Technoparks – The Future of Russian Outsourcing

Moscow, June 11, 2004 - At the 4th International Russian Outsourcing and Software Summit, LUXOFT held a press-conference dedicated to the project of building technoparks in Russia, a move seen as the future of the country’s outsourcing industry.

Russia’s software export market continues to show significant growth. Though not yet challenging the $11 billion pulled in annually by Indian companies, Russia’s software outsourcing industry has a lot to brag about. Within a very short period of time the country has positioned itself solidly in the world market. To compete successfully with mature players such as India it is essential that Russian vendors receive the same level of government support. It is therefore very encouraging that the Russian government has made it clear that it has come to understand the importance of the software development & export industry to the overall health of the economy. Recent speeches given by Vladimir Putin attest to this with Russia’s president repeatedly stating the government’s need to aid the growth of the country’s hi-tech market.

Technoparks represent the highest level of maturity for the offshore outsourcing model. The dense concentration of technological thought contained within the boundaries of technoparks produces not only economies of scale with regard to infrastructure, but also leads to unparalleled scientific inspiration and innovation that results when many talented engineers and scientists share the common desire to do things better and smarter. For Russia to take the next step in the evolution of its software outsourcing industry it must embrace the technopark model both privately and publicly.
There are many examples of successful techno parks. California’s Silicon Valley is the world’s largest and is home to the vast majority of the world’s largest IT firms. Silicon Valley began its development approximately 30 years ago and has grown steadily. The largest technopark in Europe is located in France (Sophia Antipolis). It has been in existence for more than 20 years, with the last 10 years seeing the creation of an additional 11,000 jobs.

Indian government support played a huge role in the development of the “Indian Silicon Valley” located in the city of Bangalore. This city’s technopark has been operating for over 20 years and currently employs more than 80,000 highly-qualified IT professionals. Bangalore consists of a wide network of more than 55 research and education institutions, colleges and universities. These institutions, together with vast government support have led India to become the world leader in offshore software development. Other countries enjoying a substantial rate of growth, such as China and the Philippines, are following the path forged by India and are building their own technoparks.
In China, the country’s long-term IT-development program is actively supported by both the Chinese government and private industry. Chinese software developers are rewarded with tax breaks and privileges and Chinese technoparks often operate completely exempt from taxes during the years of initial development.

“The successful development of technoparks clearly hinges on a few overriding factors. Chief among these factors is complete and comprehensive government support. A quick study of the history behind the development of the world’s technopark success stories makes this clear time and again”, commented Dmitry Loschinin, LUXOFT CEO.
LUXOFT, Russia’s premier software outsourcing vendor, has taken an active lead in the ambitious project to build Russian technoparks. The company’s aim is to channel already existing professional resources into the field of software development outsourcing. The successful implementation of the technopark project will enable Russia to achieve a new level of production and should lead to software output reaching well over $2 billion USD per year. An essential step toward this goal, as LUXOFT sees it, is the creation of 50,000 new vacancies for highly skilled IT-specialists. The average salary for such specialists should exceed $1000 USD per month.

Concrete steps have already been taken. Last year LUXOFT opened an office in Dubna, a city historically known as a leader in Russian scientific innovation. Dubna has been targeted as the location for Russia’s first large-scale technopark. The Dubna technopark will eventually be home to the largest programming and research and development projects conducted on behalf of both Russian and foreign companies. Dubna’s regional administration actively supports the ground-breaking project that seeks to make Dubna a world-class information technology center. Many pivotal agreements have already been reached including those regulating the construction of technopark housing complexes.

Russian Federation government officials are poised to become a driving force in the promotion of Russia as one of the top international software exporters. This fall the government IT committee will present its plan to Putin’s administration outlining concrete steps towards the future development of Russia’s IT industry. LUXOFT is more than pleased to have the government’s support, including the direct interest of Vladimir Putin. "The success of the technopark project lies upon the clear understanding that its success satisfies the interests of all concerned. Technoparks will strengthen our scientific output and potential by supplying a stable platform for the future of Russian software creation and technological innovation," summarized Dmitry Loschinin.