Russoft

Valentin Makarov President of RUSSOFT Association www.russoft.org Russian Software Development Export oriented Industry. Current situation and trends March 29, 2011 St Petersburg

IT in Russia: Current Picture
IT Market in Russia [Source: Russian Ministry of Comm and Mass Media]
2010: ~19bln USD
14% growth from 2009 (5% from pre-crisis 2008)
Expected further growth: 14.6% in 2011, 15.8% in 2012, 18.1% in 2013
Technology Penetration
Internet: 39.8% [Source: TNS, March 2010]
Broadband Internet Access: 26.4% [Source: J’son & Partners, 2009]
Mobile Phones (SIM cards): 148.7% [Source: J’son & Partners, 2010]
Software Export Industry in Russia [Source: RUSSOFT]
2010: ~3.1bln USD
13% growth from 2009, expected further growth of 18%
in 2011
Services: 51%; Products: 37%; Captive centers: 12%

Russian Software Development Industry annual survey. RUSSOFT, 2011 (preliminary data)

The Best 100 Global Service Providers in 2009
Among 100 best IT-service providers
EPAM Systems (Belarus-Russia)‏
Exigen Services
IBA (Belarus)‏
Luxoft
Mera NN
Reksoft
Intetics (Ukraine)‏
Itransition (Belarus)‏
Global Services&NeoIT, 2009
Ten best IT-service providers in CEE
1. Luxoft
2. EPAM Systems
3. Exigen Services
4. IBA
5. Reksoft
6. MERA Networks
8. DataArt
10. Auriga
Ten best Global Product development services’ providers
Exigen Services, EPAM Systems, Luxoft, Auriga, MERA Networks

«Top 50 emerging global outsourcing cities», Global Services&Tolons, 2009
Established outsourcing cities:
R&D — St Petersburg , Bangalore, Moscow , Shanghai, Dublin
Engineering Services — Bangalore, Chennai, Pune, St Petersburg , Guangzhou
Product development - Bangalore, Moscow, Chennai, Shanghai, Ho Chi Minh
Emerging outsourcing cities:
Product Development — .. St Petersburg
Engineering Services - ... Moscow
New aspirants: Nizhny Novgorod (Russia)‏

IT in Russia: Specifics and Strengths
Specialization on the Global Market: Software R&D
“ 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]
Strengths
Human capital : large talent pool, good education, analytical thinking, problem solving, stable teams
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]
Cultural and geographical proximity to Europe
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]
Auriga, 2011

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

Main trends (according to the market survey, RUSSOFT, 2011)
1 . Conbsolidation of the market
- this trend is considered as the most strong (pointed out by 54% of respondents)
- big companies have shown much higher growth (30%-40%) compared to SMEs (0%-10%)
- the number of big companies (with staff of 1000+) came up to 10 by the end of 2010
- there is a net increase of joint interest for
cooperation from both sides - software companies
and investment capital

Main trends (2)
- there is a net tendency of business following up the value-chain (towards IT-consulting, IT-integration and new products)
- Share of products in the total export is close to reach 40%, which is twice higher than that of five years earlier
- expansion on the Russian market is considered as the main task for 2011 by 83% of respondents
- further growth will depend on availability
of qualified personnel and of export support

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