Russia: Domestic Production: Software Development, Hardware
Manufacturing, R&D
Overview
The
Russian Software Development market is poised to be a key play in international
software outsourcing competing with the largest players in the market
such as India, China, and Ireland. In Russia,
its main advantage is the generally high level of education of its workers
especially in the science and engineering fields.
Key Stats
- Software Exports for 2001 were close to $150M
(57)
- Some estimate Russian IT Outsourcing to be close
to $350M by 2005 (57)
Software
Development
Russia’s IT exports are mainly focused in the software industry. This market is significantly underleveraged.
There are several niche packaged software players that specialize
in optical character recognition (OCR), anti-virus, and gaming. They are:
(57)
- ABBYY Software House
- 2nd largest global OCR software producer,
with 10-20% share in some European markets
- Kaspersky Lab
- Top 10 global seller of anti-virus software
- 1C
- Number 1 accounting software company as well
as dominant gaming developer and producer
- Parallel Graphics
- Leading developer of web and wireless low bandwidth
integrated rich media 3D simulation products for large industrial
applications
- Spirit Corp DSP Software Source
- Supplies algorithmic technology to Texas Instruments
for its DSP 5000 series
The
majority of exports are customized software development or offshore programming
due to Russia’s strong traditions in scientific education. Russia is working to reach the stature of other outsourcing
leaders in the IT industry. “Many
of the programmers at the higher levels have a great deal of respect for
the Russian technologies,” said Paul Swengler,
and American hired by Enterra, a Russian software
development outsourcing company. (52)
Russian
firms generally market the quality of their work instead of lower fees,
according to research firm Aberdeen Group. (52)
Typical Russian programmer fees run between $20 and $35 per hour
in comparison to $35 to $60 an hour an American might charge.
Still rates are significantly higher than most Indian programmers
earn for simple computer coding. Russian
IT companies tend to prefer intensive projects where they can diagnose
a problem and find a solution. In
contrast, Indian companies are better known for nut-and-bolts programming
Stephan Lane, a research VP for Aberdeen said. (52)
Leading
Outsourcing Players: (57)
- Luxoft
- Aukiga
- VDI
- Spirit Corp
- Star
Barriers
to growth for all Russian Software Product Companies are: (57)
- Piracy
- Lack of early stage funding
- Lack of qualified management
- Lack of sales and marketing orientation
- Lack of global network
Hardware
Production
Russia does not produce many basic technology products although
local computer assemblers control about 80% of the PC market. (51) Interestingly
enough, Russia is manufacturing communication satellites for both
domestic use and export of parts. As
of Dec 1998, most satellite manufacturers in Russia are former defense enterprises that have become more
open to international business.
As
for distribution, in the past, PC makers had to go to a major city to
buy computer components, get them on a plane, and guard them against thieves
before they could be used in assembly. By the end of 2002, distributors
began setting up regional warehouses and arranging secure transportation.
(51)
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