Opportunities of Software Development in Saint-Petersburg and

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					Opportunities of Software
Development in
Saint-Petersburg and Russia
Vera Semyonova, Executive Director
Fort Ross Consortium
Global tendency of IT outsourcing and where
is Russia placed in the world competition
IT education in Russia
Overview of IT market in Russia and in St
Petersburg in particular
Why and how to co-operate with Nordic
Fort-Ross IT Services
IT Offshore Outsourcing – Still a
Viable Option?
         Offshore outsourcing
       as percent of IT budgets
    2000                     12%
    2003                     28%
     Number of offshore IT workers
    2002                   360,000
    2005          More than 1 million
           Forrester Research, January 2002
Lessons learned by the Global
economy year 2002-2003
    Outsourcing is not a means to merely cut
    expenses, it is a unique tool for surviving and
    winning competition on the Global scale!

    Routine coding on specifications does not
    match all the market growing needs in
    effective solutions

    Russia is changing for better, it looks like a
    real alternative and a candidate for strategic
    technological partnership
       Particular features of software
       development in Russia:
     High end solutions - Russian niche in the IT
      Much higher degree of customers’ satisfaction
     (85% compared to 40%-50% on the average)
      Big Companies and small start-ups are major
     clients, leaving niche of the mid-sized clients
      67% of contracts are provided from the IT
     companies, that leaves good opportunities for
     “old economy”
“Software Development in Russia: A Buyer’s Guide to the Russian Software
     Development and Services Export Industry”, Aberdeen Group, June 2003
Strategic advantages of the Russian
Software Development Industry
    Strong in-depth educational system
    Profound scientific knowledge
    “Genetic memory” of handling
    complicated R&D projects during the Cold
    Inherent creativity and ability for
    engineering innovations
    “Revolution” in modern QA standards
    Ability to work in a team – “Team-
    sourcing” of Russian companies
IT Workforce Potential in Russia
 Within the last seven years, 1.3 million people
 graduated from Russian universities with the
 skills to work in the IT industry, an average of
 about 186K per year (India – 60K, China – 50K,
 NASSCOM) . Only 70,000 actually work in IT
 companies in Russia
                                      Microsoft Research

 Over 100,000 specialists in physics,
 mathematics, informatics and computer
 engineering annually graduate from Russian
 universities and institutes
                                          Forbes Magazine
 Annual ACM International Collegiate Programming Contests
World Champions : St. Petersburg State University
Silver Medal: St. Petersburg Institute of Fine Mechanics and Optics

World Champions: St. Petersburg State University
Gold Medal: St. Petersburg Institute of Fine Mechanics and Optics

Silver medals: Saratov State University (European Champions)

Gold medals: Moscow State University, St Petersburg State
University of Fine Mechanics and Optics
Silver medals: Saratov State University

Introduction to the Russian IT Market
Double-digit growth across all segments for 5 consecutives years
(11% in 2002)
Hardware ($5 bln in 2001, of which 90% is imported) represents
80% of the total IT market, with local companies dominating in
the final assembling
   PCs ($1.6bln) - one of the largest and fastest growing segments
   Telecom hardware ($2.2bln) - growth is coming from mobile and
   data (100% growth)
 Software ($300M in 2001) is dominated by import (70%), with
system software growing and applications outweighing other
software types
IT services ($760M in 2001) is fast growing, second biggest
domestic IT industry
                             Ernst&Young, September 2002
St-Petersburg - Situation in IT Business
    Good location for multinational IT companies
    and investments in IT and Telecom (Motorola,
    Lucent, LG, Borland, TeliaSonera)
    200 companies in software development, with
    more than 6.000 engineers,
    30 companies - IT outsourcing and Software
    Products’ active players on the International
    For 5 years running Universities are becoming
    winners at the ACM Collegiate Contests, Absolute
    Winners (Gold and Silver medals) in the Y2000
    and Y2001!!!
SWD Businesses in St.-Petersburg
                     ( less then 30 people)

        Big                                    Middle-size
   ( more then 100
                                              ( 30 - 100 people)
Main geographical areas of
                  USA and Canada



European customers
                     3% Norway   2% Italy   1% Austria
        Denmark 4%

   France 6%
                                                23% Switzerland

  Sweden 9%

   Germany 13%                                     20% Finland

                        16% UK
“Electronic Vikings”:
European IT Future is Scandinavian?
                  Penetration of mobile phones in Finland and
                  Norway is more then 60%, in Sweden - 57%
                  Internet penetration in Finland alone is
                  about 40%, in Europe less then 30%
                  The beginning Scandinavian Internet-
                  companies are underestimated compared
                  to American ones
                  Potential of increase due to possible
                  positive changes in Stock Exchange taxes’
                  regulation in Sweden
                  Tasks: Development of corporative
                  Scandinavian culture, overcoming of multi-
                  languistic fragmentation
                  Potential: front-edge technologies,
                  advantages of pioneer
Strategic co-operation in software
development in the Baltic Sea region – the
way to win on global market
                  Win-win - to use fantastic
                  IT talents located next door
                  to Nordic countries (1 hour
                  Way to the West - to
                  develop new products for
                  global market together
                  Way to the East - to
                  penetrate the growing
                  Russian market in co-
                  operation with local
Follow the success stories!

                  TeliaSonera, Nokia,
                  TietoEnator, CSC Denmark,
                  TetraPak, Volvo are already
                  working together with St
                  Petersburg software
                  Governmental projects and
                  local partners support the
Fort Ross IT Services:
  Consortium of 31 leading software
  developing companies from Russia,
  Belarus and Ukraine, employs more than
  3000 engineers,
  Covers about all areas of IT competence,
  Based on World leading Universities in
  mathematics and IT development.
  Member of the and all-Russian IT
  Association (APKIT) and National
  Software Developmnet Associations
Fort-Ross activities
   Promotion of our member
   companies worldwide: direct
   marketing, organizing of events
   Attraction of investments
   Implementation of QA and QC
   standards for member companies
   Creation of IT infrastructure in St
Fort-Ross Major Activities in
the Nordic countries
   12 business trips and “road shows” to
   Finland, Sweden, Denmark and Norway
   Two times at Comdex Nordic in Sweden
   Large network of businesses, IT
   associations, science parks,
   governmental institutions
   All that is Fort-Ross
Fort-Ross Marketing and Events Ltd.
IT Centre (science park and business
incubator) together with St Petersburg
University of IT, Mechanics and Optics
Russian Federation Chapter of Quality
Assurance Institute
IT Club in St Petersburg
Welcome to Software Outsourcing
Summit 2004
   June 23-25, 2004, St Petersburg
   Organizers:     Fort Ross IT Services, and
   Administration of St Petersburg
   Plenary Session, Panels, Round Tables,
   Exhibition of Solutions, Match-making Area
   Participants: over 500 representatives from
   20 countries