While India has been the number one software development and outsourcing destination for some time now, it appears Russia is becoming increasingly seen as an alternative to India`s sustained dominance.
This is according to Karen Geldenhuys, newly-appointed MD of IT recruitment company Abacus Recruitment.
Geldenhuys says companies unwilling to invest all their IT outsourcing resources in one country, or who are simply looking for an alternative, are turning to Russia. "This is also possibly a new competition threat to SA, which is certainly consistently ranked among the top 10 countries worldwide as a preferred outsourcing destination. In 2003, we were ranked number six, for instance."
Russia boasts a growing number of IT outsourcers, offering anywhere between US$8 000 and US$14 000 for a programming job, according to the latest reports.
Geldenhuys says Russia is now parading its IT industry as a strong alternative in the outsourcing environment. "It is offering what it claims is top quality, cut-price programming, with the renowned Russian efficiency and a big pool of highly educated programmers."
Furthermore, reports show that income generated by exported Russian IT services were raised to US$450 million in 2004. "Not big in global terms - and certainly a drop in the proverbial ocean compared to India`s US$20 billion industry - but it is certainly a definite trend upwards."
South African companies should "sell themselves better", she says, especially since the local government has recognised business process outsourcing (BPO) and software development as major export industries for the future. "In fact, the government has set aside a sum of R1 billion to invest in appropriate incentive schemes over the next five years in order to attract direct foreign investment and boost employment.
"The local BPO industry - and the software development industry - perhaps needs to be more proactive in how it works with government and how it sells its services to overseas businesses. Despite the fact that our telecommunications costs are too high, we are certainly still in a position to offer good services at very affordable prices. We should stop selling ourselves short.
"Russia is not a sleepy hollow. It has emerged from communism - or is certainly in the progress of doing so from an economic point of view - and boasts expertise in a number of hi-tech areas, including aerospace. Additionally, the country`s programmer population presents a strong front, boasting a 250 000-strong software engineering force - more scientists per capita than Britain, Germany, India and France.
"US companies seem to have taken note and have established R&D centres in Russia. Those making the move include Motorola, Siemens, Sun Microsystems and Intel," she concludes.
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