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. Last Updated: 07/27/2016

Motorola: High Salaries Hurt Russia's IT Sector

MotorolaPadmasree Warrior
ST. PETERSBURG -- Russia could lose its competitive edge as a potential IT powerhouse if salaries for programmers rise too fast, a top Motorola executive said.

Global firms could easily move their work elsewhere if they find that wages and the costs of infrastructure are too high, Padmasree Warrior, chief technology officer of the U.S. communications giant, said in an interview last week.

The interest shown in Russia by IT giants has put a squeeze on the numbers of available programmers and led to several wage hikes in the industry over the past two years. In that time period, IT companies like Sun Microsystems and Intel have set up shop in St. Petersburg. Google is reportedly also considering the construction of an R&D center here.

However, if the government does not offset growing staff costs by providing tax incentives and access to infrastructure and cheap land plots, the country could lose out to competitors like China, India, Brazil or Malaysia, Warrior said.

Motorola has been in Russia since 1994 and employs about 500 staff in St. Petersburg.

"It's very important to have government support and have sponsorship from the government for us to be [in a country]," Warrior said. "We go where the talent is."

As long as the quality of programming in Russia satisfies the company's standards and costs are kept at a reasonable level, "Russia will remain attractive," she said. "But if costs rise so much, and all else remains the same, then the attraction wanes."

One stimulus the government has hoped to provide is the creation of IT parks nationwide. The first federally backed project is set to be established on the platform of the Bonch-Bruyevich St. Petersburg State University of Telecommunications in 2008.

Vladimir Polutin, head of Motorola's St. Petersburg R&D center, said the IT park scheme had sparked interest in the sector, which is now waiting to see how it is implemented. The law on special economic zones -- which provides for IT parks -- was passed by the State Duma in August.

"We still want to see how the legislation will be executed," Polutin said. "Sometimes in Russia, the law is in place, but the execution could be better."