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Valentin Makarov President of RUSSOFT Association www.russoft.org

ICT Landscape – Russia Workshop: “The ICT landscape in BRICS countries: lessons from emerging economies (R&D, innovation and trade)» October 5, 2011

1 Johannesburg


RUSSOFT (www.russoft.org)‫‏‬ • RUSSOFT is the major Association of 70+ leading software development companies from Russia (also some from Belarus) with more than 20000 software engineers, $800 M of export turnover • Part of the Russian Information and Computer Industry Association (APKIT). • Close partnership with the Russian Association of Electronics’ manufacturers • Leadership in implementing PM and QA (CMMI/ISO) standards in the Industry • Organizer of marketing and PR activities in Russia and abroad (RUSSOFT Forum, Mobile Software Forum, SECR, IT-Seasons, National Pavilions at CeBIT, …)‫‏‬ • Active lobbyist of IT interests in the Russian Government (IT-parks and Free Economic Zones, Export Promotion Agency, Law on better taxation, less administrative barriers, more effective educational system, etc.)‫‏‬


International Cooperation: • • • • •

BITKOM (Germany)‫‏‬ AmCham (Moscow and St Petersburg)‫‏‬ Massachusetts Software Council (US)‫‏‬ Mid Atlantic-Russia Business Council US-Russia Chamber of Commerce of New England (USA)‫‏‬ • Kansai Information Systems Association (KISA, Japan) • FRUCT (Finish-Russian Universities Cooperation‫ ‏‬in Telecommunications) • KITENPI project (KOLARCTIC, EU)


IT in Russia: Current Picture IT Market in Russia [Source: Russian Ministry of Comm and Mass Media] • 2010: ~19bln USD • 14% growth from 2009 • Expected further growth: 14.6% in 2011, 15.8% in 2012, 18.1% in 2013 Technology Penetration • Internet penetration: 39.8% [Source: TNS, March 2010] • Broadband Internet Access: 26.4% [Source: J’son & Partners, 2009] • By 2014 Russia will have more Internet-users than any other country in Europe (3% of all Internet-users in the World with 2% of Global population) • Mobile Phones (SIM cards): 148.7% [Source: J’son & Partners, 2010] • Internet-enabled economy: $19,3 B [Source: Boston Consulting Group, 2010] • Share of ICT in the NPV: 4% [Source: Ministry of Communications and Mass Media] • Piracy rate goes down: from 87% in 2003 to 65% in 2010 [Source: BSA]


Mobile Telecom • MTS, Beeline, Megafon are major players with 10sMio users, aimed at the Global market (India, Ukraine,…). International competitors play secondary role (Tele 2) or get minority in JVs (Megafon, Beeline) • Telecom and Internet go Mobile • LTE vs WiMAX • Further development depends on conversion of frequencies from Defense to Civil and on liberalization of the market


Structure of the Russian IT-market 2010 IT-Market value, $23B

17%

IT-services

17%

Software 10%

10%

PC Smartphones

10%

Telecom equipment Other hardware 36%


Growth-rate in different sectors of the IT market in Russia 2010 compared to 2009 ($M)

IT-services Applications Systems' Software x86 servers Office hardware RISC servers Notebooks Smartphones 0%

20%40%60%80%100%120%140%


Forecast for 2011 Forecast of the growth-rate in 2011, usd

IT-services

Software

Hardware

0%

5%

10%

15%

20%

25%


Dynamics of petrole prices $Bio

$ per barrel 120

25

100

20

80

15

60

10

40

5

20

0

0

IT market Price of petrol

19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10

30

Source:

IDC Black Book, Energy Information Administration


IDC changes forecast for April2010 the Russian IT-market IT market , 1994-2013

$B 35 30 25 20 15 10 5

19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13

0

1 qu. 10 Source

1 qu. 11

: IDC Black Book Q3 2009 IDC Black Book Q3 2010


Where is Russia in BRIC?

2010 NPV

2010 ITexpences

2010 Growthrate of IT expences

2008-2014 Average annual IT expences

Number of Corruption 1B+ index businesses

Brazil

1,910.5

54,667

15.3%

8.4%

133

3.7

India

1,367.2

28,163

13.5%

13.0%

65

3.4

Russia Š 2010 IDC

1,507.6

23,760

3.5%

5.6%

165

07.04.10

2.2


Export of Software and Services from Russia (annual report of RUSSOFT, 2011) 5000

4500

4000

3500

$Mio

3000

2500 Export of softw are and services 2000

1500

1000

500

0 2004

2005

2006

2007

2008

years

2009

2010

2011*

2012*

12


Export of IT services from Eastern&Central Europe CEEAO and RUSSOFT, 2010 1600

1400

1200

1000

$Mio

Expor t of IT ser vices 800

600

400

200

0 Russia

Ukraine

Poland

Rumania

Hungar y

Belorus Czech Republic Bolgar ia

Estonia


Transformation of the Russian software industry (1990-2010) z

I phase (1990-2000)

ÂŤRussian engineers are top level creative masters, but Russian companies lag behind the rest of the World in quality assurance and in understanding of international businessÂť z

II phase(2000-2005)

Russian software companies reached leading position in Europe in QA (number of CMMi level 4 &5 certifications) Russian service companies became Global, able to manage distributed development in their offices worldwide z

III phase (2005-2010)

Russian companies understand business better than others: - Auriga got rating #1 among Engineering companies (DataMonitor, 2011), - Kaspersky Labs is in the list of 100 World biggest IT companies, - Mail.ru and Yandex succeeded on the global fund market


The Best 100 Global Service Providers in 2010 • EPAM Systems (Belarus-Russia) • Mera Networks • IBA (Belarus) • Auriga z Itransition (Belarus) z Artezio

Luxoft Exigen Services Reksoft Intetics (Ukraine)‫‏‬ DataArt Lanit-Tercom

Global Services, 2011

By the number of companies which form the


«Top 50 emerging global outsourcing cities», Global Services&Tolons, 2009 • Established outsourcing cities: • R&D — St Petersburg, Bangalore, Moscow, Shanghai, Dublin • Engineering Services — Bangalore, Chennai, Pune, St Petersburg, Guangzhou • Product development - Bangalore, Moscow, Chennai, Shanghai, Ho Chi Minh • Emerging outsourcing cities: • Product Development — .. St Petersburg • Engineering Services - ... Moscow • New aspirants:

Nizhny Novgorod (Russia)‫‏‬ 16


IT in Russia: Specifics and Strengths • Specialization on the Global Market: Software R&D “Russia is emerging as the destination of choice for high-end R&D and ADM work: the ability of Russian companies to tackle the non-standard tasks essential for troubleshooting, product development, and managing high-end, complex projects” [Source: IDC]

Strengths - Human capital: large talent pool, good education, analytical thinking, problem solving, stable teams - Domestic market is growing: Russia is the target market for 89% of Russian outsourcing companies, the growth of domestic market is the main trend in 2010 [Source: RUSSOFT Survey] - Cultural and geographical proximity to Europe - Time-zone differences, the closer cultural fit, the similar work ethic, the clear understanding of business issues – were often mentioned as differentiating Russia from other offshore locations [Source: IDC] Auriga, 2011


Human Capital: Quality Russia at the ACM International Collegiate Programming Contest 2011: 24,915 contestants representing 2,070 universities from 88 countries on 6 continents, 11 of 24 European teams in the finals (USA). 11 teams are from Russia, 20 are from Eastern Europe. Russia - 5 of 12 medalists 2010: second absolute place, 5 of 13 total medals 2009: world champion, 3 of 4 gold medals, 4 of 13 total medalists 2008: world champion, 3 of 4 gold medals, 7 of 12 total medalists 2000-2007: 4 times World champion, multiple medalists Auriga, 2011


Russia proved to be a source of new competences - Russia is the only country (apart from USA) with their own national Internet-search engines of Global scale (mail.ru, yandex.ru, rambler.ru) - Yury Milner and Digital Sky Technologies have got the ÂŤOscarÂť as the best investor of the Year 2010 (Facebook, Mail.ru, ...) - Kaspersky Lab, ABBYY, Parallels, PROMT, Speech Technology Center, SPIRIT, ... reached World leading positions in their respective sectors


What Russia can offer to BRIC? • Technological diversification (particularly real-time science-intensive tasks in Mobile, embedded, Data-mining, … ) • Geographical diversification (neighboring to China, to Japan, to the US, close to India and to the Arab World, part of Europe) • Open minded and opting for cooperation software development industry


October 2009, St Petersburg Innovation Forum: video-conference BRASCOM, RUSSOFT and CCIIP, supported by Intel and KPMG, have appealed to the Governments of BRIC countries for … “fastening development of IT sector and supporting international cooperation between BRIC countries in the field of IT”


Major topics of the Appeal • IT sector is the major tools for recovering of the Crisis, and also the driver of innovation activity towards new Society based on Knowledge • Development of ICT infrastructure: broadband access, telecom access, new software tools, Education • Necessity of cooperation between BRIC countries in ICT to avoid Global disbalance


Northern Mobile Cluster (proposal for the EU) - Integration of St Petersburg and Karelia into the Northern Cooperation Network of Mobile Technology (Northern Mobile Cluster) - Move of R&D outsourcing for Mobile to Northern Russia and support of innovations in Mobile Technologies there - Creation of the Integrated Education in Mobile Technologies in Northern Europe


RUSSIA-ICT.Makarov.2011  

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