More Industries Tapping Russian Offshore Software Services

BOSTON, MA --The Russian offshore software services industry has been quietly building a solid and growing client base over the past few years, as more and more companies seek to reduce costs and augment core skills by using Russian IT resources, according to a new report by Aberdeen Group, a leading market analysis and positioning services firm.

"The Russian software services industry fits right in to the offshore IT mainstream," said Stephen Lane, research vice president of IT services at Aberdeen Group and author of the report, Software Development in Russia: A Buyer's Guide to the Russian Software Development and Services Export Industry. "Users are attracted to the country's combination of a large, highly-skilled science, math and engineering talent pool, and its comparatively low labor costs."

The report also notes that the offshore services industry is becoming more diverse than many people realize.

"The offshore services industry is not just about outsourcing large non-core development projects or the wholesale transfer of application maintenance and support to low-cost countries anymore," Lane added. "Our survey showed that a number of software vendors and other IT companies - the largest users of Russian IT resources - are doing core product development in the country or contracting such work to Russian service providers."

Lane points out that a growing number of non-IT companies are using Russian firms or are working with U.S. and European suppliers with Russian offshore delivery capabilities. The latter firms, "offshore hybrids," have played an important role in building awareness of Russian resources. Meanwhile, Russian companies are building up local presences in target markets to be closer to current customers and to take advantage of the growing interest in offshore development. Fortune 1000 companies, which represent the dominant market for offshore services, are also stepping up their use of Russian IT resources.

However, Aberdeen notes that one should not look at the growth of offshore delivery in general or the Russian industry in particular from a purely geographic perspective. "Generalizations about cultural characteristics and IT skills in particular geographies are the industry's version of ethnic profiling," said Lane. "Companies contract with other companies, not countries, and in the best circumstances, the offshore part becomes transparent as business people learn how to collaborate across cultures and time zones."

For more information about Software Development in Russia: A Buyer's Guide to the Russian Software Development and Services Export Industry, please visit

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