Offshore Outsourcing Readiness/ Conclusion
In 2003, Russia exported
more than US$475 million dollars worth of software products and is listed
internationally as second in IT outsourcing behind India7.1. Despite restrictions,
regulations, policies, and lack of infrastructure, Russia has become a major
player in the outsourcing industry. Certain regions within Russia have been
the leading centers for producing IT programmers. St. Petersburg has been
credited with turning out 1500 IT engineers per year and is responsible for
30-35% of outsourced business in Russia7.1.
India has seen a rapid growth rate in salaries that cannot be maintained.
The monetary gains that American and European companies expect for outsourcing
are a minimum of 40-50%. India has proven to meet that expectation in the
past, but has recently failed to meet that expectation due to increasing wages.
Businesses are looking for extremely cheap labor without sacrificing quality.
The recent wages for a salaried programmer from a Russian specialty school
would be roughly $6,500 a year7.2. Since most students in Russia are literate
and have been trained in other languages, they make excellent candidates for
outsourcing1.1. Russia also outnumbers the number of graduates in IT from
India by almost double. In 2003, the former Soviet Union had 226,000 IT graduates
while India had 165,0007.3.
Russia’s tendency to invest heavily in the sciences, a remnant from
the Soviet Union days, has paid off for producing some of the world’s
best programmers. The Russian political system is the major obstacle that
prevents the nation from being the leading country in software development
and offshore marketing7.3. Excessive amounts of red tape, restrictive policies,
unpaid tax breaks for IT companies, and regulation of telecommunications has
been the greatest political hurdles (as stated earlier in network policy).
The areas of network readiness were discussed and evaluated to show the position
of this paper. The recommendations were made at each level of readiness. Russia
has been determined by this group to be “ready, but not attractive,”
according to the Offshore Outsourcing Readiness vs. Attractiveness Framework.
Russia has a large contingent of programmers that are capable of meeting the
needs of the world. The education system has previously focused mainly on
sciences, which has most IT professionals with advanced degrees currently
looking for employment. The lack of attraction has been indicated in the poor
state of infrastructure, the policies and regulations that limit access to
the Internet, and the lack of funding for the present schooling system. Russia
has a large potential market for offshore outsourcing (and maybe complete
dominance), but may never attain that position due to their current state.
References:
Russia Summary
1.1 A Country Study: Russia, Found at: http://geography.about.com/gi/dynamic/offsite.htm?site=http://lcweb2.loc.gov/frd/cs/rutoc.html
1.2 Business Information Service for the Newly Independent States, Found at:
http://www.bisnis.doc.gov/bisnis/bisdoc/2002RSFactsheet.htm
1.3 CIA: The World Factbook, Found at: http://www.cia.gov/cia/publications/factbook/
Network Access
2.1 A Country Study Russia, Found at: http://geography.about.com/gi/dynamic/offsite.htm?site=http://lcweb2.loc.gov/frd/cs/rutoc.html
2.2 Masmi Research Group, Found at: http://www.masmi.com/corp_040701.htm
2.3 Rostelecom, Found at: http://eng.rt.ru/home_e.shtml
2.4 The World Bank Database
2.5 CIA: The World Factbook, Found at: http://www.cia.gov/cia/publications/factbook/
2.6 Internet World Stats, Found at: http://www.internetworldstats.com
2.7 The Russian Software Industry, Andrey Terekhov, Found at: http://www.iti.spbu.ru/publications/eng/pdf/RusSoft.pdf
2.8 Trends in the Russian Telecommunications Market, http://www.tiaonline.org/policy/regional/nis/041902NISTrend.pdf
Networked Learning
3.1 The World Bank. Found at: http://www.worldbank.org.ru/ECA/Russia.nsf/ECADocByUnid/97E7A9C494AA5E8EC3256E27002773F9/$FILE/elearning_policy_eng.pdf
3.2 The World Bank. Found at: http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:20171404~menuPK:34463~pagePK:34370~piPK:34426~theSitePK:4607,00.html
3.3 Litvinovich, Dmitry. “Russian Education System Declines in Comparison
with Soviet era.” Prada.ru. October 21, 2004. Found at: http://english.pravda.ru/printed.html?news_id=14475
Networked Society
4.1 Ebusinessforum.com. Found at: http://www.ebusinessforum.com/index.asp?layout=newdebi&country_id=RU&country=Russia&channelid=6&title=Doing+e-business+in+Russia
4.2 The International Telecommunication Union. Found at: http://www.itu.int/ITU-D/ict/statistics/at_glance/Internet03.pdf
4.3 The Public Opinion Foundation Database. “Polls ‘The Internet
in Russia’.” Winter 2003-2004. Found at: http://bd.english.fom.ru/report/map/eo040601
4.4 The MASMI Research Group. Found at: http://www.masmi.com/corp_030618.htm
4.5 Department of Slavonic Studies International Russian Resources. Found
at: http://www2.arts.gla.ac.uk/Slavonic/Russian_res.html
4.6 The Free dictionary.com. “Communications in Russia.” Found
at: http://encyclopedia.thefreedictionary.com/Communications%20in%20Russia
4.7 Galena, Kan. “The Internet in Russia.” Working paper, Vanderbilt
University. Found at: http://elab.vanderbilt.edu/research/papers/html/student_projects/internet_in_russia_files/internet_in_russia.htm.
4.8 Library of Congress Country Studies. July 1996. Found at: http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+ru0141)
4.9 Alexander, Marcus. “The Internet in Putins Russia: Reinventing a
Technology of Authoritarianism.” April 2003. Found at: http://www.psa.ac.uk/cps/2003/Marcus%20Alexander.pdf
4.10 The Transnational Institute. “Russia on the Web.” Found at:
http://members.valley.net/~transnat/russinfo.html#Sites%20in%20Russia
Networked Economy
5.1 Helque, Eric. “E-commerce’s potential for Russia’s economy.”
The Russia Journal.Com. May 29, 2000. Found at: http://therussiajournal.com/index.htm?obj=2939
5.2 The AmCham E-Commerce Taskforce. March 2000. Found at: http://www.amcham.ru/upload/354040945520281_Final%20English%20e-com%20paper.doc?PHPSESSID=bb432999991246364aa33f414b72ff2a
5.3 Information Technologies Group: Center For International Development.
Harvard University. “Readiness For The Networked World: Assessment:
Russia.” Found at: http://www.cid.harvard.edu/ciditg/research/Final%20RussiaReadinessAssessment.doc
5.4 Russian Conference on Electronic Commerce. November 1-2, 2001. Found at:
http://www.admin.spb.ru/eng/conferences/ecom1.html
5.5 President of Russia.com. Found at: http://president.kremlin.ru/eng/
Network Policy
6.1 Chirkin, Dmitry. “Internet-Censorship Russian style.” Pravada.ru.
April 8, 2004. Found at: http://english.pravda.ru/main/18/88/351/12450_censorship.html
6.2 Alexander, Marcus. “The Internet in Putins Russia: Reinventing a
Technology of Authoritarianism.” April 2003. Found at: http://www.psa.ac.uk/cps/2003/Marcus%20Alexander.pdf
6.3 Waylett, Sarah. “IT in the Russian Federation.” Found at:
http://www.american.edu/initeb/sw5840a/liberalization.htm
6.4 IREX. “Russia in the Internet Age: Balancing freedom and Regulation.”
2002. Found at: http://www.irex.org/pubs/policy/mosnetconference.PDF
6.5 Hertzfeld, Jeffrey, M. “Foreign Direct Investment in Russia: Battling
Against the Odds.” International Chamber of Commerce The World Business
Organization. 3-5 May 2000. Found at: http://www.iccwbo.org/home/conferences/reports/budapest/book_articles/hertzfeld.asp
Offshore Opportunity
7.1 Bittner, Vanessa. “City Seeks Software Action.” The St. Petersburg
Times. February 10, 2004. Found at: http://www.sptimesrussia.com/archive/times/942/news/b_11654.htm
7.2 Yamamoto, Mike. “Will India price itself out of offshore market?”
ZDNet.com. March 29,2004. Found at: http://www.sptimesrussia.com/archive/times/942/news/b_11654.htm
7.3 Kozhuharov, Simone. “IT Companies' Plea for Government Support.”
The St. Petersburg Times. June 18, 2004. Found at: http://www.sptimesrussia.com/archive/times/978/news/b_12759.htm