Offshore Upstarts

In the burgeoning arena of offshore software development and services outsourcing, India remains the country to beat. But a growing number of international contenders, notably Russia, are bidding to grab a bigger slice of the pie.

Today, India accounts for 85 percent of the global offshore technology outsourcing business, with the remaining 15 percent scattered across a number of areas, including Russia, China, Mexico, the Philippines, Malaysia and Eastern Europe. By 2007, Russia will account for 5 percent of the market, according to Ian Marriott, an analyst at Gartner Inc., in Egham, England.

Russian IT services companies are aggressively marketing their offerings to U.S. enterprises looking for low-cost labor and geographical diversity for projects.

What they offer is a highly educated work force trained in science and mathematics. "They have excellent universities and good-quality graduates with very good problem-solving skills," said Marriott. "They can solve large-scale, complex technical problems and have a good cost advantage compared to the [United States] or Western Europe."

Because of the emphasis on science, graduates in Russia are good at abstract thinking, which is useful in designing systems or developing technology, according to Dmitry Loschinin, chief technology officer and general manager at IT outsourcing provider Luxoft Ltd., in Moscow.

"Take the development cycle of a software project," Loschinin said. "You start with business-requirement gathering and the design phase. Those tasks Russians can perform well because of the way they were educated. The creativity of engineers here is really outstanding. Russians also love to work on difficult things. They might get bored with routine work."

And the countrys emphasis on mathematics created a labor pool adept at developing software that relies heavily on mathematical algorithms, such as three-dimensional modeling, according to Miljenko Horvat, president of NewspaperDirect Inc., a customer of Luxoft in New York. "Any software that has to do rastorization, manipulation of images and handwriting recognition [relies on such algorithms]," Horvat said.