IT Outsourcing India

Russia is bidding for a bigger slice of the lucrative global offshore-outsourcing market, but it is being hindered by the poor international perception of the country.

Russia’s IT services industry is currently growing at about 10 percent per year and was worth $1 billion in 2005. But even though Russia is in Gartner’s top 10 list of near-shore outsourcing locations, the research firm said companies are still wary of sending work there.

“One of the biggest challenges is global public perception of Russia as a place to take work to,” said Ian Marriott, research vice president at Gartner. “If you look at what companies are doing, they are saying they are happy to do business in Eastern Europe–but not Russia. That’s going to take years to break down.”

Dmitry Milovantsev, Russian deputy IT minister, said in an interview with CNET News.com’s sister site Silicon.com that attitudes are changing and the Russian economy is being reborn as “an economy of high technologies.” However, he acknowledged that the country can’t compete with the scale and low cost of India and China.

“That is why we compete at the high end,” Milovantsev said. “India and China will never have people with such experience as our people have. If we position Russia against India and China, Russia loses its competitiveness. We don’t want our labor force to cost as low as China.”

The Russian government has been paying more attention to IT and investing in a series of “technoparks,” such as one 120 kilometers outside of Moscow at Dubna. Nevertheless, the country’s natural resources–oil and gas–remain the primary investment focus for the government.

University challenge

One of Russia’s strengths, however, is the mathematical, engineering and science graduates turned out by the country’s universities, a legacy of the Soviet education system. This means Russia has one of the highest numbers of scientists and engineers per capita, according to the World Bank.

The department of computational mathematics and cybernetics at Moscow State University, for example, takes in 500 new students per year–10 percent of the entire university’s new intake–and turns out 450 graduates annually.

The courses are rigorous, with first-year undergraduates focusing on mathematical modeling, mathematical physics and quantum computing before specializing in later years. Specialist research areas include cryptography and Internet banking security.

The students also take a mandatory two-year English course for four hours per week and do a half-year internship in their fifth year. Boris Berezin, professor and vice dean of the faculty, said the quality of the graduates means they are in high demand.

“We cannot prepare enough students to meet the demand of companies. This fundamental type of education is quite complex for students because it is a huge workload. But as a result of this they have a very well-developed brain-set,” Berezin said.

That is evident at one of Russia’s biggest IT outsourcing companies, Luxoft, where 70 percent of the 2,300 employees have a master’s degree, and 6 percent have a Ph.D. Dmitry Lochsinin, CEO of Luxoft, said that the company is using this to target the kind of high-end work that businesses “don’t normally outsource,” such as equity-trading applications and core enterprise systems.

Luxoft’s current customers include Citibank, Deutsche Bank and UBS. Lochsinin said he is confident Luxoft will see “60 percent-plus growth again this year.”

However, Gartner’s Marriott said: “Russia is in the leading pack of countries capable of doing this stuff, but it is still cheaper in India, and you get a broader range of services. It’s also still difficult to do business in Russia and to set up a captive (operation) there.”

Source : www.offshoringtimes.com

Clinical research outsourcing (CRO), touted as the next big think on the outsourcing sphere, is yet to take off. Despite the leap-frogging growth projections for the healthcare-linked business, lack of awareness, infrastructure bottleneck and crunch in trained manpower, are seemingly stunting its growth.

An Ernst and Young study has pegged the clinical research activity in India to touch $1.5 to 2 billion by 2010. By then, the segment would require at least 50,000 trained professionals.

Chennai-based independent clinical research organisation Huclin Research chairman A Ramamurthy told ET only 250 of India’s growing tribe of half-a-million clinicians are trained to do trials.

“CRO is an integration of doctors, pharmacists and pharma companies. The demand is huge but the supply is low. General hospitals do not have adequate infrastructure to support the activity, thus causing a slump in the industry growth,” he said.

According to a Ma Foi Consulting official, “It is an upcoming industry and trained manpower is extremely difficult to find. Areas like site and data management, clinical research, logistic support and storage management need skilled personnel.”

There are around 100-odd government and privately-owned Indian hospitals, engaged in global and local clinical trials. Industry observers anticipate an exponential increase and to touch an estimated 14,000 hospitals, five lakh doctors, seven lakh beds and 200-odd medical colleges by 2010.

RPG Life Sciences managing director Arvind Vasudeva said increased research and development activities would trigger a higher demand for clinical trial services. The huge patient population in India provides a massive test pool for pharma companies.

Additionally, India’s wide hospital network of doctors, nurses and technicians, are available at significantly lower salaries than their western counter-parts. Typically, entry level fetches a CRO specialist Rs 25,000 to Rs 30,000 per month, said Chennai-based Trivitron managing director G S Velu.

Stating that the CRO business is concentrated in Bangalore, Mumbai, Hyderabad, Delhi, Pune, he said Chennai is the sixth player in an Indian market, estimated to be Rs 300 crore to Rs 400 crore. “Pharma companies are moving away from CRO and positioning themselves as site management organisations (SMOs), as it is an activity that involves protocol development, monitoring besides R and D,” he said.

The SMO activity has generated Rs five crore for his company, which has clinical research routed from hospitals like Ram Chandra, M S Ramiah and Meenakshi Mission.

According to an official of Chennai-based CRO firm, which is a subsidiary of a $600 million global pharma R&D company CRO, it is mandatory for all pharma clinical research to strictly follow government-issued GCP guidelines.

“CRO is a highly-capital intensive sector, requiring sophisticated instruments for evaluation of drug substances. Expedited customs clearance of clinical trial materials and frozen biological samples will provide a great opportunity for the CRO companies to grow and provide much needed service to pharma companies,” he added.

Meanwhile, clinical trials have been facing flak from social activists, who are against the use of Indian patients as guinea pigs.

Source : www.offshoringtimes.com