russian software developing industry and software exports

Chapter 5.
Geographical Distribution and Key Vertical Markets
of respondents have been working in this market for
a long time already, and 5–10% more companies are
trying to strengthen their positions there, but as a rule
their attempts fail.
Companies with export revenues less than 50% of
total revenue are more than other exporters oriented
at the markets of Ukraine (51%), Belarus (40%) and
«Other countries of the former USSR» (35%). The
number of records of far-abroad markets by these
companies is below average (only few of them view
developed countries as key markets).
Naturally, the situation is reverse for companies
with export revenues over 51%. It will be logical
to conclude that small companies are more often
present in the markets close to Russia. Almost half
of the largest companies with the turnover over
20 MUSD operate in all markets, but they focus on the
advanced markets of America and Europe and do not
regard as their top priorities the markets of Ukraine,
Belarus, South-East Asia and the region «Australia,
Africa and South America».
St. Petersburg companies are to a greater extent
than other respondents oriented at European
markets. Around one third of St. Petersburg
companies are present in the neighboring market of
Northern Europe (primarily in Finland).
Moscow companies (mainly small and mediumsized)
most frequently named as their key markets
Ukraine, Belarus and «Other countries of the former
USSR».
In 2009, the significance of markets for software
developers should not drastically change. A small
part of respondents expects the decline in demand
in the markets of Russia and other countries of the
former USSR caused by consequences of the crisis for
their economies dependent on the production of raw
materials. Therefore, they are planning to switch to
markets more distant from Russia. It does not make
sense to make any conclusions about the year 2010
since many of the respondents were not ready to
answer this question due to the growing crisis.
The research conducted by Global Services
100 reveals what potentially interesting markets
remain unexplored (or poorly explored) by Russian
companies. The distribution of clients in the top 100
world service companies is absolutely different that
of the major Russian software exporters. Russian
companies are far less often represented in the
markets of Africa, Australia, Japan, India, China and
Canada. Probably their only advantage against world
leaders is the market presence in Eastern Europe.
Only 9 of 100 world leading service companies have
their own staff in Russia. By this indicator Russia ranks
15 among 31 countries. Recently Russian producers
have been trying to enter new markets. For instance,
as reported by CNews, a group of companies involved
in software development and the delegation of the
Russian Federation government came to the capital
of Venezuela Caracas in April 2009 to participate in
the Week of Russian IT. The long voyage was made
by heads of the following companies: ALT Linux,
ASCON, ABBYY, Digital Design and PROMT. ACS
Systems representing Kaspersky Lab in the market of
Venezuela also took part in the event.
It is also worth to mention that Exigen Services
entered the Chinese market. The company opened
its development center in China that would partially
deal with orders from the local market. Probably, it is
reasonable to enter huge markets in China and India
only by establishing own centers for development
and sales support.
Certain progress can be expected in the economic
cooperation with Latin America and a number of
African countries that Dmitry Medvedev, President of
Russia visited this June.
International clients of top 100 service companies
according to Global Services 100
in Africa
in Australia
in Canada
in China
in India
in Japan
in Western Europe/
Great Britain
in Eastern Europe
in South America/
Mexico
in the USA
in Middle East 8%
in Asia-Pacific Region
(excl. India and China)
18%
18%
27%
36%
32%
42%
VERTICAL MARKETS
0% 20% 40% 60% 80% 100%
54%
52%
84%
Source: Global Services and NeoIT, 2009 Global Services 100 Study
95%
95%
Significant changes in the distribution of companies
by vertical markets where they operate (and the
overall decrease in the number of priority vertical
markets mentioned by respondents) are mainly due
to the consequences of the global economic crisis.
The respondents have to focus on either vertical
markets where they can get competitive advantages
owing to their competencies or on narrow technology
niches. Hence, the general reduction of respondents’
participation in vertical segments of the economy.
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