plethora of IT services providers which ensures the market is driven forward by price competitiveness and the need to provider efficient services.'
Elena Klyeueva, international marketing director at 600-strong Russian software developer Digital Design, admits Russian companies can't compete with the Indians in terms of experience and cost-saving, but she still paints a positive picture: 'With the market becoming global, price and quality will become comparable across the world, and we believe our close cultural and historical links to Europe, and similar time zones, will work in our favour,' she says. 'More businesses will consider Russia in the future, especially those based in continental Europe. Scandinavian companies have worked with the Indians for a while and are now interested in seeing what we have to offer, either because they want to tr y a different approach or to compare our services to the Indians.'
She claims Digital Design is seeing its software development business grow by more than 50pc annually and is a shining example of the capabilities the top Russian providers can offer. 'Our growth is strong, but more importantly, it is sustainable,' she says. 'European customers are still surprised at the quality of solution we can deliver and amazed at the price.'
But the news is not so good for all of Russia's offshore outsourcing providers. A lack of government support, economic instability and high export taxes are all hampering the industry's growth and giving its eastern European rivals a chance of gaining ground. For an in-depth look at whether Russia can overcome its current obstacles and snatch India's crown, catch the next issue of IT Europa.