Russia has been focused on digital transformation for a long time, but since 2020, it has entered an active phase. This is not surprising: the political and economic situation requires ensuring the security of the systems used, as well as import substitution of software used by Russian businesses and government structures. Sergey Szhenov, Director of Product Development at EdgeЦентr, talks about the current market situation.
Import Substitution as a Driver of IT Development
The growth of import substitution is influenced not only by official regulatory documents, but also by sanctions: foreign software vendors, such as Microsoft, Autodesk, and others, are restricting or completely ceasing interaction with Russian clients. This affects both the ability to purchase the necessary programs and systems, and the support of previously installed ones.
In May 2024, Russian Prime Minister Mikhail Mishustin stated that by 2030, 80% of enterprises in the country should switch to domestic software. This transition has already become a market trend, influencing the further direction of its development. It can even be called a self-reproducing trend: over the past years, many companies have already installed domestic software and plan to expand their infrastructure. The replacement of foreign software has created certain market mechanisms that will continue to develop in the future.
A similar situation is developing in the services market. Demand for services implemented on the basis of domestic software and localized in Russia continues to grow. This is largely due to regulatory requirements for storing personal data on Russian servers: it is easier to choose a service that already meets these requirements than to interact with foreign vendors.
As an EdgeЦентr survey shows, more than half of Russian companies have already partially switched to Russian cloud platforms and software, although only 40.1% of their managers consider such services a full replacement for foreign solutions. This mainly concerns the convenience of interfaces, the quality of integration with other services and software, and the speed of updates. All these factors are areas of growth for domestic developers and vendors, which can be closed as the market develops.
Shift of the "Center of Gravity" from the State to Business
The development of domestic solutions is largely related to the availability of budgets for their development, as well as the commercial benefits of their use. In July 2024, a restriction was introduced for state corporations and state-owned companies, the main recipients of funds from the state budget for software import substitution. According to this restriction, if the share of sales to affiliated organizations exceeds 30% for the past calendar year, the software product will not be included in the Register of Domestic Software.
These requirements encourage state-owned companies to revise their budgets and abandon the creation of duplicate solutions if analogues already exist on the market. Thus, competition between state and commercial companies is leveled, and already existing commercial software receives the financial support necessary for its further development.
The Most Difficult Situation is in Key Industries
According to data for 2024, the agro-industrial complex, electronics, and microelectronics suffer the most from the complete absence of specialized domestic software to replace foreign software. For example, in the fields of metallurgy, the chemical industry, and the fuel and energy complex, the share of foreign software exceeds 98%.
However, there is also positive news: by 2026, domestic analogues of the American software Cognex-ViDi and Visual Inspection AI, which is used to check the quality of microelectronics and reduces the percentage of defects, should appear in Russia.
It is also known that some industrial enterprises initially use domestic software, including their own development. For example, EKF (an electrical equipment manufacturer) mainly uses Russian software and tries to replace foreign programs with its own developments.
The Question of Price
The cost of switching to Russian software may vary depending on the specific organization and the conditions of the transition.
According to a survey by the company "P7" for 2024, the inflated cost of Russian software is one of the main reasons why large Russian companies are in no hurry to switch to it. High prices can be a particularly serious problem for small and medium-sized businesses with a limited budget for software purchases - more than 70% of respondents in this category named cost as the most important criterion when deciding to switch to new software.
At the same time, the market situation is unlikely to change for the better. In the spring of 2024, it became known that the profit tax for IT companies will increase to 5% from January 1, 2025. Many developers decided to prepare for this in advance, and already in June 2024, their software rose in price by 20%.
Cloud solutions, which have been gaining popularity in recent years, face another potential problem - a shortage of capacity. This can be solved by building new data centers, but space in Moscow and St. Petersburg - the most popular places among customers - is limited, and regional data centers are not popular on the market. Huge investments are required in infrastructure development, and it is not always possible to compensate for them at the expense of users. Many operators, for example, EdgeЦентr, are keeping prices for their services at the same level, lowering their margin, but this solution is temporary. Price increases will occur, but they must be justified by the appearance of additional services and new opportunities for customers.
The Thaw Has Warmed Up - Will Foreign Solutions Return to the Market?
The process of returning foreign vendors may be delayed. It is extremely difficult for foreign software and equipment developers to return due to legal and ethical aspects, although many of them were able to maintain active communication channels with Russian clients even after leaving.
The mass return of Western IT corporations to the Russian market can be predicted in the period from 2029 to 2031. At the same time, access to government agencies and large corporations will in any case remain closed due to regulatory restrictions. However, this process will in any case be difficult. In March 2025, Russian President Vladimir Putin instructed to develop a procedure for the return of foreign companies to the Russian market, according to which Russian manufacturers should receive certain advantages in the competitive struggle.
The arrival of foreign vendors will create additional challenges for Russian developers, but government support and continuous improvement of the quality of domestic software will help maintain positions. Competition in the segment may become an incentive for further growth and improvement of Russian solutions.
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