The IT Business Breakfast at SPIEF 2022 "IT Leadership — Alliance of Russia and the Developing World"

On 18th June 2022, the IT breakfast “IT Leadership – Alliance of Russia and the Developing World”, organized by RAEC and RUSSOFT, took place at SPIEF 2022.

The topic for discussion was the possibility of Russia gaining a leader position in the field of IT, as well as the development of measures of state support for the IT industry.

The participants of the IT business breakfast:

  • the leadership of the Ministry of Digital Development, Communications and Mass Communications of the Russian Federation;
  • deputies of the Federal Assembly of the Russian Federation; 
  • leaders of the software export industry and leading Russian Internet companies;
  • IT business representatives from India, Latin America, and Southeast Asia.

The event was devoted to the following topics

  • Existing opportunities and limitations of cooperation between Russia and developing countries in the field of ICT 
  • Promising areas of cooperation, formats of interaction, methods of regulation
  • Risks of countering cooperation between Russia and developing countries in the field of ICT and ways to reduce them
  • Administrative barriers to international cooperation between Russia and developing countries in the field of ICT, ways to eliminate them and measures of state support

The moderators of the IT breakfast were Valentin Makarov, President of the RUSSOFT IT Association, and Sergey Plugotarenko, Director of the RAEC.

Валентин Макаров | Valentin Makarov

Valentin Makarov said that 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:

“In addition to the problems, we have also received opportunities for development. Developing countries appreciated the independence of Russian IT solutions and Russia’s experience in the formation of digital sovereignty. It is extremely important for developing countries to get 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 complexes.

By exporting platform solutions to developing countries, we will create a critical infrastructure for them based on Russian IT technologies, and we will link our countries with cooperation for many years to come.”

“The topic of digitalization runs through the entire SPIEF, which turned 25 this year. The digital agenda is particularly important in Russia today. Our IT Breakfast is an annual business card of the SPIEF, and this year is no exception. This year we especially want to focus on what trends in the IT industry are taking shape in this new reality that hit us three months ago. It is also important to pay attention to the external agenda: whether Russia can lead new economic alliances,” says Sergey Plugotarenko, Director of the RAEC.

Igor Kirichenko, CEO, member of the Board of Directors of NAUMEN, shared his experience of working with Southeast Asian countries and told about the necessary support for exporters:

“Entering international markets is difficult and costly for IT companies as well as for representatives of other industries. At the same time, unlike the “classical export” industries (energy resources, grain, equipment), there is practically no infrastructure and government support measures for IT companies now. We have to independently carry out a set of measures from market research and target audience to localization and product advertising, which can take several years and cost the organization a few hundred million rubles during this period. Without state support for marketing activities in foreign markets, Russian IT solution developers may not reach the first sales.

Another problem is settlements with local consumers. One of Naumen’s new cloud products found its first customers in Latin America and Southeast Asia, but due to the current situation in the banking sector, users could not pay for the service, and the bank, fearing secondary sanctions, refused to acquire. Companies exporting IT products need support at the state level so that such cases do not arise. An example of such fundamental support is intergovernmental agreements that will allow Russian companies to open legal entities in friendly countries without fear of blocking accounts. The distribution of an independent payment infrastructure — Russian National Card Payment System and MIR – will also help work with consumers.”

Lev Matveev, Chairman of the Board of Directors of Serchinform, spoke about the experience of working with the markets of developing countries and shared the necessary, in his opinion, measures to support the IT industry.

“We were prepared for the current situation: a long time ago we started working in the markets of Latin America, Africa, the Arab world, and Southeast Asia. In our relations with customers in these regions, we have repeatedly come across the fact that in choosing between Russia and the United States, preference is given to the former.

We have several proposals regarding government support measures for the IT industry. It is necessary to create Russian hubs in friendly countries, these should be not just offices, but call centers, developed branding, PR and marketing of domestic technologies, all together. Digital representatives need to be given a high political status, and it is very important to allow vendors representing the industry to participate in the selection of candidates. We need to use the potential of people who graduated from Russian universities 20-30 years ago. They already occupy the positions of generals, TOP managers and treat Russia well. You can make their registry and create a business activity. It is not necessary to supply individual licenses abroad, but platforms. We propose to introduce a data protection center in Russia, turning it into a full-fledged service, not a separate product. Finally, in my opinion, structures such as the Russian Export Center need to focus more primarily on IT exports.”

Ruslan Vagizov, Director of the international group of companies ICL Services, spoke about the changes in international expansion:

“Today we are witnessing the transition of the IT market to a new outsourcing model – Friendly Nearshoring – which involves the transfer of business processes to friendly countries located geographically close to the customer and not affected by global sanctions. The trend itself is not new, but it is becoming a key one. Back in 2016, after the initiation of sanctions against Russia due to the annexation of Crimea, ICL Services opened an office in Serbia. Through this location, we were able to continue delivering IT services to EU countries, and now we are working on restructuring so that the company meets the new, even more stringent requirements from European customers. Speaking about IT export support tools, we see great potential in expanding partnerships, both industry and technology. Russia actively participates in major international investment projects. Being long-term, they are not limited exclusively to the construction of new facilities, but also involve maintenance of equipment, modernization of related infrastructure. It is advisable to link these projects with the technological work of Russian IT companies in terms of providing services for their maintenance and support,” the speaker noted.

Dmitry Dyrmovsky, CEO of the Speech Technology Center:

“One of the drivers of export and success of Russian IT companies abroad is technological leadership. In less than a year and a half, the Speech Technology Center has shown the best results in six landmark benchmarks at once – from voice biometrics and speech analytics to speech recognition in Hindi, which, thanks to the skilful capabilities of our developers, we have learned to recognize better than native speakers. It is obvious that for the full realization of the export potential, not only high-quality technologies are important, but also deep expertise, experience in implementing secure infrastructure and creating complex AI solutions and platforms. It is for this whole range that our solutions are valued not only in Russia, but also abroad, especially in the LATAM, MENA and APAC regions, where the demand for Russian solutions is in demand for import independence and digital sovereignty, which we can fully satisfy. 

Already in 2021, the exports of the Speech Technology Center increased to 50% of revenue. For example, the asset of the company is a solution based on speech technologies and voice biometrics, which is used in the UAE, Saudi Arabia, Mexico, Ecuador, Vietnam, Qatar, Egypt and 70 other countries around the world. The creation of an expert group of representatives of IT companies with proven foreign experience under the Ministry of Digital Development can support exports, which will be able to quickly adjust and adapt support measures, form a comprehensive offer as part of multi-vendor Russian products, industry or platform bundles. The development of the Digital representatives initiative for the state promotion of Russian companies abroad will also help, which is important to develop in cooperation with leading developers. It is also important to adapt subsidy and marketing programs in the countries of presence, create a competitive mechanism for crediting customers and debug cross-border payment processes.

This set of measures will not only help to stabilize the situation in the IT market, but also motivate the best personnel with the opportunity to participate in large-scale global projects.”

Vladimir Troyanovsky, Deputy Director General of the MIR payment system:

“Being a lifeguard is good, but our role is different. Our company was established in 2014 after well-known events, and we focused on B2B and B2C platform solutions. MIRpay, SBP, and the Central Bank System are now actively working. 

We provide technological assistance to friendly countries, for example, Armenia and Belarus. So, in these countries, the cards were protected only by a magnetic stripe, but we gave new technologies, increasing the level of payment security. We communicated with foreign partners, especially in China, when we began to draw the architecture of solutions, and saw that it was equal (front-line solutions). And this is our pride. We need not import substitution, but the development of our own technologies, which will help tomorrow. This is our mission. We are not doing what will be relevant today, but what will be relevant tomorrow and the day after tomorrow.”

Alexander Tobol, Technical Director of VK:

“Our mission is to connect people, services and companies by creating simple and convenient communication tools. Thanks to the extensive technological landscape, we have launched separate VK Clips, VK Calls, VK Messenger applications in record time this year, and others will appear soon. We have extensive experience in content delivery, machine learning, recommendation algorithms, and communication technologies, which we are ready to share with the market. Now, at the SDK level, we are sharing our solutions for video, streaming, calls, which are already used in their solutions by Aliexpress, uchi.ru, Tetrica and many others. If you understand that our solutions will help you achieve your goal faster, we will be happy to help you.”

Alexey Goreslavsky, General Director of the Institute for Internet Development:

“Despite the situation that has developed in the world, we understand that there is a documentary request for animation and, oddly enough, for games. I would like to note that the situation in the games market is not the easiest right now either. Over the past few months, we have done a lot of work and found out that there are quite a lot of game development projects and everyone has one request for help selling products to the markets of Southeast Asia.”

Andrey Bezrukov, President of the Association for the Export of Technological Sovereignty, Professor of the Department of Applied Analysis of International Problems at the MGIMO University under the Ministry of Foreign Affairs of Russia

“Our path is a movement of technological non―alignment, where major players unite on common platforms with common solutions, which are then sold around the world. We are talking about the economy, but government policy aimed at creating technological alliances with our partners, such as India or ASEAN, is what we need now. There is practically no technological and digital agenda in our Foreign Ministry and other ministries, and there is none at the highest international level: ambassadors in various countries do not know what technological and digital alliances can be negotiated. We need technological diplomacy, that’s how we come to it: firstly, we need to go in full consortia, negotiate together about money, logistics, etc.; secondly, we need to go with our own money, in particular, with public funds; thirdly, we need to create foreign centers, foreign points of attraction”.

Ilya Sivtsev, Director General of ASTRA Group of Companies:

“Developing countries now have a need for products that are independent of the largest Western vendors.

As novice exporters, we feel that we lack a state “big brother” who would be aimed only at IT exporting and with whom we could interact on all issues of entering the markets: finding partners, assistance in cooperation with trade missions and at the level of diplomatic missions, as well as with colleagues who have successful cases of working in such markets. 

State business missions would be useful, “digital pumping” to developing countries to demonstrate our solutions. If the state organized them and showed platforms that could close the business tasks of foreign customers, it would be easier to sell the products on which these solutions are based. Financing of export contracts and insurance of accounts receivable, taking into account IT specifics, including simplification of the scheme for obtaining insurance and financing of small transactions and projects, will also be useful as a support measure.”

Igor Kalganov, CEO of T1 Group of Companies:

“As a representative of the IT sector, I want to thank the state and, in particular, the relevant Ministry for the fact that an extremely comfortable regime with a low tax rate, grants, subsidies, concessional lending has now been created for the industry. We are simply obliged to use the funds saved on taxes as investments in development – both domestically and in foreign markets. For example, Innotech, which is part of the T1 Group, has already shown the highest rates of development, has grown in two years from zero to tens of billions of turnover and staff of 10 thousand employees. And it is important for us not to lose pace, develop export potential and promote our own digital banking platform to loyal and interested markets in the Middle East, Africa, and Southeast Asia. It is better to do this with the support of colleagues.”

Vadim Glushchenko, Director of “Competence Center for Global IT Cooperation”:

“It is difficult to talk about barriers to export, not to mention the people who make software and hardware for export. We could not stay away from studying the topic of relocation. Each relocation case has its own characteristics. Some February decisions were made on emotions, so many are already returning: data is being announced that 85% of IT specialists have returned. In the course of our research, we communicated with real people, and the portrait of a typical “returnee” looks like this: he worked in Novosibirsk, had a permanent job and a couple of freelance projects, and decided to leave in early March. I considered Estonia, Georgia, Armenia and Poland.

I compared the pros and cons: somewhere there was an opportunity to communicate in Russian, somewhere it was better with taxes, somewhere a more familiar cultural environment. In the end, I chose Turkey. After living for 1.5 months, I realized that the situation is not much better: incomes are lower, the standard of living is not what I’m used to, the language barrier. After learning about what measures to support the industry exist, I decided to return. Now in Russia there are unique opportunities for self-realization of IT specialists. Today, many interesting ideas were voiced on how to self-actualize, for example, in the international arena: a program for training digital attaches, the movement of “technological non-alignment”. As we can see, there are not so many unfriendly countries. We have like-minded people in Asia, Africa, and Latin America. Colleagues from developing countries are ready to work with us to promote common ideas on relevant international platforms, such as the UN Forum on Internet Governance. And, in my opinion, international cooperation in the field of IT is one of the promising tracks of self–realization.”

Kirill Menshov, IT Director of PJSC Rostelecom:

“I don’t know how small companies with cash gaps survive. Even if we implement all these measures, we will not make much progress. It all comes down to another story: to sell something unnecessary, you need to buy something unnecessary. The secret lies in much greater cooperation, perhaps within the framework of BRICS. We have to open the doors and accept a certain amount of friendly software. It’s no secret that everyone develops software based on foreign components. We have to think about our foundation so that our products appear.”

Valery Tumin, member of the Expert Council on the Development of the Digital Economy under the State Duma Committee on Economic Policy:

“The Russian Federation has a huge potential in the development of IT leadership, including the field of information security. We are facing an unprecedented number of cyber attacks, and Russian organizations have accumulated vast experience in fending off threats. Such experience will only increase in the future – but, separately, within the framework of industry response centers. The creation of a single competence and information exchange center will centralize information exchange, as well as ensure that existing CERTS receive information from medium and small enterprises that are not part of the perimeter of industry centers. If he extends his cooperation to the SCO and BRICS members, the Russian Federation will take a leading position in creating a space of trust and coordinating the international response to cyber incidents.”

Anton Dumin, IT Director of Gazpromneft

“Everyone talks about their problems. We have talked a lot about software, UNIX platforms, but there is another direction that is worth paying attention to. This is not software today in the current reality, but in the future it is already software. These are programs for the innovative development of industrial automation. We want to base this direction on the basis of international standards. Everything that will work in the fast connection mode – it is necessary to adopt and develop these standards within the country. Within the framework of industrial automation, this cycle is more complicated and longer. A single platform within Russia, which is used by all industrial enterprises, allows our players to move together. The idea is that we should fix the direction by our standards, which would give the opportunity to develop internal players and move in an external direction. This decision would help not only our country, but also friendly countries.”

The results of the IT breakfast were summed up by Maksut Shadaev, Minister of Digital Development, Communications and Mass Communications of the Russian Federation:

“Following the results of today’s event, I have recorded several important ideas and proposals. So, it is urgently necessary to increase exports to friendly countries to compensate for the losses on the foreign market. It will not be possible to do this quickly without direct state support. We have four priority directions of cooperation: Southeast Asia, the Middle East, Latin America, and Africa. We also have four priority areas, which I have placed in four large blocks: financial support, sales, payments, and international cooperation. 

Financial support infrastructure: it is important to launch grants to mature IT companies to enter foreign markets. Also, when the company enters the market, there are ready-made offers from banks: preferential lending to foreign customers and insurance of receivables. It is proposed to use the funds allocated to Rosinfokominvest as the main source of financing. 

In the direction of sales infrastructure: it is necessary to use the system of trade missions in order to have digital representatives. Direct financial motivation is a great idea. The business should accept their candidacies, it should be good corporate salespeople with an understanding of products in order to build a sales infrastructure.  Organizing a roadshow of Russian solutions and pumping potential customers across individual segments and industries is also a very good story. State-owned companies need to include the tasks of promoting Russian solutions in their directives and KPIs. 

The payment infrastructure is the most incomprehensible block. We need to discuss how to build a system of mutual settlements. 

On the infrastructure of interaction, I have identified three main areas. Open source – we must lead the movement on cooperation. Cybersecurity – a topic in which Russia is recognized as a leader, everyone will be ready to cooperate, at least to have a second opinion. The formation of industry standards is also a very important topic. 

About the working group: it can be done, but it is important to intensify work on the Russian Export Center line, now it is responsible not only for exports, but also imports. I think we need to agree that the head of the REC would have a separate deputy in our line. There were questions about the state and IT. Innotech correctly noted that the state can help, but the initiative should come from the industry. A big request on your line to activate. We are ready to move in these directions. Let’s turn this into a clear plan of action. The amendments on tax benefits are in the Duma, so we are waiting for their consideration. We are doing everything possible to speed up the process. I’m leaving here with a big checklist of what needs to be done.”

Maksut Shadaev noted that he expects RUSSOFT and the industry to be included in the process of working out proposals to support the industry.

As a result of the business breakfast, the Ministry of Digital Development published a list of priority areas for export development. By September, the Ministry plans to form an export support program based on industry proposals.

Максут Шадаев | Maksut Shadaev

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