Outsourcing: Back In The USSR

Russia wants a bigger piece of the global outsourcing business, and it is launching a drive next week on its way to becoming what it calls "the next global leader in outsourcing."

W. David Gardner, Contributor

April 4, 2005

2 Min Read

Russia wants a bigger piece of the global outsourcing business, and it is launching a drive to become what it calls "the next global leader in outsourcing."

Russia's Minister of Information Technologies and Communications (MITC) Leonid Reiman will kick-off the $650 million drive at a trade exposition in London next week, while Mikhail Gorbachev, former president of the Soviet Union, will address the Massachusetts Software Council.

Maria Drinberg, spokeswoman for the Ministry, said the government's plan will be unveiled at the Eight Annual Russian Economic Forum in London. She added that the plan also calls for beefing-up Russia's outsourcing effort in the United States. Companies in the U.S. will be able to contact the MITC, which will field them and pass them along to appropriate providers in Russia.

The program is ambitious. "Our vision is for Russia to become a global center of innovation and entrepreneurship, a place where radically new, break-through technologies are developed," said Reiman in a statement. "We want Russia to be a place where 'the next big thing' is born."

Reiman said software exports are growing between 40 and 50 percent annually and that Russia's IT activity--posed to reach $2 billion in the next two years--currently outpaces all other sectors of the Russian economy. More than 250 Russian firms are active in offshore-software development, he noted.

One U.S.-based firm with software and engineering centers in Russia is AURIGA of Amherst, New Hampshire, which is sponsoring the Gorbachev event on April 12. Gorbachev, a winner of the Nobel Prize for Peace, will introduce various Russian software capabilities at the organization's meeting. AURIGA said several top managers from Russian software-outsourcing companies will attend the meeting, too. The Gorbachev event is not directly related to the Ministry's new campaign.

Drinberg said Russia is developing tax and legal reforms to make use of the country's outsourcing capabilities more attractive. Following the lead of India's Bangalore and Hyderabad, Russia plans to create more free economic zones and a national chain of technoparks. The $650 million government commitment will be spread over five years.

The Ministry said that large global firms including Intel, IBM, Motorola, and Microsoft already utilize Russian IT expertise that is "lower cost and faster to market than those of their Western counterparts."

Alexis Sukharev, a founder of the National Software Development Association of Russia (RUSSOFT), has arranged cooperative meetings between Russian software representatives and New England software groups, as well as organizing the Gorbachev event. In a statement, Sukharev said: "This year's exceptional event is the next significant step to bring [the] booming Russian IT industry to the attention of New England business community."

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