Reviewing Russia in Gartner Group’s Top 30 Offshore Destinations Rating

The rating issued by Gartner Group in 2011 highlighted top 30 countries which would suit best different outsourcing needs. While bringing a number of new names to the offshore locations list, the report looked remarkably familiar when you read the actual criteria countries’ ratings. However the analysis of the research made clear differentiators of countries and major factors that formed the specifics of export segment of Top 30 IT outsourcing industries.

It has been a year since the rating went public. While the new rating is under way, it is high time to see how Russia can possibly score this year.

Russia’s strengths are obvious. The country is a mature IT outsourcing services exporter. The market is built on the distinctive legacy of educational system. This allows Russian providers to be a handy replacement for on-shore ESPs when it comes to competence-driven assignments in software development and R&D. The efficiency in assignments of this type came mainly from people and organizational competences matched with proximity factors — be it proximity in culture or distance. Labor costs that undoubtedly grew in Russia, play less important role in this niche of IT business.

If we review Russia’s key standings from the last year’s Gartner Group rating, educational system comes first. Although EMEA educational system slipped in a number of countries, Russia still held “Good” position. The recent ACM programming contest confirms the Russia’s primary place in terms of educational background. Out of 112 universities from around the world, St. Petersburg State University of IT, Mechanics & Optics emerges as winner of “World’s Smartest Trophy” at ACM International Collegiate Programming Contest. Two more Russian universities – Moscow Institute of Physics & Technology and Moscow State University – also received prizes this year. It is the constant trend that Russia-based technology students present the best solutions in this prestigious contest every year thus confirming the country’s power in profound technical education.

Along with initiatives of the new government in the Ministry of Education and support of the IT education brought about by IT companies in their corporate training centers, it is a viable opportunity to change rating of Russia’s educational system from “Good” to “Very Good” already this year.

Another change in Russia’s standing in Gartner’s rating last year was in cost attractiveness. This criterion received “Fair” in 2011 and spoke about increasing costs in primary outsourcing locations in Russia (Moscow, St.Petersburg, Nizhny Novgorod). This fact has been admitted by market players. However the cost factor is still easily beaten since there is a substantial number of secondary destinations for building R&D/development facilities for ITO in Russia. Almost all Russian ESPs have already development centers in place in cities with about a million population and strong technical universities. Reksoft opened an office with development resources in Voronezh a few years ago and has been enjoying excellent high level technical force at attractive prices.

What could also help in improving Russia’s place in 2012 rating is a change in attitude towards IT and its role in the country’s development from the government. With the new Minister of IT and Communications appointed last week by the President, new enforcements on facilitating Russian IT industry development are viewed upon as quite possible. Supported by these initiatives the lobby from Russoft and APKIT trade association has real chances for bringing change in the government support landscape in Russia.

Russia’s placement in Gartner Group rating already presented good opportunities for the country’s outsourcing service providers. Right now, all trends prove that while India has challenges in struggling with sequences of economic downturn, growing attrition rates and dependence on US/UK markets, Russia presents a natural choice of outsourcing destination with highly educated workforce, an attractive cost margin and a growing recognition and support from the government.

Source: Russoft
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