RealTime IT News

Moscow Mimics Mumbai

Russian technological achievement and political progress were on display at a recent Mass. Software Council (MSC) meeting in honor of keynoter Mikhail Gorbachev.

MSC officials, justifiably proud of landing the former Soviet president and Nobel Peace Prize winner, noted the April anniversaries of Gregarian's space flight (1961) and Gorbachev's perestroika reforms (1985) during the event.

No one marked the recent silver anniversary of the "Miracle on Ice" however; perhaps that's just as well, given the event's hands-across-the-Bering Straight leitmotif.

The theme from the event: Russian technology firms view their U.S. counterparts as customers not competitors. What keeps them up at night now is India.

In the early 90s, both unfurled plans to become software development hubs, but only India overhauled regulations and infrastructure. The result? India's outsourcing industry is a $12 billion juggernaut, while Russia's is about $750 million.

Still, Russia sees an advantage -- its education system. Forty percent of university degrees are in science and technology disciplines, according to Gartner research. Its schools dominate programming competitions, such as the Association for Computing Machinery's annual contest of 1,300 universities from 65 countries.

Bart Higgins has a unique perspective on all this. Ten years ago, he was the first American to join India's Infosys. He retired in 2003, but was lured out of retirement by new opportunities. Now he's an executive vice president for Russia's Auriga.

"I don't think you see a company like [Auriga] in India, with all due respect to the Indians," Higgins said. "There is such a close relationship with Moscow State University."

He compared Auriga to one of the MIT spin-offs that ring Boston and tap a steady flow of ideas and talent from higher-ed.

Russian firms stress time zone advantages over India (helped by the fact that workers adjust their schedules by two later hours). Labor costs are low too. Programmers earn $14,000 in Moscow, $12,000 in St. Petersburg and $8,000 in outer provinces.

With its late start, catching India won't be easy, especially with China and Eastern European countries launching similar efforts, said Joseph Feiman, a Gartner vice president.

Russian companies, industry groups and government agencies have been poor marketers, Feiman said. They must attend international conferences, advertise and hone a unified message.

And while strong in Java and .NET application development, Russian programmers are not considered well-versed in ERP , CRM or supply chain management tasks. They need partners to fill out their services, Feiman said.

Finally, there's a perception that Russia is politically and economically unstable, even though by most measures it scores about the same as China and India in those areas, Feiman said.

Still, the case of Yukos, the Russian oil giant that was recently taken over by the state after it hit Yukos with questionable tax bills, hasn't helped improve Russia's image as a place where the rule of law is applied evenly.

The former head of Yukos, Mikhail Khodorkovsky, ran afoul of Russia's President Vladimir Putin, and the Yukos case was widely viewed as politically motivated.

Gorbachev touched on another factor that isn't as easily measured. There is still fear that Russia could be reborn as a military power, he said.

"America should get rid of those fears," Gorbachev said. "At the same time, Russia should not regard any move by the U.S. as trying to keep Russia down. We need to leave the trenches of the Cold War."

Although it felt strange standing for the Russian national anthem when Gorbachev entered the room, U.S. companies (perhaps the feeling lingers in former Soviet Bloc countries) aren't withholding software contracts for fear the Russian Bear will awaken.

After all, Germany, Japan and even Vietnam are huge U.S. trading partners. As former President Calvin Coolidge said, "The business of America is business."

In laying plans for a second term, Putin pledged to build technology parks, attract venture capital and better market its industry.

Russia won't pull even with India anytime soon, but if Putin keeps his promises, there'll be a steady flow of work flowing from Silicon Valley to St. Petersburg.

Colin Haley is a managing editor of internetnews.com in the Boston bureau