Bush Endorses Russian Outsourcing

Date: Monday, December 02, 2002 11:53 AM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

President Bush has been spending a lot of time figuring out how to ship our
jobs to India. Apparently he thinks Russia should get a pound of our flesh
also.

http://www.siliconvalley.com/mld/siliconvalley/4577102.htm

Posted on Thu, Nov. 21, 2002

Russia joins tech-worker game

OFFICIALS USE MEETING TO PITCH TALENTS OF ITS WORKFORCE
By Elise Ackerman
Mercury News

Quick: Name a foreign country with thousands of highly trained software
programmers willing to work cheaper than their U.S. counterparts.

No, not India. Try Russia.

That was the message three-dozen Russian outsourcing companies brought to
the second U.S.-Russia Technology Roundtable in San Jose on Thursday. Part
of an ongoing dialogue that was endorsed by President Bush and Russian
President Vladimir Putin at the Houston summit last year, the round table
seeks to foster cooperation between American and Russian technology
companies.

But many of the attendees were also hoping for something more tangible --
like a hefty outsourcing contract that can provide some of Russia's
million-plus technically trained workers with employment in their fields.

``The round table opens the possibility for concrete agreements and
projects,'' said Vadim Grishin, deputy director of Russia's Ministry of
Foreign Affairs. ``Ten years ago it would have been difficult to imagine the
prospect of this kind of contact,'' he noted.

India gets attention

Indeed, 10 years ago Russia was just beginning to transform itself into a
market economy. Having survived a coup attempt by communist hard-liners,
President Boris Yeltsin was lifting price controls and beginning to
privatize state industries.

Taking advantage of an abundance of smart techies, companies like Intel and
Sun Microsystems hired dozens of Russian contractors, but the trend failed
to catch on.

Over the next decade Russia's tiny tech industry languished as Indian
officials aggressively promoted their country as the offshore development
site of choice.

``Russia is where India was 10 years ago,'' said Steve Chase, president of
Intel Russia. Information technology makes up only around 1 percent of
Russia's gross domestic product. Although 1.3 million Russians have degrees
in fields like computer science or engineering, only 70,000 currently work
in information technology-related jobs.

Talent abounds

A lot of talent is untapped, Chase said. Over the years, Intel has expanded
its presence in Russia and now employs 400 people. ``They are extremely
creative; they are imaginative; they are disciplined,'' Chase said. ``When
it comes to solving mathematical algorithms, they are basically
unbeatable.''

Russian techies are also inexpensive. An Intel employee in the Russian city
of Nizhny Novgorod is lucky to earn 25 percent of what an employee makes in
Santa Clara, according to Richard Wirt, general manager of Intel's software
and solutions group.

Some Russians get paid even less.

Boris Renski, the founder of Selectosa Systems, recently delivered a
customized Web-based program for tracking jobs and materials to a
California-based advertising company for only $8,000. Selectosa could afford
to charge so little because its Russian programmers earn $400 to$600 a
month, Renski said.

Trying to stand out

Renski attended the round table hoping to drum up bigger contracts, because
he said the smaller jobs are consistently being underbid by freelance
programmers from all over the world who look for work on online
marketplaces. But, Renski noted ruefully, the bigger contracts tend to go to
the more established firms. ``Indian companies are the most well known,'' he
said. ``A lot of people won't consider Russian companies.''

Stephen Lane, a research director at Aberdeen Group, a Boston-based IT
consultancy, said Russian developers stand out for their ability to handle
complex projects based on core engineering. ``They have to find other areas
where they can differentiate themselves,'' he said. ``One of the biggest
struggles is that they are up against the dominant player in the industry.''

Contact Elise Ackerman at eackerman@sjmercury.com or (408) 271-3774.

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