The majority of Russia’s export-oriented outsourcers are located in the country’s major cities: Moscow, St. Petersburg, Novosibirsk, and Yekaterinburg. According to the most recent RUSSOFT survey (2013) Voronezh, Rostov-on-Don, Veliky Novgorod, Kazan, and Omsk are among the Top 10 Russian software development destinations. All of these cities also figure as key centers for research and development, and custom software development projects.

Rating of Russian cities
by number of head offices and remote development centers
Moscow46
St. Petersburg45
Novosibirsk10
Nizhny Novgorod8
Kazan6
Izhevsk5
Omsk5
Taganrog4
Voronezh4
Yekaterinburg4
Kolomna3
Krasnoyarsk3
Perm3
Rostov-on-Don3
Ulyanovsk3
Barnaul2
Belgorod2
Cherepovets2
Kaliningrad2
Oryol2
Penza2
Puschino2
Samara2
Tver2
Zelenograd2

The five leading cities, where the majority of headquarters and of remote development centers are located, remained the same in comparison with the previous year. Kazan has gained a foothold on 5th place and – if the current pace is maintained – may catch up with Nizhny Novgorod in the coming two to three years.

Remote development centers operate in 25 Russian cities. Most of them are located in St. Petersburg (8), Nizhny Novgorod (5), Moscow (4), Voronezh (3), Kazan (3), and Krasnoyarsk (3).

Russian export companies are present (have their head offices, remote development centers or sales offices) in 60 Russian cities.

Global Services and Tholons, in their most recent 50 Global Emerging Outsourcing Cities report, ranked St. Petersburg among the Top 5 worldwide locations for product development, engineering services, and healthcare services. Moscow was also ranked in the Top 5 for product development and healthcare services, as well as for games development.

In the same report, Nizhniy Novgorod was ranked as the top candidate for future inclusion in the Top 50. As one of the largest regional IT centers in Russia, the city is known for its engineering, research and software development capabilities. Numerous software developers and offshore service providers including Auriga, Devetel, Exigen Services, MERA Networks, RealEast Networks and Teleca all have a presence in the city; Intel also maintains a significant presence in Nizhniy Novgorod with several hundred programmers. The city’s educational institutions, with their focus on IT training and the sciences, turn out top specialists.

Rating of Russian cities
by the number of the company head offices, trade offices and remote development centers
Moscow64
St. Petersburg52
Nizhny Novgorod12
Novosibirsk10
Kazan7
Omsk6
Voronezh6
Yekaterinburg6
Izhevsk5
Krasnoyarsk5
Rostov-on-Don5
Ulyanovsk5
Kaliningrad4
Perm4
Taganrog4
Barnaul3
Belgorod3
Chelyabinsk3
Kolomna3
Arkhangelsk2
Cherepovets2
Dubna2
Irkutsk2
Krasnodar2
Obninsk2
Oryol2
Penza2
Puschino2
Samara2
Saratov2
Stavropol2
Tyumen2
Zelenograd2
Source: Russoft, 2013

The Tholons Top 100 Outsourcing Destinations released in 2012 includes four Russian cities as some of the most important IT hubs in the world with two, St. Petersburg (33) and Moscow (46) ranking in the top 50. Nizhniy Novgorod (65) and Novosibirsk (93) round out Russia’s showing in the top 100. The report sees the country as having the greatest potential in Eastern Europe predicting both global and regional domination as an outsourcing destination, citing access to domestic capital, a vast skilled talent pool that makes scaling possible, and clear cost advantages over smaller locations in the region.

Significant differences exist between various regions of the country in what workers are paid, the cost of real estate, and the cost of connectivity. The top five most expensive cities in terms of salaries according to AMT Consulting, an HR consultancy based in Moscow, are: Moscow, St Petersburg, Volgograd, Yekaterinburg, and Kazan. Information on the range of IT salaries paid in 2011 shows a significant disparity between what workers are paid in Moscow and St. Petersburg, and the salaries paid in outlying regions. The lowest average monthly wages for a PHP programmer according to Hantim range from 15,000 rubles ($450) in Rostov-on-Don to 70,000 rubles ($2100) in Moscow. Depending on a worker’s skill and experience, salaries can rise to 120,000 rubles ($4000) per month for highly qualified, internationally certified personnel (i.e., senior developers) located in Moscow.

To read more about salaries, please refer to our Interactive Map.

A gradual but steady reduction of the gap between two capitals and regions has been seen. Outside Moscow and St. Petersburg, the number of companies is growing at a slightly quicker pace than the two capitals and a number of new, large companies are starting to appear. Examples of such large regional companies are MERA Networks in Nizhny Novgorod, PROGNOZ in Perm, ICL-KME CS in Kazan, Parallels and Alawar in Novosibirsk.

Considering the difficulties of obtaining questionnaires from provincial companies and the fact that more than a half of large Moscow or St. Petersburg companies have their software development centers in the regions (at least one regional development center each), the contribution of the regions to export of software and of development services is much greater than might be assumed.

In the rating of the world’s most innovative cities Moscow took the 74th place, with St. Petersburg ranking 84th. In addition to the two Russian capitals, the following Russian cities also appeared in the rating: Yekaterinburg, Kazan, Novosibirsk, Samara, Krasnoyarsk, Kaliningrad, Rostov-on-Don, Nizhny Novgorod, Perm, Saratov, Tomsk, Vladivostok, Omsk, Volgograd, Izhevsk, Barnaul, Orenburg, and Togliatti.

The Global Services ranking of the Top 100 Outsourcing Cities, which assesses the best destinations for software development outsourcing, included four Russian cities. All of them were present in the listing a year ago. Only Moscow conceded its position, dropping from 46th to 56th place. St. Petersburg moved up one place from 33rd to 32nd, while Nizhny Novgorod moved from 63rd to 62nd. Novosibirsk moved from 97th to 92nd place.

While the cost of doing business in Moscow and St. Petersburg is appreciably higher than in the regions, the available labor pool and the quality of graduates (including English-language skills) make these locations more suited to custom software development projects for which higher prices would naturally be charged. The fact that all major expenses drop as companies move eastward means that those businesses established east of Moscow and St. Petersburg are becoming more attractive to many companies, despite difficulties associated with language and logistics.

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