Russia IT industry 2011
According to the Russian Ministry of Information Technologies and Communications (ICT), Russian IT market outsourcing went up by 16% to reach $14 billion USD in value terms in 2010. Both the government and private investors are investing huge amounts of money into this sector. If its growth rates remain the same, by 2015 the revenue of Russian IT market will increase three times over current level.
The Russian government has considered IT industry as one of the key factor for economic growth and job creation. They have invested on the construction of several IT technology parks in seven Russian regions. At the same time, they also invest heavily on IT education by update all training curricula to meet market demand. Five years ago, Russian government have pushed IT outsourcing as a major focus in response to the expansion of India ‘s IT industry globally. Last year, despite the global recession, the investment returned a huge profits in both revenue and jobs. IT exports exceed the goal of $10 billion USD and created over ten thousand new jobs. Today Russia IT outsourcing is one of the most dynamically developing sectors in the Russian IT market. Even Russia still ranks third after India and China but in past few years, Russia has narrowing the gap because they have focused on special software that only Russian developers can do. Instead of competing from their weakness such as low cost, which they cannot compete with China or India, they compete from their strength of highly specialized skills due to their excellent education system. Russian companies often bid on large, complex software and win. This strategy works well and these projects are often the most expensive with value in several million dollars.
The rise of IT industry and the skill of developers in Russia get Microsoft’s attention. Last year, Microsoft began to invest heavily in Russia companies. In November, Microsoft boss Steve Ballmer visited Russia to sign a memorandum of understanding with the Skolkovo Foundation. He outlined five major areas of cooperation, including the expansion of funding for Russian IT startups. One company, Pirate Pay, was the first Russian company to get the funding. The company has invented a technology to block illegal software usage and protect the copyright on music and movies, potentially putting an end to the uploading and downloading of unlicensed files. Unlike other technologies, Pirate Pay makes copyright materials virtually impossible to download. Microsoft manager Nikolai Pryanishnikov said that Microsoft intends to fund at least 100 Russian IT companies from $300,000 and $500,000 each, to develop new technology for Microsoft. While Microsoft did not disclose the names of those companies, many new technology invented in Russia includes corporate messaging, infrastructure for complex analytical reports for cloud computing.
According to recent survey, with the global economic recovery many western companies are under pressure to reduce costs and access to a highly skilled workers. They will increase their IT outsourcing at least 30% or approximately 300 billion dollars this year (2011). The majority will go to India, which has seen its popularity rise over the past fifteen year. However, Brazil, China, Russia, Malaysia, the Philippines, and Vietnam are also competing fiercely for this lucrative market. Among this battle, Russia probably will get most of the largest projects, the Philippines will get most of the call centers and customer supports. The rest will be divided between the low cost countries for coding and testing works.
However there are new area and new skills that nobody know where it will go to. According to the latest Gartner research, about 10% of IT spending will go towards cloud computing, and that is just the beginning. The cloud computer market is evolving rapidly and Gartner expects that Software as a Services (SaaS) will be the main trend over the next 5 years. Many companies will use cloud computing services to reduce the cost of software ownership and avoid up-front investments. How will this new area change outsourcing services market? Will it reduce internal software development as companies move toward renting rather than developing and buying? Or will it create another boost in outsourcing as many new products and services will go online and fuel the fire for more support services?
With Cloud Computing, the working environment will certainly change. Some things will certainly become tougher for outsourcing companies. Information safety and security demands will increase and many issues will force companies to select the right outsourcing provider. The need to satisfy customers will create new demand for skilled information system managers, security analysts, service managers, demand managers, and this will force university to review current training programs to meet the need of industry.
According to the survey, only two countries are ready for this trend: India and Russia. For the past few years, India’s top five companies (Infosys, TCS, Wipro, HCL, and Mahindra Satyam) have been working hard to enter this new market. They already established their cloud computing offices all over the world and ready to jump into this market. The same thing is also happening in Europe with several Russian companies are ready to provide this service at very reasonable prices. However, larger software companies such as Microsoft, Google, Oracle, IBM, Dell, HP are also considered this is the next big thing and prepare to offer more cloud computing service to global customers. Just like any new technology, new services, not all companies will be satisfied with this service offering, especially for businesses that require high safety and risk requirements, such as financing, banking, transportation and logistics. Cloud computing security process still has to be developed, with highly skilled management in place to attend the need for testing, support and maintenance of deployed software. This is still the weakness in Cloud Computing: The lack of well trained service managers.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
