Technology Parks In Russia To Benefit Everyone
The Russian government has finally recognized the potential of the IT sector and realized that the oil and gas sector is not the only one in which it can be a world leader.
May 06, 2005
Software development is one of the most profitable kinds of intellectual business. Russia ranks among the top three exporters of IT services, though its share of the global high-tech market is about 1%.
The Minister for Information Technologies and Communications Leonid Reiman said recently that the Russian IT sector is expanding by more than 20% a year, which is two to three times faster than the average global rate.
Outsourcing is doing particularly well. The National Software Developers Association (RUSSOFT) reported that while in 2004 software exports totaled $560 million, in 2005 they would reach $740 million. They are expected to exceed $1 billion in 2007. Russian software companies have successfully entered the global IT market without government intervention. More than 250 Russian companies provide offshore programming services.
The Russian government has finally recognized the potential of the IT sector and realized that the oil and gas sector is not the only one in which it can be a world leader. Despite the chaos and dislocation of the 1990s, Russia still has about 20 innovative scientific institutions, which are enabling the country to keep pace with the most developed Western countries in informatics, nanotechnology and gene engineering. The percentage of students enrolled on science and IT courses is higher in Russia than in most countries. Fifty percent of students in Russia are studying these subjects.
In January 2005 President Vladimir Putin announced that technology parks similar to Silicon Valley in California are to be built in Russia. Speaking in Novosibirsk the president stressed that "these zones should be relatively free from administrative interference ... And they will enjoy favorable tax and customs regimes." The government plans to allocate $80 million - $150 million for the construction of each park.
Projects to construct technology parks are being discussed in both chambers of the Russian parliament, in ministries, and at conferences and roundtables held by various associations and foundations. In June 2005 the Ministry of Information Technologies and Communications will submit its plans for the construction of up to six-ten technology parks in Russia by 2010. At present, technology parks are being built in four regions: the Moscow region, St. Petersburg, Novosibirsk and Nizhny Novgorod. It can only be hoped that these promising initiatives will not collapse under the weight of bureaucratic procedures.
Due to the nature of the present Russian tax and customs systems the profits of software companies are being concentrated in other countries, increasing the capitalization of Western companies. "We must introduce tax regulations that will allow Russian companies to be capitalized in Russia," says Oleg Byakhov, director of the department for the strategy to build an information society of the Ministry of Information Technologies and Communications.
The construction of technology parks in Russia is likely to prove mutually beneficial to the state, Russian software companies and Western customers. The government can levy high taxes on the technology parks and profits will not leave the country. Russian software companies will be better placed to accept big contracts from the leading Western IT and communication companies, which have long shown a keen interest in working with Russian software developers. Microsoft, Cisco, Motorola, Siemens, Hewlett Packard and other global brands have opened R&D centers in Russia. The R & D center of the Russian company Luxoft has IBM laboratory status. Intel is opening a large technology innovation center in Moscow. Intel is also making extensive use of its software development center in the formerly closed city of Sarov, home to the Russian Federal Nuclear Center. Construction of one of the technology parks is already underway not far from Sarov. Boeing and the Russian company Sistema have already expressed their interest in the project. (The latter made the headlines when it sold shares in an IPO on the London Stock Exchange.) Ni
The Minister for Information Technologies and Communications Leonid Reiman said recently that the Russian IT sector is expanding by more than 20% a year, which is two to three times faster than the average global rate.
Outsourcing is doing particularly well. The National Software Developers Association (RUSSOFT) reported that while in 2004 software exports totaled $560 million, in 2005 they would reach $740 million. They are expected to exceed $1 billion in 2007. Russian software companies have successfully entered the global IT market without government intervention. More than 250 Russian companies provide offshore programming services.
The Russian government has finally recognized the potential of the IT sector and realized that the oil and gas sector is not the only one in which it can be a world leader. Despite the chaos and dislocation of the 1990s, Russia still has about 20 innovative scientific institutions, which are enabling the country to keep pace with the most developed Western countries in informatics, nanotechnology and gene engineering. The percentage of students enrolled on science and IT courses is higher in Russia than in most countries. Fifty percent of students in Russia are studying these subjects.
In January 2005 President Vladimir Putin announced that technology parks similar to Silicon Valley in California are to be built in Russia. Speaking in Novosibirsk the president stressed that "these zones should be relatively free from administrative interference ... And they will enjoy favorable tax and customs regimes." The government plans to allocate $80 million - $150 million for the construction of each park.
Projects to construct technology parks are being discussed in both chambers of the Russian parliament, in ministries, and at conferences and roundtables held by various associations and foundations. In June 2005 the Ministry of Information Technologies and Communications will submit its plans for the construction of up to six-ten technology parks in Russia by 2010. At present, technology parks are being built in four regions: the Moscow region, St. Petersburg, Novosibirsk and Nizhny Novgorod. It can only be hoped that these promising initiatives will not collapse under the weight of bureaucratic procedures.
Due to the nature of the present Russian tax and customs systems the profits of software companies are being concentrated in other countries, increasing the capitalization of Western companies. "We must introduce tax regulations that will allow Russian companies to be capitalized in Russia," says Oleg Byakhov, director of the department for the strategy to build an information society of the Ministry of Information Technologies and Communications.
The construction of technology parks in Russia is likely to prove mutually beneficial to the state, Russian software companies and Western customers. The government can levy high taxes on the technology parks and profits will not leave the country. Russian software companies will be better placed to accept big contracts from the leading Western IT and communication companies, which have long shown a keen interest in working with Russian software developers. Microsoft, Cisco, Motorola, Siemens, Hewlett Packard and other global brands have opened R&D centers in Russia. The R & D center of the Russian company Luxoft has IBM laboratory status. Intel is opening a large technology innovation center in Moscow. Intel is also making extensive use of its software development center in the formerly closed city of Sarov, home to the Russian Federal Nuclear Center. Construction of one of the technology parks is already underway not far from Sarov. Boeing and the Russian company Sistema have already expressed their interest in the project. (The latter made the headlines when it sold shares in an IPO on the London Stock Exchange.) Ni