Offshore Destinations - Why Russia and Eastern Europe
30.07.07
For
several years India has been the country of choice for locating IT services offshore,
especially from the UK. However as companies look to utilise offshore resources
in a broader range of IT activities the ‘one size fits all’ approach to the selection
of an offshore location is not optimal and Russia and Eastern Europe
are becoming increasingly atttactive offshore destinations for software development.
The key to successful use of offshore resources is
finding the best match of offshore skills to the needs of the specific activites
or projects being located offshore, and possibly outsourced as well. The reality
is that the best match of skills for a variety of different activities may
be best sourced from different locations.
The teams at
Gazelle Software Solutions have been committed for several years to using a combination of onshore and offshore resources
in order to ensure that the strongest skills for specific tasks are utilised. In
addition the same teams have been utilising Agile software development methods for several years. Hence an important consideration in identifying offshore locations was
the ability at those locations to source skills well suited to Agile software development.
Our evaluation of several offshore destinations led us to focus in on Russian and
Eastern Europe as preferred locations for offshore Agile development.
Russia and Eastern Europe have become established
as destinations for software devlopment
by leading MNCs. Companies such as Intel,
Sun and Siemens Business Services have
establised offshore development centres in Russia. There are a number of world leading
software services companies with sizeable operations in Russia and Eastern Europe
such as Luxsoft, EPAM, Exigen Services and Reksoft. A number of factors such as
strong technical skills, lower attrition rates and a strong cultural fit with the
West have been cited in a recent white
paper (http://www.russoft.org/downloads/IDC_research.pdf)
released by the IDC and Russoft, a Russian IT services exporters association,
as strengths that give Russia and Eastern Europe an advantage as offshore destinations
for software development. These strengths are reflected in the factors that influenced
Gazelle’s decision to choose Russia as an offshore destination.
Low attrition
In contrast to other software development offshore destinations,
Russia and Eastern Europe offer very low personnel attrition rates. This translates
into the important benefit of stable project teams avoiding the potential loss of
key expertise during the lifetime of a project, and the costly need to retrain new
personnel and missing key deadlines.The typical attrition rate experienced by Gazelle
teams in Russia has been in the acceptable range of 5%.
Skilled Talent Pool
Russia and Eastern Europe benefit from a large pool of highly skilled
professionals with mathematics and science backgrounds.
Russia is known for having the world’s best education system in mathematics, science
and technology. This results in a very healthy talent pool of new graduates prepared
to enter the IT sector. According to the
Russian Federal Statistics Service (Rosstat) new IT labour supply amounted to 244,468
people in the 2005-06 academic year. Typically software developers used by Gazelle
in Russia will have university
degrees (B.Sc or M.Sc.) in computer science or engineering, which in Russia means
5+ years of university training. In addition many software developers in Russia
will have certifications from industry leaders such as Microsoft, Sun, Oracle and
IBM. The ability of the education system in Russia to provide a high volume of ‘IT
ready’ graduates ensures that the software development industry in Russia will have
the ability to scale as it grows. Closer ties between key universities in the cities
where the IT industry is growing is ensuring that the ability to scale resources
will continue. In addition Gazelle has found that the strong problem-solving approach
fostered in the Russian education system is of high value amongst software developers
using Agile methods.
Proximity to Europe
One of the major advantages for offshoring to Russia and
Eastern European is the proximity to Europe, both in the sense of time and distance
and in a cultural sense. In the case of Russia the major cities of Moscow and St,
Petersburg and the other major Russian ofshoring destinations are only 2 hours time
difference away from Continental Europe, and only 3 hours away from the UK and Ireland.
This is a major advantage in terms of the ease of doing business between onshore
and offshore teams in contrast to offshore destinations in Asia. The cultural synergy
between Russian and Eastern European devlopment teams and their Western European
based conterparts is also close. The white paper realeased by IDC and Russsoft highlighted the closer cultural fit and similar work ethic to the Western world, and the clear
understanding of business issues as differentiating Russia and Eastern Europe from
other offshore locations. This is very much echoed by
Gazelle’s own experiences were the differences between onshore teams in Western
Europe and offshore teams in Russia rapidly become
blurred due to the similarity
of work style and work ethics.
Language skills
English language skills amongst IT professionals in Russia
and Eastern Europe are becoming stronger as English
fluency is increasingly emphasized in the educational system. English is the predominant foreign language taught
at most Russian and Eastern European universities and schools. Gazelle’s experience
is that there are no barriers to hiring employees with the ability to work in English,
work with project-related doumentation in English, and to work with standard communication
tools such email, IM, phone etc. in English. In Eastern European countries the ability
to find a similar level of skills in German is also straightforward. |
