The Russian Offshore Software and Product Development Industry Survey

St.Petersburg, 16 June, 2005

The Russian Offshore Software and Product Development Industry

Survey

• Main objectives• Preliminary results:

- Estimations of export revenues 2004- Main exporters- Geographical distribution of companies– Salaries– Branch Offices– Key trends of the market (as seen by CEOs)– Areas of expertise

Contents:

• To get up-to-date information about the industry, to consider its trends and the future

• To promote the Russian software development industry on international markets and to atract potential customers

• To extend the positive image of Russia as one of the major software outsourcing destinations and as a source of high-end solutions

Objectives

• On-line sells - through Internet (Digital River, SoftKey (Russia)).

Estimations of export - $40Mio-$55Mio• Off-line sells – through direct sells and distribution channels. Estimation of export - $70Mio-$100Mio.• Main markets: USA (50%), EU (35%), Eastern Europe (10%),

Asia (5%)Source – Independent Software Developers Forum (Dmitry Kourashov)

Export market of software products

Geography

30%

25%

7%

3%

35%

Moscow

St.Petersburg

Novosibirsk

Nizhniy Novgorod

Others

Average Annual Revenue

25,0020,83

8,3311

45,83

3729

23

0,00

10,00

20,00

30,00

40,00

50,00

under $500000 $500000 - $2mln

$2mln - $4 mln $4 mln andmore

2004

2003

Market Growth Estimation

2004: $700mln

Growth estimation by CEOs:

2005: 50%

2006: 45%

Average Max. and Min. Salaries ($)

850700

500

2000

1600

1200

0

500

1000

1500

2000

2500

Moscow St.Petersburg Regions

Average software development rate: $20 per hour

Branch Offices in Russian and CIS

29

11

2325,00

37

8,33

20,83

45,83

0

10

20

30

40

50

under $500000 $500000 - $2mln

$2mln - $4 mln $4 mln and more

2003

2004

Software Development Process Certification

45%

17%

38%

ISO

SEI CMM/CMMI

Others or None

Key Trends of the Russian Offshore Development Market (as seen by CEOs)

Trends % of companies

Market growth 83.3Industry consolidation (mergers/ acquisitions) 75

Implementing western project management practices, ISO 9001 and CMM/CMMI certification

54.2

Increasing of service providing’s share 37.5

Increasing of product development’s share 25.5

Main Priorities of CEOs

Priorities % of companies

Company growth 91.7Clients acquisition through new markets entry 70.8

Offering new software development services 70.8

ISO and CMM/CMMI certification 20.8

Implementing "product" model 16.7

Areas of Expertise

20,4%

21,4%

25,2%

25,2%

26,2%

35,0%

43,7%

47,6%

47,6%

52,4%

59,2%

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0%

Software Internationalization and Localization

EAI / Middleware

Knowledge Management / Data Mining

Legacy Migration

Data Warehousing

Low-Level / System-Level Programming

Document Management Applications

Enterprise Resource Management Applications

Software Maintenance and Support

E-Business

Web Development and Content Management Tools

Business Domains

22,8%

23,0%

23,8%

28,0%

28,7%

32,7%

41,0%

41,6%

81,9%

0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0%

Entertainment

Logistics / Warehouse Automation

Retail / Distribution

Healthcare

Science and Research

Education

Government / Public Sector

Telecom

Banking and Financial Services

Thanks!Contacts:Alexey Shonin – Editor-in-Chief, Outsourcing-Russia.com+7 (812) 327-9900Editor@outsourcing-russia.com

Vakentin Makarov – President, RUSSOFT+7 (812) 331-75-61makarov@russoft.org

Maria Simonova– Head of analytical department, Fort Ross+7 (812) 331-75-60Maria.Simonova@fort-ross.ru