IT Boom Reverses Brain Drain

Date: Friday, June 06, 2003 6:10 PM

JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

A Russian manager said that: "When American or European companies need
to downsize, foreign employees are often the first to go." That is
false for obvious reasons. When companies need to cut costs they almost
always choose to keep their cheaper H-1Bs. My last employer was a
typical example - I was the first to go while the Russian H-1B stayed.

http://www.moscowtimes.ru/stories/2003/06/04/044.html

Wednesday, June 04, 2003

IT Boom Reverses Brain Drain

By J. Quinn Martin
Special to The Moscow Times Victor Mikhaylov had high hopes when he
left his native Chelyabinsk to work as a programmer at a promising
Internet-based company on the U.S. West Coast in 2000, at the height of
the technology boom.

Three years later, the U.S. high-tech sector is in shambles and
Mikhaylov, like many other Russian scientists, engineers and
programmers who left for jobs abroad, is back working in Russia.

The high-tech crisis in the West coupled with the growth of
technology-driven Russian companies is sending skilled Russian techies
scrambling for jobs back home. Industry experts say 10 percent of those
looking for work in the Russian IT sector are recent returnees or
would-be repatriates.

And this trend is likely to continue for at least two more years and
will put a small dent in the technological brain drain that has plagued
Russia for more than a decade, analysts said.

Mikhaylov's case is a textbook example. In June 2000 he was hired by a
company in Seattle, Washington, that sells digital music on the
Internet. He survived layoffs that cut the number of company employees
from about 90 to six. But when business got so bleak that the CEO moved
the company into the basement of his home, Mikhaylov quit.

He interviewed at Microsoft, Expedia.com and a telecom firm in Miami,
Florida, but he couldn't land a job. With his wife already back in
Moscow and his H1B visa running out, Mikhaylov reluctantly returned to
Russia last October.

Within a couple of months here, he had multiple offers -- including his
current job at Luxoft developing software for Dell.

"When American or European companies need to downsize, foreign
employees are often the first to go," said Larisa Lukashyova, human
resources manager at Spirit Corp., a Moscow software development firm
with 100 employees. She says in the last couple of years she has hired
five programmers who had been working abroad.

"People are coming to us not only because of the crisis in America, but
because there has been stable growth in the Russian IT sector," she
said.

In recent years, the domestic IT sector has expanded some 20 percent
annually, causing salaries to rise steadily. Nonetheless, Lukashyova
said, they continue to lag well behind those in the West.

Oleg Tsetovich, an IT personnel consultant at Avenir & Partners, a
Moscow recruitment agency, said Russians returning from abroad have
skills and knowledge that are in demand. Often, they command higher
salaries than their counterparts who have stayed at home.

"They speak English. They have great business connections. Plus they
bring Western corporate culture back with them," he said. Like
Lukashyova, he estimated that about 10 percent of the people seeking
employment in the domestic IT sector are recent returnees or would-be
repatriates.

A4Vision, one of the country's hottest high-tech companies, was started
by a pair of Russian scientists who moved back to Russia after working
in Europe. The company, a developer of cutting-edge 3-D face
recognition technology for security systems, maintains offices in
Geneva and Silicon Valley -- but all the researchers are in Moscow.

Alexei Gostomelsky, the head of the firm's Moscow office, said the IT
market trends coincided in a beneficial way for Russia. "At the same
time the IT market was falling in the States, Russia started to grow
and more opportunities became available for high-tech people here," he
said. "It's difficult for pure researchers to come back to Russia. But
for applied scientists, now is a very good time."

"They bring back unique skills like ... how to work in a team, project
management skills and knowledge of how to work with Western people." he
added. "That's important."

Understanding how to work with Westerners is especially crucial in a
field as globally interconnected as the technology industry. Despite
the ongoing high-tech crisis in the West, successful Russian technology
companies depend primarily on sales to North American and European
companies.

Luxoft, a division of IBS, develops software for Dell, Boeing, IBM and
other firms. Spirit's biggest buyer is Texas Instruments. A4Vision's
customers include Logitech, Siemens and Bell Group.

Software development centers established directly by large Western
companies in Russia also employ many programmers. Sun Microsystems has
about 500 programmers on staff in Novosibirsk, St. Petersburg and
Moscow. Intel has 300 engineers at work at its research and development
site in Nizhny Novgorod, while Motorola has 250 researchers based
outside St. Petersburg.

The IT division of Kelly Services, an employment agency, says that the
trend of Russians coming home to work is likely to continue for at
least two to three years.

A sharp slowdown in high-tech emigration because of tighter visa
regimes and a lack of jobs abroad has helped stem the brain drain that
has afflicted Russia since the early 1990s.

Mikhaylov, the programmer from Chelyabinsk, says he likes his job at
Luxoft and he admits that the repatriation trend is ultimately good for
Russia. But, he said, "If I could have found another job in the States,
I never would have come back."

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