Office Software (Russian Market)

2023: Growth in the volume of the Russian office software market by 12% to 64 billion rubles

At the end of 2023, the volume Russian market office software grew by 12% and reached 64 billion, rubles while in 2022 this figure was 56.9 billion rubles. data TAdviser Representatives have shared these since April 12, 2024. J’son & Partners Consulting

According to the results of the company's research, the main market share fell on the corporate segment (B2B) - 35.3 billion rubles (55% of the total market volume). In second place is the state segment (B2G) - 26.4 billion rubles (41% of the total market volume), and in third place are individuals (B2C) with 2.3 billion rubles (4% of the total market volume). For comparison, in 2022, the corporate segment amounted to 30.4 billion rubles (53%), the state segment - 23.9 billion rubles (42%), and individuals - 2.6 billion rubles (5%). The share of Russian software in the total market volume in 2023 reached 21% and amounted to 13.5 billion rubles, compared with 15% of the share of Russian software in 2022 and 12% in 2021.

Analysts at J'son & Partners Consulting confirmed the forecast for the growth of the market share of Russian office software in the total commercial market to 80% by 2030. The results of the current study show that if current trends continue by the end of 2030, the market will exceed 100 billion rubles and will have the following structure: Russian office software platforms will occupy a large market share - up to 80%, the share of open source solutions will be 10%, and foreign solutions - 10%.

At the same time, analysts also adjusted the market forecast for the period 2023-2030 towards smooth dynamics due to a longer than expected technological process of import substitution and maintaining the ability to purchase foreign software.

Despite this, in 2023-2025, high growth rates are predicted (12%) against the background of the ongoing digitalization of the economy and import substitution. After 2025, a slight slowdown is predicted due to the approach of the market to the saturation stage: by that time, most of the market will already use domestic software products. The CAGR between 2021 and 2030 is projected to be 11% CAGR.

J'son & Partners Consulting estimates that the main drivers of dynamics are:

• leaving the Russian market of foreign players - in particular, in 2024-2025, the validity period of three-year licenses for products of foreign vendors will expire;
• increasing the business risks of using foreign software and increasing its cost due to sanctions;
• the need to ensure information security and digital sovereignty by both state and commercial enterprises;
• active actions states to support domestic producers and import substitution;
• consistent policy of the Ministry of Digital Development, Communications and Mass Media;
• strengthening the requirements of government and commercial organizations for control over the storage of data;
• the growth of consumer loyalty to Russian software, since in 2023 many of the customers have already passed the stage of finding new solutions, conducted IT audits and pilots, decided on the choice of systems and launched migration projects;
• efforts of vendors to develop products.

At the same time, a slowdown in economic growth may become a barrier to market development, which affects purchasing power.

Office software refers to a set of software products, primarily intended for processing electronic documentation on a PC with the ability to work together. As a rule, the package includes editors of text documents, tables and presentations, as well as other components, depending on the manufacturer and product modifications. The market does not include: antivirus software, instant messengers, specialized office solutions such as email, calendars, task and project management systems, image processing applications, etc., the researchers explained.

2021: Growth of the Russian office software market by 9.54% to 42.5 billion rubles

On August 16, 2022, J'son & Partners Consulting shared with TAdviser the results of a regular study of the Russian market office software for 2021.

At the end of 2021, the market volume amounted to 42.5 billion rubles, an increase of 3.7 billion rubles over the year (or 9.54%). A large market share fell on the commercial sector: 28.8 billion rubles. In second place is the public sector - 10.9 billion rubles, in third - individuals: 2.8 billion rubles. For comparison: in 2020, commercial companies spent 26.2 billion rubles on office software, state-owned companies - 9.9 billion rubles, individuals - 2.7 billion rubles.

The Russian office software market grew by 9.5% over the year
Source: budemdobree.ru

At the same time, analysts at J'son & Partners Consulting revised the forecast for the growth of the market share of Russian office software to 82% by 2027. According to experts, the situation in 2022 is unique to the mature market, which is the office software market in Russia.

At the end of 2021, saturation was quite high and further growth was expected to be smooth. However, the observed macroeconomic factors, the dynamics of demand in 2022, the requirements of state regulation, the development of market players lead to a radical change in the market structure over the next 3-5 years, including a sharp increase in the share of Russian office software, - noted in the report J'son & Partners Consulting.

Thus, earlier it was expected a smoother dynamics of an increase in the share of Russian office software (from 7% in 2020 to 40% in 2026) and open source software (from 15.5% to 30%), as well as a decrease in the share of foreign software (from 77.5% to 30%) and a more even distribution of the market between different types of players.

Taking into account the results of a regular study for 2021 and subject to the preservation of the observed trends, J'son & Partners Consulting expects that by the end of 2027, Russian office software platforms will have a large market share (forecast up to 82%), open source solutions will remain 10%, and foreign - 8%.

The company's analysts also predict a partial redistribution of market share in favor of two Russian software manufacturers: R7 and MyOffice. At the same time, the potential market capacity can reach 327.3 billion rubles. It includes, in addition to users purchasing commercial licensed software, also those who use free software (open source), conditionally free services (including freemium), non-updated, outdated or unlicensed software.

In 2022-2023, a rather sharp increase in the growth rate of the Russian software market is predicted, despite the expected reduction in the overall growth rate of the Russian economy. Until 2025, growth will be moderate, then it will slow down due to the expected reaction of the public sector and the commercial sector to the state's import substitution requirements and taking into account the speed of decision-making, procurement and implementation. The CAGR in 2022-2027 will be 10-12%.

Analysts indicated the main drivers of dynamics:

• withdrawal from the Russian market of foreign players,
• the need to ensure information security and digital sovereignty by both state and commercial enterprises,
• active state actions to support domestic producers and import substitution,
• consistent policy of the Ministry of Digital Development, Communications and Mass Media,
• strengthening the requirements of government and commercial organizations for control over the storage of data,
• growth of consumer loyalty to Russian software,
• efforts of vendors to improve functionality,
• as well as increasing the business risks of using foreign software.

A barrier to market development may also be a slowdown in the economy, which will affect the purchasing power of organizations, institutions and the population, concluded in J'son & Partners Consulting.

2020: Russian office software market valued at ₽38,8 billion

The volume of the Russian office software market at the end of 2020 reached 38.8 billion rubles, calculated in the research company J'son & Partners Consulting.

As analysts explained, by office software they mean products that are primarily designed to process electronic documents with the ability to work together. Antiviruses, instant messengers, highly specialized office solutions such as calendars, task and project management systems, image processing applications, etc. were not considered.

The largest expenses for such software in 2020 were registered in the commercial sector - 26.2 billion rubles. State institutions and state-owned companies in 2020 purchased office software for 9.9 billion rubles, individuals - for 2.7 billion rubles.

The Russian office software market is estimated at ₽38,8 billion at the end of 2020

Consumers spend an average of 3 thousand rubles on licenses. This segment has a high potential for development. According to a study by Eset, by 2021, only 2% of individuals - software users pay for licenses. 91% of people do not update the software, use outdated unsupported versions, and unlicensed versions of the software. 7% use either free software or cloud services, which are available from a number of manufacturers for personal use for free. Specialists estimate the potential capacity of the segment of individuals at 133.2 billion rubles.

According to J'son & Partners Consulting, 77.5% of the office software market in 2020 was occupied by foreign software products (Microsoft Office, Hancom Office, WPS Office, etc.), 15.5% accounted for free software (LibreOffice and OpenOffice), 7% for Russian software ("MyOffice" from New Cloud Technologies, solutions "P7-Office" from P7 ).

Analysts call the main drivers of the Russian office software market:

• import substitution;
• External open source software support states
• strengthening the requirements of government and commercial organizations to control the storage of data;
• increased business risks of using foreign software;
• an increase in the cost of software due to sanctions.

Executive Director of the Association of Software Product Developers (ARPP) "Domestic Software" Renat Lashin, in a conversation with Kommersant, agreed that the consistent implementation of the import substitution policy is still the main driver of the transition of ministries, departments, state-owned companies and regions to domestic solutions, including office software.

State institutions and state-owned companies in 2020 purchased office software for 9.9 billion rubles

According to the ARPP, from 2015 to 2020, the volume of domestic software in public procurement increased from 20% to 70%. Such dynamics, according to analysts at J'son & Partners Consulting, will lead to changes in the market structure: by 2026, the share of foreign solutions on it will decrease to 30% from 77.5% in 2020.

According to analysts, taking into account the dynamics of demand, state regulation and the dynamics of the development of market players, domestic office software manufacturers have the opportunity to occupy up to 40% of the market, and taking into account the fact that for 2020 this segment was distributed between two key players - the decisions of "P7-Office" and "MyOffice," by 2026 they have high chances to divide the segment in equal shares.

According to J'son & Partners Consulting estimates, 11.5% of government organizations regularly purchase and update office software commercial licenses, 88.5% use alternative options. Thus, the potential capacity of this market segment can be up to 82.1 billion rubles.

In the commercial segment, most of them are occupied by large companies, their share is 84.6%. On average, large companies acquire 600 licenses for the company, medium-sized companies - 80 licenses, small companies - 10 licenses.^[1]

See also

• Enterprise Software (Russian Market)
• Russian Software (Domestic Software)
• Software developers in Russia

Notes