It has become a kind of leitmotiv, something like a mantra: At any given IT or Internet-related gathering in Moscow, these days, you’ll end up bumping into people who will tell you they want to be "like the Indians."

Pilot Software had a problem. The Cambridge, Mass., company's customers urgently needed support and maintenance work on their copies of a popular software package Pilot no longer produces. But Pilot's engineers were too busy developing new software to spend time on the job.

MOSCOW, SEPT. 9. A high-power Indian delegation is arriving in Moscow on Monday to explore Russia's fast growing and potentially huge market for telecommunications and information technologies

“The Garden City”, Fashion Capital of India”, “The Pub City of India”, “The Fruit Market of South India”, “Floriculture Capital”, “Pensioners Paradise”, “Stone City”, “Silicon Valley of India,” “Cyber City”… Yes, you might have guessed about the city I am talking about. Its none other than Bangalore, India’s fifth largest city, a home to well over 6 million people, and a base for over 1,00,000 industries.

Due to the high level of educated Russians, especially in math and engineering, the flourishing of software programming in the Russian Federation is not so surprising. Software seems to be one area where the Russian people tend to excel in the IT landscape. According to McKinsey Global, the Russian software market can, with obvious exceptions, be characterized by small scale operations and lower value products and services. They run the range of customization, localization, translation, distribution and technical support. According to Brunswick Warburg, in 1999, Russia conducted $70 million in offshore programming services with an annual turnover $560-580 million. McKinsey further reports the Russian business of offshore programming is growing at 50-60% per year and is expected to be able to obtain this requisite track record and international certification and become a force in the world offshore programming market, for example, along with India (Lakaeva, US Commercial Service, 2000).

The U.S. Embassy in Moscow recently launched an initiative to streamline the issuance of business visitors' visas to applicants from select Russian companies. This new program facilitates visa issuance without a personal interview provided that the sponsoring companies maintain a solid record of proper applicant visa use. Discussions with several firms located in Moscow and Nizhny Novgorod, the major centers of Russian software development, highlighted the shared interest in applicants returning to Russia following their travel to the US, and in the appropriateness of using business visitor's visas for qualified travelers. The initiative reaffirms an Embassy-wide commitment to facilitate business travel, and recognizes the growing importance of the IT sector in bilateral trade with Russia. End summary

The shortage of IT talent and the U.S. government's freeze on issuing H-1B visas to foreign programmers has made the market for offshore programming more attractive to businesses.

Not surprisingly, the minimal IT development in Russia is located in and around the major urban centers of the country. In general, Moscow, St. Petersburg and Vladivostok are the main focus areas for domestic or foreign investment including IT. Another possible seed of future potential is in the Ural city of Snezhinsk, a formerly closed Soviet military industrial center. As Russia has pulled so much of its investment out of technological R&D and put into the more dire needs of the society as a whole, scientists are out of work and looking for money to survive. Snezhinsk has been proposed as the new Russian high-tech commercial sector. Establishing this area on the model of a US Silicon Valley with investment from the West would help inject much needed jobs and investment creating an economic prosperous zone to get the country back on track in their bid for modernization. Also, it would help find work for the masses of unemployed scientists who are seeking jobs and hard currency abroad, even from rogue countries in the hunt for weapons of mass destruction.

Today, Saint Petersburg is one of the largest software development centers in Russia and slow but sure drifts towards becoming the national Silicon Valley. Sure, because it possesses all the qualities necessary for this; slow, due to the brain-drain and lack of support from the government.

This report provides an overview of recent trends in Western firms utilizing offshore software development in Russia. Hindered by a lack of domestic programmers, many Western software development firms are considering Russian software companies and engineers via offshore programming. There has specifically been growing interest of U.S. companies looking for programming services in Russia. This report provides a list of some companies involved in offshore programming in Russia