Europe's IT troubles could be Russia's gain
Martin Ritchie
The cost-cutting drive in high-tech companies around the world has seen many projects shifted offshore, and Russian developers may be in a good position to take a healthy chunk of this business.
"The outsourcing market tends to be countercyclical - when there is a slump in the IT industry, there is a boom in outsourcing," said David Farish, regional manager for Russia and the C.I.S. at high-tech analysts IDC. "When times are good, companies can afford to do things themselves, but when times are bad, they will start to look for someone else who can do things more cheaply."
Small, "tactical" projects are the most likely growth area in outsourcing, he told leading software developers gathered in Moscow to discuss perspectives on the European market.
"Often, companies want to cut spending but also safeguard projects for the long term," he said, adding that mobile applications, e-government applications and integration work were particularly promising areas.
So the opportunity may be there for Russia’s software industry to win new business, but the testimonies of developers at Russoft’s meeting gave an idea of the difficulties of doing so in Europe.
Anton Antich, marketing manager for V6 Technologies, said there was widespread suspicion and lack of information in Europe about the possibilities of outsourcing.
"Companies simply don’t know or don’t understand the possibilities of outsourcing," he said.
V6 set up a division in France last year, and does "20 to 30 percent" of its work for European clients. "We produced our own information book about outsourcing, not just to promote our company, but to explain what outsourcing is and what the advantages and disadvantages are," said Antich.
And even working with those companies who had made the leap to outsourcing was difficult because of the language problem - in famously anglophobic France, all documentation and contracts must be done in French, said Antich, which makes life more difficult.
Further to the north, countries in Scandinavia have also proved a difficult nut to crack. Before Christmas, The Russia Journal reported on how co-operation between Finland and Russia in the software-development market was virtually nil despite the two countries’ sharing a common border.
Svetlana Antonyuk, PR manager for Reksoft, said interest in outsourcing in Scandinavia was patchy, stunted by the North European business culture.
"They have a very closed style of doing business," she said, "Discussions always take a long time, and there’s a lot of bureaucracy. I spoke to a guy from one big telecom company who said even if they wanted to outsource they would find it extremely difficult because of all the existing employment obligations."
And a recent high-tech conference in Sweden proved to be a disappointment due to lack of interest.
"It was very badly organized," said Pavel Adylin, CEO of Artezio. "There was no PR, no advertising, and it ended up that there were as many exhibitors as there were visitors."
Many of Russia’s top developers have clients both in the United States and Europe, and some see a distinct difference in their ways of approaching co-operation.
U.S. companies very often approach problems and discussions in a very formal way, said Viktor Weinstein, general director of Aplana, a company that has clients in France, the United Kingdom and the United States.
"In Europe, things are a bit different," he said. "You first sit down and get to know the people you’re working with before you talk about doing business. In France, especially, long-term relationships are very important."
"We have to concentrate on the European market because we’re close to them not just geographically but also in the way we work," added Weinstein, although he also mentioned that, the bigger the European firm, the more it behaved like a U.S. firm.
Yet, if Russia wants to win offshore work from European companies, many say it is going to have to get out there and work on marketing the possibilities of outsourcing to firms that are very often too conservative to consider the option.
"There is only a handful of people in every company who really make the decisions about whether to outsource or where to outsource," said Reksoft’s Antonyuk. "Our job is to build good relations with those people."
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