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News Release

Apr 21, 2005

Russian software outsourcing industry: a major breakthrough

“Let’s work together” said Former Soviet Union President and Nobel Laureate Mikhail Gorbachev, presenting the Russian high tech industry to an audience composed of a Massachusetts business elite.

April 21, Amherst, NH - On April 12, 2005, the Massachusetts Software Council, the leading technology trade association in the state, held its traditional Spring Membership breakfast. Mikhail Gorbachev, formerly President of the Soviet Union, Nobel Laureate, and the founder of the Gorbachev Foundation, gave a keynote presentation. Mr. Gorbachev spoke on the “Role of IT in the Global Economy” and introduced Russian software capabilities to the US business audience. The breakfast brought together more than 900 U.S. business and technology executives.

April 12th was chosen for the Boston conference date for one important reason. It was the 44th anniversary of the day the first human – Yuri Gagarin, a Russian cosmonaut – orbited the globe. At that time, Russia was a global science and technology pioneer. Nowadays, the Russian high-tech industry seems to be similarly on the rise.

Mr. Gorbachev laid great stress in his presentation on the importance of equality in U.S. – Russian relationships in the areas of business and technology, as well as in the overall geopolitical relationship between the countries. He advocated building new bridges between U.S. and Russia. “Your meeting here,” he said, “is one of these bridges”.

Mr. Gorbachev pointed out that Russia seems ready to make a breakthrough economic step into the future. In the past, Russia succeeded in dominating in various fields of science and technology, and now the country seeks to apply these skills to become a worldwide leader in IT outsourcing.

Mr. Gorbachev is highly regarded in the U.S. business community. For a long time his foundation and RUSSOFT (the Russian association of software development companies), have been looking for an opportunity to showcase Russian IT capabilities in the U.S. The April 12th event was the outcome. It reflects a continuing interest on his part in development of the Russian software industry. His non-profit foundation also recently launched a “Gorbachev Foundation High Technology Project” to support and promote the development of Russian software companies.

Russian IT and software industry:

Many analysts recognize Russia as one of the principal players in the global IT outsourcing market. The overall Russian IT industry is expected to generate more than $20 billion in revenues in 2005 and the IT outsourcing segment, which has been experiencing remarkable growth – more than 40% annually -- during the last few years, is expected to grab more than 20% of it.

Russia has been exporting software services for more than 10 years. Software export volumes are predicted to reach $1 billion in 2005. Low software development costs and highly skilled (especially in R&D) personnel are the strong Russia’s competitive advantages. Recently the Russian government announced a support program for the industry, including creation of “techno parks”, and legal and tax preferences are being considered.

The depth of Russia’s high-tech talent has been proven once again by the impressive results that Russian programmers chalked up this year at the annual Association of Computing Machinery’s (ACM’s) “Collegiate Programming Contests”. This year Russian teams came in #2 and #3 in the world, carrying on a long history of excellent performances. The competition, informally known as the international “Programming Olympics”, has been for 30 years the most prestigious competition between young programmers drawn from many nations. In the last six competitions, Russian teams were declared World Champion three times.

Leader’s opinions:

Joseph Feiman, Ph.D., vice president and research director at Gartner Research, commented that the Boston event might become a turning point in the way the Russian industry markets itself. Mr. Feiman, who pays careful attention to the Russian IT and software industry, notes that Russia, instead of pursuing an India-like “all things to all people” strategy, should concentrate its IT Outsourcing efforts instead toward specific technology areas where it has traditionally been strong. “Russia's biggest asset is its highly educated and creative workforce”, said Mr.Feiman. He added that there are other advantages as well, including low wages, and its geographical proximity and historic cultural ties to the European market.

Alexis Sukharev, AURIGA’s President, thanked Mr. Gorbachev for his contribution. “This year’s exceptional event is the next step in bringing our booming Russian IT industry to the attention of the New England business community. Mikhail Gorbachev is well known as the 20th-century leader who ended the Cold War, promoted the end of communism in the Eastern Europe, and opened the “Iron Curtain” between East and West. Nowadays he is one of the world’s most recognized public figures and his participation in the Boston event was remarkable both for the Massachusetts business audience it was able to attract and the participation of so many representatives of the Russian IT industry. We hope that this meeting will become one of those mutually beneficial occasions that provide rich business opportunities to all the participants and break new ground for further cooperation in the area of IT between U.S. and Russian businesses”.

George Bell, Massachusetts Software Council Chairman, thanked Mr. Sukharev for playing a central role in bringing about the very successful event on April 12th. “Surely the largest and best attended Massachusetts Software Council event ever", he commented.

Carol Greenfield, Massachusetts Software Council VP, commented “It was a resounding success and a most memorable event! Gorbachev's place in history was long ago secured and with your [AURIGA’s] assistance, we were able to provide our membership with the opportunity to see and hear from him”.

Julia Rovinskaya, pr@auriga.com
+ 7 (495) 975-7400 # 231


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