RUSSOFT Survey Presents Russian IT-Industry State and Trends

Auriga presents a summary of the 10th annual survey on the Russian software development export industry, prepared by RUSSOFT, an association of Russian software development companies. This report is the most comprehensive and reliable source of information on industry dynamics, its position on the global market, and the most relevant development trends.

As one of RUSSOFT’s founding members, Auriga is actively engaged in the association’s activities and initiatives. In this article, we have highlighted for you the most important points from RUSSOFT’s survey. To download the full version of the report, click the link.

Overall State of the IT Industry in Russia

  • According to IDC, the IT market grew by 3.9% in 2012 compared to the previous year, while according to the Ministry of Telecom and Mass Communications of the Russian Federation, it grew by 7%. The preliminary data shows that the IT market volume amounted to $33 billion (IDC) or 700 billion Rubles (Ministry of Telecom and Mass Communications).
  • IDC predicts the Russian IT market to increase on average by 8% per year in the next five years.
  • The cumulative turnover of the Russian software development companies in 2012 reached at least $9.5 billion (approx. 0.45% of the nominal GDP of Russia).
  • The year 2012 represented an active development phase for the Russian software development industry. The growth was nearly 15% more than a year before (export value reached $4.6 billion, whereas export of software development services increased by 10% up to $2.1 billion, export of licensed software grew by 17% up to $2.0 billion, and the volume of export of R&D centers of foreign corporations amounted to $500 million (representing an increase of 12%)).
  • In 2012, the share of Russian software in the entire Russian export volume amounted to 0.88% (it was 0.8% in 2011). Experts forecast the further growth of the software export share in the years to come.
  • Auriga is consistent in securing a spot among the leading outsourcing companies according to rating agencies. In the last five years, the company has been included in the lists of the best outsourcing providers according to both the Global Outsourcing 100 and the Global Services 100.

  • The positions of Russian service companies in international ratings, such as the Global Outsourcing 100 and the Global Services 100, are being strengthened.
  • Russia improved its positions in various international ratings, which reflects the level of IT development and usage as well as conditions for conducting business.
  • There has been considerable growth of investments into the Russian IT industry. According to the data of the Russian Venture Company (RVC) and PricewaterhouseCoopers (PwC) in 2012, venture investors invested $910.6 million into Russian IT companies, which is 2.3 times more than in 2011.

Major Results and Trends of the Russian Software Development Export Industry

  • In 2012, a relatively small decrease in the number of domestic market-oriented companies and an increase of export-oriented companies were observed.
  • Experts forecast that in 2013/14, IT export from Russia will experience similar growth of 15 to 20%. At the same time, the growth rates of the software development services export will stay at the current level, but we will see the growth of licensed software solutions export.
  • In the last few years, there has been a gradual but consistent reduction of the gap between the two capitals and regions with regard to the development of the IT industry (in the regions, science and technology parks are being put into operation, venture and investment funds are being allocated, and startups are receiving support.)
  • The US market is not the second most important market for Russian companies (after Russia) anymore. Russian software developers focused on the promotion of their products and services in the neighboring countries of the former USSR as well as in Africa, Arab countries, South America, and South-East Asia.

The changes of the global landscape of the IT industry definitely shape the changes and trends of the Russian IT market.

  • The global cost of information security services grows by more than 10% per year. Russian companies are traditionally strong in this area and have a very good worldwide reputation.
  • There is currently rapid growth in the global telematic services market where the Russian navigation and traffic monitoring applications are expected to take top positions.
  • According to J’son & Partners Consulting, the volume of the global mobile applications market reached $7.83 billion in 2012 and is expected to reach $65.79 billion by 2016.
    In 2012, the sales value of business applications for mobile devices reached $250 million. According to the J’son & Partners Consulting analysts, the market of mobile business applications has good growth perspectives. The share of business applications in the total mobile applications global market in monetary terms will reach 5.4% in 2016. As a comparison, in 2012, this share was a little more than 3%.

  • There is continuous growth in the areas of mobile technologies, cloud services, social networks, and systems for big data analysis.
  • Business Intelligence (BI – large data bulks analysis and interpretation) is another dynamically developing segment. RUSSOFT experts predict an increase in the number of business applications operating with unstructured information and using semantic methods to find relevant data. According to Gartner, the e-business intelligence (BI) global market increased by 6.8% and reached $12.3 billion. This segment demonstrates a faster growth rate than the entire global IT market.

The research also contains detailed data on such issues as human resources and the labor market, demand for technologies, and the main vertical markets of the Russian software development market. The conclusions and forecasts provided in the report will help software developers and their customers better understand the state of the industry and apply this information to address their business needs.