Just a seven-hour drive south of Moscow, Stary Oskol could be a world away when it comes to the costs of running a business. For Metalloinvest Holding Co., the bargain was too good to pass up.
Starting in July, Russia’s largest iron-ore producer is relocating some management personnel from the capital to the old mining center that’s perhaps best known as the home of the country’s most celebrated mixed-martial-arts fighter.
And once its new service hub there is up and running, the company expects to cut its expenses for operations such as bookkeeping and human resources by almost a third. Billionaire Alisher Usmanov’s Metalloinvest is the latest among a slew of major companies that are seizing on the discrepancies in pay and costs, queuing up for smaller towns left behind during the oil boom years of the past decade.
As the economy digs out of its longest recession this century, a tepid recovery is depressing corporate profits and pushing businesses to cut expenses.
“Entrepreneurs at private companies lack the confidence that the future will be any better,” said Dmitry Prokhorenko, head of a department at Russian IT firm IBS that manages human resources for other companies. “That’s why now is the right time to maximize profits and focus on cutting costs.”
For the rest of this article: https://www.bloomberg.com/news/articles/2017-09-24/tycoons-purging-costs-strike-office-gold-in-russia-s-hinterlands