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Export of Russian Software Development Industry 2017 Export of Russian Software Development Industry 14-th Annual Survey With support from RUSSOFT Association APKIT Association 2017 Dear colleagues! Dear friends! Here you will find the results of the annual (and 14th!) survey of the software export industry in Russia, which has traditionally been carried out by the Noncommercial Partnership for Software Developers RUSSOFT (NP RUSSOFT). In February-April 2017 we surveyed over 150 companies on the market (this was a record for the entire period of surveying!) Additionally, we studied various sources of information, and received expert assessments from dozens of directors of software developer companies. Last year was marked by the Russian economy moving from stagnation to growth, which was reflected in the increase of sales of Russian software companies not only abroad, but also on the domestic market. Another important factor was the election of Donald Trump as the US president, which led to a deepening in the geopolitical conflict between Russia and the USA, creating preconditions for strengthening the position of our industry in Europe and in countries of the developing world. At last, the mechanism of state support of hi-tech export was launched, in the form of the Russian export center. The first results were shown by our activity in third-world countries, where Russia proved capable of providing alternative solutions in the security sphere, de facto offering these countries “Digital sovereignty”. The volume of foreign sales of software and developer services of Russian companies grew by 12% and reached $7.5 billion. At the same time, it must be admitted that for geopolitical reasons, it is becoming more difficult for our companies to sell software and developer services from Russia, and so the gap has increased between the total volume of foreign sales by Russian companies and the volume of sales by their Russian offices (which came to $4.8 billion). Both service and product companies have strengthened their positions in world ratings. Eight service companies were included on the list of the 100 top service companies in the world (according to IAOP). Russian software manufacturers continued to strengthen their position in “Gartner magic quadrants”, and the success of our companies in the information security sphere should be particularly noted. Unfortunately, further prospects for growth of export to the USA will not depend on companies themselves in many ways, but on the development of the geopolitical situation. But it is evident that there are prospects for growth in European countries, in Southeast Asia, in Latin America and the Arab world. I would like to take this opportunity to thank the company ToyOpinion for their efficient support of the study in gathering initial information, and the company PROMT for the excellent translation of the report into English. Thanks to our colleagues from Tomsk and Chelyabinsk for helping to gather information in their cities, which raised the number of questionnaires filled out to a record level, and made it possible to analyze the situation in the regions. And of course, my most sincere words of gratitude go to our analyst Dmitry Zhelvitsky for his enormous work on gathering additional information, for preparing the report, and for forming ratings of leading companies and universities. We are very grateful to the Association of Computer and Information Technology Companies and our sponsors for support in carrying out the study. I would also like to thank everyone who took part in the survey and provided information about their companies. Yours sincerely, President of RUSSOFT Association Valentin Makarov Contents Chapter 1. Russian positions on the world IT market 6 Views of experts 7 1.1. Russian ICT market 9 1.2. IT market in view of different market players 9 1.3. Some pieces of information allow for drawing conclusion on what is 14 going on the Russian IT market 1.4. Structure of the Russian IT market 16 1.5. Russian IT market segment information 16 1.6. Russian software market 18 1.7. Use of Internet technologies 20 1.8. Telecommunications market 22 1.9. IT market in the nearest future 23 1.10. Russia, Russian cities and Russian software companies in world ratings 24 Doing business — the 40th place 25 E-Government Development Index (EGDI) — the 35th place 26 The Global Competitiveness — the 43rd place 26 Human Capital Index 2016 — the 28th place 27 World Competitiveness Yearbook (IMD) — the 46th place 28 Bloomberg 2017 Innovation Index - the 26th place 29 Global Innovation Index – the 45th place 29 Innovation indicator (Gesamtergebnis des innovations indikators) 2017 30 Global Cybersecurity Index 2017 – the 10th place 31 ICT Development Index 2016 - the 43rd place 31 Networked Readiness Index– the 41st place 32 The Web Index – the 35th place 33 The 2015 Global Retail E-Commerce Index — the 8th place 33 GfK Connected Consumer Index — the 43rd place 34 Innovation Cities Global Index 2016-2017 34 Data-driven city 35 2016 BSA Global Cloud Computing — the 17th place 35 Stability of Internet national segments — the 3rd place 35 Tholons Top 100 Outsourcing Destinations 35 1.11. International ratings of Russian companies 36 The 2017 Global Outsourcing 100 36 ISG Outsourcing Index 2017 37 Deloitte Technology Fast 500 EMEA 2016 37 Software 500 38 Magic Quadrants of Gartner 38 Chapter 2. Volume and structure of sales by Russian software 40 companies in domestic market and abroad 2.1. Sales volume of Russian software development industry 41 2.2. Basic indicators of Russian software industry 41 2.3. Foreign sales and net foreign currency inflow 44 2.4. Foreign sales movements for different company classes 50 2.5. Head office location 52 2.6. Share of foreign sales in the turnover of companies 53 2.7. Dedication of companies 53 2.8. Turnover change nature 58 2.9. Distribution of foreign software sales depending on the business model 59 2.10. Service companies 61 2.10.1. Income structure and sources of service companies 63 2.10.2. Forecast of turnover and foreign sales changes of service 64 companies 2.11. Software products and ready-to-use solutions 66 2.12. Software development centers of foreign corporations in Russia 68 2.13. RUSSOFT rating of major software companies of Russia 71 Chapter 3. Primary Trends in the Russian Software Development 74 Industry 3.1. General analysis 75 3.2. Quality management system certification 78 3.3. Investment promotion 80 3.4. Import phase-out 86 3.5. Technology trends 90 3.5.1. Blockchain 93 3.6.2. The Internet of things 93 3.5.3. Self-driving transport 94 3.5.4. How Russia fits into world technology trends 94 3.6. Need for cooperation 96 3.7. Examples of Russian companies uniting efforts 97 Chapter 4. The business environment in Russia 99 4.1. Results of general analysis 100 4.2. Structure of expenditure 102 4.3. State support in the IT sphere 103 4.4. Assessment of the taxation system 110 4.5. Presence of modern infrastructure 113 4.5.1. Office space 115 4.5.2. Technology parks 118 4.5.3. Special economic zones, innovation towns and science towns 122 4.5.4. Telecommunications 126 4.6. Situation in the sphere of protecting intellectual property rights 127 4.7. State support of international marketing activity 129 4.8. Financing of R&D 130 4.9. Bureaucratic and administrative barriers 131 4.10. Financial support of startups 132 4.11. Influence of external factors on doing business in Russia 133 4.12. Importance of measures of state support 135 Chapter 5. Geographical Research and Vertical Markets of 137 Russian Software Developer Companies 5.1. The Russian market and global presence 138 5.2. Distribution of sales by macro-regions of the world market 140 5.3. The emergence of “problem markets” caused by increasing political 145 tension 5.4. New markets 146 5.5. Geography of preference of service and product companies 147 5.6. Geographic distribution of marketing and sales offices of Russian 148 companies 5.7. Geographical distribution of software development centers 150 5.8. Facts relating to the expansion of Russian companies on foreign markets 152 over the last 5-6 years 5.9. Vertical markets 157 Chapter 6. Human resources 158 6.1. Assessment of the general situation of human resources in the industry 159 6.1.1. Change and distribution of the number of software developers 161 6.1.2. Job attraction factors 164 6.2. Migration of labor resources 164 6.2.1. Moving abroad 165 6.2.2. Inflow of personal from abroad 168 6.2.3. Internal migration 170 6.3. Deficit and rotation of human resources 171 6.3.1. Staff turnover 173 6.3.2. The most in-demand specialists 175 6.4. Remuneration of labor 176 6.4.1. Average salary in Russia, in the IT sphere and in the software 176 industry 6.4.2. Cost of person hours 177 6.4.3. Change in average salary in different categories of companies 178 6.4.4. Level of salary for individual popular professions 179 6.5. Personal training. Universities 181 6.5.1. Number of graduates by IT profession 181 6.5.2. Popularization of IT education 182 6.5.3. Quality evaluation of university work 183 6.5.4. Postgraduate education 183 6.5.5. Study at foreign universities 184 6.5.6. Involvement of business in the process of training personnel 185 6.5.7. Russian universities in international and Russian ratings 187 6.5.8. Participation of Russians in international programming 194 competitions 6.6. Foreign language skills 197 6.7. Global Labor Market 199 6.7.1.
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