Russian IT Quarterly (Issue 24, July 2010)
Jul 09, 2010
Summing up
To mark the start of summer, the Russian IT outsourcing community gathered in St. Petersburg to attend the industry's key annual event - the Russian Outsourcing and Software Summit (now known as the Russoft Forum), where the results of the year are traditionally summed up and discussed.The attendees shared the latest news and gossip, speakers detailed current market trends, and Russoft revealed the preliminary results of 2009 Russian IT market research.
Russian IT exports in 2009 have stayed almost flat growing only to $2.7bn from the previous year (2.6 bn). The comparison with the active growth of such outsourcing giants as India and China partly reflects a tendency that has been noticeable among Russian outsourcers over the last few years - a move up the value chain.
Despite retaining considerable cost advantages compared to Europe and the US, these days Ru! ssia cannot be called a low-cost destination or compete on price with Asian BPO specialists. However, Russian companies have proven to be unbeatable performers in complex high-end projects demanding flexibility, creativity and a readiness to innovate.
Russian companies have been moving away from simple body-selling, and are taking on more tailor-made, fixed-price projects that demand an imaginative approach. This type of business is less sensitive to market trends than mass outsourcing, which has resulted in the Russian IT export staying flat.
But the Russian IT industry is certainly growing more mature. That is proved by a number of acquisitions made by foreign investors in Russian IT and Internet companies, such as the Tencent/Digital Sky deal, and global Internet players like eBay, Facebook, and Paypal entering the Russian market.
Another sign of market maturity is the structuring and consolidation of the main market players. This year, due to economic instability, this process went especially actively. A lot of small companies and freelance teams found themselves swept off the market or acquired by larger players. Other companies spun off minor concerns to focus on their core business.
Last year was also marked by government action on the IT market. The Russian government procurement was a main driver for the domestic IT industry, with expansive projects like "Electronic Russia" and "Electronic Government", while great effort were made to create and sustain the country's innovations ecosystem. The most significant project, among new technology parks development and the formation of a State science corporation, was the development of the Russian Venture Company (RVC), a State venture fund for seed investments. Benefited by the appointment as CEO of Professor Igor Agamirzian, a famous scientist and past Microsoft Head of GR, RVC immediately invested in several promising start-ups in Russia. Last week brought news on RVC joining! its efforts with Morgan Stanley and Chevron for entering international markets with the first project of investing in BrightSource Energy, a US-based developer of solar thermal power plants.
Another customer sector growing as the economy crisis lifts was the telecommunications industry. That brings us to the prospects of the next year revealed at the Russoft forum by Robert Farish, IDC Vice-President and Regional Director in Russia. With the popularity of mobile accessories growing daily, as well as that of notebooks, smartphones and other communication tools, this sector could well be the driver of IT outsourcing industry in the near future. And as the fastest-growing internet and mobile markets are Russia and Asian countries - India, Japan, China, the global vendors and integrators will need not only outsourcing services but also reliable on-site support. Ex oriente lux. Light is shining on IT vendors from the East again.
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