Better Spell It 'Cyberia'

Vladimir Malukh, a 33-year-old computer programmer, regularly receives e-mails from Microsoft. The software giant wants to hire him, and has offered him several incentives: a work permit, a fat salary, a nice apartment in Redmond, Washington-even driving classes. Malukh isn't interested. "When you've lived in the Soviet Union, the last place you want to work is Microsoft," he says. Malukh much prefers running his own thriving company, called ProPro, which makes computer-design software. "We have clients around the world," he says.

So far, so familiar. But Malukh is more than an independent-minded software entrepreneur. He's an independent-minded software entrepreneur who lives in Siberia. Specifically, in Akademgorodok, a once secret "academic town" started by Nikita Khruschev in 1957 as a defense-industry research center. Since 1994 more than 40 software companies have sprung up in this town, which is 2,000 miles from Moscow, 20 miles south of Novosibirsk and sufficiently prominent in cyberspace to have earned the nickname of the "Silicon Taiga." Lodged in decaying university buildings, these fledgling firms are producing products for such world-class technology companies as Canada's Northern Telecom and America's Sun Microsystems. Akademgorodok is teeming with cheap talent. For many years, mathematically gifted students from across Russia were brought to the city to study. Its institutes were the country's most and its scientists the most privileged, shopping in well-stocked stores. Funding peaked in the mid-1980s when Mikhail Gorbachev commissioned 500 engineers to build a rival to Intel. Since then drastic cuts have left little money for salaries. A programmer can now be hired for as little as $1,000 a month.

No wonder Western companies have come calling. Northern Telecom chose a firm called XDS to upgrade its compiler programs. Sun signed up UniPro, which has more than 100 employees, to work on a number of projects, including applications for its Java language. Though Malukh said no, Microsoft has hired away so many Akademgorodok programmers that the locals are now annoyed.

It's not surprising that many want to leave. Some scientists go unpaid and must grow their own potatoes to get enough to eat. The health service has deteriorated, and the crime rate is rising. Such hardships have made some researchers reactionary. You're more likely to see a picture of Stalin than Einstein in the institutes, while hammer-and-sickle flags fly proudly over shopping arcades.

But the Internet just might save the city. Malukh's customers, many of them in Europe, don't care that he's in Siberia. They download his products over the Web, use e-mail to get technical support and savor the fact that his products cost a third as much as competing products from the West. "We do not feel we need to emigrate because Russia has become a country with better opportunities to start your own business," says Malukh. Watch out, Bill Gates.

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