Moscow, 18 June 2011 – In June this year it is exactly 10 years since the building of a professional software development industry in Russia. 2001 saw the first Software Development Summit (at the time named SOS – Software Outsourcing Summit), at which the key objective for Russian companies was to master marketing on the international markets, while foreign companies were looking more closely at an emerging export industry, which was just beginning to switch to a market economy.

The last ten years have seen significant change. The industry has leapt ahead and Russia is now a discernable player on the global software and IT services market, achieving notable success in different sectors and through different business models. Product export volumes jumped from just $200 million in 2001 to $3.2 billion in 2010. A number of software producers have taken up leading positions in their market segments and successfully compete with international giants listing their shares on the world’s leading exchanges. Russians regularly participate in and emerge victorious at prestigious global software development contests, while large corporations are recognizing more and more that Russian specialists possess the highest technical qualifications, are flexible and can work well to meet tight deadlines.

Industry leaders from Internet and software and service development companies including Luxoft, EPAM Systems, Kaspersky Labs, ABBYY, Mail.ru, Yandex and Digital Design, Lanit-Trecom took part in an active and lively discussion organized by the Russian Venture Company and Russoft. The industry’s founding fathers discussed the main obstacles hindering industry development, as well as crucial steps that need to be taken in the next few years so that Russian companies can successfully compete on the international market. Much was said about personnel training programs, which have become outdated and incapable of producing the required number of qualified specialists not only for the industry itself but also for the sectors of the economy that use IT solutions, services and products. Given the drop in the birthrate in the 90s and the resulting deficiency of young workers, the introduction of a set of measures in higher education now appears to be extremely important.

“With the emergence of global companies, serious world players, came global clients and a new level of work. Whereas before we were just surviving, running around looking for clients and trying to prove that it’s worth dealing with us, now customers are chasing us and we have quite a queue. Now the question isn’t who to work with, but how and where to grow and develop, how to find the talent we really need today,” noted Luxoft CEO Dmitry Loschinin.

Participants noted the need to stimulate internal demand for products and services in both private and state companies. The world is becoming more and more technology-oriented. To compete on a global level in any industry, steps need to be taken to modernize and integrate not only manufacturing but also intellectual and service solutions.

“The software development industry can act as a driver in the modernization of the country’s economy,” explained Igor Agamirzyan, President and CEO of the Russian Venture Company. “All around the world the export of advanced technologies serves as an indicator of a country’s stability and economic development and through the implementation of the clearly-defined measures we propose, it could well become a significant part of Russia’s technology export.”

Russian market players see enormous opportunities for industry growth in the next ten years. Import substitution in key software areas could reach 60%, while the software development industry could contribute 5% of GDP.

The industry can serve as an outstanding example for the entire Russian market; within a period of ten years, different companies have made significant headway, breaking into the global top 100 in their sectors, becoming international players with offices in dozens of countries around the world and servicing the largest global corporations, while the names of Russian Internet and IT business owners have begun to figure more and more frequently in the pages of international business publications.

“The success that has been achieved in ten years is incredible. What you have done takes 20 or 30 years in other countries,” enthused Alexandra Johnson, managing director at DFJ VTB Aurora.

A debate was sparked at the meeting about when should be considered the birth date of the industry: 1954 when the first programmers graduated; the beginning of the 90s when many of today’s leading companies were established; or 2001 when the first summit was held.

Valentin Makarov, president of Russoft and the event’s host, recalled that ten years ago Esther Dyson, US presidential IT advisor, member of the supervisory board of the Skolkovo Foundation and guardian angel of the Russian software development industry, made a $10,000 bet with a colleague at the first summit that the leading business newspapers The Wall Street Journal and the New York Times would describe Russia as “a global software leader”.

“All the prerequisites for being a leader are there,” Esther replied.

Industry representatives at the breakfast were given the most unexpected and undoubtedly most valuable piece of advice from Craig Barrett, former chairman of Intel Corporation: “… Everyone here is talking about current problems. My former boss told me something many years ago that’s very relevant for this audience: ‘Only the paranoid survive’. Stay paranoid and you’ll be successful.”