2019 Russian software industry 16-th Annual Survey With support from RUSSOFT Association APKIT Association 2019 Dear colleagues, We bring to your notice the results of the annual (by this time the 16th!) survey of the software development export industry in Russia which as ever has been conducted by RUSSOFT Association. In February-April 2019, we surveyed 175 market players (it is a record throughout the entire period of survey!). Additionally, we studied various sources of information and received expert assessments from dozens of directors of software developer companies. Last year was marked by a significant growth of sales of Russian software industry on the Russian IT market, particularly of software development services. An important factor which had an impact on the growth of domestic market was a real digital transformation process deeply felt by Russian economy. A deepening in the geopolitical conflict between Russia and the USA results in reduction of the share of the US and the EU markets in the total volume of foreign sales of Russian software and of software development services, at the same time the confidence in the future promotes a large rise of companies which aim at coming in these markets over the next two years. Foreign sales of Russia have slightly increased on emerging markets, particularly in African countries. In the developing world Russia proved capable of providing alternative solutions in the security sphere, de facto offering these countries access to the “Digital sovereignty”. The volume of foreign sales of software and of software development services of Russian companies grew by 10% and reached $9.7 billion. The cumulative volume of sales in Russia and abroad in ruble terms increased by 19% almost up to 1 trillion, and in dollar terms increased by 10.6% up to $15.8 billion. Service companies hold positions on the list of the 100 top service companies in the world (according to IAOP). Russian software vendors continued to strengthen their position in “Gartner magic quadrants”, and the success of our companies in the information security sphere should be particularly noted. I would like to take this opportunity to thank ToyOpinion for their long-standing efficient support of the study in gathering initial information. Thanks to our partner Associations who successfully and all by themselves provided collection of questionnaires in their regions: in Tomsk it is City IT (via SibEDGE), in Novosibirsk – SibAcademSoft, in Rostov region – InTechDon (via Inostudio Solutions), in Perm – Foresight. I would like also to thank HeadHunter for helping to gather information about situation on the Russian labor market. And as it always has been, I wish to give kind words of gratitude to our chief analyst Dmitry Zhelvitsky for his enormous work on gathering 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 (AP KIT) and to our sponsors for long-standing 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. Best regards, Valentin Makarov President of RUSSOFT Association. Contents CHAPTER 1. Russian software companies at the world IT 9 market 1.1. Russian ICT market 10 1.1.1. Basic figures of Russian ICT market 11 1.1.2. Some information about situation at the Russian IT market 12 1.1.3. Structure of Russian IT market 13 1.1.4. Information on segments of Russian IT market 14 1.1.5. Russian software market 15 1.1.6. Forecast for the Russian IT market in next years 17 1.1.7. Use of Internet technologies 18 1.1.8. Telecommunication market 19 1.2. Russia and Russian cities in world IT ratings 20 1.2.1. Competitive edge and business environment 21 1.2.2. Innovativeness and ICT application 24 1.2.3. Ratings of cities 27 1.3. Achievements of individual Russian companies in the world IT ratings 28 CHAPTER 2. Volume and structure of sales of Russian 33 software companies at domestic market and abroad 2.1. Basic indicators of Russian software industry 34 2.2. Volume of sales of Russian software development industry 34 2.3. Future prospects of changes in basic indicators of software industry 35 2.4. Foreign sales and export earnings 38 2.5. Sales at domestic market 40 2.6. Head office location 42 2.7. Share of foreign sales in the turnover of companies 42 2.8 Turnover change nature 43 2.9. Distribution of foreign sales vs. business model 44 2.10. Service companies 46 2.11. Software products and ready-to-use solutions 48 2.12. Software development centers of foreign corporations in Russia 49 2.13. RUSSOFT rating of major software companies of Russia 50 CHAPTER 3. Primary Trends in the Russian Software 53 Development Industry 3.1. General analysis 54 3.2. Quality management system certification 57 3.3. Investment promotion 59 3.3.1. Demand for external financing 61 3.3.2. Investment attraction by categories of companies 63 3.3.3. Major events of the venture market 65 3.3.4. Foreign investments of Russian companies and funds 66 3.4. Import substitution 69 CHAPTER 4. The business environment in Russia 71 4.1. Results of general analysis 72 4.2. State support in the IT sphere 75 4.2.1. Support of IT export 78 4.2.2. State support at regional level 79 4.2.3. Attitude toward State support in the IT sphere by different categories of 81 companies 4.3. Assessment of the taxation system 82 4.4. Presence of modern infrastructure 84 4.4.1. Office space 86 4.4.2. Technology parks 89 4.4.3. Telecommunications 89 4.5. Situation in the sphere of protecting intellectual property rights 90 4.6. State support of international marketing activity 92 4.7. Financing of R&D 94 4.8. Bureaucratic and administrative barriers 96 4.9. Financial support of startups 97 4.10. Influence of external factors on doing business in Russia 100 4.11. Importance of measures of State support 103 4.12. Structure of expenditure of Russian software companies 105 CHAPTER 5. Geographical Coverage and Vertical Markets 107 of Russian Software Development Companies 5.1. Russian market and global presence 108 5.2. Distribution of sales by macro-regions of the world market 110 5.3. The emergence of “problem markets” caused by increasing political tension 117 5.4. New markets 118 5.5. Geography of preference of service and product companies 119 5.6. Geographic distribution of marketing and sales offices of Russian companies 121 5.7. Geographical distribution of software development centers 122 5.8. Facts related to geographic expansion of Russian companies over last 2 years 125 5.9. Vertical markets 128 CHAPTER 6. Human resources 131 6.1. Assessment of the general situation of human resources in the industry 132 6.1.1. Staffing level of the entire ICT sector 134 6.1.2. Insourcing companies and IT departments 134 6.1.3. Rotation of human resources 135 6.1.4. Inflow 136 6.1.5. Rise in labor productivity 137 6.1.6. Job attraction factors 137 6.2. Current demand for IT professionals 138 6.2.1. The most in-demand professions 140 6.2.2. Potential sources of the increase in a number of software developers 141 6.3. Migration of labor resources 143 6.3.1. Outflow 143 6.3.2. Inflow of personal from abroad 144 6.3.3. Internal migration 145 6.4. Remuneration of labor 146 6.4.1. Average salary in Russia, in the IT sphere and in the software industry 146 6.4.2. Change in average salary in different categories of companies 148 6.4.3. Level of salary for popular professions 149 6.5. Personnel training. Universities 150 6.5.1. Main problems and changes in the education system 150 6.5.2. Future professions 153 6.5.3. Number of graduates by IT professions 153 6.5.4. Popularization of IT education 155 6.5.5. Quality evaluation of university work 156 6.5.6. Postgraduate education 159 6.5.7. Study at foreign universities 159 6.5.8. Involvement of business in the process of training of personnel 160 6.5.9. Russian universities in international and Russian ratings 162 6.5.10. Participation of Russians in international programming competitions 175 6.6. Foreign language skills 178 CHAPTER 7. Technologies 181 7.1. Operating systems 182 7.2. DBMS 185 7.3. Languages and programming tools 187 Main conclusions 191 Participants of the Survey 199 Структура массива опрошенных компаний Консолидация активов в отрасли проходила все последние 10 лет (крупные компании росли быстрее, чем малые), и этот процесс еще продолжается. Например, в 2014-2015 годах компании с оборотом более $20 млн. росли намного быстрее, чем компании меньшего размера. Многие небольшие компании вообще сократили выручку в долларовом выражении. CHAPTER 1 При рассмотрении структуры совокупного дохода и поступлений от экспорта в зависимости от местоположения штаб-квартир компаний респондентов, необходимо принимать во внимание тот факт, что к 2008–2010 гг. завершилось формирование «пирамиды» российской индустрии разработки ПО. На вершине пирамиды сложилась группа лидеров, которые закономерно превратились в глобальные корпорации, имеющие офисы продаж на всех ведущих рынках и разветвленную сеть центров разработки в России и других странах. Однако в последние годы доля малых предприятий в совокупных доходах и совокупном экспорте, по крайней мере, стабилизировалась за счет значительного роста их количества. Возможно, сказалось и то, что льготы по оплате страховых взносов несколько лет назад стали для них более доступны (для их получения сейчас нужно иметьв штате не менее 7 сотрудников).