How do the cost level and structure in Russia relate to those in India? Beyond the obvious comparison of direct cost per hour (which is also very interesting), how does the TCO of working with a Russia-based provider look like compared to an Indian company?

There is no easy way to answer this question. Typically, consultants and representatives of both markets tend to compare on formal or tangible basis and stop there. Both hope that the numbers and skill sets may swing the potential clients either way, depending on the presenter and goals. As we have learned, these parameters are great when you are considering the basics of a business case, but not nearly enough to have a complete picture.

As a part of the equation, client's organizational and particular project readiness has to be measured differently when looking at going to India or Russia. Some aspects like proximity, time difference and infrastructure are easily calculated and usually used in a realistic manner when considering a SW provider.

However, more and more clients and consultants are now looking at the "intangible contributors", such as culturally ingrained behavior, local society's standards and educational roots. These are directly linked to how it is best to calculate the TCO of any given project. It is important to pay special attention to these, because most of the time clients know about these intangibles but rarely attach numbers to them.

Local culture has a heavy impact on the communication and understanding of the client's desires and requests. In India, it is rare to hear "no" to any particular request. It is culturally acceptable to be able to tailor to any wish the client presents and therefore a negative answer is viewed as a weakness. In my experience, often, the "yes" answer is given without any preliminary qualification.

I have spent several years being the client and finally learned that it is often up to the client to qualify the "yes" and how deep this "yes" goes. In Russia, there is frequently a slight hesitation before a "yes" is given and most of the time, there are at least a few qualifying questions. Hearing a quick solid "yes" has actually become a seldom occurrence as providers specialize more and more in industries and technologies. A few years ago, it was very similar in Russia as it was in India, as the Russian providers were more concerned about getting the business than executing it. Today, in both markets, from mature service providers, a "yes" is often derived from experience.

In my view, it was more driven by commercial desire than a cultural set of responses. An American start up chases anything and everything just to get some cash in the bank. A typical service provider may automatically say, "yes", which is usually followed by the phrase "cheaper, faster, better than anywhere" to drive the point. Larger providers utilize a quantitative basis as they do a very wide spectrum of work across many industries.

This is only one small example of culturally ingrained behaviors. It is amazing to me that these cultural issues are known however few companies evaluating these opportunities factor them into the decision making process.

Another intangible contributor, which may be very well transferred into tangible numbers when it comes to expected effort is educational strategy or roots. Universities in both markets, Russia and India turn out a fair quantity of qualified resources for the SW development pool. When looking closely, India has somewhat more of a segmented approach vs. a more general one by Russian colleges. When a client is looking first to a specific market and trying to figure out where it is best to have his/her solution created and/or supported, most of the time, again only the skills, experience and price are considered. If you look closely, Russian education is based on engineering principles in many universities, apart those of course that prepare pure scientists and researchers.

In India in order to be qualified to be a SW resource, one has to have a directly related degree. The challenge today, in my opinion, is that in Russia there are not enough of these directly related degrees and too many "sub-specialists" that may qualify to be a resource. The root of this problem is in the government classification used in the higher education in Russia. Therefore, when a client considers a qualified resource pool for any given project, especially a sizeable one, it is not so easy to compare apples with apples.

Educational systems have a direct impact on the personal thinking process, i.e. do you think and relate to problem solving in a linear fashion, applying what you know and using your colleagues' knowledge to complement yours, as observed in India or do you look at a problem from a complex view trying to figure out the best possible way to fix it, as it is in Russia's engineering approach.

In both cases, there is a dire need for "solution integrators" or project managers. Both markets have them; the cost is relevant and seen in the team composition and how the problems are solved. It is still a requirement in India to have a large resource pool to solve a problem or conduct a project. Russians work in smaller teams and orient themselves on more problem solving than execution of clearly defined specs. Where in India, in my view, added value may be client driven, in Russia, added value is often pushed to the client in form of suggestions, potential optimizations and beneficial analysis.

To conclude, having worked as a client and a provider, and now working with clients to successfully establish operations offshore, I take into consideration both parts of the equation - tangible and intangible. From experience, the intangible part more often than not, translates into extra costs for communications, expectations, and preparations.

I cannot say in a blanket statement, when comparing Russia and India, that one is better than other. At Trestle Group, we believe that all facets have to be examined and calculated in order to have the best cost-effective scenario. For some projects, Russia's engineering approach and skills along with culturally ingrained dedication to the client may play a major deciding role. For others, a mass execution approach utilizing numbers to arrive at a solution, where a creative approach may hinder execution, India may be the best choice.

Bottom line - companies should evaluate both tangible and intangible attributes of a destination when evaluating outsourcing operating model. Using impartial professionals may help with the process and save time/money.