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. Last Updated: 07/27/2016

New Intel Software Center in Nizhny

Nizhny Novgorod was once the Soviet Union's biggest center for the development of defense electronics, a closed military-industrial metropolis where as many as 75 percent of local enterprises were geared toward the defense industry.

Now it has Intel inside.

In Moscow last Friday, Intel Corp. executive director Craig Barrett said the world's leading maker of microprocessors was opening its own offshore programmi ng center and turning the Nizhny Novgorod programmers it has been hiring on a contract basis over the past seven years into full-fledged Intel staff.

The 100-employee center is working on support software for the next generation of the Pentium microprocessor and a new series, the Itanium 64-bit processor, due out later this year.

Intel, based in Palo Alto, California, plans to employ up to 500 programmers in the Intel Nizhny Novgorod Lab, paying them a salary that Alexei Odinokov, co-general manager at the lab, said was enough to win over the best programmers in Nizhny Novgorod.

The programmers also will get stock options if the Central Bank grants permission.

Odinokov said Intel would soon begin headhunting in Moscow and St. Petersburg, the two most competitive IT labor markets in the country, where employment agencies report salaries of $1,000 a month as common f and highly skilled programmers can earn several times more than that.

Intel did not disclose the amount it invested to equip the new laboratory and bring the programmers onto Intel's staff. The company had slated $6 billion for capital expenditures this year, the Wall Street Journal reported.

The center will add to the nation's software outsourcing boom. All told, Russia exported $70 million in offshore programming services last year, according to a report by Brunswick Warburg brokerage.

Local software specialists are valued in the industry for their strong grounding in mathematics and the natural sciences f and of course their lower cost compared to Western programmers.

"The skills they have, and the knowledge of natural sciences, have found a use in modern capitalist Russia," said Odinokov. "The laws of physics and mathematics are the same whether you use them to write computer software or, to put it crudely, build a nuclear bomb."

Odinokov said some of the older programmers at the Nizhny lab are former defense workers. But others, he said, are recent college graduates and others are still students.

"We didn't ask where they worked. We are more interested in the work they can do today," he said.

The bottom line, he said, is strong education in math and science fundamentals, as opposed to education tailored to fit the high-tech industry's needs of the day, something he says is common in the West. Two local institutes, the Nizhny Novgorod State University and a technical institute, fed Intel the majority of the employees at the center.

Intel is not the only Western company to look to Russia to solve a shortage of IT personnel. Sun Microsystems and Motorola both have outsourced some of their software development here.

In St. Petersburg alone, between 10 and 15 major Western companies have set up offshore programming centers, in addition to the 100 or so Russian companies that take outsourcing orders from Western companies, according to estimates from a leading employment agency.

Novosibirsk, site of another major technical university, has also caught the attention of personnel-poor Western companies.

"The advantage of the employees here is that they have a deeper and broader knowledge of mathematics and algorithms," Odinokov said. "In writing a program, this allows them to choose from a wider range of available algorithms than a Western graduate could."

Together with other labs in the United States and Israel, the Nizhny programmers are developing a program known as VTune that shows programmers of applications software how their software can be optimized to work better with Intel's new microprocessors.

"In America, they had ideas on how to make VTune. In Israel, they understand the architecture of the processor very well. In Russia, we do a graphic representation of the program that is worked out with the help of VTune," Odinokov said.

They are also developing what Odinokov called a "library of building blocks" for applications and new digital video capabilities, advancing the technological foundations for electronic business as Intel focuses its strategy on companies intent on moving their business to the web.

"Our plans are to be a building block supplier," Barrett said at a Friday news conference in Moscow. He predicted the bulk of "e-business" would be done not by web-based startups, but by traditional businesses seeking to optimize their businesses using the Internet.