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Why Does Russia Need Technoparks?


it-daily.ru, February 25, 2005

Another event dedicated to IT development in Russia took place on Thursday, February 24, in Moscow. This was a Round Table discussion: “The future of Russian technoparks”, organized by the Manager Association. The event attracted about 20 participants who represented various state organizations and IT companies (Ministry of Information and Communications, Ministry of Economic Development, RosNauka, FCA System, SAP, Verysell, IBS, Kurchtovsky technopark, Micron plant, etc.). Similar to the event conducted a few days earlier in Dubna, the instructions for IT development given by the Russian President were the background for the Round Table talks.

The discussions mainly concerned the creation of technoparks, and innovation infrastructure was covered to a certain extent. The Dubna’s Round Table discussion also touched on the problem of technoparks creation. However, the most time was dedicated to other issues.

Another agenda brought forward by the participants was to determine the method for achieving this goal and to develop a thorough approach to the program. The majority of the Round Table participants believed that the program should be treated as a business project, and are prepared to assist the government in developing the program’s business plan. However, this will only be done if the Government changes its approach to the IT business, i.e., to stop discriminating against it (see IT-daily: “Russian software developers accuse the Government of discrimination towards the native IT business”). The Government must take a firm position to support the Russian IT business in the country and abroad. As Alexander Sokolov, CEO of Elvis+, put it: “We should follow the example of the US Government:

— In 1996 we introduced our product onto the information security market in the USA. The US State Department immediately interfered, and we couldn’t sell without their permission.

However, as Mr. Sokolov pointed out: “Our Government still supports the information security branch. In this respect it acts like other mature countries that have restrictions for such foreign production. Yet, attempts to eliminate these restrictions have been made many times, mainly due to the influence of other countries’ governments and foreign companies:

— For example, the future of Russia’s inclusion in the WTO is hotly discussed now. Just a few days ago this issue was touched upon at a non-official meeting between the representatives of Russian state organizations, and native and foreign companies. One of the questions discussed was whether Russia should or should not accept the universal criteria of informational security specified in the corresponding international standards. A Microsoft representative was the first of two dozen people to vote for such acceptance. The rest positively doubted the need for such actions. On the one hand, the WTO-joining will allow additional potential to introduce our developments onto international markets. However, it has been discovered in the course of discussion that the joining won’t bring equal opportunities to everyone: “Let’s unite”, they tell us, “but your software, like cryptographic algorithms, won’t be considered equal to ours”!

Another of Dubna’s discussion topics was the trend for IT business development. Andrey Morozov, CEO of CBOSS Association, insisted that Russia shouldn’t copycat India and invest in offshore programming. In his opinion, it’s better to sell end products, rather than promote labor.

— What sells better: labor or products? Labor sells faster. But labor is a raw material and its cost-effectiveness is limited.

Let’s take India, for example. This country has an enormous IT base, but the products are purchased in the USA, which means losses. They are relative, of course. We know how much India earns on the services provided to IT corporations (the volume of Indian software export was about $13 billion last year – IT-daily), but we don’t know how much it spends on acquiring products from these corporations. (the volume of Indian software export was about $13 billion last year – IT-daily), , but we don’t know how much it spends on acquiring products from these corporations.

Moreover, Russia can’t compete with India on the offshore programming market. Firstly, India has many more human resources that can be engaged in production. Secondly, the labor prime price in the offshore programming depends on the employees’ wages. Russia already lacks good IT professionals. The wages in this industry will inevitably grow with the development of the IT industry. The cost of offshore programming will increase as well.

The same viewpoint is shared by the leaders of FCA System. Dmitry Novikov, the IT-daily director of KМ Soft, said that the management of this company decided not to compete with Indian, Chinese, Israeli and other companies engaged in the offshore programming: “We see no prospects in this field”. However, according to Mr. Novikov, this doesn’t mean that System won’t conduct this type of business: “If we find a customer ready to cooperate with us, it would be silly to lose an opportunity”.

The training of IT specialists was also discussed at the Round Table. If the training is free, these specialists can leave the country, sooner or later. But making students pay for their education is a bad idea as well. The discussion participants offered the following way to solve this problem: take money for the education, but from the company that needs a specialist, rather than from the student. Otherwise, payments should be received from the state, but the money should later be paid off by the company that engages the young specialist.

The representatives of Dubna University showed much interest in such a scheme and expressed their eagerness to organize an experimental project on the domain of their university.

Technoparks was a topic scarcely discussed at this Round Table, except for the natural conclusion that they should exist. The President’s advisor from the Russian Academy of Natural Sciences (RANS), Alexander Mochinin, offered to analyze the experience of “other developed countries”, rather than to re-invent the wheel:

— In Japan, for example, there exists an infrastructure for IT development. There is a Development Corporation and a production center, which actually is a technopark. The state provides well-organized assistance by means of low taxes for IT products, soft-window facilities, etc.

The pace of the Moscow’s Round Table discussion on technoparks was set by the CEO of Scientific Center Concern (SCC, part of FCA System), Alexander Goncharuk:

— We are going to discuss technoparks, because it was in the President’s instruction given to the Russian Government. However, the creation of technoparks is the first action the state should take to prove it is ready to follow another innovation way. The problem is not purely organizational, though. Technoparks are just one of the factors that influence the speed and degree of the country’s innovational development.

There already exists a draft law on technoparks. However, some sections of this document are doubtful. For example, it’s not clear why some allowances mentioned by the President in January disappeared from the draft law in the course of its preparation. The mere definition of technoparks is also dubious. If simply a green field can be considered such a structure, we can lose the existing draft components of technoparks.

It seems that FCA System decided not to wait for support from the state and began to organize its second technopark in Dubna (for details see IT-daily: FCA System is resolute about technopark creation). The director of the Department on strategies for informational society development from the Ministry of Information and Communications, Oleg Byakhov, said that the draft law mentioned by the SCC’s head has nothing in common with technoparks:

— This draft law is not about technoparks, not about IT parks, but about free economic zones. As for the innovation development, it should depend on patents and on the intellectual property, especially in the IT sphere.

The IT business should operate in a favorable environment. That is a crucial condition for innovative investments to be attracted to Russia, as it used to be in India, Ireland, Israel and other countries.

When the Ministry of Information and Communications considers the policy for IT sector support, we understand that we face several tasks. One is to create the conditions required for IT business development in Russia, and to ensure competitiveness on the international market. As for technoparks, they are a tool for another task – assurances of the IT solutions’ competitiveness and their promotion on international markets. Technoparks can ensure conditions for the concentration of the IT business. The technoparks have thus nothing in common with free economic zones.

Special economic regions are thus created to enable a fast growth of small or new companies (not only IT).

If we return to the topic of the Round Table and discuss the future of technoparks, the state ought to share some responsibilities. For example, the Ministry of Information and Communications is preparing a program on implementation of test technoparks. The ministry is also discussing issues concerning the introduction of minor changes to the active tax legislation, so as to support the IT business. These issues are to be solved by March 1st, and they are now being discussed with the Federal Tax Service.

The discussion showed that the Ministry of Economic Development shares a similar viewpoint. The head of the Department on social and economic reform strategies, Artem Schadrin, was actually citing Oleg Byakhov. Not one of the business representatives showed any surprise at the words of the Ministries’ officials.

All the other speakers dwelt upon their own situations. The president of IBS Group, Anatoly Karachinsky, for example, said that there is neither need nor opportunity to create small technological parks (some thousand square meters) for dozens or hundreds of companies in Moscow. It’s better to organize IT enclaves for tens of thousands of specialists. In connection with this, Mr. Karachinsky reminded us of the project for the Russian programming center, one of whose initiators was Luxoft of IBS Group.

The first vice-president of Micron plant, Mikhail Pavlyuk, urged the involvement of the existing structures – about a hundred technoparks across Russia, - rather than beginning on a blank page. Moreover, the top manager of the Zelenogradian company said it’s absolutely wrong on the part of the state to opt for technoparks as an environment for small IT companies’ development.

The general conclusion follows: the Government helps those who help themselves.


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