What Makes Belarusian Outsourcing Different

The major differences between Belarus and many of its competitors in the outsourcing area are the strength of the country’s leading outsourcing companies and the conditions under which they have been evolving.

With its modest population of 9.9 million, Belarus hosts the largest and most established European IT outsourcing providers to the east of Germany. Five of its largest IT outsourcers are at least 10 years old, an age well above average for a private business in Belarus. Two major ones, IBA Group and EPAM Systems, have respectively 1500 and 1200 employees, while the next largest outsourcer in the region, Luxoft from Russia, has around 850. EPAM and IBA occupy the first two positions of the "Top 5 to Watch in Central and Eastern Europe" section of the "Offshore 100," a list of the world’s leading IT and BPO outsourcing providers published in January 2005 by consulting firm neoIT and monthly newsletter CMP’s Managing Offshore. A few other local outsourcers such as Sam-Solutions, Belhard, and ScienceSoft employ 150-400 IT staff.

An emigrant from Belarus, Arkadiy Dobkin founded EPAM Systems together with his schoolmate Leonid Lozner in the US in 1993. Headquartered in Princeton, New Jersey, where it has over 50 employees, EPAM is the winner of Technology Fast 500 award in 2002, 2003 and 2004, while its development centre in Minsk became the first CMMI 4 certified company in Europe.

IBA earned its CMMI 4 certification just two weeks after EPAM. The company emerged in 1993 as a partnership between IBM and Minsk R&D Institute for computer development, once one of the cornerstones of the Soviet computer industry. In 1999, IBM withdrew as shareholder of IBA but remained its main customer and strategic partner. Currently, about 600 out of IBA’s 850 software engineers in its Minsk office work on projects for IBM.

Smaller companies cannot boast CMMI certifications but nevertheless demonstrate high growth. ScienceSoft, founded back in 1989, has increased its revenue by 34 percent and its staff by 27 percent to 180 employees in 2004, according to its owner Dr. Val Tsourikov.

"If you compare Belarus to Russia and Ukraine in terms of the size and age of IT outsourcing companies, the industry in Belarus would look the most mature," says Lozner, who is also EPAM’s VP of Technology and Infrastructure. Still, although it might look superior on the Eastern European scale, Belarusian IT outsourcing industry is by far less impressive in comparison to India, where the largest firms employ tens of thousands of programmers each and have hit the$1 billion revenue level.

The Belarusian IT outsourcing industry employs between 3,000-3,500 software engineers, according to the former head of the president’s administration Ural Latypov. Market Visio, a Gartner partner in Russia, estimates the Belarusian outsourcing industry’s revenue was $90 million in 2004. For a comparison, in 2003 exported IT services totalled $475 million in Russia, $22 million in Poland, $20 million in Hungary and $26 million in Czech Republic, according to a June 2004 report by neoIT.

The country’s strength is rooted in its mature technical infrastructure and reputable educational system inherited from Soviet times when Belarus used to manufacture over 50 percent of the computers and computer components in the former USSR. In March 2004, a team from Belarusian State University was among the top three out of over 3,000 teams at a major international college programming contest in Prague, outscoring their counterparts from MIT and Harvard University.

Limited domestic demand for the IT labour force is another factor that spurred the early orientation to offshore outsourcing. Luxoft CEO Dmitry Loshchinin once noted that while in Russia programmers were actively hired by banks and other organizations; in Minsk they did not have other opportunities except offshore programming.

Geographical and cultural proximity to the EU is also important. "Minsk is within a two and a half hour flight from Frankfurt, and one hour after landing you can already be at our office," says EPAM’s Lozner. Lennart Jakobsson, CEO and Owner of Swedish high tech company Litcon Invest AB, says Belarus exceeded his expectations when he came there for the first time: "I met many Belarusian businessmen and IT professionals and was amazed by how easy it was to communicate with them. They are really willing to cooperate and, most importantly, they get things done in a fast and proper manner," he says. Now Jacobsson is considering setting up a software company of his own in Belarus.

Written by Vlad Radkevitch