Russian Vendors Strive to Meet Requirements of the US Market
Just to be considered as a potential service provider to a top-tier US-based customer, a vendor should meet two major requirements, CMM or ISO certification and an ongoing presence in the USA.
Jun 17, 2002
A recent survey by the Offshore Development Group has clearly explained a well-known fact: just to be considered as a potential service provider to a top-tier US-based customer, a vendor should meet two major requirements, CMM or ISO certification and an ongoing presence in the USA.
It is sad but true that very few Russian vendors can boast such achievements. As bootstrapping companies, most Russian vendors lack free financial resources to establish a strong presence in the States, merely a dozen providers have opened representative offices there.
Moreover only three Russian companies currently are certified to CMM standards. One of these is the fully owned subsidiary of Motorola. Another, Telma (www.telma.ru), has been serving Motorola for 10 years. The last one, Luxoft (www.luxoft.com), obtained CMM Level 4 status only a couple of months ago.
A number of companies have recently announced plans to get CMM certification in the near future. Among them are the St Petersburg based STAR SPB (www.star.spb.ru) and Digital Design (www.digdes.com).
There are ISO-certified Russian providers, but ISO is being quickly replaced by CMM as a de facto quality management standard in the USA.
In these circumstances it is obvious why Russian outsourcing vendors face serious challenges on the tight American IT-market. According to the Russian Digital Alliance (www.russiada.org), in the year 2001 Russian vendors got $40 mln of business from US-based customers, that is only 20% of their revenue from offshore contracts. Compare this to the 60-70% of sales which US contracts account for in the revenue structure of Indian providers.
However, it is a fact that Russian companies have qualified for and successfully carry on work for Fortune 500 companies, including General Electric, Texas Instruments, Boeing, Dell, Agilent Technologies, and Motorola. Even more American corporations are end-customers of the software developed by Russian developers (a common situation when a vendor works through a US-based IT-consultancy).
One of the recent and most prominent success stories is at Texas Instruments, which is now shipping Russian software bundled with its C54 CST processor. The software was developed by SPIRIT (www.spiritcorp.com), a Moscow-based supplier of Digital Signal Processing software products with a subsidiary in Delaware, USA. And now SPIRIT is the largest Texas Instruments' 3rd party software partner in Eastern Europe. The TI product embeds an extensive library of telephony algorithms from SPIRIT. By using a 3rd party library, start-up costs were reduced through elimination of up-front fees and royalties. As the joint press-release says (www.ti.com/sc/docs/news/2001/01188.htm), "-TI selected SPIRIT because of its extensive telephony algorithm knowledge, software excellence, timely support and quality of user documentation."
SPIRIT is also known for its long-standing cooperation with Nortel Networks. The company has served as a subcontractor for Nortel Networks since 1997, when SPIRIT established an Offshore Development Center for Nortel Networks in Moscow specializing in DSP programming.
Another example of Russians' success is STAR SPB (www.star.spb.ru)'s work for Millennium Pharmaceuticals (www.mlnm.com) going back to 1998. Millennium is a leading US-based biopharmaceutical company specializing in biopharmaceutical R&D. Millennium integrates a wide range of technologies, from genomics to chemistry to robotics. STAR SPB traditionally has had strong experience in language engineering and has helped Millennium to apply its proprietary technologies to the problems of bioinformatics. Through the course of this cooperation with Millennium, STAR SPB developed a concept-based Information Retrieval system that is applied to process huge volumes of textual data (millions of documents, covering areas of medicine, biochemistry and genetics).
For another client, Previo (www.previo.com, formerly STAC), STAR SPB was able to quickly gather 25 computer engineers within one month and establish an Offshore Development Center that was involved in the development of recovery and data protection software products. The end-customer was Tivoli Systems, a subsidiary of IBM. In addition, STAR's specialists designed and deployed an advanced testing laboratory to ensure a software Quality Assurance process that is crucial for this type of project.
Notwithstanding these successes, company representatives at STAR note their business in the USA has been held back by lack of CMM certification and not having representatives on the ground. Both objectives are now in the company's near term plans.
Vested Development (VDI, www.vestedev.com), an ISO9001 certified company with offices in Moscow and Boston, is another good example of a company that successfully operates on the world's largest IT-market. VDI helped Banta Integrated Media (www.banta-im.com) deliver its B-Media product to market on-time and within budget. Banta Integrated Media, a subsidiary of Banta Corporation, is a provider of software and E-Business solutions for digital content management, E-Commerce, and Internet-based cross-media publishing. Banta needed to add functionality to its core product line, but, due to internal resource limitations, could not do that within schedule. VDI helped it all to come about. Even more, VDI managed to stay on schedule despite growing product requirements. They delivered code with very few bugs.
VDI also assisted Datum eBusiness Solutions (www.datum.com) in porting of their Confidential Courier product to a Windows NT environment. Datum eBusiness Solutions (EBS) is a division of Datum, Inc. that provides secure time and information distribution solutions. Its Confidential Courier manages access to confidential or proprietary information and was originally developed for Windows 3.1 and Windows 95. Datum needed to deliver it on the Windows NT platform but here again had limited internal resources to perform the task and chose VDI as an outsourcing partner. More recently the partnership has been expanded and VDI is now involved in the development of Datum's TymServe products.
Auriga (www.auriga.com), another Moscow-based vendor with an office in Amherst, NH, serves Interleaf (now acquired by Broadvision, www.broadvision.com) and LynuxWorks (www.lynuxworks.com). The vendor is responsible for the development of BladeRunner, a Web content management solution from Interleaf, one of the best in its class. LynuxWorks, that develops and markets software products and services for use in a wide range of intelligent (microprocessor-based) products, including an embeddable real-time operating system called LynxOS, has been using the services of Auriga for several years. Auriga engineers have worked on many LynuxWorks projects including hardware startup monitors, device drivers, test suite development, Gnu compiler development, and porting LynxOS to the Motorola MPC860/821 microprocessor. LynuxWorks uses teams of Auriga engineers at Auriga's Moscow headquarters as well as in Silicon Valley. In the coming year LynuxWorks plans to continue to use Auriga engineers in some of its key projects.
Auriga is also working hard to get CMM certification. According to Dr. Sukharev, President of Auriga, the Moscow-based software development facilities are applying for CMM Level 3 certification by mid 2002.
Conclusion
When the market is dominated by Indian vendors, a Russian company should exceed customer's expectations in order to get the contract. As we see, for today's major Russian players the importance of established (and officially certified) QA process is an indisputable fact of commercial life. They also clearly recognize the need to be close to potential customers by opening US representative offices.
It is sad but true that very few Russian vendors can boast such achievements. As bootstrapping companies, most Russian vendors lack free financial resources to establish a strong presence in the States, merely a dozen providers have opened representative offices there.
Moreover only three Russian companies currently are certified to CMM standards. One of these is the fully owned subsidiary of Motorola. Another, Telma (www.telma.ru), has been serving Motorola for 10 years. The last one, Luxoft (www.luxoft.com), obtained CMM Level 4 status only a couple of months ago.
A number of companies have recently announced plans to get CMM certification in the near future. Among them are the St Petersburg based STAR SPB (www.star.spb.ru) and Digital Design (www.digdes.com).
There are ISO-certified Russian providers, but ISO is being quickly replaced by CMM as a de facto quality management standard in the USA.
In these circumstances it is obvious why Russian outsourcing vendors face serious challenges on the tight American IT-market. According to the Russian Digital Alliance (www.russiada.org), in the year 2001 Russian vendors got $40 mln of business from US-based customers, that is only 20% of their revenue from offshore contracts. Compare this to the 60-70% of sales which US contracts account for in the revenue structure of Indian providers.
However, it is a fact that Russian companies have qualified for and successfully carry on work for Fortune 500 companies, including General Electric, Texas Instruments, Boeing, Dell, Agilent Technologies, and Motorola. Even more American corporations are end-customers of the software developed by Russian developers (a common situation when a vendor works through a US-based IT-consultancy).
One of the recent and most prominent success stories is at Texas Instruments, which is now shipping Russian software bundled with its C54 CST processor. The software was developed by SPIRIT (www.spiritcorp.com), a Moscow-based supplier of Digital Signal Processing software products with a subsidiary in Delaware, USA. And now SPIRIT is the largest Texas Instruments' 3rd party software partner in Eastern Europe. The TI product embeds an extensive library of telephony algorithms from SPIRIT. By using a 3rd party library, start-up costs were reduced through elimination of up-front fees and royalties. As the joint press-release says (www.ti.com/sc/docs/news/2001/01188.htm), "-TI selected SPIRIT because of its extensive telephony algorithm knowledge, software excellence, timely support and quality of user documentation."
SPIRIT is also known for its long-standing cooperation with Nortel Networks. The company has served as a subcontractor for Nortel Networks since 1997, when SPIRIT established an Offshore Development Center for Nortel Networks in Moscow specializing in DSP programming.
Another example of Russians' success is STAR SPB (www.star.spb.ru)'s work for Millennium Pharmaceuticals (www.mlnm.com) going back to 1998. Millennium is a leading US-based biopharmaceutical company specializing in biopharmaceutical R&D. Millennium integrates a wide range of technologies, from genomics to chemistry to robotics. STAR SPB traditionally has had strong experience in language engineering and has helped Millennium to apply its proprietary technologies to the problems of bioinformatics. Through the course of this cooperation with Millennium, STAR SPB developed a concept-based Information Retrieval system that is applied to process huge volumes of textual data (millions of documents, covering areas of medicine, biochemistry and genetics).
For another client, Previo (www.previo.com, formerly STAC), STAR SPB was able to quickly gather 25 computer engineers within one month and establish an Offshore Development Center that was involved in the development of recovery and data protection software products. The end-customer was Tivoli Systems, a subsidiary of IBM. In addition, STAR's specialists designed and deployed an advanced testing laboratory to ensure a software Quality Assurance process that is crucial for this type of project.
Notwithstanding these successes, company representatives at STAR note their business in the USA has been held back by lack of CMM certification and not having representatives on the ground. Both objectives are now in the company's near term plans.
Vested Development (VDI, www.vestedev.com), an ISO9001 certified company with offices in Moscow and Boston, is another good example of a company that successfully operates on the world's largest IT-market. VDI helped Banta Integrated Media (www.banta-im.com) deliver its B-Media product to market on-time and within budget. Banta Integrated Media, a subsidiary of Banta Corporation, is a provider of software and E-Business solutions for digital content management, E-Commerce, and Internet-based cross-media publishing. Banta needed to add functionality to its core product line, but, due to internal resource limitations, could not do that within schedule. VDI helped it all to come about. Even more, VDI managed to stay on schedule despite growing product requirements. They delivered code with very few bugs.
VDI also assisted Datum eBusiness Solutions (www.datum.com) in porting of their Confidential Courier product to a Windows NT environment. Datum eBusiness Solutions (EBS) is a division of Datum, Inc. that provides secure time and information distribution solutions. Its Confidential Courier manages access to confidential or proprietary information and was originally developed for Windows 3.1 and Windows 95. Datum needed to deliver it on the Windows NT platform but here again had limited internal resources to perform the task and chose VDI as an outsourcing partner. More recently the partnership has been expanded and VDI is now involved in the development of Datum's TymServe products.
Auriga (www.auriga.com), another Moscow-based vendor with an office in Amherst, NH, serves Interleaf (now acquired by Broadvision, www.broadvision.com) and LynuxWorks (www.lynuxworks.com). The vendor is responsible for the development of BladeRunner, a Web content management solution from Interleaf, one of the best in its class. LynuxWorks, that develops and markets software products and services for use in a wide range of intelligent (microprocessor-based) products, including an embeddable real-time operating system called LynxOS, has been using the services of Auriga for several years. Auriga engineers have worked on many LynuxWorks projects including hardware startup monitors, device drivers, test suite development, Gnu compiler development, and porting LynxOS to the Motorola MPC860/821 microprocessor. LynuxWorks uses teams of Auriga engineers at Auriga's Moscow headquarters as well as in Silicon Valley. In the coming year LynuxWorks plans to continue to use Auriga engineers in some of its key projects.
Auriga is also working hard to get CMM certification. According to Dr. Sukharev, President of Auriga, the Moscow-based software development facilities are applying for CMM Level 3 certification by mid 2002.
Conclusion
When the market is dominated by Indian vendors, a Russian company should exceed customer's expectations in order to get the contract. As we see, for today's major Russian players the importance of established (and officially certified) QA process is an indisputable fact of commercial life. They also clearly recognize the need to be close to potential customers by opening US representative offices.