Expert opinions, TECHNOLOGY

Will Russian IT industry get ahead of Western technologies?

Recently, there have been more reports about sanctions affecting the global economy and the tech sector, in particular. Will Russian IT professionals be able to get ahead of Western technologies and what factors can boost the Russian IT industry?

First of all, let’s divide this enormous job into simple stages because there seems to be a certain disbalance in different areas:

  • Digital client services
  • IT services (usually internal)
  • Fundamental apps

Now, let’s look at every segment more specifically.

Client services

Russian IT professionals can develop not only unique and innovative apps but also substitutes for foreign platforms by adding a localized innovative touch to their functionality. Some examples include Yandex.Music, Yandex.Maps and Yandex.Drive. Not only do they perform the function of similar apps popular outside Russia, they also have interface adapted specifically for users in Russia.  

RuTube is another good example. The platform was developed to compete with YouTube and potentially become the largest video hosting platform in Russia. Considering the growing traffic, it could happen pretty soon. According to InClient, in January-May 2022, RuTube’s traffic grew by 550%, which was also confirmed by a publication on Habr that offers statistics from the Yota mobile network provider:

“RuTube has shown the biggest traffic growth in the first eight months of 2022. The number of users increased by 20%.”

TadVider publication cited the video hosting’s general producer David Kocharov, who said that in 2023, the number of registered RuTube users grew by 36%.

Mediascope has prepared a small survey and shared the results:

“YouTube remains the largest video hosting platform. The service’s monthly audience in March-April was 90 million people. At the same time, the monthly audience of the updated RuTube service in March-April grew by 161% as compared to the beginning of the year and reached 16.4 million people in April.”

Naturally, RuTube will have to face a series of tasks to attract audience and improve the involvement of users. However, the current dynamic is positive.

Some Russian solutions are even better that their foreign alternatives. Using the idea of certain foreign apps as a basis, Russian experts managed to adapt them to the local market. For instance, tax services such as Electronic Budget and Taxpayer’s Account ensure high level of automation and convenience for taxpayers. The Russian service for paying public parking, Moscow Parking, provides for a quick payment using a smartphone. This concerns not only publicly available apps, but also complex IT solutions. The Moscow Metro is a combination of the transport and digital infrastructure. An entire system of interconnected programs was created for it to ensure the maximum efficiency of operation and its convenience for passengers.

Despite the success, the audience of Russian-made products still does not match the audience of foreign products due to such factors as the low brand trust, advertising policy, as well as the development of an ecosystem of additional services and integration with global tech giants.

The creation of successful partnerships with global tech giants can also help increase the audience of Russian services. The integration with popular international platforms and services will allow Russian products to become accessible for a wider audience, and build trust.

In this round, I would say, the score is 1-0 in favor of Russian products.

Internal services for companies

In the area of system services for developers and companies’ internal systems, Russian IT experts also show impressive results. They replaced such services as Confluence (with Russian-made EvaWiki), Jira (EvaProject), Asana (EvaTeam, Megaplan, plus several others that repeat and complement the functionality of the foreign services). In the nearest future, these services are expected to become as convenient as the foreign alternatives, which will help enterprises to reduce their dependence on foreign software. Another example for this segment is server software.

Russian companies are actively developing their own commercial products that can become serious competitors on the global market. These solutions open new horizons for market promotion, which makes them attractive for local and foreign clients. The development of such services helps not only to reduce dependence on foreign technology, but also develop our IT market in general. Due to the growing popularity among Russian users, such products as Postgres PRO, Jatoba, Tarantul, nginx, and Astra software have received motivation to develop. Developers also actively work on their own software adding new functions, fixing bugs and constantly improving it.

The government’s support is an important aspect here, contributing to the growth of infrastructure, education and research in IT. Such assistance will encourage development of innovative solutions and technologies, which will help boost Russian IT companies’ competitiveness globally.

2023 has seen an increasing interest in Russian software products, which allows for the development of IT services and market in general. In the long term, such expansion will lead to a more stable and independent IT sector in Russia, which will contribute to its further growth and make it a sufficiently powerful and self-reliant player in the world economy.

In my opinion, this round’s score is 2-0 in favor of Russian players.

Knowledge-intensive software applications

As regards fundamental applications, such as databases and image, audio and video editing software, complex mathematical algorithms remain the main obstacle for outrunning western technologies. Within the next two or three years, adequate replacement for foreign solutions is hardly possible; yet, we can already see Russian specialists already using simplified open source-based approaches. Obviously, these applications have less functionality but they can still serve a quality substitution for foreign products.

Russian developers are taking active efforts to refine open source apps, effectively creating related commercial products that are nearly on par with their foreign counterparts in certain aspects. I would mention Postgres PRO and similar software as an example.

I would say this round ends in draw, the final score being 3-1 in favor of Russian products.

Hardware infrastructure

As for the hardware infrastructure such as servers, CPUs and equipment, the Russian market currently cannot to offer decent alternatives, such examples as YotaPhone showing that we cannot expect short-term success in this regard.

Sadly, in this round I would award a point to global suppliers, the overall score being 3-2 in favor of Russian players.

Russia’s IT sector obviously has certain issues. Yet, hopefully, we can eventually find compromise solutions which will facilitate the development of the national IT industry.

Despite the emerging problems, there is still hope for compromise solutions to ensure a rapid advancement of Russia’s IT sector. Meanwhile, our IT specialists must continue seeking alternative development scenarios, particularly in fundamental areas. The country’s IT industry has already achieved considerable success. In its report issued in February 2023, TadViser said that Russia’s IT market is estimated to decrease by $12.1 bln in 2022, or 39% against 2021, amounting to $19.1 bln, a negative trend caused by Western sanctions and the lack of technological equipment, as well as the need to replace foreign software with Russian-produced counterparts. This forecast was made by IDC analysts in April 2022, who roughly estimated Russia’s IT costs in 2021 at $31.2 bln. Yet, further development requires tackling weaknesses and focus on strengths.

Although Russian IT specialists have yet to catch up with Western technology, they have already made substantial progress in developing client and internal corporate services. Through taking further efforts to improve our products and seek integration into global standards, Russia can become a leader in the global IT market in the future. However, this requires focusing on the development of infrastructure, education and research in IT, as well as on cooperation with international partners and foreign technology companies.

Given all these factors, Russian IT specialists soon may not only overtake the West in technology but also take the lead in the global IT services market.

By Dmitry Naumov, Director of Digital Technology and Transformation

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