Russia bids for offshore outsourcing top spot

Russia claims it can replicate the success of India's high-tech centres in Bangalore and Hyderabad and become the next global IT outsourcing hotspot.

Russian IT minister Leonid Reiman said the government is committing $650m over the next five years to attract more overseas private investment along with tax breaks, "free economic zones" and a national network of high-tech business parks.

IT is one of the fastest growing sectors of the Russian economy with 25 per cent annual growth and the Ministry of Information Technologies and Communications claims the country's offshore outsourcing market will be worth $2bn by 2007.

Reiman said in a statement: "Our vision is for Russia to become a global centre of innovation and entrepreneurship, a place where radically new, breakthrough technologies are developed. We want Russia to be a place where 'the next big thing' is born."

But Russia not only has a long way to go to compete with dominant offshore player India, it also faces stiff competition from a host of Central and Eastern European countries, such as the Czech Republic and Hungary, that have pitched themselves as more convenient 'nearshore' alternatives for offshore outsourcing.