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07-22-2008, 04:52 AM
This is a very informative monograph (140 pages) that I finally got around to reading (having first downloaded it some years ago):
http://www.rand.org/pubs/monographs/2005/RAND_MG422.pdf
Some excerpts:
At the time of the Soviet Union's collapse in 1991, Russia did not have an internationally competitive, business-oriented, or market-driven information technology sector. Rather, the country's considerable math, engineering, microelectronics, communications, and computing capabilities and expertise—which, among other accomplishments, enabled the USSR to compete with the United States in the conquest of space—were embedded in the military-industrial enterprises and to a lesser extent in government ministries and research facilities. Moreover, the IT systems the Soviet Union had were oriented around large, increasingly outdated centralized mainframe computers running highly customized software that were not networked on a significant scale. [A push by the Gorbachev administration in the late 1980s to quickly develop a personal computer (PC) industry based on cloning Western technologies failed (Igor Agamirzian, "Russia on the World IT Services Market: Current Situation and Perspectives," presentation at Software Outsourcing Summit 2001, St. Petersburg, Russia, June 2001).]
With the paralysis and atrophy of Soviet institutions in the late 1980s and early 1990s, talented and entrepreneurial individuals left the state-owned IT centers to start their own private-sector firms. Prominent among these entrepreneurs were Dmitry Zimin (founder of mobile telephone company Vympelcom), Anatoly Karachinsky (founder of Information Business Systems , a software and systems integration group), and Alexis Sukharev (founder of Auriga, an offshore programming specialty firm). Relcom, one of Russia's largest Internet service providers (ISPs), emerged in the early 1990s from Moscow's Kurchatov Institute of Atomic Energy. These and other companies that started in the early 1990s form the core of Russia's commercial IT sector today.
[...]
Russia now has a number of small but highly innovative software development and IT research firms and centers—most built from scratch during the past 15 years. Collectively, they constitute one of Russia's most vibrant and internationally competitive economic sectors outside of the natural resources sector. Finally, under President Vladimir Putin, electronic government initiatives such as E-Russia, E-Moscow, and E-Chuvashia have been championed with the stated goals of improving publicsector transparency, efficiency, service, and accountability.
Pointing to these developments, Russian and international observers frequently argue that the nation can become a full-fledged participant in the global Information Revolution by drawing on its significant human-capital assets, including a sizable number of high-tech specialists with deep knowledge of mathematics and engineering; an extensive array of high-tech research and development facilities; world-class institutions of higher education and advanced training; and a receptiveness to and facility with new technologies among the general population.
[...]
• Samsung opened a Moscow operation in 1993. Areas of IT in which the firm is active in Russia include semiconductor microelectronics for memory and digital processors; multimedia technologies, such as three-dimensional graphics and modeling; and systems for mobile and stationary telephony. Samsung employs 80 engineers and programmers who helped the firm secure 50 international patents in 2003 alone, and it has an active contract research program. "Russia is number-one destination for technology outsourcing," said a company executive. [Moon Ihlwan, "Want Innovation? Hire a Russian," [i]Business Week, March 8, 2004.]
• Since 1991, Sun Microsystems has contracted systems software and customized implementation work to engineers working in Moscow, Novosibirsk, and other locations. Jason Horowitz, the Russian project team manager, noted to RAND that Russian programmers are "very serious engineers" and, in comparison with their counterparts in other countries, tend to be "stronger at tasks that require a deeper mathematical background." Sun has teams around the world working on similar projects—in such countries as Ireland, India, Israel, and the Czech Republic—but programmers in such countries typically "don't have anywhere
• In 2000, Intel opened a Development Lab near Nizhny Novgorod to capitalize on the proven talents of mathematicians who once worked at the Sarov nuclear weapons research facility. Intel uses the Nizhny Novgorod lab for important research challenges, such as software for its wireless technologies, which are a central element of the firm's business development strategy. Intel has repeatedly expanded its R&D presence in Russia and in 2004 bought out two technology firms it had been working with, Elbrus and UniPro, bringing its total employment in Russia to more than 1,500. The firm's current goal is to integrate the organization's architecture expertise with software development and hardware design. Intel representatives reported to RAND that they have been successful in reorienting their research staff from a focus on abstract science toward applied problem-solving for the market—a significant issue in light of the fact that specialists from Russia's "closed cities" for nuclear weapons production often have been portrayed as having little understanding of the outside world. [The Soviet Union (and now Russia) designed, produced, and stored its nuclear weapons arsenal in ten secret, highly restricted, closed cities.]
• Cadence, an integrated-circuit and electronic design and engineering firm first opened a sales and support office in Russia in 1992 to supply local manufacturers and R&D centers with its U.S.-made technologies. The firm in 2001 opened an R&D center in Moscow (managed by an R&D outsourcing specialty firm) with four employees for the purpose of upgrading the firm's existing technologies. Based on the success of this venture, Cadence in 2004 converted its operation to a dedicated center for state-of-the-art R&D in the areas of optics, physics, and sophisticated mathematical modeling. To do so, Cadence has invested in and developed close relationships with Russian research centers, such as the Department of Applied Mathematics at Moscow State University. In late 2004, the firm employed 75 engineers, who were mostly in their 20s or 30s.
[...]
With outsourcing revenue in Russia estimated at $750 million in 2004, Russia is still capturing only a fraction of the action: Gartner Group estimated that the global outsourcing market in 2004 totaled $200 billion. One reason for this showing is that Russia has made inroads into only a small subsegment of the market: elite offshore software engineering and technology development. The exploitation of basic software programming and IT-enabled services, such as data and call centers, are the bases on which India, Ireland, and other countries have gained most of their outsourcing revenues and built their IT sectors. In 2003, India's total offshore industry for IT services and other business processes was 40 times larger than Russia's, while Israel's and China's were more than ten times larger (see Figure 2.2). Given the scale of business and the pace of growth elsewhere in the world, Russian IT entrepreneurs and firms still have a long way to go to fully capitalize on the opportunities being created by rapidly growing, but highly competitive, domestic and global markets.
[...]
Ideas [Russian firms and specialists] pitch to potential funders often are intriguing in concept but usually have few prospects for practical application in the marketplace. To improve the situation, they need a better grasp of global technology market trends, technology needs, and hot spots in technology evolution. They also need to complement their scientific and research know-how with "business-building capability" and management discipline, Jan Dauman, of the Central European Trust, told RAND. Researchers and technology developers in Russia often are hesitant to bring in outside talent and investors and to relinquish control of their companies.
http://www.rand.org/pubs/monographs/2005/RAND_MG422.pdf
Some excerpts:
At the time of the Soviet Union's collapse in 1991, Russia did not have an internationally competitive, business-oriented, or market-driven information technology sector. Rather, the country's considerable math, engineering, microelectronics, communications, and computing capabilities and expertise—which, among other accomplishments, enabled the USSR to compete with the United States in the conquest of space—were embedded in the military-industrial enterprises and to a lesser extent in government ministries and research facilities. Moreover, the IT systems the Soviet Union had were oriented around large, increasingly outdated centralized mainframe computers running highly customized software that were not networked on a significant scale. [A push by the Gorbachev administration in the late 1980s to quickly develop a personal computer (PC) industry based on cloning Western technologies failed (Igor Agamirzian, "Russia on the World IT Services Market: Current Situation and Perspectives," presentation at Software Outsourcing Summit 2001, St. Petersburg, Russia, June 2001).]
With the paralysis and atrophy of Soviet institutions in the late 1980s and early 1990s, talented and entrepreneurial individuals left the state-owned IT centers to start their own private-sector firms. Prominent among these entrepreneurs were Dmitry Zimin (founder of mobile telephone company Vympelcom), Anatoly Karachinsky (founder of Information Business Systems , a software and systems integration group), and Alexis Sukharev (founder of Auriga, an offshore programming specialty firm). Relcom, one of Russia's largest Internet service providers (ISPs), emerged in the early 1990s from Moscow's Kurchatov Institute of Atomic Energy. These and other companies that started in the early 1990s form the core of Russia's commercial IT sector today.
[...]
Russia now has a number of small but highly innovative software development and IT research firms and centers—most built from scratch during the past 15 years. Collectively, they constitute one of Russia's most vibrant and internationally competitive economic sectors outside of the natural resources sector. Finally, under President Vladimir Putin, electronic government initiatives such as E-Russia, E-Moscow, and E-Chuvashia have been championed with the stated goals of improving publicsector transparency, efficiency, service, and accountability.
Pointing to these developments, Russian and international observers frequently argue that the nation can become a full-fledged participant in the global Information Revolution by drawing on its significant human-capital assets, including a sizable number of high-tech specialists with deep knowledge of mathematics and engineering; an extensive array of high-tech research and development facilities; world-class institutions of higher education and advanced training; and a receptiveness to and facility with new technologies among the general population.
[...]
• Samsung opened a Moscow operation in 1993. Areas of IT in which the firm is active in Russia include semiconductor microelectronics for memory and digital processors; multimedia technologies, such as three-dimensional graphics and modeling; and systems for mobile and stationary telephony. Samsung employs 80 engineers and programmers who helped the firm secure 50 international patents in 2003 alone, and it has an active contract research program. "Russia is number-one destination for technology outsourcing," said a company executive. [Moon Ihlwan, "Want Innovation? Hire a Russian," [i]Business Week, March 8, 2004.]
• Since 1991, Sun Microsystems has contracted systems software and customized implementation work to engineers working in Moscow, Novosibirsk, and other locations. Jason Horowitz, the Russian project team manager, noted to RAND that Russian programmers are "very serious engineers" and, in comparison with their counterparts in other countries, tend to be "stronger at tasks that require a deeper mathematical background." Sun has teams around the world working on similar projects—in such countries as Ireland, India, Israel, and the Czech Republic—but programmers in such countries typically "don't have anywhere
• In 2000, Intel opened a Development Lab near Nizhny Novgorod to capitalize on the proven talents of mathematicians who once worked at the Sarov nuclear weapons research facility. Intel uses the Nizhny Novgorod lab for important research challenges, such as software for its wireless technologies, which are a central element of the firm's business development strategy. Intel has repeatedly expanded its R&D presence in Russia and in 2004 bought out two technology firms it had been working with, Elbrus and UniPro, bringing its total employment in Russia to more than 1,500. The firm's current goal is to integrate the organization's architecture expertise with software development and hardware design. Intel representatives reported to RAND that they have been successful in reorienting their research staff from a focus on abstract science toward applied problem-solving for the market—a significant issue in light of the fact that specialists from Russia's "closed cities" for nuclear weapons production often have been portrayed as having little understanding of the outside world. [The Soviet Union (and now Russia) designed, produced, and stored its nuclear weapons arsenal in ten secret, highly restricted, closed cities.]
• Cadence, an integrated-circuit and electronic design and engineering firm first opened a sales and support office in Russia in 1992 to supply local manufacturers and R&D centers with its U.S.-made technologies. The firm in 2001 opened an R&D center in Moscow (managed by an R&D outsourcing specialty firm) with four employees for the purpose of upgrading the firm's existing technologies. Based on the success of this venture, Cadence in 2004 converted its operation to a dedicated center for state-of-the-art R&D in the areas of optics, physics, and sophisticated mathematical modeling. To do so, Cadence has invested in and developed close relationships with Russian research centers, such as the Department of Applied Mathematics at Moscow State University. In late 2004, the firm employed 75 engineers, who were mostly in their 20s or 30s.
[...]
With outsourcing revenue in Russia estimated at $750 million in 2004, Russia is still capturing only a fraction of the action: Gartner Group estimated that the global outsourcing market in 2004 totaled $200 billion. One reason for this showing is that Russia has made inroads into only a small subsegment of the market: elite offshore software engineering and technology development. The exploitation of basic software programming and IT-enabled services, such as data and call centers, are the bases on which India, Ireland, and other countries have gained most of their outsourcing revenues and built their IT sectors. In 2003, India's total offshore industry for IT services and other business processes was 40 times larger than Russia's, while Israel's and China's were more than ten times larger (see Figure 2.2). Given the scale of business and the pace of growth elsewhere in the world, Russian IT entrepreneurs and firms still have a long way to go to fully capitalize on the opportunities being created by rapidly growing, but highly competitive, domestic and global markets.
[...]
Ideas [Russian firms and specialists] pitch to potential funders often are intriguing in concept but usually have few prospects for practical application in the marketplace. To improve the situation, they need a better grasp of global technology market trends, technology needs, and hot spots in technology evolution. They also need to complement their scientific and research know-how with "business-building capability" and management discipline, Jan Dauman, of the Central European Trust, told RAND. Researchers and technology developers in Russia often are hesitant to bring in outside talent and investors and to relinquish control of their companies.