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Outsourcing: Alexei Miller, Executive Vice President Of DataArt (Part 2)

Posted on Friday, Apr 22nd 2011

By Sramana Mitra and guest author Sudhindra Chada

Sramana Mitra: That gives me a way into drilling down into what is going on in Eastern Europe: Russia, Ukraine, Croatia – these countries have emerged as major software destinations. Would you talk more about that part of your strategy? How many people do you have in each of these locations; what are the reasons behind choosing the locations you have chosen; what are the competitive dynamics for talent in those locations? And, especially when you look at that what is going on in India, for instance, where the competition for talent is very high and attrition rates are also very high, would you talk about the dynamics of what is happening in Eastern Europe and Russia in particular?

Alexei Miller: Right! First of all, we think that locations, talent, and the entire resource strategy of outsourcing firms – and client firms, for that matter – should be based on a notion of price-to-performance ratio. Oftentimes, a combination of those two factors is overlooked. People say that the region is cheap, that the region is expensive, that the region has smart people, that the region has no smart people, and so on. But when the argument is so one sided, it inevitably misses the big picture. We believe that Eastern Europe as a whole and Russia and Ukraine in particular have a very nice price-to-performance combination. It is not the cheapest region for sure, but if done right, it delivers extremely high performance as defined by a variety of methods. Strategically, it is that combination combined with some cultural affinity in who we are and the types of clients we serve that explains our choice of this region. In our engineering organization, we have about 600 people in total, and they are split among five locations. Actually four today, but we are in the process of opening up a location in Kiev, which is the capital of Ukraine, so we will have five soon.

We have, on purpose, decided to spread ourselves across multiple locations. It may strike someone that 600 people across four locations is spreading yourself a bit too thin, but it is one of the interesting aspects of our strategies was done intentionally. We believe that the type of work we do, the type of retention targets we set for ourselves, all these things require the best of the best, the crème de la crème of the resource market, so you need to be in several places. Not too many, but certainly not one or two in order to be able to solicit or to get, the best from the market. That explains why when we were originally starting in Russia, St. Petersburg was our first location. We expanded to Ukraine about four years ago for precisely that reason. So, right now we have four offices, and the resources of these 600 people are roughly evenly split among those four locations.

SM: What are the locations?

AM: St. Petersburg is the oldest. The second place in Russia is in a city called Voronezh, and the two in Ukraine are in Kharkiv and Kherson.

SM: What are the characteristics of these cities; what do you have in those cities that they are your chosen location?

AM: Some things are quite natural; an education system and a sizeable pool of local technology talent are obviously mandatory. We will go only to locations that have a strong group of higher education facilities with proven track records in math, physics, and computer science, but that is an answer almost anyone would give. What is equally important, an possibly more important, is to start there not from zero, not from the basic facts, but to find somewhere that is a good place in terms of having nice universities and where competition is low. We want to start not from zero but from a group of people. Our preferred strategy is go to a location and hire a group of people who work together for a long time, and these people will be the core of this strategy. We want people with whom we feel some affinity in terms of how we work and how they work and we understand each other, because corporate culture is very strong area of focus for us as a company. It is only when we are able to locate such a group of people that we will be comfortable that we can build around them. It is imperative for us that this original group of people stay with the company for a long time.

 

This segment is part 2 in the series : Outsourcing: Alexei Miller, Executive Vice President Of DataArt
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