Russian ICT Industry all Set to Don the Mantle of IT Outsourcing Major
The Russian information and communications technology (ICT) is going from strength to strength on the back of robust economic growth, greater political stability, expanding consumer base, and increasing foreign investments.
Jul 25, 2007
With the Indian markets slowing, Russia has become a particularly strong contender as a provider of complex engineering IT outsourcing and solutions.
New Country Industry Forecasts from the Frost & Sullivan Economic Research and Analytics team addressing the Russian ICT Industry reveal that particular opportunities exist in the offshore software development, broadband technologies and equipment, managed network security, IP telephony, packaged software, communication value-added services (VAS), 3G networks, and digital broadcasting in fixed line telephony sectors of the industry.
Russia has a strong advantage in offshore software development, which is becoming the fastest growing sector in the IT industry. The country plans to increase its IT outsourcing exports with the goal of becoming one of the top three global outsourcing destinations by 2010. There exists a strong scope for greater foreign investments in Russian ICT design and development centers.
Broadband Internet is expanding rapidly due to the rising connectivity of Russian towns, in line with the Government's E-Russia policy focus. The increased focus on E-Governance and ICT diffusion at all levels of schooling is boosting the uptake of ICT goods and services by government agencies and schools. Meanwhile, new special economic zones (SEZs), techno-parks, and provision of venture capital are enhancing opportunities for small businesses in the Russian ICT industry.
As corporate Russia increasingly switches from closed networks to IP networks to increase efficiency, markets for enterprise resource planning (ERP) as well as managed network security and IP virtual private networks (VPNs) have received a shot in the arm. IP telephony is catching on in the mobile telephony segment and this could be the first step toward full-scale adoption of next-generation networks based on packet telephony.
"Communication VAS, particularly ring tones and logos, media projects, and information and entertainment in the mobile content market, is the fastest growing segment of telecommunication services," says Farheen Pasha, Team Leader, ICT, Frost & Sullivan's ERA group. "Currently, less than 50.0 percent of the telephone lines in Russia are digital; however, the government aims to completely switch from analog to digital mode by 2015."
Although the Russian Government had historically passed over the interests of the ICT industry in favor of others such as oil and gas, it has steadily increased interest in the IT industry. It is also actively involved in developing the telecommunications infrastructure and is a strong participant as well as regulator in this field.
Russia's vast human resources and low labor costs hold it in good stead in the ICT industry, while its competent education system provides its people with high levels of skills, excellent training, as well as intensive scientific and engineering expertise. However, a substandard process quality and a weak legal system and intellectual property right (IPR) enforcement impair it. This scenario is set to change, with the present government placing unprecedented focus on the development of the IT industry.
The Government is sparing no efforts to upgrade the telecommunications infrastructure and services throughout Russia. It has deployed a supportive framework for the development of the ICT industry to make it competitive in both domestic and international markets. It hopes to improve information transparency and enhance the efficiency of the public as well as private sectors.
The Government is also committed to raising the levels of penetration, diffusion, and awareness of ICT goods and services in Russia. Moreover, a series of high-profile industry reports changed the general perception that the ICT infrastructure in Russia is inadequate by publishing positive articles.
Russia has been the biggest spender on IT among the central and eastern European (CEE) countries and its spending has been higher than the global average since 2002. This is mainly due to the growing affluence of the
New Country Industry Forecasts from the Frost & Sullivan Economic Research and Analytics team addressing the Russian ICT Industry reveal that particular opportunities exist in the offshore software development, broadband technologies and equipment, managed network security, IP telephony, packaged software, communication value-added services (VAS), 3G networks, and digital broadcasting in fixed line telephony sectors of the industry.
Russia has a strong advantage in offshore software development, which is becoming the fastest growing sector in the IT industry. The country plans to increase its IT outsourcing exports with the goal of becoming one of the top three global outsourcing destinations by 2010. There exists a strong scope for greater foreign investments in Russian ICT design and development centers.
Broadband Internet is expanding rapidly due to the rising connectivity of Russian towns, in line with the Government's E-Russia policy focus. The increased focus on E-Governance and ICT diffusion at all levels of schooling is boosting the uptake of ICT goods and services by government agencies and schools. Meanwhile, new special economic zones (SEZs), techno-parks, and provision of venture capital are enhancing opportunities for small businesses in the Russian ICT industry.
As corporate Russia increasingly switches from closed networks to IP networks to increase efficiency, markets for enterprise resource planning (ERP) as well as managed network security and IP virtual private networks (VPNs) have received a shot in the arm. IP telephony is catching on in the mobile telephony segment and this could be the first step toward full-scale adoption of next-generation networks based on packet telephony.
"Communication VAS, particularly ring tones and logos, media projects, and information and entertainment in the mobile content market, is the fastest growing segment of telecommunication services," says Farheen Pasha, Team Leader, ICT, Frost & Sullivan's ERA group. "Currently, less than 50.0 percent of the telephone lines in Russia are digital; however, the government aims to completely switch from analog to digital mode by 2015."
Although the Russian Government had historically passed over the interests of the ICT industry in favor of others such as oil and gas, it has steadily increased interest in the IT industry. It is also actively involved in developing the telecommunications infrastructure and is a strong participant as well as regulator in this field.
Russia's vast human resources and low labor costs hold it in good stead in the ICT industry, while its competent education system provides its people with high levels of skills, excellent training, as well as intensive scientific and engineering expertise. However, a substandard process quality and a weak legal system and intellectual property right (IPR) enforcement impair it. This scenario is set to change, with the present government placing unprecedented focus on the development of the IT industry.
The Government is sparing no efforts to upgrade the telecommunications infrastructure and services throughout Russia. It has deployed a supportive framework for the development of the ICT industry to make it competitive in both domestic and international markets. It hopes to improve information transparency and enhance the efficiency of the public as well as private sectors.
The Government is also committed to raising the levels of penetration, diffusion, and awareness of ICT goods and services in Russia. Moreover, a series of high-profile industry reports changed the general perception that the ICT infrastructure in Russia is inadequate by publishing positive articles.
Russia has been the biggest spender on IT among the central and eastern European (CEE) countries and its spending has been higher than the global average since 2002. This is mainly due to the growing affluence of the