Russoft 2007: Putting the Focus on Russian IT
On June 21-22, the seventh annual Russoft Forum took place in St. Petersburg where the Russian software development outsourcing companies and their potential customers from the Western countries gathered.
Jul 01, 2007
Although the forum organizers’ expectations were not fully met and the event was attended by a less number of foreign participants than Russoft had expected to get, it was interesting and useful, most participants said.
During the three-day forum the corporate presentations of such companies as E-Skills, DBL, Softech, Siemens, Deloitte, CPS Labs, Inforus Consortium, Invest in Sweden Agency, Metalink, DLA Piper, Levi9 Global Sourcing took place at the venue. Several round tables were focused on the establishment of the captive centers in Russia as well as the consolidation of the software industry and program engineering outsourcing in Russia. Among the forum participants were the representatives of such companies as Motorola St.Petersburg, Intel, EMC, CPS Labs Ltd, Small&Big, McKinsey, eWeek, IAOP, S&O, Database Intelligence, SAP and others.
One of the main questions discussed at the forum was the development of the software outsourcing in Russia and the uprising interest that the Western companies have in it as long as the ways of cooperation between the big and small companies operating in this market sector, including the questions of subcontracting, advantages and disadvantages of companies merging and the ways of survival on its own for small business companies.
On the first day of the forum Russoft declared the main purposes of its activity. Among them is the foundation of the agency focused on the provision of support to the Russian IT exporters, the involvement of the new partners as well as the new branches opening in other countries that will contribute into the development of the partnering chain of the Russian software developing companies abroad. The first foreign Russoft branch is to be started in the U. S. Among its priorities will be the organization of the joined exhibition sectors for the Russian software development companies at the international IT exhibitions and the search for the potential partners for them.
The other key question that was discussed at the forum was the lobbying of the IT industry interests on the state level. As it turned out at the forum, it is lack of the well-thought state policy in the IT industry the market participants worry about. What makes the situation worse is that last year the State Duma has already passed a law, adopting the amendments to the Tax Code. According to the new law the Russian IT exporters get the consolidated social tax reduction up to 7 %. However, the new law has not come into effect because of some of its parts that contradict the constitutional provisions but have not yet been corrected.
The results of the fourth annual survey on the Russian software exporting companies conducted by Russoft association were also announced at the forum. According to it, in 2006, the export volume of the software products and the development services amounted up to $1,495 billion. 55 per cent of the export volume was provided by the big companies with over 120 employees, 10 per cent was made by the middle-size companies where from 35 to 120 employees work, and 8 per cent of it was made by the small companies that number less than 35 people in staff, 5 per cent was provided by the universities and 3 per cent was made by the informal unions of the software developers, and just 19 per cent of it was produced in the Russian software development centers of the foreign companies.
The significant rise of the ready-to-use software products (19 to 25 per cent) volume was announced as one of the main trends of the year 2006. Valantin Makarov, president of Russoft Association thinks that such level of growth is nonrandom. "Russia is not exotic anymore, it is practically the mainstream in the software development industry. The only thing you need in order to have the non-stop industry development in the future is the mutual integration of all the market participants," he said.
According to the other survey conducted by the international research company IDC which covered twenty foreign companies, the Russian outsourcing software development companies are interesting to their Western partners not just by their cheaper products but also by their cultural closeness than, for example, their Indian counterparts.
The active growth of the domestic (up to 70 per cent) and export (up to 60 per cent) markets as well as the business enlargement was said to be the main trend in the Russian software development sector. The rise of the salary level (from $200- $400) took place in all market segments, and now its upper limit is $1400.
The labor market has not been saturated yet too. The software development companies have a big demand for Java è Ñ++ programmers (35 per cent of the companies are in need of them), 28 per cent of the companies have open vacancies for C+ programmers, and 27 per cent of them lack for the quality engineers.
One of the most important problems the Russian software development companies face is the professional training for the IT staff, principal legal issues in the software industry in Russia, such as taxation and labor regulations, copyright laws and their new regulations which will come into effect on January 1st, 2008.
The development prospects of the small software development companies were discussed as soon as Russoft Association announced that in 2007 it admits the small business companies operating in software development outsourcing. In order to help the small software developers to find the big customers, Russfort offered to establish the subcontracting stock exchange that will facilitate the process of foreign investments attraction and solve the problem of lack of orders that small businesses solve on a regular basis. The conversation turned into a dispute. Many of the forum participants said the big companies are mostly not interested in cooperation with the small business because they do not often have any recommendations. It causes mistrust that hinders their future mutual cooperation. Therefore, the experts say that there are several ways of survival for the small software development companies – they can either join the holding ventures or be merged by the larger companies as well as focus on the narrow soft-engineering fields in order to succeed in them.
Russoft Association was founded in 2004 after the merger of Fort Ross Consortium with the National Software Development Association. Today Russoft unites more than 80 companies with 17000 of highly qualified programmers and software engineers. RUSSOFT Association is struggling for better tax and customs legislation for the IT sector, for a system of IT-parks all over Russia and for attracting the State support to the international IT events.
It generates lots of marketing and PR activities in Russia and abroad, in the major destinations of the Russian speaking IT industry - the USA, Europe and Far East. Among the most significant examples is its participation at CeBIT (2001-2006), Comdex Scandinavia (2001-2002), road-shows to the USA (2002-2006), Germany and Scandinavia (2000-2006), Russian Outsourcing and Software Summit (2001-2006), Russian CIO Summit (2003-2006) and many others. It is also a part of the Russian Information and Computer Industry Association (APKIT) where it plays the role of Software Development and Export Committee.
During the three-day forum the corporate presentations of such companies as E-Skills, DBL, Softech, Siemens, Deloitte, CPS Labs, Inforus Consortium, Invest in Sweden Agency, Metalink, DLA Piper, Levi9 Global Sourcing took place at the venue. Several round tables were focused on the establishment of the captive centers in Russia as well as the consolidation of the software industry and program engineering outsourcing in Russia. Among the forum participants were the representatives of such companies as Motorola St.Petersburg, Intel, EMC, CPS Labs Ltd, Small&Big, McKinsey, eWeek, IAOP, S&O, Database Intelligence, SAP and others.
One of the main questions discussed at the forum was the development of the software outsourcing in Russia and the uprising interest that the Western companies have in it as long as the ways of cooperation between the big and small companies operating in this market sector, including the questions of subcontracting, advantages and disadvantages of companies merging and the ways of survival on its own for small business companies.
On the first day of the forum Russoft declared the main purposes of its activity. Among them is the foundation of the agency focused on the provision of support to the Russian IT exporters, the involvement of the new partners as well as the new branches opening in other countries that will contribute into the development of the partnering chain of the Russian software developing companies abroad. The first foreign Russoft branch is to be started in the U. S. Among its priorities will be the organization of the joined exhibition sectors for the Russian software development companies at the international IT exhibitions and the search for the potential partners for them.
The other key question that was discussed at the forum was the lobbying of the IT industry interests on the state level. As it turned out at the forum, it is lack of the well-thought state policy in the IT industry the market participants worry about. What makes the situation worse is that last year the State Duma has already passed a law, adopting the amendments to the Tax Code. According to the new law the Russian IT exporters get the consolidated social tax reduction up to 7 %. However, the new law has not come into effect because of some of its parts that contradict the constitutional provisions but have not yet been corrected.
The results of the fourth annual survey on the Russian software exporting companies conducted by Russoft association were also announced at the forum. According to it, in 2006, the export volume of the software products and the development services amounted up to $1,495 billion. 55 per cent of the export volume was provided by the big companies with over 120 employees, 10 per cent was made by the middle-size companies where from 35 to 120 employees work, and 8 per cent of it was made by the small companies that number less than 35 people in staff, 5 per cent was provided by the universities and 3 per cent was made by the informal unions of the software developers, and just 19 per cent of it was produced in the Russian software development centers of the foreign companies.
The significant rise of the ready-to-use software products (19 to 25 per cent) volume was announced as one of the main trends of the year 2006. Valantin Makarov, president of Russoft Association thinks that such level of growth is nonrandom. "Russia is not exotic anymore, it is practically the mainstream in the software development industry. The only thing you need in order to have the non-stop industry development in the future is the mutual integration of all the market participants," he said.
According to the other survey conducted by the international research company IDC which covered twenty foreign companies, the Russian outsourcing software development companies are interesting to their Western partners not just by their cheaper products but also by their cultural closeness than, for example, their Indian counterparts.
The active growth of the domestic (up to 70 per cent) and export (up to 60 per cent) markets as well as the business enlargement was said to be the main trend in the Russian software development sector. The rise of the salary level (from $200- $400) took place in all market segments, and now its upper limit is $1400.
The labor market has not been saturated yet too. The software development companies have a big demand for Java è Ñ++ programmers (35 per cent of the companies are in need of them), 28 per cent of the companies have open vacancies for C+ programmers, and 27 per cent of them lack for the quality engineers.
One of the most important problems the Russian software development companies face is the professional training for the IT staff, principal legal issues in the software industry in Russia, such as taxation and labor regulations, copyright laws and their new regulations which will come into effect on January 1st, 2008.
The development prospects of the small software development companies were discussed as soon as Russoft Association announced that in 2007 it admits the small business companies operating in software development outsourcing. In order to help the small software developers to find the big customers, Russfort offered to establish the subcontracting stock exchange that will facilitate the process of foreign investments attraction and solve the problem of lack of orders that small businesses solve on a regular basis. The conversation turned into a dispute. Many of the forum participants said the big companies are mostly not interested in cooperation with the small business because they do not often have any recommendations. It causes mistrust that hinders their future mutual cooperation. Therefore, the experts say that there are several ways of survival for the small software development companies – they can either join the holding ventures or be merged by the larger companies as well as focus on the narrow soft-engineering fields in order to succeed in them.
Russoft Association was founded in 2004 after the merger of Fort Ross Consortium with the National Software Development Association. Today Russoft unites more than 80 companies with 17000 of highly qualified programmers and software engineers. RUSSOFT Association is struggling for better tax and customs legislation for the IT sector, for a system of IT-parks all over Russia and for attracting the State support to the international IT events.
It generates lots of marketing and PR activities in Russia and abroad, in the major destinations of the Russian speaking IT industry - the USA, Europe and Far East. Among the most significant examples is its participation at CeBIT (2001-2006), Comdex Scandinavia (2001-2002), road-shows to the USA (2002-2006), Germany and Scandinavia (2000-2006), Russian Outsourcing and Software Summit (2001-2006), Russian CIO Summit (2003-2006) and many others. It is also a part of the Russian Information and Computer Industry Association (APKIT) where it plays the role of Software Development and Export Committee.