What's Going To Happen To Import Substitution? Highlights Of The RUSSOFT Press Conference

Growth on the domestic market for Russian companies has remained significant over the last 3 years: sales of Russian companies on the domestic market have grown by more than 30% annually, contributing to the total turnover expected to reach 2.6 trillion rubles in 2024 compared to 2 trillion rubles in 2023 (according to RUSSOFT estimates). However, despite this success, the software industry has to make a choice whether to continue focusing on import substitution or actively develop exports.

In 2024, export indicators are expected to show positive dynamics for the first time in several years thanks to arranging work with friendly countries. According to RUSSOFT Research, in 2024, foreign sales volume will show growth for the first time in 3 years, with exports increasing by 6.6% due to the friendly markets. This highlights the export potential of Russian technologies, especially given the need to achieve technological sovereignty and the obvious limitations of the Russian domestic market size.

To sum it up, the conference has shown that Russian solutions have tremendous opportunities to enter the international arena, but it’s necessary to understand the main trends of specific markets, have a strategy, and receive adequate government support for promotion on foreign markets.

At the same time, broad opportunities remain within the country—even if some Western IT vendors return, it’s impossible to stop the development of our solutions, so formats for preferential growth of the Russian industry must be developed alongside effective coexistence with imports.

 This is according to the speakers at the RUSSOFT press conference.

 The event opened with welcoming remarks from Valentin Makarov, RUSSOFT President, who moderated the press conference:

 “For three years we've been engaged in import substitution in an environment where the entire unfriendly world imposed sanctions to prevent Russia from using ICT for its development. In this environment, the ICT industry not only survived but also helped the country’s economy demonstrate growth exceeding the one of these unfriendly countries. Software import substitution will continue, but declining sales growth rates due to the limited size of the Russian market necessitate not just focusing on import substitution on the domestic market but actively developing exports, despite insufficient state support.

 Despite the departure of foreign vendors, we've proven our ability to support critical information infrastructure and build an independent IT industry. However, the urgent nature of import substitution measures has led to new domestic problems: thousands of new products in the registry result in tough competition and disperse resources, and there are customer complaints about overpriced Russian software, although our inspections haven't confirmed this. We're facing a transition period—it’s important to find a balance between systematic work on replacing imported software in critical information infrastructure and promoting domestic developments abroad, which is absolutely necessary for transitioning from a ‘besieged fortress’ model to technological leadership.”

Ildar Khusnutdinov, Executive Director of ICL Services, shared the company's experience in applying international IT practices on the Russian and global IT markets:

 “ICL Services continues to operate on highly competitive overseas markets. Successful practices established before 2022 and proven by many years of working with foreign customers are now being used for projects on the MENA and Balkan markets. For us, selling Russian IT solutions here is a form of art. As it's very important to follow the ‘rules of the game’, i.e. to have a representative in the region, localize the product and support it in English, be ready to invest time and money, provide high quality services, and offer competitive prices. But there are promising areas for cooperation, and we see opportunities to implement interesting large-scale projects. These include digital platforms for banks, cloud solutions, IoT, information security, digital platforms for government agencies, smart city solutions, and many more.”

View the full video of the conference and other speakers here. 

Learn more about ICL Services’ goals and business positioning in the new video.