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Business news, 18.04.2007 15:51

Software export grows 1,5-fold in Russia

russoft_forum The volume of software exports grew by 53,8% in 2006 as compared to 2005 and reached $1,495bln. Experts say the country is third on software exports, however is far behind the leaders, China and India. They believe the market will be able to hold the high growth rates next year as well.

Russia has been demonstrating stable growth of the software export market for the recent few years. 2004 and 2005 saw a 30% and 40% growth respectively. Valentin Makarov, Russoft President believes the reason for it is the demand-supply situation of the international IT-outsourcing market. According to the research of the NeoIT consulting company, Russia is third on the international software exports market after China and India. “Russia is far behind India - $22bln against $1,5bln. “However, the third position is explained by the hi-tech software, which at times can't be developed by anyone but Russian specialists”, said Mr. Makarov.

Data Art Director Mikhail Zavilevsky believes the main trend of the current outsourcing is multisourcing, when suppliers’ solutions developed in different regions of the world are united into one product under a single brand. Meanwhile, Russian programmers are entitled to develop the most complicated parts of the product, which is explained by the peculiarities of the national programming school, Mr. Zavilevsky believes. The main part of the national software export, estimated at $1,1bln is the programmers’ services, which they sell to foreign clients. The remaining $355mln fall on software products’ development: software by foreign license, as well as products of foreign companies’ development centers.

“It is difficult to assess the share of products in the market’s volume, considering the fact the developer usually promotes the brand but not the producer country and doesn’t usually like to share information on its business activity”, said Valentin Makarov. This was the first time that the Russoft members of the research have positively spoken of the Russian software market, putting it on the second position after the US. Our respondents have pointed out two trends: the growth of the software development market – 70%, another 60% pointed out the obvious export growth and the enlargement of the market players, which resulted from the recent wave of mergers”, said Mr. Makarov. Also, he said Russia might overrun the US in a year by gaining additional 5 points in the rating.

“Positive trends marked in 2004, when the government proved high interest in the IT-sector”, Russoft president said. “The creation of a fund to support IT, a special economic zone aimed at hi-tech production, technopark projects; all this led to a tangible PR-effect on the international level. As a result foreign companies began to trust this country’s IT-potential. 60% of the respondents of the Russian IT-market believe the state supports the industry”.

Experts are unanimous in the territorial spread of the national IT-outsourcing market. They say 30% of the companies are situated in Moscow, 22%-25% in St. Petersburg, and the remaining 45% in other regions, under more in Novosibirsk, Nizhniy Novgorod, and Yekaterinburg. “Many small towns have good IT-potantial”, said Mr. Makarov. “Their only but the main weak point is the absence of international communication networks. Roughly speaking, the absence of direct flight connection between Brussels and Samara can prevent a young company from entering the international market. The client would not be bothered with flying to the engineers with numerous transfers. In this respect a number of Russian IT-outsourcing companies are not beneficial for foreign clients. However, I believe this might encourage the programmers from far away regions to create their own authentic product. The programme to create technoparks and SEZ are aimed at this”.

“Transport communication is definitely very important”, said Svetlana Vronskaya, Reksoft’s Corporate Communications head. “Big clients always consider the possibilities of direct flights to the place where work is underway”. Meanwhile she doesn’t think these removed companies will be able to attract foreign clients with new programme products. “While developing new products it is important to keep in mind the region’s transport infrastructure”, she believes.

Svetlana Vronskaya believes Russoft’s estimates are correct. According to her, the growth of the companies operating on the software export market, which is about 30% is the result of management being actively committed into the marketing on foreign markets. However she believes the state support leaves much to be desired. “In August 2006 the Russian president approved amendments into the Tax Code reducing the single social tax for software developers. So far no agency has been created to maintain the adopted amendments. The market is growing in spite of the absence of government support, but not by virtue of it”, said Ms. Vronskaya.

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