Russia Information Technology Report Q1 2012
Business Monitor International, January 2012, Pages: 71
Market Overview Russian IT spending is expected to record double-digit growth in 2012, following a strong performance in 2011 across most IT spending verticals. The IT market is forecast to grow to US$38.7bn by 2016, as the IT market powers ahead despite recent external shocks.
The broader use of ICT in government and other sectors will ensure an upward market trajectory in the medium term, along with major projects in key sectors such as banking and oil and gas, and a restructuring of the utilities sector.
Russia is showing signs of becoming a market that through its scale can influence global industry developments. Growing computer penetration, government ICT projects and immense potential for IT spending by Russia's traditional industries could drive an increase in IT spending per capita from around US$157 to US$280 over 2012-2016.
Industry Developments The next milestone in the Russian government's e-services development plan is July 1, 2012, by which date a unified electronic system of interdepartmental interaction is supposed to connect the regions and municipalities. It is hoped this will improve the efficiency of the 337 state services (out of 900) which require interdepartmental coordination. As of October 1, 2011, all Russian federal authorities were mandated to use electronic communication for all interactions.
In 2011, the Telecommunications Minister Igor Schegolev called for a strong push to develop Russian cloud applications. The Minister described the rollout of a national cloud platform as a top priority area for the development of the domestic IT industry. A key government partner in the national cloud platform campaign will be incumbent telco Rostelecom, which has been charged with providing a cloud platform with open interfaces.
Meanwhile in July 2011 Russia's Economic Development Ministry was reported to be considering introducing customs duties on imports of personal computers. The reason for the potential new tax is apparently to provide a boost to domestic computer hardware production. The possible tax increase would be expected to lead to more foreign investment in manufacturing and assembly facilities in Russia.
Competitive Landscape In 2011 the Russian government pressed ahead with plans for a national open source software platform. RUB161mn (US$5.3mn) was budgeted to finance a possible migration towards a new national system in 2010 and an additional RUB490mn will expand the system between 2011 and 2013.
Meanwhile in October 2011, Microsoft had an agreement of intent with incumbent Russian telco Rostelecom on collaboration about building an open platform to be used for providing cloud computing services in Russia. According to the contract, the parties are to partner to roll out and promote IT services for state and commercial organisations.
In H111 a number of new service providers have entered the emerging market for cloud computing services in Russia. In June 2011, Inoventica, a new infrastructure service provider in Russia, announced that it was ready to offer cloud computing services for the public and private sectors.
Hardware BMI forecasts solid growth for the Russian computer hardware market in 2012, consolidating a strong recovery in 2010-2011. According to BMI projections, the computer hardware market is forecast to reach a value of US$11.1bn in 2012, up from US$10.4bn in 2011, driven by notebooks.
Computer hardware sales will find support from a number of fundamental drivers, including low PC penetration, rising incomes, government IT initiatives and industrial reform in many sectors. PC market CAGR for the next five years is projected to be in the region of 12%, with spending reaching about US$17.6bn by 2016.
Software The domestic software market is projected at around US$4.4bn in 2012. Spending on software returned to positive growth territory in 2010 after demand was hit in 2009 by the much sharper decline in PC sales. The market is forecast to grow at a CAGR of 18% to US$8.4bn by 2016, making Russia potentially one of the most significant global software market opportunities.
Although Russia has the fifth-highest software piracy rate in the world (87%), BMI expects government efforts to strengthen intellectual property protection will mean this falls closer to the Eastern European average, boosting the market. Unsurprisingly, there are regional disparities, with Moscow some way ahead of its closest rival St Petersburg in terms of enterprise resource planning (ERP) deployments.
Services BMI forecast an IT services market value of US$6.3bn in 2012, with growth across all main IT spending verticals. The IT services opportunity is forecast to grow robustly to US$12.8bn by 2016, surpassing its pre-crisis level, as the IT market recovers from recent external shocks.
Systems integration is the largest IT services component, accounting for as much as one-third of revenues and, together with the implementation of hardware and software, it probably accounts for about half of all IT services. However, value-added services such as consulting and applications development are growing fast. Outsourcing is also on the rise, although it is below the levels in some other Central and Eastern European (CEE) countries.
E-Readiness The government's ambitious policy is that every locality in Russia should be provided with fixed-line telephony infrastructure, mobile phone coverage and internet access by 2015. According to the Ministry of IT and Communications' target, every populated area in the country should be provided with all three elements irrespective of its economic weight and population. The former IT and communications minister, Leonid Reiman, described the digital divide as a challenging issue for all countries in the Commonwealth of Independent States (CIS) and one that the Russian government was aiming to overcome.
Internet use is forecast to experience robust growth over our forecast period. However, tight credit markets are limiting the ease with which broadband operators are able to source much needed funds to invest in network proliferation. Coupled with economic uncertainty, this is creating a troublesome environment for operators to plan their investment decisions. However, growth will still be strong, but will not meet its full potential.
Competition between the incumbent's holdings and alternative operators such as Comstar-UTS, Golden Telecom and Net By Net will continue to drive the sector. Expansion of fixed and wireless networks should result in increased penetration rates across the regions, while uptake remains strong in the more urbanised areas. Alternative technologies such as WiMAX and fibre will also play their part in expanding the market by introducing competition, as well as offering services over a wider area.
- Benchmark BMI's Independent 5-year IT Industry Forecasts to test other views - a key input for successful budgetary and strategic business planning in the Russia IT market.
- Target Business Opportunities & Risks in Russia's IT sector through our reviews - and major deals, projects and investments in Russia.
- Exploit Latest Competitive IT Intelligence & Company SWOTS on your competitors and peers through company rankings by sales, market share and ownership structure – includes multi-national and national companies"
Business Monitor International's Russia Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Poland's information technology industry.
Executive Summary
SWOT Analysis
Russia IT Sector SWOT
Russia Telecoms Industry SWOT
Russia Political SWOT
Russia Economic SWOT
Russia Business Environment SWOT
IT Business Environment Ratings
Table: Regional IT Business Environment Ratings
Europe IT Markets Overview
Market Overview
Government Authority
Table: Russia's IT Market Structure, 2002-2004 (US$bn)
Hardware
Software
Services
End-User Analysis
Industry Developments
Table: Russia's Technopark Expenditure, 2006-2010 (US$mn)
Industry Forecast Scenario
Table: Russian IT Sector, 2007-2015 (US$mn Unless Otherwise Stated)
Country Context
Table: Rural/Urban Breakdown, 2005-2030
Table: Consumer Expenditure, 2000-2012f (US$)
Internet
Table: Telecoms Sector - Internet - Historical Data & Forecasts
Macroeconomic Forecast
Table: Russia – Economic Activity, 2011-2016
Competitive Landscape
Table: Svyazinvest Regional Companies – Broadband Subscribers
Company Profiles
IBS Group
IBM Russia
Kraftway
NCC
HP
Oracle
Country Snapshot: Russia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2006
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
Sources
- IBS Group
- IBM Russia
- Kraftway
- NCC
- HP
- Oracle
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