Human Resource Management at Yandex

Situation for analysis 1. Human Resource Management at Yandex

Yandex, a leading Internet service provider in Russia, has created a sophisticated and creative working environment implementing a work-life balance in HRM practices, namely flexible working hours, motivation based on a great variety of non-financial benefits, and a training system supporting creative and innovative thinking for talented people. This kind of innovative workplace and integration of business processes and work practices may have a significant impact on labor productivity and thus the company’s profit, as it requires self-management, loyalty, and goal sharing from employees. Nowadays when Yandex is actively developing its business, these limitations, may be of great importance and require attention from management and HR.

Yandex at a Glance

History and Current Situation

The company traces its roots to 1990^[1], when Arcadia Inc. (now CompTek), one of the largest distributors of networking and telecom equipment in Russia, developed two informational search systems: the “International Classifier of Inventions” and the “Goods and Services Classifier.” These systems provided the foundation for Yandex’s technology.

In 1993, the founders of CompTek, Arkady Volozh and Ilya Segalovich, created Yandex as a Russian-language search mechanism. Formally, however, Yandex was only established as a standalone in 2000^[2]. The history of the company was very dynamic, with new services being developed. Selected moments of Yandex’s history are provided in Exhibit 1.

Nowadays, for the majority of Russian-speaking people, the word “Yandex” has become synonymous with the word “internet.” Indeed, a commonly heard answer to questions is, “Why are you asking me? Ask Yandex.”^[3] The company’s audience has reached almost 7 million visitors and continues to grow.^[4] 

Yandex is a Russian search engine, the world’s second-largest non-English-language web portal, and the largest Russian-language one. It was launched in 1997. The word “Yandex” could be explained as “Yet Another iNDEXer” or “language Index.” Today Yandex’s websites attract a weekday audience of more than 12 million users (as of the start of 2009) from Russia, Ukraine, and other countries.^[5] By 2009, the company controlled 56% of the search market in Russia (compared with 23% for Google, the world search leader), boasted an impressive two thirds of all revenue from so-called search ads, and had drawn more than three billion hits a month.^[6] This market’s major players are shown in Exhibit 2. Yandex’s main goal was to provide easy access to the wealth of information available online in order to answer any questions Russian-speaking users might have.^[7] 

Currently Yandex leases offices in Moscow, St. Petersburg, Yekaterinburg, Kiev, Odessa, and Burlingame (CA, USA). The company also has data center facilities in Moscow and Moscow Region and points-of-presence in Yekaterinburg, Novosibirsk, St. Petersburg, Samara, Kiev, and Frankfurt. In 2009, Yandex had over 1,600 full-time employees.^[8]

More than 61% of the company’s stocks belong to investment funds (ru-Net Holdings, Baring Vostok Capital Partners, and Tiger Technologies). Twenty-four percent is owned by company managers and employees, 10% by investors and former employees, and 5% by holders of securities.^[9] In 2009, the ultimate parent company of Yandex – the Dutch company Yandex N.V. – issued preferred stock that was bought by Sberbank for one euro. The one and only option of this stock was to veto the selling of 25% of Yandex’s shares. Yandex reached its breakeven point in 2002, and revenue has been increasing ever since.

Company revenue growth (in US$)^[10]:

• 2003: 8 million
• 2004: 18 million
• 2005: 35 million
• 2006: 72 million
• 2008: 300 million

In 2008, revenue exceeded $300 million, up more than 80% year-on-year^[11] with increases predicted.

The internet market promised serious growth. Only a quarter of Russians currently have online access. High-speed connections are only now beginning to reach smaller cities. Broadband penetration, currently at 10%, is forecast to triple by 2010.^[12] According to Google’s expectations, the Russian internet search market will rise from $200 million last year to $1 billion by 2010.^[13]

Yandex’s Activities

Yandex’s main activity is offering services for the mass Russian-speaking audience. Yandex was the leading search engine in Russia. About 80% of the Runet audience uses the Yandex search engine, according to TNS Gallup and comScore.^[14] But, in fact, Yandex continually adds innovative services because of its need to meet the consumers’ demand.

Other popular services created by the company were:

• Yandex.News – Local, national and international news
• Yandex.Market – A comparison shopping resource
• Yandex.Traffic – A real-time traffic monitoring system
• Yandex.Fotki – Free photo hosting
• Yandex.Blogs – A blog search engine
• MoiKrug.ru – A social networking site
• Yandex.Money – An online payment system
• Narod – Free web hosting

Also, Yandex offers a broad range of services that are free to users and that enable them to find relevant and objective information more quickly and easily and to communicate and connect all over the internet.^[15] 

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