New Autumn RIQ Issue: The Russian Domestic Market Attracts Local and Global Vendors
Continuously praising Russia as a key destination for offshoring and nearshoring for Western Europe, we frequently overlook the fact that the domestic IT Market has a huge potential
Oct 23, 2007
In the past years exporting IT companies from Russia realized this and started to re-focus their operations to serve their home market. Recently, an enormous attractiveness of the neighbouring market became obvious to European enterprises.
Having built a solid production base on offshoring orders, Russian ESPs have actively rushed up the value chain and positioned themselves in a different way in Russia and CIS than they do overseas. This trend is confirmed by the newly issued study by Russoft IT association (www.russoft.org) which stated that Russia came up second among the most attractive markets for Russian IT services exporters (giving in only to US).
Since systems integration and other IT services are in high demand among Russian companies, large European IT services giants are in a hurry to establish a presence in Russia. Last three months have seen TietoEnator and T-Systems - two rivaling companies in respective Nordic and German markets - strengthening their positions in St.Petersburg, largely expanding their existing facilities. Both are attracted by the forecasts, made by analysts about the growth of the market - for instance, IDC projects in "Russia IT Services 2007-2011 Forecast and 2006 Vendor Shares" report that spending on IT services in Russia will increase at a CAGR of 21.3% over the five-year forecast period, reaching $7,8 million in 2011. They also point out that a lot of their existing clients are already in Russia and need to be served on site.
Technology MNCs which have already had the presence in Russia see strong sales results and compare the Russian market to the markets of the developed world, pointing out to the strong R letter in the overall BRIC development.
They also bring another interesting trend to light - the business came out of Moscow and the regional expansion began. For example, local Microsoft office reported 110% growth rate in Russian sales over the last year and was surprised to see 55% out of this revenue coming from the regions.
Serious investments in government IT infrastructure speeded up over the last nine months with the government organizations becoming one of the largest client segments for ICT providers.
An increasing competition and a higher caliber of domestic projects contribute to the growth of competence, clearer vendor strategies and continuous vertical or technology specialization. For international clients this will mean a familiar high level of service in Russia and a wider range of suppliers to choose from.
Read the full version of this RIQ issue here (PDF).
Having built a solid production base on offshoring orders, Russian ESPs have actively rushed up the value chain and positioned themselves in a different way in Russia and CIS than they do overseas. This trend is confirmed by the newly issued study by Russoft IT association (www.russoft.org) which stated that Russia came up second among the most attractive markets for Russian IT services exporters (giving in only to US).
Since systems integration and other IT services are in high demand among Russian companies, large European IT services giants are in a hurry to establish a presence in Russia. Last three months have seen TietoEnator and T-Systems - two rivaling companies in respective Nordic and German markets - strengthening their positions in St.Petersburg, largely expanding their existing facilities. Both are attracted by the forecasts, made by analysts about the growth of the market - for instance, IDC projects in "Russia IT Services 2007-2011 Forecast and 2006 Vendor Shares" report that spending on IT services in Russia will increase at a CAGR of 21.3% over the five-year forecast period, reaching $7,8 million in 2011. They also point out that a lot of their existing clients are already in Russia and need to be served on site.
Technology MNCs which have already had the presence in Russia see strong sales results and compare the Russian market to the markets of the developed world, pointing out to the strong R letter in the overall BRIC development.
They also bring another interesting trend to light - the business came out of Moscow and the regional expansion began. For example, local Microsoft office reported 110% growth rate in Russian sales over the last year and was surprised to see 55% out of this revenue coming from the regions.
Serious investments in government IT infrastructure speeded up over the last nine months with the government organizations becoming one of the largest client segments for ICT providers.
An increasing competition and a higher caliber of domestic projects contribute to the growth of competence, clearer vendor strategies and continuous vertical or technology specialization. For international clients this will mean a familiar high level of service in Russia and a wider range of suppliers to choose from.
Read the full version of this RIQ issue here (PDF).