The software industry is one of Russia’s most rapidly growing information technology sectors. Growth in this sectors is estimated at 25% annually, as computers become ever more prevalent in the Russian private sector. Industry sources estimated the IT market at $5-7 billion in 2004. Following global patterns, software sales have been growing faster than the sales of hardware over the last 10 years. The size of the software market in 2003 was estimated at $ 1 billion, and is expected to reach $1.4 billion in 2004. However, the demand for software is difficult to determine due to the high level of pirated software available on the Russian market. Industry sources estimate that up to 85 percent of all software sold in Russia is pirated. Recent new IPR legislation coupled with active enforcement efforts are having an impact on the availability of pirated software. This report provides an overview of the Russian software market in 2003-2004.
Russia is very receptive to U.S. software products. U.S. companies such as Microsoft, IBM, Sun Microsystems, and Oracle are name brands universally recognized in Russia for their quality and sophistication. Leading U.S. software companies are present in the Russian market and their products are available, either directly or through representative offices or distributors. Imports from third countries are also growing, and U.S. software products are facing increasing competition from European software vendors in the Russian market. German, Dutch and Scandinavian suppliers have gained market share through direct distribution or by establishing local subsidiaries.
The domestic Russian software industry is relatively young and is composed of thousands of firms specializing in a broad range of activities including development and localization, translation, production, distribution and technical support. Local software houses, system integrators and application service providers also work as distributors for foreign companies.
Russian software companies can be characterized by their diversified activities, though most distributors claim to specialize in complex solutions for customers. The most successful Russian firms have displayed growth rates of 50-60% per year, according to industry analysts. Russian software companies typically supply office information systems, as well as information systems (i.e., system integration, end-user analysis, information system design, project management, network implementation, training and customer support), information systems for retail and distribution networks and complex solutions for specialized industrial sectors such as engineering, construction and manufacturing.
One of the emerging trends of the Russian software industry is the growth and development in the outsourcing sector. Software outsourcing is estimated to represent over 50% of future domestic software production. Outsourcing in Russia is a win-win scenario due to its well-educated labor force, and the current worldwide demand.
The most popular software applications currently sold in Russia are Customer Resource Management Systems (CRM), data management and archiving systems. The growing interest in these types of software is due to a favorable economic situation and high demand in the government and corporate sectors, including oil and gas, metallurgy, finance and telecommunications.
Russian consumers are interested in all types of standard applications, Internet and Intra- and Extranet software, web content management software and solutions, networking software and network security products, development tools, Windows, Linux and UNIX-based products, storage management software, CRM and ERP products, and application management products. There is also strong demand for game software in the consumer market.
Due to economic changes and new technological and global fluctuations, the 2003-2004 Russian software market was affected by the following:
Thanks to the development of distribution systems and dealerships, the software market in Russia has spread geographically; however, various estimates still indicate up to 60% of the demand for IT technology is concentrated in Moscow and St. Petersburg. Novosibirsk, Nizhny Novgorod, Yekaterinburg and Kazan (Tatarstan) are considered to be the most promising regional markets for IT imports.
According to industry sources, the single largest and fastest-growing segment of the software market is enterprise software, including ERP systems and specialized business applications. Sales of ERP programs alone, increased by 50% (up to 127 million dollars) in 2003. This type of product is sold in Russia mainly by IT consulting companies and system integrators. Several local companies (including 1C, R-Style, Diasoft and Parus) offer specialized business software, which is used by medium and small-scale Russian enterprises.
This site was last updated 6 March, 2009