Russia plans transition to home-grown IT
The Government's import substitution policy aims to counter Western sanctions by relying on domestic alternatives to software like Windows.
The Russian government is moving to implement a broad import substitution policy in the domestic IT industry, bolstering demand for the products and services developed by local IT firms.
The move is intended to lessen reliance on Western software and IT services, and to offset sanctions against Russia as a result of its invasion of Ukraine.
In March, President Vladimir Putin issued a directive prohibiting - with a few exceptions - state agencies and other state-owned businesses from acquiring foreign software for key infrastructure projects. That included both standalone applications and code shipped with equipment.
Russian organisations need clearance from the Government before importing software or using foreign IT services for critical infrastructure.
The Government's intent is that, by 2025, all hardware, software and foreign solutions will be replaced with Russian equivalents.
The primary factor driving the domestic market's growth in the next years, according to analysts, will be the replacement of Microsoft and Apple systems with Russian analogues.
Despite the new measures to restrict use of foreign software, the Government is permitting 'parallel imports' - the import of products without the authorisation or consent of the trademark holder. For example, they may have been developed for another market, like Ukraine, and then imported.
Although the volume of parallel imports remains relatively small, the use of pirated software and IT hardware obtained/ downloaded illegally has increased in recent months as a result of the policy.
Russian IT is teetering without global support
The main concern for the Russian IT industry is the serious scarcity of enterprise software and equipment, including servers, storage devices, and workflow tools.
In March, American chipmakers AMD, Intel and Nvidia suspended their supply to Russia after the country invaded Ukraine. IBM also halted shipments when Ukraine asked US cloud computing and software businesses to stop doing business with Russia.
For Russia, encouraging its domestic IT services and products is the only way to support its IT industry.
In a few years, the Russian government believes that local enterprises and state agencies will be able to replace the vast bulk of Western IT services and technology in their daily operations.
That is despite the continuous large exodus of qualified IT personnel from Russia to other countries. There is now a 170,000-person staffing gap in the IT sector, but the state is outwardly optimistic that the issue could be resolved shortly.
The Government is contemplating exempting most domestically skilled IT professionals from paying taxes, especially those who will work for the military. For several of the top local IT organisations, significant benefits are also being suggested.
Additionally, efforts are being made to attract some of the top Russian state businesses to enter the IT industry, to help in at least some of the sector's import replacement.
Russian state enterprise Rostec is presently engaged in building online messengers for officials and businesses, according to Vladimir Arlazarov, general director of Smart Engines, one of Russia's major IT companies.
Rostec is also developing a video-conferencing platform, which may be analogous to Zoom.
Rosatom, a Russian nuclear energy firm, is also active in IT developments and working to create software and IT systems for personal authentication.