Russian Federation

Basic information

Capital: Moscow
Population: 142.4 mio.
Large cities: St.Petersburg, Yekaterinburg, Novosibirsk
Currency: Ruble
Language: Russian
Government: Semi-presidential Republic
Time zone: UTC +2 to +12
GDP: $ 1000 bn. (estimated)
Dialling code: +7
Internet TLD: .ru, .su 

Overview Russian Federation

The Russian Federation (Russia) was the largest republic in the former Soviet Union. Just like the Soviet Union in former times, today’s Russia is an assemblage of various territiories in various stages of development, and it may rightfully be called a multi-ethnic state. Apart from Russians, who make up 79 % of the population, people from almost 100 other ethnic groups live within the country.

Russia is the largest country in the world, both as far as its total area as well as its geopgrahical extent are concerned. At 17,075,200 square kilometres, Russia extends across more than a ninth of the Earth’s land area.

Russia has the world’s largest mineral and energy resources. While there are large mineral deposits, many of them are situated in far-away areas where extreme climatic conditions render exploitation expensive.

Due to the existing natural resources and the high oil price, Russian export revenues have been increasing steadily since 2000. As a consequence of an increase in real income, import growth has also developed positively in the same period.

Overview IT provider market

Most IT companies and specialists are located in cities such as Moscow and St. Petersburg; however, they can also be found in so-called economic centres such as Nizhny Nowgorod and Novosibirsk. The specialists usually received excellent training within the technical courses of study. Most software developers are physics and mathematics graduates. 

Russian companies’ special strengths lie in their ability to solve complex technical problems and to implement these solutions with the help of high-quality software and by producing and supervising comprehensive IT products for clients. The same is true for companies all over Eastern Europe.

In some cases, however, regional strengths have evolved. This still dates back to Soviet times and results, for example, from the location of the former space industry. Russia commands a strong portfolio of services in the areas of application development, maintenance of legacy systems, product development as well as research and development concerning mathematical systems and algorithms.

In Russia, a marked price increase can be witnesses. As far as regional differences are concerned, in cities such as Moscow or St. Petersburg, hourly rates of up to € 60 are sometimes expected, thus almost reaching European levels, while companies in cities such as Novosibirsk and Novgorod are in a position to offer services at Chinese rates.
The human resources market can be regarded as stable – the labour turnover which is common in this industry slightly exceeds the European level. Due to attractive rates and favourable conditions, however, it is interesting also for Ukrainians and Belarusians to work in Russia’s large citites.

SWOT analysis

Strength

• Employees’ qualifications and level of training.
• Broad price spectrum depending on the distance to Moscow.
• Scalability

Weakness

• On average, prices are higher than in neighbouring countries.
• Cultural differences increase parallel to the distance to Central Europe

Opportunities

• 2nd and 3rd tier cities may be resorted to in order to reduce costs.
• The consolidation of companies results in an increase in larger and more productive IT service providers.

Threats

• Because of an increasing domestic demand, outsourcing becomes progressively unattractive for suppliers, who decide in favour of domestic projects.
• Russia is politically stable, but the country is still subject to great changes.