Last month Russoft, a major Russian IT association, released its 17th “Annual survey of the software development Industry.” Even though its data relate mostly to 2019 — not 2020, — this report offers a variety of interesting market insights. Some of them may be summarized as follows:
Sales volumes:
- The Russian software industry (including both software development service providers and software publishers) generated $17.3 billion in 2019, up 14.9% from the previous year. On average, mid-sized companies performed better in terms of growth than the largest market players.
- Almost a half of the sales volume ($8.25 billion) was generated abroad, up 17.5% from 2018. The numbers for 2020 are not known yet, but Russoft told East-West Digital News that software export might have increased by 8%-10%, if judging by the Central Bank’s quarterly reports.
- In 2019, according to this institution, the share of “computer services” (which the Central Bank defines as including IT services and software licenses) in the total volume of Russian export increased from 0.81% to 0.94%.
Geographic analysis:
The deepening confrontation between Russia and the Western bloc led to a decrease of Russian sales in the USA and the EU, notes Russoft President Valentin Makarov, — not in absolute numbers, but in relative terms, as Russian service and license sales increased in other countries.
Thus, in 2020:
- 36.1% of the Russian software companies surveyed by Russoft served customers in Kazakhstan;
- 20.9% of them had clients in the Middle East;
- 9.7% in Brazil;
- 9.7% in Japan.
In emerging markets, according to Makarov, “Russia is able to provide local governments and business communities with alternative security solutions, de facto offering them ‘digital sovereignty’.”
Meanwhile, the report also notes the performance of Russian software companies in a country like France, with 19% of the surveyed companies selling services or licences in this country, and some 30% expecting to do so in 2021.
On the domestic market, Russian software publishers generated $4.7 billion in domestic sales in 2019. (IDC offers an alternative estimate at $3.2 billion). Foreign publishers sold software products for at least $2 billion.
In the total, Russia and neighbouring countries account for 57.1% of the industry’s revenues. Western markets generate 32.3% of its revenues, while new markets account for 10.6%.
Regulation:
Russoft notes that, in recent years, the Russian authorities paid a growing attention to the high-tech sector. The most important measure — tax cuts for software developers — was adopted in July 2020 and came into force on Jan. 1, 2021.
Human resources:
As of late 2019, at least 580,000 professionals were “directly involved in software development processes” in Russia, according to Russoft’s “conservative estimate.”
Of this number, the software industry specifically accounts for around 180,000 IT specialists.
There is a notable increase in these numbers each year (at least 10% in the software industry), according to Russoft. This may be explained by the growing number of students in IT specialties, starting from 2014.
