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Window to Europe 2.0: What the St Petersburg software industry exports

St Petersburg has long been considered a Russian “Window to Europe”, but today, this expression has acquired additional meaning since the city has become Russia’s largest software exporter.

St Petersburg supplies the global IT market with cloud platforms, programming environments, speech recognition solutions, as well as a wide range of services in the field of custom software development. In total, there are about 600 IT companies operating in the city and about 200 of them export their products. Information technologies account for 25% of all St Petersburg exports.

St Petersburg-based Speech Technology Center is a developer of synthesis, analysis and speech recognition systems. It is one of the examples of how Russian programmers successfully mastered a unique niche. STC products in the field of voice and multimodal biometrics are widely known in the global IT community. Only a few companies in the world have been able to achieve success in this area.

“Now the whole business is developing towards platform solutions. If you take a look at successful businesses in the world, for example, at the top 10 largest companies, you will see that they are dealing mostly with ecosystems and platforms,” – says Oleg Glebov, Global Business Development Executive of the STC Group.

Other popular software products from St Petersburg are JetBrains which deals with programming environments, EGO-Translate which develops systems in the field of IT linguistics, Genesis which is into web- and intellectual routing services, or Wrike, providing a service for efficient cooperative work.

Among the new teams in the market, there is the promising Robbo technology startup. This is a manufacturer of robotic designer kits, with the help of which kids can construct and program a robot. The company supplied those kits to Russian schools. But an unexpected victory in the Google RISE Awards competition served as a springboard for the company’s international activities.

Another part of the companies create software solutions and software made to order. The largest IT service companies are: Auriga, Arcadia, First Line Software and Netrika. IT-service developers for Western clients create systems for collecting and analyzing large data and building analytical models aimed at providing support for management decision-making processes.

“In the market of IT services for software development, Russian companies in general and those from St Petersburg in particular occupy the intellectual products niche. Due to such national peculiarities as the propensity of our fellow citizens to more analytical perception of the world, we have certain advantages in the segment of complex mathematical systems software engineering based on big data, artificial intelligence, neural networks”, says Nikolai Puntikov, the founder of First Line Software, an IT service company, which carries out 70% of its activities in the US, European and Australian markets.

Pavel Frolov, the founder of Robbo, emphasizes the importance of taking into account the specifics of local markets and recommends looking for a local partner in the target country.

“For example, when we entered the Thai market, I did not know that gifts are usually offered to nationally important institutions. We came to a school for disabled children which is under the Queen Mother’s patronage. I didn’t take with me anything as a gift, so I gave them a learning course developed by Robbo on how to teach children to make robots. It should be noted here that in Thailand they sort of despise any instructions, specifications and manuals. No Thai school in Thailand has taken instructions to the kits, although we insistently begged them to pay attention to this. Now the only school that initially reluctantly agreed to accept the specification from us, is winning all the local robot design competitions in the country and kids from this school have received a lot of prizes”, Frolov recollects his personal experience.

Other market players are also talking about localization. Evgeniya Gorodetskaya, Vice-President for Technological Development of EGO Translating Group, developer of specialized IT solutions for the linguistic services industry, emphasizes the importance of product information localization.

“Localization of descriptive information about your solution is necessary. It is important to have a comprehensive approach, taking into account all the linguistic subtleties, cultural aspects, and differences in terminology. The task of adapting the naming and the renaming of the company’s brand, its product and solution offered by the company when entering other geographical markets remains an extremely urgent problem,” she says.

Nikolay Puntikov adds that the most accurate global business development strategy is organic growth as new clients emerge, also thanks to good company reputation.

“Sometimes customers find us themselves, as in the case of an Australian startup in medicine. The customer invented an EMR (Electronic Medical Records) system from scratch. He called our office in the USA with a request for development, and for more than five years one third of the Australian population has been using the service developed by St Petersburg engineers,” he says.

In 2019, exactly in line with this scenario, the company entered the market of South Africa, where it is preparing to develop digital solutions for transport infrastructure in Johannesburg.

As far as other St Petersburg’s IT export destinations are concerned, Genesis supplies its services to the USA, Western Europe, South Africa and the Middle East. Robbo sells its designer kits to schools in Finland, UK, Thailand and Japan. The Speech Technology Center software can be found in 60 countries around the globe.

According to Russoft 2018 data (the assessment was made at the national level), most often Russian technologies are purchased in the USA ($224.3 mio), Germany ($141.9 mio) and Switzerland ($91 mio). Among the Asian countries the leading buyers are China and India ($90.8 mio and $52.3 mio, respectively).

By Tomofey Trudnikov

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