Russia: National IT Strengths & Weaknesses

IT in the Russian Federation

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National IT Strengths & Weaknesses Size of Domestic IT Market National ICT Policies Telecommunications Infrastructure Telecommunication Deregulation & Liberalization Computing, Internet Diffusion & Cultural Attitudes toward Technology ICT Usage by Businesses: Electronic Commerce & E-Business E-Government Domestic Production: Software Development, Hardware Manufacturing, R&D IT Workforce IT Geographics IT Financing IT Legal Environment	Analysis: National IT Strengths & Weaknesses ICT Strengths Russia has such great potential to harness its ICT strengths and overcome its weaknesses. New economic conditions have truly created the opportunity to build its budding software industry into an international powerhouse. The Russians have one strength in particular that may prove to be their ticket to success – a well-educated, well-trained, and dynamic workforce focused on science, engineering and technology. Areas for Potential Although Russia does not have a long list of strengths, it does have a pick list of areas with great potential. Market growth, not only in the ICT market, but overall has been consistent. Russia’s IT spending has outperformed the global averages for the last three years running at about 20%. Spending in the ICT market is projected to reach almost $20B by 2005. Of course, the major driver of growth in the ICT market is the budding software outsourcing market. Russia is working hard to develop a reputation in the global outsourcing market much like China or Vietnam. Foreign investment in ICT in Russia has been relatively flat from US companies. Despite this, there are several major US technology players that have had a strong presence in the market for the majority of market economy history including Intel, IBM, Sun, Dell, and HP. Russia has proven to be a high growth performer for several of these companies on an annual basis. ICT Weaknesses Major factors preventing Russia from fully capitalizing on its human capital strengths are software piracy, poor infrastructure, and poor image. Even though piracy rates have decreased significantly since the 1990s, Russia is still among the worst rated country in the world with a rate of 79%. Some legal reform has been enacted to significantly decrease this number but enforcement is key. Slow implementation of Government infrastructural reforms in industries including telecommunications, banking, postal, transport, and municipal has kept Russia behind the curve from its counterparts in the West. As mentioned above, Russia’s software outsourcing industry is plagued by a weak reputation. Stories about the Russian mafia don’t help the negative image that is many time associated with doing business in Russia. Companies trying to market themselves abroad must start by dispelling the rumors, and prove themselves to be reliable, hard-working, well-educated problem-solvers. Recommendations The demand from Western markets and a strong government lead in the ICT market will make this industry’s future. A strengthening of Russian IT Industry Association (APKIT) will also have an impact on lobbying for further economic and political improvement for the ICT market. A continuing focus on scientific and technological educational excellence will poise Russia to be a major player in the global ICT market. Russia has the necessary characteristics to travel the road of technological progress to success.

National IT Strengths & Weaknesses

Size of Domestic IT Market

National ICT Policies

Telecommunications Infrastructure

Telecommunication Deregulation & Liberalization

Computing, Internet Diffusion & Cultural Attitudes toward Technology

ICT Usage by Businesses: Electronic Commerce & E-Business

E-Government

Domestic Production: Software Development, Hardware Manufacturing, R&D

Analysis: National IT Strengths & Weaknesses

ICT Strengths

Russia has such great potential to harness its ICT strengths and overcome its weaknesses. New economic conditions have truly created the opportunity to build its budding software industry into an international powerhouse. The Russians have one strength in particular that may prove to be their ticket to success – a well-educated, well-trained, and dynamic workforce focused on science, engineering and technology.

Areas for Potential

Although Russia does not have a long list of strengths, it does have a pick list of areas with great potential. Market growth, not only in the ICT market, but overall has been consistent. Russia’s IT spending has outperformed the global averages for the last three years running at about 20%. Spending in the ICT market is projected to reach almost $20B by 2005.

Of course, the major driver of growth in the ICT market is the budding software outsourcing market. Russia is working hard to develop a reputation in the global outsourcing market much like China or Vietnam.

Foreign investment in ICT in Russia has been relatively flat from US companies. Despite this, there are several major US technology players that have had a strong presence in the market for the majority of market economy history including Intel, IBM, Sun, Dell, and HP. Russia has proven to be a high growth performer for several of these companies on an annual basis.

ICT Weaknesses

Major factors preventing Russia from fully capitalizing on its human capital strengths are software piracy, poor infrastructure, and poor image.

Even though piracy rates have decreased significantly since the 1990s, Russia is still among the worst rated country in the world with a rate of 79%. Some legal reform has been enacted to significantly decrease this number but enforcement is key.

Slow implementation of Government infrastructural reforms in industries including telecommunications, banking, postal, transport, and municipal has kept Russia behind the curve from its counterparts in the West.

As mentioned above, Russia’s software outsourcing industry is plagued by a weak reputation. Stories about the Russian mafia don’t help the negative image that is many time associated with doing business in Russia. Companies trying to market themselves abroad must start by dispelling the rumors, and prove themselves to be reliable, hard-working, well-educated problem-solvers.

Recommendations

The demand from Western markets and a strong government lead in the ICT market will make this industry’s future. A strengthening of Russian IT Industry Association (APKIT) will also have an impact on lobbying for further economic and political improvement for the ICT market. A continuing focus on scientific and technological educational excellence will poise Russia to be a major player in the global ICT market. Russia has the necessary characteristics to travel the road of technological progress to success.