IT import substitution drivers in Russia

2022: Drivers of the Past, Present and Future

What are the most important events that stimulated import substitution of software in 2021

The issue of import substitution has been on the agenda of state-owned companies and enterprises since the late 90s - early 2000s. However, the trend received real progress only in 2014 after the introduction of the first sanctions against the public sector of the Russian economy. In addition, at the same time, due to a sharp increase in the foreign exchange rate, the transition to Russian software became economically feasible, which prompted selective import substitution in a number of commercial companies, and not only Russian ones.

Despite the fact that private business was not limited in any way in acquiring licenses of foreign software, the transition to Russian software, even taking into account the costs of licenses and services of integrators for data and process migration, gave tangible savings in the future for several years, - recalls Pavel Kashtanov, General Director of Synthellect.

Over the next years, despite all the difficulties, the trend for import substitution as a whole continued to intensify. Measures taken at the state level contributed to the gradual transition to domestic decisions. Cooperation between Russian software vendors and manufacturers of hardware solutions developed, serious funds were invested in the development of domestic systems.

Over the past 7 years, more than 1.5 thousand projects have been successfully implemented in the country to create similar software solutions that were previously supplied from abroad. All this time, the IT industry received special attention, as a result of which the volume of domestic solutions on the market increased 5 times, - said Roman Romanov, Deputy General Director for Development of SATEL.

Let's consider some points that have become drivers of import substitution processes in 2021.

Personal responsibility for import substitution

The insufficient pace of import substitution, together with expectations from the negligent prospects for cooperation with Western partners, led to rather tough statements and proposals.

Vladimir Zalesky, managing partner of FIS, highlights two key incentives for import substitution in the public sector, which influenced the course of this process in 2021.

One of them was the geopolitical situation associated with the advancement of NATO to the east and resulting in a deterioration in relations with Western partners. The second was the statement of the President of the Russian Federation at the end of 2021 about the need to introduce personal responsibility for the processes and results of import substitution in state-owned companies and corporations, says Vladimir Zalesky.

The president's support for such tough enough measures has become an important stimulating factor for a new wave of departure from foreign systems.

Colleagues must understand that at some point, even what they use today, for known reasons, may be closed, and they will not be ready. And if I am not ready, they will be held accountable, "Vladimir Putin noted.

According to the Ministry of Digital Science, due to mistakes made under the import substitution program in 2019-2020, the Russian market received less than 70 billion rubles, which state-owned companies could spend on domestic software.

As the executive director of ARPP "Domestic Software" Renat Lashin noted [^[1]], the introduction of personal responsibility for the heads of state-owned companies and state corporations will strengthen control over the implementation of key performance indicators for import substitution and significantly accelerate the transition to domestic software and hardware solutions.

Large-scale digital transformation projects and IT support measures

Another factor of acceleration for import substitution processes in 2021 was large-scale projects within the framework of digital transformation programs.

Natalia Sofronova, director of import substitution solutions at CROC, recalls that it was supposed to switch to the "digital" of many industries and an increase in the share of purchases of domestic software and equipment, as well as the production of its own electronic components for customer requests. At the same time, at the level of state corporations, Strategies for digitalization and import substitution were developed, including migration from foreign to Russian software.

Additional impetus was given by additional measures taken during the year to support the IT industry, in particular, when the purchase of domestic software began to be subsidized by the state (grants by Government Decree No. 550).

This was reflected in the budgets allocated for digitalization, especially in the public sector. The grants made it possible to free up funds that used to be spent on the purchase of a "base" like office packages or the renewal of OS licenses, and redirect them to other needs, "said Alexey Parfentiev, head of analytics at SearchInform.

In addition, the state tried in every possible way to support Russian developers of both software and hardware solutions, providing them with various benefits and preferences.

All this not only increased the popularity of domestic developments, but also stimulated their active development. Moreover, in a number of segments, Russian developments began to compete on a par with the products of large foreign vendors. These include, for example, unified communications, where in recent years such solutions as IVA, Vinteo, Trukonf, etc. have noticeably "moved" mastodons such as Cisco, Avaya, Microsoft, etc., office applications ("My Office," "P7-Office"), operating systems ("Astra Linux"), enterprise management systems (1C , Galaxy) and many others. There are, of course, software classes where Russian products cannot yet perform on equal terms with foreign ones, several years behind the latter. But this gap is rapidly shrinking. This situation is observed, in particular, in the field of engineering software, says Stanislav Iodkovsky, General Director of IVA Technologies (Hi-Tech Group of Companies).

Regulator pressure

In the field of information security, the recommendations of the Government of the Russian Federation on import substitution further strengthened the requirements of the FSB, FSTEC and the Bank of Russia. Regulator pressure is the main motivator for the purchase of information security software in the public sector, recalls Alexey Parfentiev.

As part of our research, we saw an increase in the number of companies that are ready to spend more on the purchase of new information security software, as well as on expanding the number of licenses. If in 2020 information security budgets grew only in 19% of organizations, then in 2021 - already 26.5%, - said the head of the analytics department at SearchInform.

Growing confidence in domestic solutions

Commercial organizations, especially large ones, in 2021 believed and checked that imported products were able to solve their problems, while withstanding the scale. According to Konstantin Lyanguzov, head of the business unit for working with state authorities of Directum, there is an active interest in such companies. Requests for implementation and development of solutions were mainly based on imported products and components.

As the moment of modernization, our customers from among government agencies gradually imported the solutions used: they switched to Linux, Postgres, Directum RX and domestic office packages MyOffice and P7-Office, - notes the representative of Directum.

New IT Partnerships and Collaborative Solutions

The joint work of the state, IT companies and industry associations is also beginning to bear fruit. BIA Technologies notes the emergence of a large number of concluded partnerships of system integrators working with the public sector, with Russian developers, primarily in the field of working with big data.

Alexander Belokrylov, General Director of Bellsoft, highlights the great work that was carried out by the relevant associations, in particular ARPP Domestic Software, to prepare and provide customers with end-to-end solutions based on domestic software and equipment.

Without this, it is difficult to imagine digital sovereignty, he notes.

Alexey Peregudov, Director for Work with EOS Partners, recalls the appearance of the first projects for building IT systems on hardware with domestic processors. As an example, he cites AIS MPSC Delo, which runs on servers with Elbrus processors.

Konstantin Lyanguzov, head of the business unit for working with state authorities of Directum, adds about state support in this direction. Thus, the Ministry of Digital Engineering of the Russian Federation organizes meetings for EDMS vendors with the developer of the domestic mobile operating system Aurora, and also provides devices for developing and debugging solutions, informs about distribution plans.

However, as the Directum expert adds, the import of hardware and domestic mobile operating systems in 2021 lagged behind due to the limited availability of devices. They are still rare and not ubiquitous, and investment in this story remains controversial in the absence of demand.

Consequences of the coronacrisis

Partly, the consequences of the coronavirus pandemic, or rather the results of adaptation of companies and businesses to new conditions, influenced the distribution of domestic products and services in 2021.

According to Alexei Murashov, CEO of Trivium, the changes began back in 2019, when many companies had to adapt to work in a remote format. This format involved digitalization in areas where it had not previously been in demand to such an extent. Accordingly, the processes of adopting services that provide logistics, communication, accounting have accelerated. In short, all the areas necessary for the normal functioning of the business.

{{quote 'In 2021, the epidemiological situation continued to have a noticeable impact on the development of IT and information security markets: companies continued projects for intensive digitalization, business processes moved online, the landscape of cyber threats also continuously transformed. Import substitution processes and the development vector of Russian IT/information security software corresponded to these trends, - confirms Ruslan Rakhmetov, General Director of Security Vision. }}

The same factor played into the hands of import substitution in the video communication segment. In 2021, the trend of 2020 continued, when at the height of the pandemic, the public sector and business urgently transferred work processes and employees to online mode.

As noted by Dmitry Seryi, deputy director and co-founder of Vinteo, in April 2020, many drew attention to the American decision, with the AEROSPACE FORCES help of which meetings were held in the highest echelons of government. Then IT market experts denied the possibility of fully replacing imported video communication systems with Russian ones. However, already in April 2021, when information appeared about the possible refusal of the American Aerospace Zoom Forces to work with the Russian public sector, almost all departments reported on the successful use of domestic platforms.

Industry Specific Features

Let's also pay attention to the peculiarities of replacing foreign software in different industries. For example, in the construction industry, import substitution was stimulated, first of all, by the government's decision on its digital transformation. And the understanding that such a digital transformation should go ahead of the world level, came after the introduction of pandemic restrictions and the transition of the country to the online mode.

This mode involves providing secure remote access to information resources. To do this, you need to solve at least two tasks: organize common information spaces and ensure data security, which cannot be achieved without switching to domestic software, explains CSoft.

Not the last role was played here by the government's decision to develop GISOGD (State information systems for ensuring urban planning activities). Their goal, they remind in, is CSoft to provide state authorities, local governments, individuals and legal entities with reliable information necessary for urban planning, investment and other economic activities, as well as land management. In addition, in 2021, the transformation of processes in the design and construction industry was launched through the introduction of information modeling technologies.

The trend towards import substitution has also intensified in the retail sector.

In recent years, we have observed a trend in the transition of retail chains to Russian software, including cash solutions. In 2021, some important events further contributed to this - in particular, the introduction by the state of VAT benefits for software from the Register of Domestic Software, as well as many legislative changes in the country that it is difficult for foreign vendors to support: related to the new FFD 1.2, with labeling of goods and others, - said Alexey Ankudinov, Product Director Set of CSI.

What will stimulate the import substitution process in 2022

Geopolitics and sanctions

The key driver of IT import substitution in 2022 is the organization of uninterrupted operation of information systems in the context of sanctions and denial of service by foreign manufacturers. Geopolitics and sanctions led to the withdrawal from the market of Western suppliers of hardware and software products. And even those domestic organizations that previously did not consider import substitution a worthy topic are now forced to pay close attention to this issue.

Firstly, niches previously occupied by foreign companies have been freed up for domestic manufacturers. Secondly, restrictions on the supply of hardware raised the question of the effective use of previously purchased equipment. For example, the question arose of reducing the volume of data storage and using effective formats for this. As expected, the demand for clouds and cloud services has grown, - notes Konstantin Lyanguzov, head of the business unit for working with government authorities at Directum.

According to him, today there is a large demand in the domestic market. This is a moment of opportunity and growth for domestic IT products and solutions.

Strengthening sanctions against Russia, a ban on the supply of a number of high-tech products and a ban on supporting the IT infrastructure of Russian companies will seriously stimulate import substitution. The more implementations and complex projects, the faster domestic products and investments in them will develop. The number of partnerships and ecosystems with Russian producers will expand, - said Sergei Popov, Deputy General Director of I-Teco.

Vladimir Rogovoy, Director of Business Development at Innovative People, identifies three key factors in the rapid growth of the share of domestic software:

• illusions to normalize relations finally disappeared into the air, after unprecedented Western sanctions and the withdrawal from the Russian market of the largest players in the global industry, such as Microsoft, SAP, Oracle, Adobe, etc.;
• The government advocated for the personal responsibility of the management of companies for not switching to Russian software;
• concessional lending, grants, subsidies from the government for the creation and purchase of Russian software.

But still, according to experts, it is the sanctions factor that will become the main one in the import substitution process in the coming years. After all, even if after some time foreign developers themselves return to Russia, it will be very difficult for them to regain market confidence.

As they say, reputation is earned for years, and you can lose it in one day, - notes Stanislav Iodkovsky, General Director of IVA Technologies (Hi-Tech Group of Companies).

Striving for technological sovereignty

In addition to the lost reputation of foreign companies and the vacated individual niches for domestic developers, there are more global prospects. According to a number of experts, mass statements by foreign vendors about leaving the Russian market were able to do in a few days, it would seem impossible - to force all strata of Russian society to think about "technological sovereignty."

In 2022, the achievement of digital sovereignty due to the new conditions for the functioning of the Russian economy is more relevant than ever, therefore, as a domestic software manufacturer, we will actively work to ensure the technological independence of Russian business, "says Vladimir Zalesky, Managing Partner of FIS.

The BusinessAutomation SPC believes that both an active policy of import substitution and growing dissatisfaction with foreign software played a role in the desire for technological sovereignty.

A number of problems have accumulated related to the non-compliance of foreign IT products with Russian management standards, database security, high cost of licenses and technical support, as well as long periods of system implementation and changes, the company notes.

Market reaction and further routes of import substitution

In 2022, the import substitution process due to sanctions pressure and the withdrawal of a number of large foreign players from the market received a new impetus. Moreover, the situation that arose made us think about the transition to Russian solutions of even the most ardent adherents of foreign products.

Dmitry Seryi, deputy director and co-founder of Vinteo, said that in the segment of video conferencing systems since February 24, Russian corporate users have faced the real problem of completely losing the necessary services. As a result, even those companies that had not previously been affected by sanctions began to select a replacement for foreign VKS solutions - this is the oil and gas sector, banks, commercial companies.

To date, we can talk about a noticeable increase in the number of requests to the company - their number has increased 3 times since February 24 compared to the same period in 2021. The main type of requests is operational migration to the Vinteo VKS from the solutions of foreign video communication vendors who announced the suspension of activities in the Russian Federation, says Dmitry Seryi.

In the segment of engineering software, almost all foreign vendors have suspended or stopped working in Russia, notes Pavel Shcherbinin, head of special projects at ASCON. Given that Microsoft has also joined the sanctions, the goal is not just the transition to Russian engineering software, but the introduction of completely import-independent solutions running on domestic operating systems.

Experts interviewed by TAdviser note that many customers are hastily adjusting their programs for introducing domestic software. At the same time, first of all, we are talking about operating systems, office packages and DBMS.

Alexey Lyubimov, CEO of 3iTech, calls three main advantages of switching to Russian software:

Firstly - predictability and stability, secondly - prices in rubles, thirdly - data protection and minimization of any risks.

Alexey Parfentiev, head of analytics at SearchInform, emphasizes that in conditions of geopolitical instability, the purchase of domestic software is no longer an option, but a necessity.

Technological autonomy has become especially important for maintaining the information security of our state, Sergei Dubodelov, CEO of Innovative People, is sure. However, due to the increased requirements, the demand for all IT specialists will continue to grow, and it will become almost impossible to close it only on its own. In this regard, customers will seek help from outsourcing companies, so in the coming years the market for this line of business will strengthen, predicts CEO Innovative People.

Natalia Sofronova, director of import substitution solutions at CROC, adds that the events of recent months have dramatically affected the pace of import substitution and significantly increased the demand for service contracts to support Western solutions and for migration to Russian software for all components of the IT infrastructure.

According to Security Vision CEO Ruslan Rakhmetov, the issue of dependence on foreign decisions has reached a radically new level.

{{quote 'License reviews and denial of services, large-scale care of Western vendors, the unprecedented barrage of cyberattacks has raised deep concerns about cybersecurity and digital sovereignty at the highest levels, as a result, the sensational Decrees of the President of the Russian Federation were adopted, prohibiting the use of imported software at significant facilities of the CII from 2025, as well as prescribing by government agencies, state-owned companies and KII entities from 2025 not to use foreign means of protecting information, - he explains. }}

2021

Which can speed up IT import substitution. IT Industry Opinion

What could accelerate IT import substitution in the near future? With such a question at the beginning of 2021, TAdviser turned to experts from domestic IT companies with experience in replacing foreign products. Key growth factors, according to respondents, are associated with improving the functionality of Russian solutions, expanding the partner ecosystem around domestic developments and money, without the allocation of which all these processes are impossible.

Improving the functionality of Russian products

It is very important that in addition to regulatory support for the import substitution process, there is an internal evolution of the Russian development market. Domestic vendors should be interested in creating a product that will remain competitive even if there are no political reasons to replace foreign software and hardware at all, said Igor Leypi, director of the department for work with state organizations at Softline.

The higher the level of quality of Russian solutions, the less doubts customers will have when implementing them, "he explains.

Nikita Rogozin, executive director of the Stakhanovets project, explains that import substitution can significantly pump up the functionality of Russian solutions.

Replacing foreign developments, domestic vendors receive a request from customers to refine the functionality that software from the Russian Federation may not have, but which turned out to be available from a foreign product and became part of the client's business processes. As a rule, Russian manufacturers are ready to pass such "bridges of functionality." It also accelerates IT import substitution to some extent, "he says.

Lev Matveev, chairman of the board of directors of SearchInform, is also convinced that import substitution can only accelerate the improvement of the functionality of Russian products.

Customers will buy domestic if the Russian product is better than Western. In the information security solutions sector, this is exactly what happens, "he notes.

According to Evgeny Sudarkin, CEO of Prof-IT Group, world-class solutions are already in the segments, ERP EDMS information security and office software. However, a significant lag, he said, is observed in the direction, DBMS PLM, MES and other production and design systems, as well as telecommunications and server equipment.

Serious competitive advantages, increased reliability and difference in cost and TCO solutions of Russian production against foreign systems will contribute to a more dynamic implementation of the import substitution policy, "concludes Vladimir Burgov, Commercial Director of CommuniGate Systems.

Creating a Partner Ecosystem

Another important detail that many Russian manufacturers are still neglecting is the creation of a partner ecosystem around them. To quickly develop and promote the product, it is very important to have a developed partner network.

Service providers are able not only to expand the sales market, but also to qualitatively deepen the relationship between manufacturers and their customers by creating joint services with vendors, "says Igor Leypi, Director of Government Relations at Softline.

The implementation process itself can be accelerated by the presence of a team of qualified specialists in the immediate vicinity of the customer, adds Konstantin Lyanguzov, head of the Directum implementation department in government bodies.

For example, projects for the implementation of the system in the Ministry of Natural Resources of the Russian Federation and the Government of the Kurgan Region were implemented by our partners, he explains.

Building End-to-End solutions

The process of import substitution will be accelerated by the development of comprehensive, compatible domestic solutions that will provide a whole range of functional needs for industries and departments.

These solutions should have functionality in all areas of development of domestic IT: hardware, virtualization, SRK, SHD, OS, antivirus software, a complex of hardware and software information security tools, applications, etc., - notes Andrey Karachevsky, system architect of the Center for Design of Computing Complexes "Jet Infosystems."

Evgeny Sudarkin, General Director of Prof-IT Group, explains that the use of various platforms and solutions in departments creates difficulties in data integration, a single NSI, data exchange formats, etc. When switching, departments should be sure that all systems will work normally, without loss of functionality and are fully compatible with the software already used. There should be no risks that the developer stops supporting or developing the product.

The right approach in this case is uniform standards, methodologies, roadmap of information systems and products, agreements with developers and the inclusion of projects in the budgets of departments, he says.

Alexander Gladkov, head of major corporate clients at Macroscop, adds that today many companies that meet import substitution criteria are not ready to cooperate with other vendors. Meanwhile, creating open API tools that allow you to integrate software with related products would open up opportunities for creating multifunctional complex solutions.

Use of boxed products

The transition to import-substituted products somehow comes to users - interface components and the order of usual actions are changing. And there are many custom local modifications to the customer's requirements, and their translation, retraining and development of user resistance is a long process, an obstacle that also requires additional financial investments.

According to Konstantin Lyanguzov, head of the Directum implementation department in state authorities, a possible way out of this situation is to use boxed products. And many companies use it.

If we used to see a trend towards customized custom solutions, now customers prefer more versatile, quickly deployed and regularly developed for the needs of changing legislation. Ready-made solutions are the optimal strategy for both customers and vendors, the expert believes.

Increase government funding and sales markets

State financing of migration projects is an important area for accelerating IT import substitution processes. In addition to procurement budgets software , it is necessary to directly take into account the cost of complex projects, including piloting, implementation, integration and technical support.

A consistent state policy in stimulating authorities and corporations to replace foreign software with Russian software by subsidizing them will help accelerate import substitution. The sooner customers have funds for the purchase and implementation of new software, the sooner they will be able to implement import substitution projects, according to the New Communication Technologies company.

The driver of accelerating IT import substitution in Russia may be a further increase in state interest in digital sovereignty and technological independence from foreign developers, said Sergei Chernykh, Deputy Chairman of the Board of Directors of HaiTek Group Hi-Tech. In his opinion, the industry should be "filled" with money so that it can develop and grow. It is necessary to continue the investment and subsidized policy, which has already been implemented on the basis of the Ministry of Industry and Trade, the Ministry of Economic Development and the Ministry of Digital Industry.

It is the serious support of a domestic manufacturer that will ultimately help grow truly globally competitive solutions in Russia. And this is extremely difficult to do without the help of the state, which, as well as business, is interested in increasing the share of non-resource exports, developing its own high-tech production base, expanding scientific and technical developments, etc., - explains Sergey Chernykh.

Vladimir Andreev, president of Docsvision, says that now you can get a state grant for the development or revision of software, but as soon as the revenue from the implementation of software falls below 90%, VAT and social services are immediately included in full.

This fundamentally limits the size of the grant received. 10% of the developer's revenue - nothing significant in the product for this money will be done. It is necessary to somehow overcome it by law. And it is also necessary to resolve the VAT that appears in the dealer network, this is important for large dealers who cannot switch to "simplification," namely, they make the weather, - he notes.

Vyacheslav Volodkovich, General Director of Aerodisk, believes that acceleration IT import substitution will contribute to a guaranteed sales market for domestic products.

Now Russian IT manufacturers turn to different enterprises and collect requests literally bit by bit. Because of this, they cannot save on scale: products cost more than they could. If manufacturers had a guaranteed market, they could plan demand in advance and produce larger batches, reducing the cost of products and thereby attracting new consumers, the expert said.

Alexander Semenov, chairman of the board of directors of Korus Consulting Group, adds that for the appearance and development of Russian products, they must have a wider user base. And for this, demand is not enough only within the country.

State support for companies in entering foreign markets is needed to grow and expand the client base - primarily in Asia, Africa, and the Middle East, the expert believes.

Training and retraining of personnel

Another condition for accelerating import substitution is the evolution of IT specialists, which should accompany the technical development of domestic software.

The maturity level of some customers leaves much to be desired. It happens that in real production you come across the fact that no one needs automation tools, since the entire document flow is carried out in the "barn books." Users are not flexible enough to easily migrate to new software products. Employees of IT departments of large companies also do not always have up-to-date knowledge, understand modern approaches or have relevant experience. The human factor, primarily the issue of training and retraining personnel, is very important in import substitution, - said Laysira Eroshenko, director of the production department of practice 1C "T1 Consulting."

Alexander Donin, head of import substitution of software at the CROC IT company, believes that regular training of IT specialists in working with new programs would help accelerate import substitution.

The process of switching to domestic software is largely hampered by the lack of qualified specialists in the development and support of products on the import-independent technological stack. The pandemic and digitalization led to an increase in demand for IT specialists in the labor market as a whole, which worsened the already not very rosy picture for employers of the availability of competent personnel. It is necessary to strengthen the training of system administrators, support engineers and developers on import-substituted products and technologies, - said Konstantin Lyanguzov, head of the Directum implementation department in government bodies.

Vyacheslav Volodkovich from Aerodisk adds that the foundations should be laid in school computer science programs.

Otherwise, a young specialist comes to a Russian company that uses Linux, and cannot cope even with the most basic tasks. The basics can be included in school computer science programs - even a seventh or eighth grade student will easily master the basics. And to obtain in-depth knowledge, specialized departments of top universities must provide relevant programs in cooperation with Russian IT manufacturers. This practice is already actively used by leading vendors both in the west and in the east, says Vyacheslav Volodkovich.

New regulatory measures

A number of experts believe that in the coming years import substitution in IT will grow due to new regulatory and stimulating measures of the state. First of all, this trend will be characteristic of government agencies and companies with state participation.

It is known that by 2024 the share of Russian software in state organizations should exceed 70%, and in state-owned companies it should be at least 50%. In 2024-25. organizations falling under the 187-FZ "On the Security of Critical Information Infrastructure," including the largest industrial and financial companies, should switch to Russian software, "says Natalya Zubkova, Deputy General Director of Norbit (part of the Lanit group of companies).

Laysira Eroshenko, Director of the Production Department of 1C T1 Consulting Practice, believes that the introduction of a "digital" tax for foreign companies may serve as an additional acceleration

Although the initiative of the regulatory barrier itself causes a twofold attitude: sometimes the line between companies that can be considered Russian and foreign is very thin, she explains.

According to Vitaly Bogdanov, director of business development at Baikal Electronics, the policy of "stick and carrot" could accelerate IT import substitution, where the stick is forcing state-owned companies to import substitution through quotas in public procurement and through the mandatory use of Russian processors for domestic computing equipment, and the carrot is subsidizing companies' import substitution costs.

Dmitry Grebenshchikov, director of import substitution technologies at Diasoft, adds that an important incentive could be the exclusion from the register of Russian software of products that cannot work on Russian processors, as well as the prohibition of use in government agencies, state-owned companies and educational institutions of all levels of proprietary office formats.

What events of 2020 stimulate IT import substitution in Russia

2020 was marked by a number of events that will positively affect the development of projects in the field of IT import substitution. First of all, these are legislative initiatives that tighten purchases of foreign IT solutions and support domestic developers, as well as processes caused by restrictions due to the spread of coronavirus infection.

Legislative tightening

On May 1, 2020, significant changes to the Decree of the Government of the Russian Federation No. 616 came into force, establishing a ban on the access of industrial goods from foreign countries to public procurement, including for the needs of the country's defense and state security.

As noted by Andrei Karachevsky, system architect of the Center for the Design of Computer Systems "Jet Infosystems," the decree actually prohibits the use of foreign solutions for departments, state-owned companies and state corporations, at least where there are domestic analogues.

In addition, in accordance with the Decree of the Government of the Russian Federation of December 3, 2020 No. 2013, state-owned companies and state corporations from January 1, 2021 are required to comply with the norms for the minimum shares of purchases of domestic solutions, including in the IT industry.

Igor Leypi, director of the department for work with state organizations of Softline, also adds that in 2020, the timing of the transition to the predominant use of Russian software and equipment of critical information infrastructure facilities was determined.

Recall that initially in May 2020, the Ministry of Digital Engineering proposed to oblige the owners of KII to switch to the predominant use of domestic software from 2021, to Russian equipment - from 2022. However, then the deadlines were shifted - until January 1, 2024 for software, and until January 1, 2025 for equipment. At the same time, the majority of respondents surveyed by TAdviser still consider them too tough.

In addition, as experts explain, in 2020, registers began to fully work - the Register of Russian software and the Register of Russian electronic products.

Regulatory documentation in previous years appealed to the Register of Russian software, but it was in 2020 that steps began to structure it, finalize the regulatory framework, synchronize regulatory documents and requirements with each other. As a result, restrictions on admission to state purchases of imported products (not from the register) have been earned - the "third extra" rule has appeared (an application with foreign goods will be rejected if there are two applications with products from the Register of Russian Goods from two different Russian manufacturers), - said Vitaly Bogdanov, director of business development "Baikal Electronics."

Boris Ivanov, vice president of Ricore, recalled another initiative. In December 2020, the Ministry of Industry and Trade issued an order according to which IT equipment that can receive an opinion from the Ministry of Industry and Trade on production in the Russian Federation must have processors on board that meet the requirements for 1st and 2nd level microcircuits. Processors "Elbrus," "Baikal," "Elvis" and "Komdiv" meet such requirements today, he noted.

Tax Credits and Support Programs

In 2020, a law on tax maneuver in the IT industry was adopted. According to this initiative, since 2021, companies included in the register of accredited IT companies and the register of Russian software have received significant benefits - reduction of income tax from 20 to 3%, insurance premiums - from 14 to 7.6%.

The tax maneuver in IT provided Russian developers not only with benefits, but also real competitive advantages in price, which was not before. The possibilities of Western suppliers for dumping are great, but not unlimited, - explains Vladimir Andreev, president of Docsvision.

Sergey Chernykh, Deputy Chairman of the Board of Directors of HaiTek Group Hi-Tech, adds that the tax maneuver will reduce the burden on the payment fund, i.e. an item of expenses that is significant for developers.

Along with the tax cut for Russian developers, the zero VAT rate for foreign programs was canceled.

In my opinion, the driver of IT import substitution was the abolition from 2021 of preferential VAT for foreign licenses and software products, which led to an increase in the cost of software by at least 20%. As a result, on the one hand, we saw a boom in purchases of imported software in December 2020 - suppliers reached record revenues since the 1990s. On the other hand, many companies have already planned budgeting and initiated automation processes using domestic software products, "says Anastasia Grigorieva, director of the project department of 1C T1 Consulting practice.

The tax maneuver supplemented the picture and confirmed the intention of the authorities to adhere to the course they took earlier. In 2020, the volume of purchases of domestic software by Russian state-owned companies reached 80 billion rubles, and the plans for 2021 indicated a target of 120 billion, hence the new measures to stimulate domestic developers, adds Mikhail Egorov, executive director of ID Management Technology.

Grant support has also played a significant role, covering more and more projects for the development and implementation of import-dependent products.

Assistance provided to both startups and large enterprises allows you to replace foreign software with domestic software products without loss of functionality and with increased convenience for the Russian user. Plus, the already existing regulatory legal acts focused on import substitution contribute to the active development of the industry. All this suggests that the state really supports the transition to domestic software, providing financial assistance to companies and stimulating developers of Russian IT products, - explains Konstantin Lyanguzov, head of the Directum implementation department in government bodies.

Coronavirus and remote

2020 was rich in events that helped speed up the import substitution process. One of them is the coronavirus pandemic.

The transfer of a large number of employees to remote work became a certain catalyst - companies needed tools to organize remote work, which increased interest in domestic solutions, "explains Konstantin Lyanguzov, head of the Directum implementation department in government bodies.

Lev Matveev, chairman of the board of directors of SearchInform, confirms that the impact of coronavirus and remote control on import substitution processes has generally turned out to be positive.

Yes, purchases for urgent and small needs were canceled, the operational capacity of the processes was put at the head, and not import substitution. But new large needs also arose, and in order to close them, companies planned to immediately introduce domestic software. These are big infrastructure changes and spending that are important to plan correctly. Plus, the previously agreed purchases have not gone anywhere. Large ones take months and years, their terms could have shifted, but in general, plans did not fail. So remote for many customers accelerated the process of import substitution, - said Lev Matveev.

Other experts also talk about increasing demand for domestic IT products during the pandemic. Vladimir Burgov, Commercial Director of CommuniGate Systems, notes that forced self-isolation and remote work stimulated the growth of the information security market, communication platforms, remote control systems and other Russian-made solutions.

BellSoft believes that COVID-19 gave a "digital kick," which accelerated all processes related to digitalization and, as a result, stimulated, including import substitution.

Nikita Rogozin, executive director of the Stakhanovets project, says that the directive transition to remote work stimulated even those companies that had not previously practiced remote employment to find solutions for monitoring employees outside the office.

We completed the calendar year 2020 with revenue that was 2.5 times higher than the results of 2019. I note, without the effect of a low base, since Stakhanovets has been on the market for a long time, - explained Nikita Rogozin.

In fairness, it should be noted that although the overwhelming majority of the surveyed experts noticed positive dynamics in the processes of import substitution and the introduction of domestic solutions during the period of mass removal and covid restrictions, some respondents told TAdviser about the opposite situation. For example, the company "New Communication Technologies" noticed covid-quarantine cuts in budgets.

2020, for this reason, sank heavily in the dynamics of import substitution, and many plans were postponed to subsequent years, the NKT noted.

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