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Global Role for the Russian IT Market by Dmitry Milovantsev, Deputy Minister of Information Technologies and Communications (ComNews) [10.01.07]

The Russian IT-market is developing rapidly: it grew almost by 25% in 2005 while the world average growth rate is 6%. Since 2005 public agencies in Russia have become active in the IT-sector.  The Federal Agency for IT Export Development was established by the President's decree.  The Ministry of Information Technologies and Communications launched the program of IT parks.   Dmitry Milovantsev, Deputy Minister of Information Technologies and Communications shared his vision of the potential of Russian IT-companies in the world market and of instruments of state support with "Standard" мagazine.

"In order to outline Russia's role in the world IT-industry it is necessary to comment on the significant growth of the Russian IT market.  According to our information, the national IT-market has doubled in the past 4 years. Last year it amounted to $10.7 billion. In 2006 we expect even bigger market worth up to $13.5 - 13.7 billion. This makes a little over 1% of the world IT-market that totals at $915 billion.

Yet, the growth rate of the Russian high tech industry (24.5% in 2005) is much higher than the average world rate (6%) or rate in the EMEA region (Europe, Asia, and Middle East) (16.7%). According to IDC analytics, this is the world best result.

The share of Russian companies in the world IT-outsourcing market is $1 billion while the world market totals at $60 billion but impressive growth of software export (30%) allows hoping for a serious increase of the IT share in GDP in the nearest future.

The IT industry is growing also because of the growing demand of foreign companies. In 2005 major foreign companies such as Intel, Siemens, Alcatel, AMT, Linux, DNA, Epam opened 7 new centers for software development. In 2006 Microsoft opened its Innovation Center in the Moscow Institute of Engineering and Physics (MIFI). Investments in the IT-industry are also growing. Last year the record number of investment contracts was concluded in the Russian IT-market. In 2005 the Russian and foreign investors spent $700 million and according to our estimations in 2006 foreign investors alone will have spent about $1 billion.

We, at the State level, have to provide full support to positive tendencies, which will increase the share of software in the national export.  This year the President signed a decree to establish a new federal agency that will promote Russian software and services in the world market. A new law was put in effect in July 2006 that gives tax privileges to IT-industry including the lower common social tax for export-oriented IT-companies.

Following the best practice of India where a flourishing industry of software export has been created, we plan to establish at least four IT parks by 2010 - in Dubna (Moscow Region), Saint-Petersburg, Nizhniy Novgorod, and Novosibirsk.

The share of ICT products and services in the total export of Russia is under 1% today. By 2010 the Ministry plans to increase this share to 4% by taking various measures aimed at development of the IT industry. In that case Russia will become one of the world three leaders in the IT export market exporting $10 billion worth of services with the national IT-market amounting to $40 billion. This is a very optimistic forecast - an objective we should strive to achieve if we wish to implement the innovative development model. The future of the Russian IT industry largely depends on the world fuel prices. But the key prerequisite to achieve this objective is head steadily toward modernization of economy."

Source: Standard Magazine, November, #11 Issue (http://www.comnews.ru/index.cfm?id=25799)