Russia has a large reserve of software development resources waiting to be tapped. Its universities continue to turn out thousands of graduates of IT and engineering fields. International and local recruiting agenesis operate on the domestic market so that companies can avail themselves of IT resources through the Russian Federation. Cost factors are undeniably a key consideration in any company’s decisions with regard to outsourcing.
Costs for Development
Costs for software development depend on the following: needed skills, project size, commercial renown of the provider, the geographical location, and experience of a provider, the provider’s order book, and various fixed overheads, the specific type of contract under negotiation, ratio of onsite to offsite work, guaranteed workload and other factors. Hourly rates may vary from as low as $10 (in rare cases) to $40 and up to $50. Testers and quality assurance personnel typically cost 20-30% less, and project managers 50-100% and even 150% more. Key personnel, if the client insists on a certain candidate, can cost up to twice as much
A Skilled Workforce
Russian programmers are up to date with all technical skills, as well as those needed for legacy migration. Russia has all the latest worldwide technical, both in English and in localized versions. Russian students have beaten competitors from all over the world in international competitions making them very well educated in their fields. Local providers are prepared with the following steps: specialized technical libraries and leading specialists are invited to educate on the latest trends and technologies. Some of the certification centers include Sun, Microsoft, Novell and independent authorities. Russian companies have a strong advantage in R&D, meaning all the software development that requires creativity and strong skills in adjacent domains.
String Education
A Russian programmer gets a strong education in fields like Mathematics, Physics and other domains before entering the computing programming field, which in turn makes them better prepared when graduating and looking for a job in programming.
Major development centers are situated in the European region – St.-Petersburg, Moscow, N.Novgorod. It takes 3 hours to fly from Paris or Berlin and 8 hours from the USA to reach Moscow or St.-Petersburg. Russia normally compensates for the time difference with their European and even American clientele by adjusting their working schedules so as to have maximal overlapping hours for mutual contact.
All the above factors contribute to the great potential of Russian software outsourcing industry for integration in the worldwide IT industry. Russian companies have strong positions in very few domains which include antivirus software, OCR and scientific software. The main reason for lack of success in other fields is the lack of experience in and failure to invest in marketing, which is a legacy of the Soviet Union and its command economy. The local IT-industry serving domestic clients has dominant positions in systems integration, accounting software and Web-development, where it overshadows the offices of international companies in Russia. These local providers are also beginning to expand into the international market.
DISADVANTAGES
Outsourcing to Russia has a number of drawbacks. There is a general lack of high-level managers in software development. Although some providers have worked in the market for 10 years or more, to date the lack of managers, especially project managers and sales managers remain great inhibitors to growth. Recently the Russian government has drawn public attention to IT and this provides hope that at least educational standards will be changed to fully meet industry needs.
Russia faces many issues in the industry in general which include intellectual property rights, export and import, taxation, labor and currency laws, company accounting. The challenges are real, their relevance to an export oriented business model is tenuous or nil.
The knowledge of English is crucial for middle and top management. However there is no need for every developer to speak English even if he or she should be able to read in English. Generally Russian developers pick up adequate language skills in their courses of higher education.
As for the other European languages, German and, especially, French can become a barrier for communications, because these languages are typically not studied by Russian programmers. However, the situation can be remedied and even today there are Russian IT companies which accept non-English project specifications.
Education
The literacy rate in Russia is 99.4% which as you can see is very high. The education is completely manged by the state with no private interference. It is very common to find graduates in Russia because of the measures of the government. The medium of instruction is Russian in the education system which is something to be considered. Because of the prevalence of Russian, English is relatively less prevalent. This is a draw back though Russia provides many other benefits which make it a lucrative destination for outsourcing
Culture and Availability of Talent
The work ethic is similar to that of European countries and US. Russia has a large talent pool from the Russian military institutions who are highly skilled and experienced in handling sophisticated equipment. The labor cost is also low for such high skilled employees. Russia has 3500 Engineers for every 1 million people. It is well known that the mathematics in the academics of Russian schools is the toughest in the world. It is well know n that mathematics is a crucial component for any technological/scientific endeavor. The world championships of programming are frequently won by Russians. They are known to beat several universities including MIT, Harvard and Cal Tech. The 2010 World champion results in a programming contest had Russians in the 2nd, 4th , 5th,7th and 9th positions.
Infrastructure and Business Incentives
Russia has a very stable power grid which sources power from a varied variety of sources. The oil supply as you might have heard is almost unlimited. Russia is situated about 8-10 hours from US which is one of the major incentives to outsource to Russia. The government is also conducive to outsourcing by completely eliminating the customs duty. There is no Value Added Tax on the export of Information Technology based services and there is no import duty for equipment related to IT.
Geopolitical factors
Russia has a democratic government which is very stable and it has no enemies outside unlike India. You need not worry about a possible revolution or uprising since there are no big noteworthy internal struggles within Russia. You can safely plan a future involving your Russian counterpart of the company.
The only limitation of outsourcing to Russia is the relatively less prevalence of English. One should consider outsourcing hi tech activities to Russia because no other country can compete for that spot. The government is also friendly with its Tax incentives. Infrastructure is on par with the best of the countries. There are no political problems associated with Russia. All these factors make Russia a sought after destination for technology related outsourcing activities.
2022 Update
With Russia waging war on nearby Ukraine, any previous evaluations are currently not applicable. We hope a time comes when Russia rejoins the civilized world.
