Soviet skills draw R&D work

The U.S. IT industry is tapping into the technological prowess of the former Soviet Union, which is emerging as a research and development centre for software and telecommunications companies, a recent report by Aberdeen Group Inc. has found.

But the region’s software development skills, which can be accessed at a cost well below U.S. rates, is also appealing to managers of non-IT firms. Craig Maccubbin, vice president of technology at online travel service, is one of them.

“Many (Russian developers) are ex-Soviet military technologists and programmers, and because of that, they have had classical training in software development,” he said. “They are so disciplined that there is almost a level of inflexibility to their approach.” But, Maccubbin added, that level of discipline also “helps the process of working with them immensely.”

Boston-based Aberdeen found that IT vendors are Russia’s largest offshore contingent, accounting for about three-fourths of all the offshore work done there, said analyst Stephen Lane, who wrote the report.

IT companies are setting up development centres in Russia to help build a market there and to utilize Russian talent for high-end development.

“What they do have is a culture that is focused on problem-solving and focused on using technology in an innovative fashion,” Lane said. But “there is not a Russian company out there that can compete with an Indian company in terms of scale or scope,” he added.

Maccubbin uses Epam Systems Inc., a services provider in Princeton, N.J., that has operations in Moscow and Minsk, Belarus. He said he relies on the development workers in Minsk to build and maintain most of the Web site’s back-end functions. But the customer-facing aspects, such as graphic design work and other “defining characteristics,” are handled in the U.S. “You can’t outsource that to anybody,” he said. Developers in the U.S. charge about US$38 per hour, while the Russian per-hour rate is up to US$20 less, he added.

Bob Pryor, who heads Cap Gemini Ernst & Young’s outsourcing services in New York, agreed that Russia’s workers have advanced technological skills. However, he said, the country will remain a small part of the offshore outsourcing market because its government isn’t developing the industry. “I don’t see any significant investment for new skills and capabilities,” he said.

Marc Herbet, executive vice president of Sierra Atlantic Inc., an application management company in Fremont, Calif., that runs an offshore centre in India, said Russia may well take off as an offshore outsourcing centre if Europeans begin embracing offshore work, particularly because of the proximity.

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