Locals Look Good in Software
Jun 11, 2002
Although India remains the world leader in the software-outsourcing industry, Russia is catching up rapidly, according to information-technology analysts attending the Second Software Outsourcing Summit in St. Petersburg last week. The three-day conference was held at the Pulkovskaya Hotel, attracting nearly 500 representatives from 200 software companies and IT associations from over 25 countries.
A key factor boosting Russia's attractiveness for software investment is the growing political tension in India, with U.S. companies nervous about the future of software deliveries from India in the event of war with neighboring Pakistan.
These concerns come at a time when the costs for Indian software outsourcing are rising dramatically. "Every six months, I have to raise wages by 40 percent, in order not to lose my best-qualified personnel. It's impossible to carry on like that," said Michael Weldon, vice president of Xerox Global Software Operations. Xerox, a major international player on the documents-solution market, is now thinking of establishing an Offshore Software Center in Russia.
According to investment bank Brunswick Warburg, Russia will export an estimated $300 million in software this year, almost doubling last year's export total of between $170 million and $200 million. In 2005, it is predicted that the figure will reach $1 billion, though experts maintain that there will have to be major improvements for that target to be achieved.
"The main problem is your [Russian] marketing," Robert Williams, a senior IBM executive, said in a speech given at the summit. "Even though you may have the best programmers in the world, if no one is aware of that, you won't sell a thing."
Williams criticized the Russian government for not giving the offshore business enough support. "In India, software companies receive the full support of the authorities," he said
Russia has thousands of small software companies with an average of between 10 and 50 employees. Large companies, like Luxoft, with 300 employees, are a rarity. India has fewer companies, though they are larger in size and have larger marketing budgets. This year, India will export $8 billion in software.
Most Russian companies can only afford to promote their products through the Internet. "It's very difficult to make contacts with Western companies. That's why we are here," said Katya Martemyanova, chief marketing officer for Sitech, a Samara-based firm.
Next year, the Outsource Summit will be held in the late summer or autumn, in order not to coincide with St. Petersburg's 300th-anniversary celebrations. This year's summit, however, was generally considered a success by participants, with the Pulkovskaya Hotel unable to accommodate all the guests at its Electron Standard Business Center.
A key factor boosting Russia's attractiveness for software investment is the growing political tension in India, with U.S. companies nervous about the future of software deliveries from India in the event of war with neighboring Pakistan.
These concerns come at a time when the costs for Indian software outsourcing are rising dramatically. "Every six months, I have to raise wages by 40 percent, in order not to lose my best-qualified personnel. It's impossible to carry on like that," said Michael Weldon, vice president of Xerox Global Software Operations. Xerox, a major international player on the documents-solution market, is now thinking of establishing an Offshore Software Center in Russia.
According to investment bank Brunswick Warburg, Russia will export an estimated $300 million in software this year, almost doubling last year's export total of between $170 million and $200 million. In 2005, it is predicted that the figure will reach $1 billion, though experts maintain that there will have to be major improvements for that target to be achieved.
"The main problem is your [Russian] marketing," Robert Williams, a senior IBM executive, said in a speech given at the summit. "Even though you may have the best programmers in the world, if no one is aware of that, you won't sell a thing."
Williams criticized the Russian government for not giving the offshore business enough support. "In India, software companies receive the full support of the authorities," he said
Russia has thousands of small software companies with an average of between 10 and 50 employees. Large companies, like Luxoft, with 300 employees, are a rarity. India has fewer companies, though they are larger in size and have larger marketing budgets. This year, India will export $8 billion in software.
Most Russian companies can only afford to promote their products through the Internet. "It's very difficult to make contacts with Western companies. That's why we are here," said Katya Martemyanova, chief marketing officer for Sitech, a Samara-based firm.
Next year, the Outsource Summit will be held in the late summer or autumn, in order not to coincide with St. Petersburg's 300th-anniversary celebrations. This year's summit, however, was generally considered a success by participants, with the Pulkovskaya Hotel unable to accommodate all the guests at its Electron Standard Business Center.