City Vies for Position As High-Tech Center
St. Petersburg has made its name as an international source of software engineers, with world-class education in mathematics and physics, providing migrant programmers abroad and working on outsourcing in Russia.
Apr 16, 2004
St. Petersburg has made its name as an international source of software engineers, with world-class education in mathematics and physics, providing migrant programmers abroad and working on outsourcing in Russia.
Leading mobile technology firm Motorola has been active in the city since 1994 when it opened a research laboratory. In 1997, it formally opened a software development center that today provides some 300 jobs to local specialists. It plans to boost this number by at least 10 percent this year and is aiming for a local staff of 500 plus.
The operation focuses on writing code for mobile phones, automotive electronics, cellular infrastructure and advanced technologies.
Asked why Motorola had chosen the city for its operations in Russia, Vladimir Polutin, managing director of the firm's global software group in St. Petersburg, said Motorola had been well aware of the city's talent pool. After discussions with the Academy of Sciences in Moscow and St. Petersburg, Motorola found that Russia has only a few major research and development centers.
He listed these as Moscow, St. Petersburg, Yekaterinburg, Novosibirsk, Tomsk and Nizhny Novgorod.
"Moscow is the most expensive," he said in a telephone interview. "St. Petersburg is less so and the other regional centers are even lower but lack some of the other criteria we were looking for."
Motorola wanted an operations center in a location with appropriate infrastructure, an international airport, high-quality and capacity communications, and international standard hotels, Polutin said.
While the cost-effectiveness of Motorola's operation in St. Petersburg is constantly growing, Polutin said the information technology market is rapidly changing.
"The only competitive advantage of St. Petersburg is the talent pool," he said. "That's disappearing steadily compared to other regions of Russia because other cities like Nizhny Novgorod have started to pick up and are improving their cost-effectives and infrastructure.
"If the city authorities continue to ignore what is happening this advantage will disappear," Polutin added. "There is a tendency to locate in smaller cities such as Intel has done in Nizhny Novgorod. People are looking for less costly areas where there is still talent."
Not only is St. Petersburg competing for the outsourcing dollar with other cities in Russia, but also with those abroad, he said.
The economic parameters under which Motorola is operating do not always match the needs of the IT industry and the global industry is changing, added Polutin, who had just returned from India's outsourcing capitals of Bangalore and Hyderabad.
Countries such as Brazil, Scotland, Singapore, Italy and Malaysia provide incentives to the software development industries, while the St. Petersburg city administration is glad to have Motorola as a leading taxpayer in the center of the city. Motorola has also spent $400,000 supporting three technical universities over the last three years and is a sponsor of the Vaganova Ballet School.
"We will not be able to compete on cost without incentives from the government," Polutin said.
Not only will regulators need to change their stance, but the Russian industry will have to be better at policing itself if the market is to grow, he said.
Quality is uneven with some garage-style companies undercutting the standards of market leaders, he said
Russian programmers work in a different niche than China or India, but the niche it occupies has the potential of less than 10 percent of the whole global IT Technologies market of $776 billion this year, Polutin said.
The country has the talent to compete against highly developed countries like the United States, France and Germany, but will need a lot more attention to investment before it does, he said.
Leading mobile technology firm Motorola has been active in the city since 1994 when it opened a research laboratory. In 1997, it formally opened a software development center that today provides some 300 jobs to local specialists. It plans to boost this number by at least 10 percent this year and is aiming for a local staff of 500 plus.
The operation focuses on writing code for mobile phones, automotive electronics, cellular infrastructure and advanced technologies.
Asked why Motorola had chosen the city for its operations in Russia, Vladimir Polutin, managing director of the firm's global software group in St. Petersburg, said Motorola had been well aware of the city's talent pool. After discussions with the Academy of Sciences in Moscow and St. Petersburg, Motorola found that Russia has only a few major research and development centers.
He listed these as Moscow, St. Petersburg, Yekaterinburg, Novosibirsk, Tomsk and Nizhny Novgorod.
"Moscow is the most expensive," he said in a telephone interview. "St. Petersburg is less so and the other regional centers are even lower but lack some of the other criteria we were looking for."
Motorola wanted an operations center in a location with appropriate infrastructure, an international airport, high-quality and capacity communications, and international standard hotels, Polutin said.
While the cost-effectiveness of Motorola's operation in St. Petersburg is constantly growing, Polutin said the information technology market is rapidly changing.
"The only competitive advantage of St. Petersburg is the talent pool," he said. "That's disappearing steadily compared to other regions of Russia because other cities like Nizhny Novgorod have started to pick up and are improving their cost-effectives and infrastructure.
"If the city authorities continue to ignore what is happening this advantage will disappear," Polutin added. "There is a tendency to locate in smaller cities such as Intel has done in Nizhny Novgorod. People are looking for less costly areas where there is still talent."
Not only is St. Petersburg competing for the outsourcing dollar with other cities in Russia, but also with those abroad, he said.
The economic parameters under which Motorola is operating do not always match the needs of the IT industry and the global industry is changing, added Polutin, who had just returned from India's outsourcing capitals of Bangalore and Hyderabad.
Countries such as Brazil, Scotland, Singapore, Italy and Malaysia provide incentives to the software development industries, while the St. Petersburg city administration is glad to have Motorola as a leading taxpayer in the center of the city. Motorola has also spent $400,000 supporting three technical universities over the last three years and is a sponsor of the Vaganova Ballet School.
"We will not be able to compete on cost without incentives from the government," Polutin said.
Not only will regulators need to change their stance, but the Russian industry will have to be better at policing itself if the market is to grow, he said.
Quality is uneven with some garage-style companies undercutting the standards of market leaders, he said
Russian programmers work in a different niche than China or India, but the niche it occupies has the potential of less than 10 percent of the whole global IT Technologies market of $776 billion this year, Polutin said.
The country has the talent to compete against highly developed countries like the United States, France and Germany, but will need a lot more attention to investment before it does, he said.