Russia Contributes to Hi Tech Future

One of the criteria taken into account when choosing an outsourcing destination is governmental support in this country. In this respect Russia is becoming a tasty morsel: firstly, the creation of technoparks, then the increase of university places for students of technical branch of study, and now spending on technology-based research programs (about $25 billion) including the creation of two national research universities.

Prime Minister Vladimir Putin made this announcement as he spoke at a science and education conference. “We have never provided this sort of money for such purposes before,” Mr. Putin said. And as he stated the money would go toward various federal target Hi Tech programs from 2008-2010.

Putin also announced that a five-year program for basic research worth $10 billion had been approved, and that two national research universities would be created. “The successes of basic science do not provide the necessary dynamism and quality of applied research, and they in turn do not fully take into account the real needs of the economy,” Putin said.

Source: EETimes

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The Economist Intelligence Unit Reveals IT industry Competitiveness Index

According to a new study conducted by the Economist Intelligence Unit, the business information arm of The Economist Group, and sponsored by the Business Software Alliance (BSA), the United States continues to rank first in the annual global IT industry competitiveness index. However its score has gone down a bit compared to the previous year as many other countries are nipping at its heels.

The study assessed and compared the information technology industry environments of 66 economies to determine the extent to which they enable IT sector competitiveness. According to the Economist Intelligence Unit, six factors combine to create a sound environment for the IT sector, including: overall business environment, IT infrastructure, human capital, legal environment, research and development environment, and support for IT industry development.

Interesting to notice is that in this study Russia goes right after India and ranks higher than China.

Source: BSA

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IT Services: Russia Excels. Part 2

According to a recent study by French analytical company Pierre Audoin Consultants (PAC), the growth rate of Russian IT services market is a bit lower compared to IDC calculations and it wasn’t half as high as in 2006 and increased by 18% only (vs 47.2% according to IDC). However, PAC’s estimation of IT services market volume equals to that by IDC: approximately 3 billion euro or 4.4 billion dollars.

Nevertheless, PAC admits that even with 18% growth rate in 2007 Russian IT services market is the fastest growing in the world. Its growth surpasses IT services market growth rate in Western (6.6% in 2007) and even Eastern Europe (15% in 2007).

Local integrators who participated in IDC survey don’t question its correctness. “We share the opinion that our market shows robust growth”, assured Sergey Matsotsky, Chairman of the Board and General Director of the IBS Company. "Outrunning growth of this segment [IT services] is obvious”, confirmed his opinion Andrey Ageev, Technoserve A/S marketing department manager. He claims that the market will continue to grow at the rate of 20% annually in 3-5 years to come, especially taking into account underdevelopment of IT services sector in the Russian Federation compared to Western IT markets.

Sergey Matsotsky and CNews confirmed the possibility of IT services market growth: “IT services comprise more than 50% in the mature market, whereas lion's share of sales in emerging markets is hardware. This world experience shows that Russian IT services market has “the whole life ahead of it”. Although growth rate can decrease a bit in the short-term prospects due to current global financial fluctuations. Still, in the long-term plan the market can develop quite dynamically at the rate of 25-30% annually. Obviously, Russian economy demand for effective IT which secures competitiveness will increase”.

IDC forecasts that in 2009 IT services in Russia will reach 8 billion dollars and this segment will comprise 26%.

Source: CNews

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IT Services: Russia Excels. Part 1

According to IDC last year Russian IT services market showed robust growth and reached 4.4 billion dollars. As company analysts claim this growth rate is considered to be the highest in the world.

According to IDC’s classification IT services segment consists of systems integration (30.4% of the services market), consulting and custom application development (28.8%), hard- and software support and installation (18.7%), IT education and training (4.3%).

The largest IT services buyer is the financial sector (18.2%), governmental customers rank second (16.2%), and telecommunication companies are the third (13.1%).

The top 10 IT service providers according to IDC are IBS, Technoserve А/S, CROC, Optima, Lanit, CompuLink, I-Teco, HP, EPAM Systems and R-Style.

IDC states high growth rate three years in a row: in 2004 it increased by 26.3% to reach 1.9 billion dollars being the highest in Europe, and in 2006 the market reached 2.99 billion dollars with the increase by 23.2%.

Oil prices and the launch of large federal IT projects are among the main reasons of IT services segment growth in Russia according to Alexander Prochorov, analyst at IDC. Stable political situation and favorable investment climate foster IT market development as well.

Source: CNews

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Europe Outsources for Quality

A new study by Ernst & Young completed last month found that Europeans are becoming more open to outsourcing. Being one of the few research works analyzing Europe’s openness towards outsourcing, the study showed that outsourcing was being used by 70 per cent of the European firms surveyed.

The British are, however, likely to outsource only a few standard functions, while the French and Belgians are open to outsourcing a wide range of functions.

Also, compared to 70 per cent of respondents that had at least one outsourcing relationship, only 49 per cent of respondents cited cost savings and higher productivity (revenue earned per employee) as the advantage of outsourcing for their organization. About 33 per cent identified better quality through use of specialized skills.

“French companies attribute less importance to cost-saving benefits, with improvements in quality and strategic organization being the key advantages identified. Belgian companies are also strong proponents of the improved quality brought by outsourcing, while in the UK, quality considerations are rated on a par with cost savings,” the study said.

Source: The Economic Times

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