Russia - Country Commercial Guide
Information & Communication Technology

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-10-15

Overview 

With a population of 144 million, Russia’s IT market is one of the world’s largest, with significant potential. By 2025, there are expected to be 124 million Internet users in Russia.  According to the International Data Corporation (IDC), a global leader in market intelligence for IT, the value of the Russian IT market grew 7% to a value of $24.8 billion in 2019.  The main growth drivers in 2019 were concentrated in software, services, and hardware solutions.

As of 2019, 1.3 million people were employed in the IT sector (1.7% of the employed population of Russia, 2.7% of GDP). In terms of its share in GDP, the sector is comparable to energy supply (2.9% of GDP) and is lower than agriculture (4.4%), the financial sector (4.2%), construction (6.4%), and mining industry (10.4%).

Increases in IT spending have been noticeable in the banking and oil and gas industries as well as the public sector.  Reflecting the structure of the economy, IT expenditures are concentrated among the 100 largest Russian companies, which account for 85% of total IT spending.

The industry’s fastest-growing segments are hosting, software maintenance and administration, consulting, software customization, and information security services. Market leaders believe the ongoing digitalization of the Russian economy will lead to an increase in demand for IT services.

The Russian government is striving to enhance the use of modern technologies in everyday life while attempting to maintain significant control over the information available on the web. For the past few years, the industry’s regulatory framework exhibited very positive development trends which resulted in the adoption of the Telemedicine Law (2018), Law on Critical Infrastructure (2017), Online Cash Register Law (2017), amendments to the Public-Private Partnerships Law (2018), allowing the IT infrastructure to be managed under concession agreements, and several tax incentives for the industry were introduced.

However, the beginning of 2020 showed signs of recession for the ICT market as the industry experienced the adverse effect of the pandemic after its moderate growth in 2019, according to IDC experts. The alarming situation attracted the government’s attention, and the Russian President convened a meeting in June 2020 devoted to the development of the ICT industry, setting out an unprecedented strategy to support it by creating globally competitive conditions for IT businesses and IT specialists in Russia. The government has published the “IT tax maneuver” law, which decreases the corporate tax rates from 20% to just 3%. The new legislation will reduce social security tax rates to 7.6%, compared to 30% in other sectors of the economy.

The United States is one of the leading suppliers of IT products and technologies in Russia’s highly competitive market.  The quality of most domestic products is lower than that of foreign manufacturers, but Russian firms are frequently trying to sell products and services at lower prices. Google, Apple, IBM, Cisco, Oracle, Intel, Dell, and HP are among U.S. market participants that face competition from Russian firms including Kaspersky Lab, Yandex, 1C, Cognitive Technologies, EPAM Systems, CFT, Luxoft, Abbyy, Acronis, Parus, CBOSS, and Mail.Ru.

The largest local IT companies in Russia in 2019, according to TAdviser, a Russian IT-focused media outlet:

  • Rostech Corporation (Diversified ICT Services and Products)
  • NCC (Diversified ICT Services and Products)
  • Lanit (System Integrator, Engineering, and Consulting)
  • Softline (Digital Transformation, Cyber Security, Cloud Services)
  • 1C (Data Analyses, IT Services)

As projected by the various industry experts (Baker McKenzie, Deloitte, IDC) the new conditions in the ICT industry will result in higher software prices for consumers and increased prices for mobile Internet. The remote working patterns will require investment in hardware, in tackling information security incidents, and in IT infrastructure development.

The main barriers mentioned by the industry players are difficult political conditions, restrictions on doing business with sanctioned industry sectors (energy, finance, and defense), and immaturity of solutions based on breakthrough technologies.  Experts mention the government’s policy of building the digital economy and the rapid development of the IT services sector as the main driver of industry growth. Overall, the experts emphasize positive trends in the ICT sector, including the formation of a highly favorable institutional environment, expansion of international cooperation, the inclusion of SMEs into the digitalization processes, and the accelerated implementation of the Internet of Things (IoT) concept, which is anticipated to lead the ICT industry to recovery in 2021-2022.

Leading Sub-Sectors

Government, Banking Industry, Oil and Gas, Metals and Mining Industry, Transportation, Data Centers, Utilities and eCommerce

Opportunities

Best Prospects: Cloud Computing, Artificial Intelligence, Internet of Things, Virtual Reality, Big Data, Telemedicine.

Trade Events

Integrated Systems Russia (Audio Visual Equipment)
October 18- 20, 2021
Moscow

Svyaz Expo (Telecom)
April 26-29, 2022
Moscow

Resources

  • Ministry of Digital Development, Communications and Mass Media of the Russian Federation
  • Roskomnadzor
  • IDC Research Agency (Information Technology Sector in Russia)
  • TAdviser (Media Portal for IT Industry in Russia)
  • CNews (IT Media)