On 1st June, 2022, an expert session “Export of Russian ICT” organized by RUSSOFT took place within the framework of the CIPR conference. The session was moderated by Valentin Makarov, President of RUSSOFT.

The changes that took place in the world after the start of the special military operation radically transformed the landscape of the IT market and created prerequisites for the Russian IT industry to gain leading positions in friendly markets, besides in emerging markets of the 6th Technological paradigm.

Support for the export of software products, software engineering services and hardware, and software platforms should become a strategic priority of state support for the development of the industry. There are still numerous barriers on the way of export activities in the IT sector, which are created both by unfriendly countries in the form of anti-Russian sanctions, and by the existing regulation of various aspects of export activities in Russia.

The participants of the expert session discussed what problems exporters have, what support measures are now required by IT companies, and what the state can do to support and stimulate exports.

At the end of the session, a resolution will be developed, where IT companies will note the necessary measures to support exports. The resolution will be presented at the RUSSOFT IT Breakfast at the SPIEF-2022 on 18th June.

Valentin Makarov, president of the RUSSOFT IT Association, noted that in the current conditions, Russian software developers are forced to significantly change the geography of marketing and turn to developing countries that are open for partnership:

“Due to the anti-Russian sanctions in 2022, the export of software and services for its development to the United States and other unfriendly countries will be significantly reduced. Due to the refusal of customers to work with Russia, we may miss 50% of exports, which is about 300 billion rubles. Neither the growth of import substitution nor the funds of the RFRIT fund will be able to compensate for these losses, which means that in order to retain IT specialists in Russia, it is necessary to take proactive measures to stimulate the transfer of part of the IT industry sales to the developing countries markets. First you need to change the attitude to IT export.

The special operation led to the polarization of the world. Developing countries appreciated the independence of Russian IT solutions and Russia’s desire for digital sovereignty and realized that Western vendors control their information flows, besides, they may suddenly stop fulfilling their obligations. It is especially important that developing countries need only Platform solutions which include not only system and application software, but also hardware, which we produce in Russia and which is the basis of infrastructure, which means that exporting platform solutions means supporting the development of hardware and software sectors.

By exporting platform solutions to developing countries (which is 40% of the global IT market), we create technological connection of these countries with Russia for many years, provide training for engineering schools and generations of users who support the implementation of the product, and thereby create a critical infrastructure of the country based on Russian IT technologies. This is how we will form a New technological paradigm in developing countries based on Russian solutions.”

Representatives of the largest exporting companies spoked about how the practice and export policy of the Russian IT business has changed, and what alternatives IT companies see in developing countries.

Andrey Shastin, Director of business development in the field of medical and embedded software at Auriga, said that despite the fact that talks about developing cooperation with large Western companies have been suspended, medium-sized companies and startups that are less dependent on the political environment and need operational support are still ready to work.

Nevertheless, changes are needed: “The outsourcing market has long demanded the transformation of the commercial offer towards the development of proprietary software solutions. It’s time to give up past habits. The prospects for emerging markets are really broad, but it is important to take into account their technological and cultural specifics – fewer R&D centers, a different logic of budget planning.

While Western businesses seek to minimize risks, we have to think about what can be done to minimize the dependence of these companies on Russian exports. Alternatively, we can sell “semi-finished” code (parts of functional packages), this will allow Western companies to reduce the time needed to create software and at the same time consider the code their own.

As for relocation, it goes slowly and loses its appeal. There are a lot of household and social issues that the relocated employees have to solve themselves. In our experience, less than 30% want to relocate. Therefore, the risk of losing engineering talents may be exaggerated.”

Lev Matveev, Chairman of the Board of Directors of Serchinform, supported the development of platform solutions and the provision of a range of software prosucts to customers, but this will be possible only with the full and constructive support from all levels of government and its offices in partner countries:

“It is important for us to change the attitude to the industry within the country, because IT is better than oil. We need the help of ministries, trade missions, and ambassadors. For this purpose, the Digital representatives initiative was created, but so far there have been no concrete and practical actions to support companies. People who will represent the interests of Russian IT in the countries of presence should clearly know the strengths and weaknesses of our products, understand their competitive features, and be interested in the effectiveness of their own work. Therefore, it is important to motivate digital representatives, for example, to give them a percentage of the transaction, to enter KPIs.”

Dmitry Dyrmovsky, CEO of the Speech Technology Center, highlighted the importance of developing exports, new partnerships, and promotion mechanisms:

“Latin American countries, APAC and MENA have traditionally generated demand for Russian AI solutions and such demand is growing – in 2021, the export revenue of the Speech Technology Center increased 5.6 times compared to last year. The catalyst was the request of these regions for import independence and digital sovereignty. The export of Russian effective AI solutions and platforms allows, on the one hand, to satisfy such a request, and on the other hand, makes it possible to stabilize the situation in the IT market, support and motivate the best personnel with the opportunity to participate in large–scale, globally significant projects.

An important factor of the project approach in the LATAM, APAC and MENA regions is the availability of a financing mechanism, and here the synergy of leading IT exporting companies and the strengthening of state export support mechanisms is important. The development of the digital representatives initiative may also help. Leading developers can make a serious contribution to the development of the initiative, so the experts of the Speech Technology Center can share their expertise in the field of artificial intelligence, as well as real experience in exporting high-tech products.”

Alexander Gutin, Marketing Director of Astra Group, said that the current situation is not only a challenge, as is commonly thought, but also a huge opportunity for development:

“Solutions built on the infrastructure platform principle are especially in demand in the domestic and international markets now. In a situation where third-country customers cannot be sure of the reliability and support of Western vendors, it is the platform approach that ensures the continuity of the company’s business processes that can become a key advantage of Russian IT in the international arena.”

Alexander also noted the need for preferential lending to Western customers, because Russian products and services, especially if purchased in a complex, will require serious financial costs.

Representatives of export support institutes: RFRIT, Russian Export Center and Moscow Export Center spoke on the topic of assistance in the development of IT solutions exports.

Alexey Mudrakov, head of the REC Client work project, said that REC plans to enter new markets, as well as expand the list of its representative offices in different countries.

Alexey noted that IT companies should continue to talk about their needs to the state, then the support centers will have resources on a larger scale. It is important that the Ministry of Digital Development and the Ministry of Industry and Trade of the Russian Federation develop an interdepartmental policy on IT development, which everyone will follow.

Vitaly Stepanov, CEO of MEC, spoke about the support tools for IT companies provided by MEC, noted that even the individual requests of IT companies MEC is ready to work out.

Maxim Kiselyov, Director of the Department of Strategic Development and Project Activities of RFRIT, noted that the Institute of digital attaches is actively developing. More than 600 candidates are currently being selected for these positions. Additional training and internships will be available for the selected specialists both in development institutes and in IT companies.

Digital attaches will be representatives at trade missions, and their KPIs will depend on the satisfaction of companies and sales of contracts with their assistance. They will become a single entry point for IT companies, will provide analytics, marketing and legal support based on RFRIT.

Valentin Makarov, President of RUSSOFT, noted that now there are opportunities for export development that require almost no costs from the state:

1. It is necessary to use the funds of the Rosinfokominvest fund, which were suspended after closing, they should go to the RFRIT and be directed to foreign marketing of the Russian IT industry.
2. It is important to start using alternative digital and dollar-independent digital payment systems to ensure business transactions for import-export operations.
3. It is necessary to simplify obtaining permits from Russian regulators for the export of critical IT systems, to stimulate the export of critical information infrastructure and information security technologies.
4. IT export support should become a priority for REC to provide IT exports with a set of its financial and non-financial support measures.

At the end of the session, experts from IT companies noted that support for business missions is needed, a mechanism for material incentives for digital attaches and representatives should be provided so that they maximally facilitate the conclusion of transactions and contracts, it is necessary to allocate money for PR and marketing of Russian IT products and services abroad.

For the status of a digital representative, it is also important that he has the authority, and for effective work in the market, a name, and reputation in the business sphere of the selected region. The company also expressed its wishes that the competition commission for the selection of digital representatives should include people from the IT community. The experts also noted the need for up-to-date information on the state of the market in each specific selected export region.

Taking into account the changing global context for the export of Russian products and services, it is important for support measures to be transformed as quickly as possible to the changed world. Now we need to use the maximum potential of Russian companies in the window of opportunity that has appeared.