Russia country profile, Russian ICT and ITO market trends

1. IT SOURCINGEUROPE Central and Eastern Europe’s Country Profile: Russia

2. Area: 17,075,200 km2 Population (est. 2009): 140.041 million Human Development Index (ets. 2007): 0.817 GDP/capita (est. 2009): 11,094€ GDP growth rate (est. 2009): -0.47% IT Outsourcing market value (est. 2009) – 660,6€ million GENERAL DATA

3. * Based on the 2009 Legatum Institute estimation PROSPERITY INDEX*

4. PROSPERITY INDEX

6. Russia represents by far the highest market potential in Central and Eastern Europe and continues to maintain very extensive economic and political authority in the region.

7. ICT market is currently undergoing some significant changes as the opportunities seem unlimited. The market is vast and there is still a lot to do in many sectors. The Russian IT market seems to be closely related to the overall economic evolution, but most of all to the primary resources market.

8. More than 2/3 of IT revenue is generated by the public sector, supporting the necessary development of the country’s technological infrastructure. A great number of products and services are therefore intended for this sector.MARKET TRENDS

10. The Central region with the capital city of Moscow concentrates nearly 37% of the ICT channel players, representing the most important growth cluster for the ICT sector. The Northern region comes second with a 19% concentration rate, while the former industrial Ural region concentrates about13% of the ICT channel players.

11. Of all Western countries, the United States is most interested in the Russian ICT industry, attracted by its great growth potential and lack of maturity.MARKET TRENDS

13. Outsourcing of software services to Russian companies for reasons of cost generates only 7% of the total IT revenues.

14. The antivirus sector is a Russian specialty, and their distribution network extends to over 60 countries. This market is expected to expand, together with other cost effective markets such as server virtualization.

15. The growth in ERP solutions is comparable to overall growth in the ITO sector. The market also shows great interest for BI solutions, as lately consulting has experienced a growth trend.

16. Recession has led to a significant decline in the Russian ITO market. As a result, many service providers restructured their IT spending to support implemented solutions and to reduce the cost of services. IT spending on systems upgrade has been frozen, while spending on IT support – retained.MARKET TRENDS

18. One of the main constraints of the Russian software market remains piracy: estimates indicate that more than two thirds of existing products on the market are pirated.MARKET TRENDS

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