IT companies: “Our business is obstructed not by sanctions themselves but by political things that generated them”
Russian companies declared the problem of import replacement in IT to be the key topic of the industry in 2014
Sep 12, 2014
Russian IT companiesb called the issue of anti-Russia sanctions and import substitution in IT the key subject of the industry in 2014. This verdict was reached by the participants of the media briefing "Focus on import substitution: chance or risk for the Russian IT industry?" that was held on 9 September 2014 in Moscow as a part of the 15th anniversary of RUSSOFT - a non-profit partnership - the biggest and the most influential Russian association of software development companies.
The Russian service companies are capable to substitute foreign solutions by domestic ones in many fields, noted the general director of Auriga Vyacheslav Vanyulin. We need just a bit to do it: a decision made at the national level and financing of operations. In this event the domestic IT industry is capable to offer its own products both in the area of specialized and applied software and the hardware components to provide system availability in the fields crucially needed by the state.
Numerous examples of implementation of these solutions were presented by the managing director of Diasoft Platform Konstantin Varov. Several Russian banks have already been hit by the sanctions imposed on Russian business structures by the governments of the US and of EU countries. "They were informed without prior arrangement that the software support was stopped and no new releases would be supplied, noted Varov. – In actual fact, Russian banks were suggested to worm their way out of the situation independently". In this context, many in-house solutions of Diasoft Platform helped many Russian financial structures to avoid losses and assure operability of their critically important systems. In opinion of Konstantin Varov, the sanctions helped Russian developers in competition with foreign companies that not long ago held a monopoly position at the dedicated software market. The Diasoft managing director also noted that the foreign customers became to be alerted by their governments against solutions offered by Russian companies. According to his version, one of the US clients of his company refused to conclude a contract due to political risks.
The president of SPIRIT Andrei Sviridenko agrees with Konstantin Varov. He pointed out that the sanctions allowed Russian developers to make a name of themselves in segments where down to date it was not possible to compete with foreign companies. As an instance, Sviridenko mentioned implementation by Transtelecom of the project on deployment of video conferencing service on VideoMost platform. It will be used by the communications provider to render web video conferencing services to their clients countrywide. Meanwhile until quite recently, as noted the SPIRIT head, it was practically monopolized by such giants as Cisco, Avaya, Microsoft and others. The sanctions resulted in delay in equipment supply, system updating and so on. In this context, a Russian solution helps avoiding dependence on foreign vendors. "We hope, - emphasized Sviridenko, - that the current situation will assist us to faster provide Russian governmental agencies and corporate clients with our technologies".
Oleg Nishonov, vice president of Kodeks, speaking about the need in financing Russian technologies by the state, noted that the volume of government buying of IT did not increase since the past year. "Basically, the government takes a well-balanced station, - thinks Nishonov. – I believe they are right because you just can’t take up and cut all cooperation with the West, we are strongly integrated into the international community. It is essential to produce our own products, but the level should be complied with the worldwide standards".
The speakers also noted the changes in relations with their foreign customers. "Neither our company nor our clients are included in the sanction list. And our business is obstructed not by sanctions themselves but by the things that generated them, - made a comment the president of First Line Software Nikolai Puntikov. – At the moment we have to prove to our clients that we are a part of the large global business, we know well how to do our work and we remain to be professionals in our field". Besides, Puntikov noted the meaninglessness of talking of import substitution in the cases when the issue is core systems. "In the past years so much effort, intellect and solutions have been spent on the MS DOS system developed by Bill Gates that it is useless attempting to replace it. But the higher is a system level the more chances are to create one’s own solutions. It’s always been the case and we are just doing it", says the head of First Line Software.
"From the very beginning, the RUSSOFT Association included not only Russian developers but also foreign companies that develop software in Russia. The entire ecosystem of software development was represented – that is the basis of our international acknowledgement and of Russian software developers’ competitiveness. It’s no secret that many our developers use the US vendors’ platforms and enter the world market with them. Certain limitations of import due to the counter-sanctions will not destroy the Global nature of the Russian software community." - reminded Valentin Makarov.
The collaboration of Russian developers and global companies, in opinion of the general director of Intel Software Igor Kaloshin, is the most important for the Russian IT industry. "Intel and other transnational companies present at the Russian market are the key and very important element of development and life-sustaining activity of the ecosystem", he emphasized. Kaloshin noted that the company entered the Russian market more than 20 years ago and its staff of developers inside Russia is over 1000 persons. Kaloshin also reminded about billion investments of Intel in the Russian IT industry, and the activities of the Intel Capital fund. "We work side by side with service companies; one of the most important factors is the transfer of experience gained by international developers to Russia. The Russian companies thanks to give-and-take relations get access to technologies and hardware components, thereby gain competitive strengths not only on Russian but global market as well, says Kaloshin. – If we mention the importance of import substitution, we cannot fail to see its obvious economic viability. But we have to act here gradually and prudently. There exist two approaches: prohibitive and stimulating. In the IT industry there should be used the latter. If there is a critically vulnerable component which must be replaced, there should be formulated a clear work order. Certainly, it is possible to kill all sparrows in Russia but you have to realize that after it locusts will come".
For many large Russian enterprises, for example, from the defense-industrial sector, is not very important where the software manufacturer is located as long as software is state-of-the-art, competitive and steadily supported, thinks Nikolai Komlev, the head of IT association AP KIT. "As for me, the most adequate idea is formation of a register of the "trusted" software, for example, to be purchased by the state institutions. It is clear that the government would like to shield the state companies, ministries and institutions from unsafe software which can hide bugging devices. But they can be in any software regardless of the country where they were created, or platform, even the open source software is not a cure-all solution. If you are apprehensive about bugging devices – introduce the mandatory software certification. But in this case, do it without any exception – for all kinds of software. It would look logical both from the standpoint of information security, and from the standpoint of market-driven economy", noted the expert.
Russian IT industry in 2013
In the course of the briefing there were made public the general results of the traditional survey of the Russian IT market performed by RUSSOFT on the annual basis. This time the representatives of 130 companies took part in it. They gave answers to the questions concerning the key aspects of the branch.
As a whole, the year 2013 should be recognized as successful for responding companies. Their consolidated turnover increased by 16% compared to 2012, and the export earnings in Russia – by 14%. Nine members of NP RUSSOFT entered TOP-100 rating of the best world service companies according to the annual global survey by Global Services:
Artezio, Auriga, DataArt, EPAM Systems, First Line Software, Luxoft, MERA , Reksoft, Return on Intelligence (before 2013 – it’s name was Exigen Services).
Over a number of years, one of the most acute problems for Russian IT industry was a staff scarcity. The research shows that the situation at the labor market still is difficult. In 2013 a share of companies experiencing difficulties as regards shortage of skilled professionals was increased. In 2011 54% of participants in RUSSOFT survey stated that they did not run short of developers. In 2012, the proportion of these companies reduced to 27% and by the results 2013 survey their number increased even more - to 24%.
Truly speaking, it should be taken into account that this information reads both ways. On the one hand, the growing lack of developers tells about the shortage of supply on the labor market. On the other hand, this dynamics may evidence that more and more companies set a goal of turnover increase and business development. The small companies with the turnover less than $0.5 million have become more active on the labor market; most probably it is associated with a general improvement of business environment for small-sized companies.
In 2013, the wages of software developers kept on growing. At the same time, the pace decreased down to 4.5 – 7% in rubles. The distinctive feature is that different third parties noted a growth in wages also in the first months of 2014, but by April-May this process stopped.
A more positive became the estimate of the status of Russian infrastructure by market insiders. It was called "good" by 32% of respondents while a year ago this mark was given only by 23% of companies. At the same time, it worth noting that the companies positively assess not so much the existing level as the progress at hand.
Another positive change recorded in the research is a "startup boom". The number of young companies with less than 5-year market experience increased more than twofold.
15th anniversary of RUSSOFT
In the 15th anniversary of RUSSOFT took part the representatives of governmental authorities, branch associations, Russian and foreign IT companies, journalists.
RUSSOFT was established as a regional Consortium of 10 IT-businesses in St Petersburg in 1999. Then after the amalgamation with the National software developers association on September 10, 2004, it took the name RUSSOFT and today unifies more than 80 companies operating in the area of software development. The main RUSSOFT’s objectives, in the opinion of its president Valentin Makarov, are as follows: constructive dialogue between business and government, advocating the interests of Russian software developers in the state bodies, international marketing of Russian software companies worldwide and improving of education and training, QA and PM in the Russia IT business.
The importance of dialogue between business and government was emphasized by the RF deputy minister of communications and media Rashid Ismailov. The close cooperation between IT industry and government assists the market regulators in creation of the most favorable conditions for development of both individual companies and the Russian IT industry as a whole, elaboration a strategy of branch development, materialization of competitive strengths of Russia on the global market. "People are more important than institutions" - reinforced the deputy minister reminding that the constructive dialogue with business is one of the priorities of the Ministry of Communications and the Media.
The fruitful cooperation of branch association was spoken about at the 11/9 event by the AP KIT president Nikolai Komlev, the head of international project department of Russian Venture Company Oleg Plaksin, the senior project manager of Information Technologies Cluster Skolkovo Foundation Ivan Kireev, the secretary of the interim committee on development of information society at the Council of Federation Alexander Shepilov, the president of IT Company Group Taghir Yapparov, the general director of Belarus IT branch association Infopark Vladimir Basko.
Additional information:
Anna Popova, +7 (931) 232 13 28, [email protected]
Background information about NP RUSSOFT
NP RUSSOFT was established in St. Petersburg on the September 9th, 1999 as Consortium Fort-Ross. In September 2004, after amalgamation with Software Developers Association (NSDA) it was named RUSSOFT Association.
Currently, RUSSOFT Association is one of the most influential and heavyweight associations of software development companies in Russia. The association includes more than 80 member companies that today form the key expert opinion in the area of software development and high-tech export from Russia.
www.russoft.org
The Russian service companies are capable to substitute foreign solutions by domestic ones in many fields, noted the general director of Auriga Vyacheslav Vanyulin. We need just a bit to do it: a decision made at the national level and financing of operations. In this event the domestic IT industry is capable to offer its own products both in the area of specialized and applied software and the hardware components to provide system availability in the fields crucially needed by the state.
Numerous examples of implementation of these solutions were presented by the managing director of Diasoft Platform Konstantin Varov. Several Russian banks have already been hit by the sanctions imposed on Russian business structures by the governments of the US and of EU countries. "They were informed without prior arrangement that the software support was stopped and no new releases would be supplied, noted Varov. – In actual fact, Russian banks were suggested to worm their way out of the situation independently". In this context, many in-house solutions of Diasoft Platform helped many Russian financial structures to avoid losses and assure operability of their critically important systems. In opinion of Konstantin Varov, the sanctions helped Russian developers in competition with foreign companies that not long ago held a monopoly position at the dedicated software market. The Diasoft managing director also noted that the foreign customers became to be alerted by their governments against solutions offered by Russian companies. According to his version, one of the US clients of his company refused to conclude a contract due to political risks.
The president of SPIRIT Andrei Sviridenko agrees with Konstantin Varov. He pointed out that the sanctions allowed Russian developers to make a name of themselves in segments where down to date it was not possible to compete with foreign companies. As an instance, Sviridenko mentioned implementation by Transtelecom of the project on deployment of video conferencing service on VideoMost platform. It will be used by the communications provider to render web video conferencing services to their clients countrywide. Meanwhile until quite recently, as noted the SPIRIT head, it was practically monopolized by such giants as Cisco, Avaya, Microsoft and others. The sanctions resulted in delay in equipment supply, system updating and so on. In this context, a Russian solution helps avoiding dependence on foreign vendors. "We hope, - emphasized Sviridenko, - that the current situation will assist us to faster provide Russian governmental agencies and corporate clients with our technologies".
Oleg Nishonov, vice president of Kodeks, speaking about the need in financing Russian technologies by the state, noted that the volume of government buying of IT did not increase since the past year. "Basically, the government takes a well-balanced station, - thinks Nishonov. – I believe they are right because you just can’t take up and cut all cooperation with the West, we are strongly integrated into the international community. It is essential to produce our own products, but the level should be complied with the worldwide standards".
The speakers also noted the changes in relations with their foreign customers. "Neither our company nor our clients are included in the sanction list. And our business is obstructed not by sanctions themselves but by the things that generated them, - made a comment the president of First Line Software Nikolai Puntikov. – At the moment we have to prove to our clients that we are a part of the large global business, we know well how to do our work and we remain to be professionals in our field". Besides, Puntikov noted the meaninglessness of talking of import substitution in the cases when the issue is core systems. "In the past years so much effort, intellect and solutions have been spent on the MS DOS system developed by Bill Gates that it is useless attempting to replace it. But the higher is a system level the more chances are to create one’s own solutions. It’s always been the case and we are just doing it", says the head of First Line Software.
"From the very beginning, the RUSSOFT Association included not only Russian developers but also foreign companies that develop software in Russia. The entire ecosystem of software development was represented – that is the basis of our international acknowledgement and of Russian software developers’ competitiveness. It’s no secret that many our developers use the US vendors’ platforms and enter the world market with them. Certain limitations of import due to the counter-sanctions will not destroy the Global nature of the Russian software community." - reminded Valentin Makarov.
The collaboration of Russian developers and global companies, in opinion of the general director of Intel Software Igor Kaloshin, is the most important for the Russian IT industry. "Intel and other transnational companies present at the Russian market are the key and very important element of development and life-sustaining activity of the ecosystem", he emphasized. Kaloshin noted that the company entered the Russian market more than 20 years ago and its staff of developers inside Russia is over 1000 persons. Kaloshin also reminded about billion investments of Intel in the Russian IT industry, and the activities of the Intel Capital fund. "We work side by side with service companies; one of the most important factors is the transfer of experience gained by international developers to Russia. The Russian companies thanks to give-and-take relations get access to technologies and hardware components, thereby gain competitive strengths not only on Russian but global market as well, says Kaloshin. – If we mention the importance of import substitution, we cannot fail to see its obvious economic viability. But we have to act here gradually and prudently. There exist two approaches: prohibitive and stimulating. In the IT industry there should be used the latter. If there is a critically vulnerable component which must be replaced, there should be formulated a clear work order. Certainly, it is possible to kill all sparrows in Russia but you have to realize that after it locusts will come".
For many large Russian enterprises, for example, from the defense-industrial sector, is not very important where the software manufacturer is located as long as software is state-of-the-art, competitive and steadily supported, thinks Nikolai Komlev, the head of IT association AP KIT. "As for me, the most adequate idea is formation of a register of the "trusted" software, for example, to be purchased by the state institutions. It is clear that the government would like to shield the state companies, ministries and institutions from unsafe software which can hide bugging devices. But they can be in any software regardless of the country where they were created, or platform, even the open source software is not a cure-all solution. If you are apprehensive about bugging devices – introduce the mandatory software certification. But in this case, do it without any exception – for all kinds of software. It would look logical both from the standpoint of information security, and from the standpoint of market-driven economy", noted the expert.
Russian IT industry in 2013
In the course of the briefing there were made public the general results of the traditional survey of the Russian IT market performed by RUSSOFT on the annual basis. This time the representatives of 130 companies took part in it. They gave answers to the questions concerning the key aspects of the branch.
As a whole, the year 2013 should be recognized as successful for responding companies. Their consolidated turnover increased by 16% compared to 2012, and the export earnings in Russia – by 14%. Nine members of NP RUSSOFT entered TOP-100 rating of the best world service companies according to the annual global survey by Global Services:
Artezio, Auriga, DataArt, EPAM Systems, First Line Software, Luxoft, MERA , Reksoft, Return on Intelligence (before 2013 – it’s name was Exigen Services).
Over a number of years, one of the most acute problems for Russian IT industry was a staff scarcity. The research shows that the situation at the labor market still is difficult. In 2013 a share of companies experiencing difficulties as regards shortage of skilled professionals was increased. In 2011 54% of participants in RUSSOFT survey stated that they did not run short of developers. In 2012, the proportion of these companies reduced to 27% and by the results 2013 survey their number increased even more - to 24%.
Truly speaking, it should be taken into account that this information reads both ways. On the one hand, the growing lack of developers tells about the shortage of supply on the labor market. On the other hand, this dynamics may evidence that more and more companies set a goal of turnover increase and business development. The small companies with the turnover less than $0.5 million have become more active on the labor market; most probably it is associated with a general improvement of business environment for small-sized companies.
In 2013, the wages of software developers kept on growing. At the same time, the pace decreased down to 4.5 – 7% in rubles. The distinctive feature is that different third parties noted a growth in wages also in the first months of 2014, but by April-May this process stopped.
A more positive became the estimate of the status of Russian infrastructure by market insiders. It was called "good" by 32% of respondents while a year ago this mark was given only by 23% of companies. At the same time, it worth noting that the companies positively assess not so much the existing level as the progress at hand.
Another positive change recorded in the research is a "startup boom". The number of young companies with less than 5-year market experience increased more than twofold.
15th anniversary of RUSSOFT
In the 15th anniversary of RUSSOFT took part the representatives of governmental authorities, branch associations, Russian and foreign IT companies, journalists.
RUSSOFT was established as a regional Consortium of 10 IT-businesses in St Petersburg in 1999. Then after the amalgamation with the National software developers association on September 10, 2004, it took the name RUSSOFT and today unifies more than 80 companies operating in the area of software development. The main RUSSOFT’s objectives, in the opinion of its president Valentin Makarov, are as follows: constructive dialogue between business and government, advocating the interests of Russian software developers in the state bodies, international marketing of Russian software companies worldwide and improving of education and training, QA and PM in the Russia IT business.
The importance of dialogue between business and government was emphasized by the RF deputy minister of communications and media Rashid Ismailov. The close cooperation between IT industry and government assists the market regulators in creation of the most favorable conditions for development of both individual companies and the Russian IT industry as a whole, elaboration a strategy of branch development, materialization of competitive strengths of Russia on the global market. "People are more important than institutions" - reinforced the deputy minister reminding that the constructive dialogue with business is one of the priorities of the Ministry of Communications and the Media.
The fruitful cooperation of branch association was spoken about at the 11/9 event by the AP KIT president Nikolai Komlev, the head of international project department of Russian Venture Company Oleg Plaksin, the senior project manager of Information Technologies Cluster Skolkovo Foundation Ivan Kireev, the secretary of the interim committee on development of information society at the Council of Federation Alexander Shepilov, the president of IT Company Group Taghir Yapparov, the general director of Belarus IT branch association Infopark Vladimir Basko.
Additional information:
Anna Popova, +7 (931) 232 13 28, [email protected]
Background information about NP RUSSOFT
NP RUSSOFT was established in St. Petersburg on the September 9th, 1999 as Consortium Fort-Ross. In September 2004, after amalgamation with Software Developers Association (NSDA) it was named RUSSOFT Association.
Currently, RUSSOFT Association is one of the most influential and heavyweight associations of software development companies in Russia. The association includes more than 80 member companies that today form the key expert opinion in the area of software development and high-tech export from Russia.
www.russoft.org