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Gorbachev Urges Russian-U.S. IT Ties

BOSTON -- After their first face-to-face meeting in 1985, President Ronald Reagan and President Mikhail Gorbachev were debriefed by their diplomatic delegations.

Each man was asked to assess his Cold War counterpart. Reagan called Gorbachev a "die-hard Bolshevik"; Gorbachev saw Reagan as "a real dinosaur."

Not a good start. Fortunately, they got past first impressions. After working long hours over the next few days, the men developed a rapport and had the courage to question a MAD strategy.

Mikail Gorbachev
Mikhail Gorbachev
Source: Mass Software Council

Gorbachev relayed this anecdote to members of the Massachusetts Software Council and the Russian Software Industry Association here Tuesday to underline the point that trust and cooperation are essential in an interconnected and interdependent world.

"During the decade after the end of the Cold War, some of these bridges have deteriorated and need renovation and repair," Gorbachev said through an interpreter. "Your meeting here, your discussion, is one of the new bridges necessary to both our nations."

Gorbachev's remarks, which covered a range of topics and were punctuated by his subtle humor, came almost exactly 20 years after he set government restructuring (perestroika) and social reform (glasnost) in motion.

In some cases, subsequent Russian leaders moved too quickly, too slowly or without focus. For example, Russia and India were both trying to establish outsourcing industries at the same time. India made it a national priority. Russia did not and must now play catch-up.

But that doesn't mean Russia's IT industry is moribund. Last year, Russia's IT exports tallied $750 million. Counting the Ukraine, which still is closely tied economically and culturally to Russia, the figure tops $1 billion.

Russia's biggest asset is its highly educated and creative workforce, said Joseph Feiman, vice president and research director at Gartner Group.

"All their employees have formal educations from universities," Feiman told the audience of 750 people. "Russians tend to hire engineers with three, five or seven years of experience."

In addition, Russian application development outsourcers are more inclined to offer certification training (.NET, Java, Oracle database management) than U.S. technology giants.

Costs are also lower. A developer earns about $14,000 per year in Moscow, $12,000 in St. Petersburg and as low as $8,000 in other Russian cities, Feiman said. Finally, the time difference to Western Europe -- an important market -- is only a few hours.

Russia has obstacles to overcome if it is to take advantage of a second chance at becoming an outsourcing hub. IT companies are smaller than in many popular outsourcing countries, limiting the size of projects they can take on.

The country also needs to invest more in marketing itself both to solicit outsourcing work and to drum up foreign venture capital investment -- something China has excelled at, Feiman said.

Gorbachev said President Vladimir Putin has pledged to build new technology parks in St. Petersburg and Moscow and earmarked funds to help small and medium businesses.

"I look with interest and hope at this process," Gorbachev said, adding that equal partnerships with Western European and U.S. firms will accelerate Russia's internal steps to jump-start IT.

"Without trust there is no cooperation," Gorbachev said. "So lets work together."