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The Positives :


  • Russia has a large number of quality programmers. Russia has about 7500 programmers that generate revenue of about $60Million to $100Million every year. Russian software development centers are concentrated in Moscow, St. Petersburg and Novosibirsk.
  • US companies have major basis in Russia. A number of large offshore development centers of US companies are also in operation. Intel has about 200 developers, Motorola has about 200 developers and Sun Microsystems has about 300 developers in Russia. The Lawrence Livermore maintains a lab in Russia in a joint venture.
  • Highly educated Human Resource : Most Russian programmers have a formal science degree and have worked in very complex Russian defense programs building missiles, space vehicles, satellites, nuclear power plants and equipment, gas pipeline and closed loop control systems and instrumentation. Programming is a secondary skill acquired by these scientists. They are self taught in programming which is why they have a reputation of being "hackers". Russian programmers by virtue of this involvement have a "systems" view of the project.
  • Offshore Outsourcing being looked upon as a cottage industry: Russia has a large number of small companies of 20 to 30 people handling projects as they come their way.

The negatives:


  • Relative inexperience in managing large scale offshore development centers: As a consequence the management depth and processes remain shallow. This also is a reason why Russia does not have a single CMM SEI certified software operation.
  • Linguistic Limitations: Language is another area of concern with Russian programmers. Russian scientists still have difficulty with the English language and communicating with the "brilliance" may well require a very experienced translator who has understanding of technology.
  • The Russian business environment is far from user friendly: The Government still maintains strict controls; travel can be cumbersome with restriction even with the opening of the Russian economy. Communication costs to Russia are still high. The cost for high speed networks is falling but still is at a high level. The biggest challenge will come through issues such as intellectual property rights and protection, export and import of dual use equipment, taxation, labor laws, company registration and reporting and the tight currency control. Subcontracting to a Russian company may help avoid some of the tax and compliance issues; however any company that looks at outsourcing invariably does so with an objective of setting up a wholly owned development center. And that is where things get extremely tricky in Russia. Labor laws have not changed from the Soviet era; therefore there are very strict laws that govern hiring and firing of employees with severe penalties.
  • No efforts to implement well defined Intellectual property laws: Copyright laws are divided into property rights and non-property rights. Property rights govern the right to sell or copy the Software. Non property rights include the right of the author of the software to be "recognized" in the work product and the right to protect the integrity of the software. Thus the "author" of the software holds the right to any changes that could be made to the software to protect from his reputation being sullied. This is a grey area in Russian law. For software developed outside Russia the copyright law of the country where it was developed is recognized. However, to ensure enforcement it may be worth the effort (and this can be an effort) to get the copyrights registered in Russia. Copyrights transfer can be tricky as only property rights of the software are transferable; the author always retains his non property rights. Copyrights to software developed while employed belong to the employer. If a company considers "acquiring" intellectual property to be re-used in the technology being created there it should very carefully look at all rights including contracts between employees and employers to understand issues related to non property rights.
  • Licensing hurdles from the Government agencies in the import of equipments: Import of equipment particularly dual use equipment requires licenses from various Agencies in Russia. This contrasts with India where any item can be imported through a single window license mechanism into the Software Technology Park. The license is easy to obtain and ensures that imported equipment attracts a zero percent customs duty.

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