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  1. 1. Valentin Makarov President of RUSSOFT Association Russian Software Development Export oriented Industry. Current situation and trends March 29, 2011 St Petersburg
  2. 2. IT in Russia: Current Picture <ul><li>IT Market in Russia [Source: Russian Ministry of Comm and Mass Media] </li></ul><ul><ul><li>2010: ~19bln USD </li></ul></ul><ul><ul><li>14% growth from 2009 (5% from pre-crisis 2008) </li></ul></ul><ul><ul><li>Expected further growth: 14.6% in 2011, 15.8% in 2012, 18.1% in 2013 </li></ul></ul><ul><li>Technology Penetration </li></ul><ul><ul><li>Internet: 39.8% [Source: TNS, March 2010] </li></ul></ul><ul><ul><li>Broadband Internet Access: 26.4% [Source: J’son & Partners, 2009] </li></ul></ul><ul><ul><li>Mobile Phones (SIM cards): 148.7% [Source: J’son & Partners, 2010] </li></ul></ul><ul><li>Software Export Industry in Russia [Source: RUSSOFT] </li></ul><ul><ul><li>2010: ~3.1bln USD </li></ul></ul><ul><ul><li>13% growth from 2009, expected further growth of 18% </li></ul></ul><ul><ul><li>in 2011 </li></ul></ul><ul><ul><li>Services: 51%; Products: 37%; Captive centers: 12% </li></ul></ul>
  3. 3. Russian Software Development Industry annual survey. RUSSOFT, 2011 (preliminary data)
  4. 5. The Best 100 Global Service Providers in 2009 <ul><li>Among 100 best IT-service providers </li></ul><ul><li>EPAM Systems (Belarus-Russia)‏ </li></ul><ul><li>Exigen Services </li></ul><ul><li>IBA (Belarus)‏ </li></ul><ul><li>Luxoft </li></ul><ul><li>Mera NN </li></ul><ul><li>Reksoft </li></ul><ul><li>Intetics (Ukraine)‏ </li></ul><ul><li>Itransition (Belarus)‏ </li></ul><ul><li>Global Services&NeoIT, 2009 </li></ul><ul><li>Ten best IT-service providers in CEE </li></ul><ul><li>1. Luxoft </li></ul><ul><li>2. EPAM Systems </li></ul><ul><li>3. Exigen Services </li></ul><ul><li>4. IBA </li></ul><ul><li>5. Reksoft </li></ul><ul><li>6. MERA Networks </li></ul><ul><li>8. DataArt </li></ul><ul><li>10. Auriga </li></ul><ul><li>Ten best Global Product development services’ providers </li></ul><ul><li>Exigen Services, EPAM Systems, Luxoft, Auriga, MERA Networks </li></ul>
  5. 6. «Top 50 emerging global outsourcing cities», Global Services&Tolons, 2009 <ul><li>Established outsourcing cities: </li></ul><ul><li>R&D — St Petersburg , Bangalore, Moscow , Shanghai, Dublin </li></ul><ul><li>Engineering Services — Bangalore, Chennai, Pune, St Petersburg , Guangzhou </li></ul><ul><li>Product development - Bangalore, Moscow, Chennai, Shanghai, Ho Chi Minh </li></ul><ul><li>Emerging outsourcing cities: </li></ul><ul><li>Product Development — .. St Petersburg </li></ul><ul><li>Engineering Services - ... Moscow </li></ul><ul><li>New aspirants: Nizhny Novgorod (Russia)‏ </li></ul>
  6. 7. IT in Russia: Specifics and Strengths <ul><li>Specialization on the Global Market: Software R&D </li></ul><ul><ul><li>“ Russia is emerging as the destination of choice for high-end R&D and ADM work : the ability of Russian companies to tackle the non-standard tasks essential for troubleshooting, product development, and managing high-end, complex projects” [Source: IDC] </li></ul></ul><ul><ul><li>Strengths </li></ul></ul><ul><ul><ul><li>Human capital : large talent pool, good education, analytical thinking, problem solving, stable teams </li></ul></ul></ul><ul><ul><ul><li>Domestic market is growing : Russia is the target market for 89% of Russian outsourcing companies, the growth of domestic market is the main trend in 2010 [Source: RUSSOFT Survey] </li></ul></ul></ul><ul><ul><ul><li>Cultural and geographical proximity to Europe </li></ul></ul></ul><ul><ul><ul><ul><li>Time-zone differences , the closer cultural fit , the similar work ethic , the clear understanding of business issues – were often mentioned as differentiating Russia from other offshore locations [Source: IDC] </li></ul></ul></ul></ul><ul><ul><li>Auriga, 2011 </li></ul></ul>
  7. 8. Human Capital: Quality 2011: 24,915 contestants representing 2,070 universities from 88 countries on 6 continents, 11 of 24 European teams in the finals (USA). 11 teams are from Russia, 20 are from Eastern Europe 2010: second place, 5 of 13 total medals 2009: world champion, 3 of 4 gold medals, 4 of 13 total medals 2008: world champion, 3 of 4 gold medals, 7 of 12 total medals 2000-2007: 4 times world champion, multiple other medals Auriga, 2011 Russia at the ACM International Collegiate Programming Contest
  8. 9. Main trends (according to the market survey, RUSSOFT, 2011) <ul><li>1 . Conbsolidation of the market </li></ul><ul><li>- this trend is considered as the most strong (pointed out by 54% of respondents) </li></ul><ul><li>- big companies have shown much higher growth (30%-40%) compared to SMEs (0%-10%) </li></ul><ul><li>- the number of big companies (with staff of 1000+) came up to 10 by the end of 2010 </li></ul><ul><li>- there is a net increase of joint interest for </li></ul><ul><li>cooperation from both sides - software companies </li></ul><ul><li>and investment capital </li></ul>
  9. 10. Main trends (2) <ul><li>- there is a net tendency of business following up the value-chain (towards IT-consulting, IT-integration and new products) </li></ul><ul><li>- Share of products in the total export is close to reach 40%, which is twice higher than that of five years earlier </li></ul><ul><li>- expansion on the Russian market is considered as the main task for 2011 by 83% of respondents </li></ul><ul><li>- further growth will depend on availability </li></ul><ul><li>of qualified personnel and of export support </li></ul>