russian software developing industry and software exports

Conclusions
Generally, the global economic crisis has negatively
affected exports of Russian software developers,
but at the same time it produced a healing effect
on the industry enabling companies to optimize
their structure and reduce expenses primarily on the
lease of premises and staff. The devaluation of the
Russian currency against the dollar has positively
influenced the competitiveness of Russian companies.
A sharply negative impact of the crisis was reported
only by 20% of export companies participating in the
poll, although the effect of crisis as the main factor
influencing the market was mentioned by 80% of
respondents. For 4% of companies the effect of the
crisis was obviously beneficial.
According to 2008 results, the volume of Russian
exports of software and development services
reached USD 2.65 bn. Russian companies continued
to develop the niche of science-driven projects that
require profound knowledge of mathematics and
related sciences. The total revenue of all Russian
software companies from the sales of software
products, software development services,
implementation and maintenance of information
systems amounted to approximately USD 5.5 bn.
The year-end 2008 was marked for the reduced
growth rate of export of software and development
services and the increase in exports only by 21%.
This is a record-low indicator over the years of the
survey (despite it still remains one of the highest in
the world).
The compound annual growth rate for the period
from 2002 to 2007 is 44.3%. Export growth rate is
expected to further slow down in 2009 (to 8-13%),
which will be followed by export growth of software
and development services in 2010 to the level
of 18-20%.
The structure of export continued to change
mainly owing to a faster growth in sales of software
products and ready-made solutions. In 2008, their
growth made 26%, and the volume of export –
USD 800 mln. Exports of software development
services totaled USD 1,450 mln (growth by 16%).
The volume of exports of development centers
of international companies and software export
from universities and research centers almost have
not increased. Their export volume amounted to
USD 400 mln (growth by 4%). It is expected, that in
2009 sales of product companies in external markets
would also grow at a fast pace, but the increase
will be much less than 26%. The sector of software
development services has severely suffered from
the crisis, but it has recovered in spring 2009 and is
expected to grow in H2.
Apart from the crisis the slow down in export
growth in 2008 was caused by the fact that the
average salary of software developers reached its
maximum beyond which custom development in
Russia becomes unprofitable. In its turn the boosting
growth of salaries of staff observed in recent
years was the result of the state education failure
to provide for the sufficient level of IT graduates
corresponding to the growth rate in the industry.
The crisis made the staff issue less urgent. Due to this
since spring 2008 to spring 2009 the average salary
of key specialists of software companies reduced
approximately by 20%.
More than a half of export companies consider
that the problem of the lack of staff is still the main
limiting factor for the industry growth despite a sharp
increase of supply in the labor market caused by the
crisis. Based on the results of the poll, companies are
not planning to extensively employ in 2009. Judging
by their intentions the staff of export companies
should grow by 7% on average.
The indicator of staff turnover stays at the
low level. In 2008 it averaged 9%. A low indicator
of staff turnover is one of competitive advantages of
Russia in the global market of IT services. Since this
indicator has become almost equal for companies
of different sizes, it may be stated that the outflow of
employees from small companies to large businesses
has almost stopped.
The number of respondents critical of the
state support for software industry has increased.
As a result of the crisis the dependence of Russian
economy on raw materials prices became more
apparent, which should make the State realize the
need of state support for high-tech companies willing
to export their products and services.
The share of companies unsatisfied with the
taxation system reduced from 45% to 37%. Moreover,
11% evaluated the taxation system as «good». This is
a result of the use of a simplified taxation system for
small companies and extension of benefits for the
uniform social tax (UST) for export companies. At the
same time, major companies more often show their
dissatisfaction with the system of taxation in view of
the projected replacement in 2011 of the UST by
social payments significantly exceeding the UST.
As expected, in 2008 the importance of the
Russian market for companies exporting software
and development services continued to grow. The
share of respondents who named the implementation
of projects in Russia as the key industry trend soared
more than in previous years – from 55% to 87%. The
CIS market has also become more significant for
respondents.
The shrinkage of the Russian IT market urges
Russian software companies to enter new markets.
They already consider export opportunities in the
countries of Africa, Latin America and the Asia-Pacific
region counting on the state support. Previously
Russian companies practically were not represented in
these markets. At the same time, the USA and Europe
remain the most important international markets for
Russian companies.
Only few percent of respondents are planning to
open new trade offices and development centers in
2009-2010. The majority decided to abstain from such
activities during the crisis.
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