Natural French-Belarusian IT cluster!

If there is a buzzword in the world of promotion of innovation, it is the concept of cluster (Sofia Antipolis in France, the Silicon Valley, Rd 128, Cambridge shire in the UK, etc.). Despite that nobody really knows why things are working sometimes and sometimes not (such as the IT Fornebu in Oslo), clusters are so over-rated that you have public and private initiatives all other the place and Eastern Europe is no exception.

All these initiatives in the Eastern Baltic are of course welcome but unfortunately often inadequate and over-optimistic, sometime they are even misguided. According to the OCDE definition on what is a cluster, there is no to my knowledge any ICT cluster in the Eastern Baltic region despite some marketing noise from Riga.

Knowing this, I was very surprised to discover a natural and real “baby-cluster” in Minsk. It involves 3 independent IT companies working mainly for the French market! This is more than just a punctual collaboration. It is actually quite a cluster for many reasons and one of them is a high-level of interaction between those companies, which have a separate ownership (one is owned by a Belarusian entrepreneur, another is affiliated to IBM, and the last one is the result of a French international entrepreneur). They collaborate on several levels (project level, HR level, etc.). The last reason is essential and missing in most so-called clusters in the region.

This cluster, naturally, established to answer the need of each other and the one of very large customers. It was completely spontaneous (the result of the initiative of one actor) and is sustaining and developing without the help of external / public support.

And, that, is remarkable on its own right!

The Belarusian Paradox

I have again been to Minsk early last month before to fly to France for Xmas (thus my lack of posting in December). After several new meetings in Belarus, it confirmed the particularity of the Belarusian ICT sector, especially linked to the international entrepreneurship issues; a particularity that I decided to call the Belarusian Paradox.

This paradox goes that way: how come in a country frozen in a stage of post-communism, highly bureaucratic, with a relatively poor service culture and having diplomatic rows with western neighbours, how come Belarus is so successful in exporting its IT services?

With an industry, which has already reached by mid-2005 over 100M USD of export (according to the government, a number which can be seen as under-estimated since many businesses do not declare fully or at all their income to the Belarusian administration) and forecasted by experts to be reaching 250 M to 400 M USD within the next few years, Belarus is the little India of Europe for the ITO market!

Partial answers can be found in several facts:
- A government keen on promoting an IST society and thus a strong ICT sector (this can be seen by several presidential decrees in recent years)
- A freedom of movement for people which allow easy international business links (although at a prohibitive cost)
- An historic country background of high-technologies and a high proportion high education graduate

However these factors are only structural and several issues could counter-effect them (such as the insufficient number of IT graduate nowadays or the relative high cost of the IT labour in the capital Minsk, higher than in the neighboring new EU member states, etc. ).

In my humble opinion 2 factors are key explanations for the successful Belarusian ITO sector:
- The local IT market was unattractive to the private sector due to very low contract / tender pricing from governmental/public projects (public sector still represents around 80% of GDP).
- A latent entrepreneurship spirit, which have succeeded to emerge truly because of lucrative global opportunity.

And thus the quite high rate of successful international entrepreneurs in Belarus (in ITO).

Saying that, these 2 factors are only partial explanations and I am still looking for more clues to explain questions such as is this unique to the ITO industry in Belarus (as it seems) and if so why?