Russian IT for Danish Laboratories
Nils Erik Klausen, program director of Computer Science Corporation, and CEO of Star Software Nick Puntikov express opinions on Russian outsourcing capabilities.
Jun 18, 2003
St.Petersburg has created propitious conditions for making a living from innovative and science-intensive products.
On Roentgen Street, not far from the Peter & Paul Fortress, 45 Russian programmers are at work on two floors of a former military enterprise. They are busy creating a system, which should produce a revolution in the Danish Department of Health.
The Chief State Community of Hospitals (HS) is the main customer for a medical system through which doctors and nurses can receive the results of blood and urine analyses directly on their computer screens a few seconds after submitting samples.
"We have great expectations for this system and we intend to sell it around the world. Firstly this means Denmark, the Faroe Islands, Norway, Greenland and Sweden," says project leader Nils Erik Klausen of Computer Science Corporation (CSC).
While CSC is responsible for installing the system, its development was given over to the company Star Software in St. Petersburg. This complex medical system ensures the automatic delivery of test samples to their correct address so that research results can be shown immediately on screen. At present a multi-level security system has already been developed and information is provided about possible errors as they may arise.
A Classic Example
This project is a classic example of computer programming made to order and of offshore programming.
Star Software has been working to orders from CSC ever since the mid-1990's when CSC, an American company, bought Datacentralen, the state-owned Danish company specializing in systems integration. During this period the founder of Star Software, Nikolai Puntikov, met with one of the CSC managers at a conference on computer linguistics in Copenhagen.
"I usually say that success in business is often 90% dependent on luck and happy coincidence. Therefore if luck is not with you from the very beginning, you will not succeed however much planning you do," says Nikolai Puntikov.
Luck has been kind to Puntikov during all of his 45 years. But it was precisely his outstanding abilities and high professionalism that over the last 10 years have turned a small working group of enthusiasts into a contemporary IT company with 210 employees and a turnover which should grow to 30 million Danish kronor in the coming year.
It was difficult
The first agreement with CSC was formally speaking concluded between CSC Great Britain, CSC Denmark and the Russian side who were dealt with as consultants, since there was no prior experience of working with Russian IT companies and the Danish labor unions were not very confident in the strength of Russian programmers. However in the course of the collaboration, Puntikov and his team quickly won their trust and developed a good reputation. After this experience the contracts came one after another. The latest project is number 16 and according to CSC manager Nils Erik Klausen is hardly the last. "We have been working with Nikolai Puntikov and Star for seven years and no problems have ever arisen," says Nils Erik Klausen.
Klausen sees three factors that make collaboration with Russia attractive for large Danish IT companies:
In the opinion of Nils Erik Klausen Danish companies can make much more effective use of the potential existing in the Russian IT sector through outsourcing and offshore programming.
"We understand that the legacy of the past cannot disappear in the course of 10 - 15 years, but the Russians are moving forward quickly and still have colossal potential. St Petersburg is becoming all the more attractive as a market for IT companies of the Baltic region. If we look several years into the future, Russia can soon begin to play the same role in outsourcing as India has over the past 10 - 15 years," says Nils Erik Klausen.
Nikolai Puntikov's story is typical. Trained as an economist, he was always interested in research in the field of computers. He subsequently followed his own studies in linguistics, which led him in the mid-1980's to become the leader of a research project at the Independent Academy of the Humanities.
Struggle for Survival
Soon after this the Soviet Union collapsed and the market economy stormed into the world of academic science like a tornado, bringing with it a general struggle for survival.
"In 1992 the salary of employees at universities and research institutes amounted to $10 a month, which prompted many to seek out new ways of making a living. In our case this turned out to be programming," says Nikolai Puntikov.
A good knowledge of English and contacts abroad served Nikolai Puntikov well in his first two years and in 1993 things improved. This is when happenstance again played a decisive role.
One of Puntikov's friends went to Germany, where he found a job in a company that was part of the Swiss-based company STAR AG, which was engaged in software development, desktop publishing, and technical translating.
The Beginning
Nikolai Puntikov's friend persuaded the management of the company to pay attention to the possibilities of Russian IT firms in St Petersburg. The boss liked what he saw and soon Nikolai Puntikov and his laboratory received their first large order. At the same time this laid the groundwork for their eventually entering into the STAR Group of companies, which is represented in 33 countries.
"Joining the STAR Group was a turning point for us. We obtained many linguistic projects and orders linked with desktop publishing. BMW was one of STAR's biggest clients, and when BMW began selling their cars in Russia, the STAR Group was able to use our expert knowledge successfully," says Nikolai Puntikov.
In the course of 10 years, STAR Spb (Spb is an abbreviation of St Petersburg) grew into a large company which embraces two firms: one is Star Software - producing software programs - and the other is STAR Spb, which does translations and pre-press work for such companies as Renault, Siemens, Honda, Heidelberg, Bosch and Daimler-Chrysler.
In the field of IT, Star Software's largest clients are the Danish firms /CSC - ed./, Contex, a producer of scanners, and Foss Electric, as well as the American company Millennium Pharmaceuticals.
Affiliates are Opened
Last year Star Software opened a new branch office in Boston, USA, and soon afterwards another one in Germany. At the same time the company has commercial agents working in Belgium and Sweden. Ever since the year 2000, Puntikov invests heavily in promoting the company's services on the international IT market. On average the company receives 3 - 5 commercial enquiries a week from foreign companies operating on this market.
Puntikov invites Danish companies to hurry up if they want to occupy a place in the rapidly growing Russian market. He also sees a great need for intermediaries with well-established contacts on both sides of the Baltic to help Danish companies resolve potential problems of entering the Russian market.
"There is considerable distrust of the Russian IT market which limits its growth despite the great potentials which underpin this field. As in the past it is difficult to sell Russian products other than to such major companies as CSC, who are building their strategy on outsourcing. Many companies continue to be hostage to prejudices," comments Nikolai Puntikov.
"I am running a private business with open and transparent ledgers. Many people in the West do not understand what serious changes have occurred in Russia over the past 10 years," says Puntikov.
Barriers to Development
Puntikov's own story reflects a path that many observers have commented upon. Tens of thousands of engineers, mathematicians, physicists and other researchers and specialists with a technical education who 10 years ago seemed lost in the market economy have found an application for their higher education in the new economy.
In St.Petersburg there are approximately 35,000 companies, which make their living from scientific research and technical developments. In the opinion of the financial magazine Ekspert, the city is especially suited to play a leading role in an economy emphasizing innovative and science-intensive products.
The city graduates 40.000 students each year and such giants as Microsoft, Intel, Sun Microsystems and Motorola have created software development centers for their products in St.Petersburg.
Daniil Aleksandrov, a historian of science and vice chancellor of the municipal Higher School of Economics, predicts that in the coming 10 - 15 years innovation and related activity can grow to constitute 30% of the overall economy of St.Petersburg. At present it amounts to between 3 and 4%, while science and technology together constitute 12%.
The city has a big advantage in its favor: it is not the financial center of Russia, nor does it possess oil or some other natural resource. This forces it to invest its intellectual potential in innovations and in the development of advanced technologies.
However in the opinion of experts the city also falls short in organization, planning, and show of initiative at all levels of business, which a dynamic market economy requires. In the Soviet Union all of this was done through top-down administration, which in the final analysis turned out to be a cul-de-sac.
Original version of the article (in Danish)
On Roentgen Street, not far from the Peter & Paul Fortress, 45 Russian programmers are at work on two floors of a former military enterprise. They are busy creating a system, which should produce a revolution in the Danish Department of Health.
The Chief State Community of Hospitals (HS) is the main customer for a medical system through which doctors and nurses can receive the results of blood and urine analyses directly on their computer screens a few seconds after submitting samples.
"We have great expectations for this system and we intend to sell it around the world. Firstly this means Denmark, the Faroe Islands, Norway, Greenland and Sweden," says project leader Nils Erik Klausen of Computer Science Corporation (CSC).
While CSC is responsible for installing the system, its development was given over to the company Star Software in St. Petersburg. This complex medical system ensures the automatic delivery of test samples to their correct address so that research results can be shown immediately on screen. At present a multi-level security system has already been developed and information is provided about possible errors as they may arise.
A Classic Example
This project is a classic example of computer programming made to order and of offshore programming.
Star Software has been working to orders from CSC ever since the mid-1990's when CSC, an American company, bought Datacentralen, the state-owned Danish company specializing in systems integration. During this period the founder of Star Software, Nikolai Puntikov, met with one of the CSC managers at a conference on computer linguistics in Copenhagen.
"I usually say that success in business is often 90% dependent on luck and happy coincidence. Therefore if luck is not with you from the very beginning, you will not succeed however much planning you do," says Nikolai Puntikov.
Luck has been kind to Puntikov during all of his 45 years. But it was precisely his outstanding abilities and high professionalism that over the last 10 years have turned a small working group of enthusiasts into a contemporary IT company with 210 employees and a turnover which should grow to 30 million Danish kronor in the coming year.
It was difficult
The first agreement with CSC was formally speaking concluded between CSC Great Britain, CSC Denmark and the Russian side who were dealt with as consultants, since there was no prior experience of working with Russian IT companies and the Danish labor unions were not very confident in the strength of Russian programmers. However in the course of the collaboration, Puntikov and his team quickly won their trust and developed a good reputation. After this experience the contracts came one after another. The latest project is number 16 and according to CSC manager Nils Erik Klausen is hardly the last. "We have been working with Nikolai Puntikov and Star for seven years and no problems have ever arisen," says Nils Erik Klausen.
Klausen sees three factors that make collaboration with Russia attractive for large Danish IT companies:
- Accessibility of Russian labor resources
- Cultural affinity of Denmark and Russia
- An advantageous combination of high Russian educational levels and attractive pricing
In the opinion of Nils Erik Klausen Danish companies can make much more effective use of the potential existing in the Russian IT sector through outsourcing and offshore programming.
"We understand that the legacy of the past cannot disappear in the course of 10 - 15 years, but the Russians are moving forward quickly and still have colossal potential. St Petersburg is becoming all the more attractive as a market for IT companies of the Baltic region. If we look several years into the future, Russia can soon begin to play the same role in outsourcing as India has over the past 10 - 15 years," says Nils Erik Klausen.
Nikolai Puntikov's story is typical. Trained as an economist, he was always interested in research in the field of computers. He subsequently followed his own studies in linguistics, which led him in the mid-1980's to become the leader of a research project at the Independent Academy of the Humanities.
Struggle for Survival
Soon after this the Soviet Union collapsed and the market economy stormed into the world of academic science like a tornado, bringing with it a general struggle for survival.
"In 1992 the salary of employees at universities and research institutes amounted to $10 a month, which prompted many to seek out new ways of making a living. In our case this turned out to be programming," says Nikolai Puntikov.
A good knowledge of English and contacts abroad served Nikolai Puntikov well in his first two years and in 1993 things improved. This is when happenstance again played a decisive role.
One of Puntikov's friends went to Germany, where he found a job in a company that was part of the Swiss-based company STAR AG, which was engaged in software development, desktop publishing, and technical translating.
The Beginning
Nikolai Puntikov's friend persuaded the management of the company to pay attention to the possibilities of Russian IT firms in St Petersburg. The boss liked what he saw and soon Nikolai Puntikov and his laboratory received their first large order. At the same time this laid the groundwork for their eventually entering into the STAR Group of companies, which is represented in 33 countries.
"Joining the STAR Group was a turning point for us. We obtained many linguistic projects and orders linked with desktop publishing. BMW was one of STAR's biggest clients, and when BMW began selling their cars in Russia, the STAR Group was able to use our expert knowledge successfully," says Nikolai Puntikov.
In the course of 10 years, STAR Spb (Spb is an abbreviation of St Petersburg) grew into a large company which embraces two firms: one is Star Software - producing software programs - and the other is STAR Spb, which does translations and pre-press work for such companies as Renault, Siemens, Honda, Heidelberg, Bosch and Daimler-Chrysler.
In the field of IT, Star Software's largest clients are the Danish firms /CSC - ed./, Contex, a producer of scanners, and Foss Electric, as well as the American company Millennium Pharmaceuticals.
Affiliates are Opened
Last year Star Software opened a new branch office in Boston, USA, and soon afterwards another one in Germany. At the same time the company has commercial agents working in Belgium and Sweden. Ever since the year 2000, Puntikov invests heavily in promoting the company's services on the international IT market. On average the company receives 3 - 5 commercial enquiries a week from foreign companies operating on this market.
Puntikov invites Danish companies to hurry up if they want to occupy a place in the rapidly growing Russian market. He also sees a great need for intermediaries with well-established contacts on both sides of the Baltic to help Danish companies resolve potential problems of entering the Russian market.
"There is considerable distrust of the Russian IT market which limits its growth despite the great potentials which underpin this field. As in the past it is difficult to sell Russian products other than to such major companies as CSC, who are building their strategy on outsourcing. Many companies continue to be hostage to prejudices," comments Nikolai Puntikov.
"I am running a private business with open and transparent ledgers. Many people in the West do not understand what serious changes have occurred in Russia over the past 10 years," says Puntikov.
Barriers to Development
Puntikov's own story reflects a path that many observers have commented upon. Tens of thousands of engineers, mathematicians, physicists and other researchers and specialists with a technical education who 10 years ago seemed lost in the market economy have found an application for their higher education in the new economy.
In St.Petersburg there are approximately 35,000 companies, which make their living from scientific research and technical developments. In the opinion of the financial magazine Ekspert, the city is especially suited to play a leading role in an economy emphasizing innovative and science-intensive products.
The city graduates 40.000 students each year and such giants as Microsoft, Intel, Sun Microsystems and Motorola have created software development centers for their products in St.Petersburg.
Daniil Aleksandrov, a historian of science and vice chancellor of the municipal Higher School of Economics, predicts that in the coming 10 - 15 years innovation and related activity can grow to constitute 30% of the overall economy of St.Petersburg. At present it amounts to between 3 and 4%, while science and technology together constitute 12%.
The city has a big advantage in its favor: it is not the financial center of Russia, nor does it possess oil or some other natural resource. This forces it to invest its intellectual potential in innovations and in the development of advanced technologies.
However in the opinion of experts the city also falls short in organization, planning, and show of initiative at all levels of business, which a dynamic market economy requires. In the Soviet Union all of this was done through top-down administration, which in the final analysis turned out to be a cul-de-sac.
Original version of the article (in Danish)