The new generation of outsourcing: a paradigm aimed at results rather than cost savings

CNews: IT is subject to the influence of marketing communications just as much as any other industry. “New” services and products are continuously appearing. The new generation of outsourcing, claimed to be the competitive advantage of your company – is it a real trend or just a fad?

Nikolay Puntikov: On the world outsourcing market, this is a clear trend. The problem is in rather sorry statistics demonstrated by the global outsourcing industry despite its generally positive reputation. In some experts' opinion, more than half of all software development projects involving partners from cheap-labor countries are failing in terms of budget, time, quality or any combination thereof. There is a sad joke: “How much did that failure cost you? One million? Ha, I managed to get away for half that much!” So, the new generation of outsourcing is a paradigm primarily aimed at the results rather than cost savings. This approach has a number of distinctions, bit the principal one is probably the vendor’s willingness to share the risk with the client, which, in its turn, implies the client’s willingness to share the business profits with us if the project is successfully completed.

CNews: A number of legislative initiatives have recently been introduced in regard of the Russian software development market. For example, what do you think of VAT abolition for software developers?

Nikolay Puntikov: The IT field has long been lacking professional legislative regulation. This is primarily true for the domains where the qualified human resources are the main capital. Their economic aspects are very specific, such as, for example, over 60% of the costs borne by the companies of our type being the salaries and associated taxes and other components of the compensation and social package. Undoubtedly, we support the initiatives of today’s legislators aimed at creating an economic environment making the Russian companies more competitive on the world market. For example, the tax concessions will allow the companies to free up the funds for further professional development of the personnel, investing into new development centers, or boosting the marketing efforts on the world markets. From the geopolitical point of view, these legislative initiatives are hard to overestimate. It is a shame when the authority commanded by a world superpower is directly proportional to commodity prices.

CNews: Russia does not offer the cheapest labor, yet many companies open their development centers here, and still more are outsourcing their projects. Why do they choose Russia over other countries?

Nikolay Puntikov: There is a well-known quote attributed to Steve Chase, recent Director General of Intel Russia: “If your project is urgent, leave it in America; if it is big, send it to India; and if it is impossible, do it in Russia.” This joke accentuates the most renowned skill of our programmers – the ability to solve the most complex tasks in a creative manner. This is due to our fundamental system of education, the heritage of the great ancestors, the Sputnik Syndrome, and many other reasons attractive to the international business. I think the greatest high of my work is just in “these boys and girls” – for nearly twenty years, I have been walking the corridors of my company and getting invariably amazed by their brainpower. This is the only kind of resources that can be effective in a company subscribing to the concept of the new-generation software outsourcing; they are the only reason for the company’s extreme mobility and flexibility.