Frost and Sullivan: Trends in ICT outsourcing

The global information and communications technology (ICT) industry has provided the supporting infrastructure for economic growth across the world in the last decade. Despite the setbacks following the failure of dot com enterprises, the ICT industry continues to show enormous growth potential. ICT is a vital component of the infrastructural support needed for the development of any economy. Global trends in telecommunications indicate a shift toward open access, creation of a healthy competitive environment, and a consequent drop in prices. Although companies are likely to continue outsourcing IT services mainly to India, they are also expected to increasingly witness lucrative bids from Russia, the Philippines, Ireland, Israel, and China.

ICT spending is likely to grow impressively, with emerging markets in eastern Europe and Asia leading the way. Shares of IT and telecommunications sectors are almost equally important in the total ICT spending, with governments and businesses accounting for more than three quarters of the spending. The general economy, expanding consumer base, and increasing foreign investments play a critical role in the development of this industry.

The economic future of Russia looks promising in the central and eastern European (CEE) region, owing largely to the country’s stable and strong macroeconomic environment. The gross domestic product (GDP) of over $814.76 billion and economic growth rate of 6.7 percent in 2006 have strengthened Russia’s robust growth prospects. Moreover, strong consumer demand, greater political stability, expanding consumer base, and increasing foreign investment flows are expected to allay hindrances such as energy-dependent exports, weak infrastructure, and geographical imbalances. This industry offers tremendous employment opportunities, considering it witnessed double-digit growth for the last five years and is poised for further growth until 2010.

Russia’s vast human resources and low labor costs hold it in good stead in the ICT industry, while its competent education system provides its citizens with high levels of skills, excellent training, as well as intensive scientific and engineering expertise. However, the country is impaired by substandard process quality, a weak legal system, and intellectual property right (IPR) enforcement. All these are set to change, with the present government strongly focusing on the development of the IT industry, since the telecommunications industry is already well covered.

link to "Economic Analysis for the Russian Information and Communication Technologies Industry" report page