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Press about Auriga

May 2, 2005

Networked Server: Closing the Gorbachev loop on Russia opportunities

Mass High-Tech,
Ethan Forman

Credit Alexis Sukharev, president of Auriga Inc., an Amherst, N.H.-based Russian software development and IT outsourcing company, for delivering former Soviet president Mikhail Gorbachev to the Massachusetts Software Council.

Gorbachev came to Boston April 12 preaching not only the merits of political and economic reform with perestroika, and openness with glasnost, but a changed Russian society in which IT can play an important role.

He spoke to the software executives in the ballroom of the Boston Marriott Copley Place about Russia as an offshore IT resource.

“The information technology industry in Russia today is developing very dynamically,” Gorbachev told a packed ballroom of more than 800 people.

Industrial parks are springing up, not only in the expensive cities of Moscow and St. Petersburg but also in Novosibirsk, Siberia’s largest city, said Gorbachev, leader of the Soviet Union from 1985 to 1991.

“As a result, we are following very closely with our main competitor (India),” Gorbachev said.

Auriga specializes in developing system-level software. Sukharev started the company in Moscow in 1990 and later moved it to New Hampshire.

Sukharev noted that on the same day Gorbachev visited Boston, the Russian minister of information technologies and communications announced in London a new push for Russian IT outsourcing.

Sukharev says the Gorbachev software summit served a purpose beyond handshakes and photos with the 1990 Nobel Peace Prize winner. It showed that Russian companies could do more than just export raw materials.

New England is a hotbed of innovation, with many cash-starved startups that could benefit from Russian IT services, Sukharev said.

Auriga’s newsletter says that next year Russia might capture 10 percent of the world’s IT outsourcing.

Auriga, with 200 people, was mentioned in an October Gartner Inc. research report by Joseph Feiman, vice president and research director at Gartner Research, and Ian Marriott as a “next-tier vendor,” one with between 150 and 300 people and revenues in the $3 million to $8 million range.

Sukharev said most of his employees work in Moscow and he is developing a research center in Kazan, a large university city in Tartarstan, 500 miles southeast of Moscow.

Of course, Russia is nowhere near India right now in IT exports, Feiman said.

Gorbachev pegged Russian IT exports at $750 million, $1 billion if you include Ukraine and Belarus.

Feiman says the largest Indian external service providers have revenues of $1 billion.

Sukharev is a founder of the Russian national software development association, Russoft. The group has a partnership agreement with the Massachusetts Software Council.

“I was the originator of the idea (to bring Gorbachev to Massachusetts),” said Sukharev, who noted it was a joint project of Russoft, the software council, and the U.S.-Russia Chamber of Commerce of New England.

“They approached Gorbachev about giving a major speech in the United States,” said Massachusetts Software Council president Joyce Plotkin, “that would highlight the growing Russian software industry.”

So could links with Russian and Ukrainian software companies lead to Massachusetts jobs heading to Eastern Europe?

Plotkin preferred to use the words “partnership opportunities.”

“What many executives tell me is that sometimes when they have a relationship with a Russian company doing development work for them, that then becomes a basis for developing the Russian market,” Plotkin said.

Russia, according to the Gartner report, has a lot to offer, including a near 100 percent literacy rate, skilled programmers, an elite university system, competitive wage rates similar to India’s, and a western Europe’s proximity to the United States.

Still, wages are low. Russian programmers make about $14,000 a year, while programmers outside big cities make about $8,000 a year, according to the Gartner report. The cost for programmers can run 10 percent higher than in India. That’s because Moscow is an expensive city.

SoftServe Inc., one of the largest software developers in eastern Europe, presented at the event.

The company, which bills itself as “the world-class software factory” spun out of Lviv Polytechnic University in Ukraine by two postgraduate students in 1993.

“I think it was very important to talk about the trust and getting to know one another because business relationships are based around that,” said Feyza O’Connell, vice president of professional services for SoftServe, which employs four people in Waltham.

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