Softage: Russian Rewards - Roman Martynenko

The urge to cut costs is driving companies to outsource parts of their business, and software development is a prime focus. Roman Martynenko, CEO of software provider Softage, explains to Jim Banks how Russia offers an attractive blend of high-quality service and potential cost savings.

Businesses have long understood the cost savings that outsourcing can generate, whether through labour cost arbitrage, economies of scale or process improvement. Deteriorating economic conditions around the world, however, are prompting more companies to develop global sourcing solutions to drive down the cost of processes such as software development.

Russia continues to grow as a prime location for outsourced software development, offering expertise and reliability with an attractive cost proposition.

‘In 2009, recessionary tendencies in the world economy will bring a number of completely new clients to the arena of IT outsourcing,’ says Roman Martynenko, CEO of software development service provider Softage.

‘These customers will be searching for providers who can offer the full range of software development services along with fixed prices, predictability of the process, control of the development cycle and full responsibility for software delivery. These needs can be met only by providers that have strong industrial expertise and mature business processes for software development.’

Softage offers the full spectrum of services including on-site business analysis and project management services. It supports its model of long-term cooperation with clients by leveraging the latest technology, best practices and methodologies.

It has offices in the US, China and the UK, but its main outsourcing web development and software programming centre is located in Russia. ‘The country has the potential to become a major player in the global IT outsourcing market not only in terms of market volume, but also the number of IT professionals and companies offering outsourcing services,’ says Martynenko.

‘A large labour force is just one advantage. Low staff attrition and alignment with European and North American business cultures are just as important.’

Attrition rates in Russia are around 8%, an impressive benchmark that illustrates the region’s resilience to the labour migration often seen in Asia or India. Russia’s service providers focus on complex, high-end application development work, so they prioritise the retention of specialist, market-focused developers

‘A strong work ethic and an understanding of customer needs can be as important to a successful partnership as a developer’s technical skill. Russia can claim parallels in each of these cultural factors to North America and Europe,’ adds Martynenko.

Quality is the key

Martynenko believes that cost cannot be the only driver when it comes to making the decision to outsource.

‘Skills, experience and stability are the most important criteria for choosing an outsourcing provider, but cost savings are typically the main driver. It is important to realise, however, that real cost analysis goes far beyond comparing the resource cost per hour.

Clients of firms in Russia report that our creativity, autonomy and problem-solving approach translate into higher uptime, projects moving faster and shorter time to market, which in turn means lower cost per line of working software than that of the competing geographies,’ he remarks.

He stresses that while companies might once have been able to absorb some deficiencies in a service provider’s work, such as delivery delays or an unexpected low quality of products, they can no longer afford this luxury.

‘An example of dissatisfaction leading to a change of service provider is that of Skype, which came to us with one of their components. Their previous supplier could not provide the necessary level of performance and stability for one of its critical software components, so they called us,’ Martynenko explains.

Softage plans to expand its service offering by acquiring technological knowledge and industrial expertise to add to its strong experience in telecoms, banking, finance, ecommerce and healthcare.

This is a sign that Russian service providers are upping their game and the winners will be the clients that spot the opportunity.

Softage CEO Roman Martynenko.