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Russia's new hobby - high technologies
MOSCOW. (RIA Novosti economic commentator Mikhail Khmelev) -

High technologies have become one of the fastest developing sectors of the
Russian economy. Their growth rates are among the highest in the world.

In the estimate of the Russian Ministry of Information Technologies and
Communications, the scale of the Russian IT market went up by 17.3% in 2006
to reach 361.5 billion rubles ($14 billion) in value terms. Both the
government and private investors are pumping huge amounts of money into the
branch. If its growth rates remain the same, by 2010 the turnovers of IT
companies will increase three times over the current level.

The Russian government has been taking good care of its IT industry. IDC,
world software market analysts, estimate that in 2006 IT investment reached
$11.9 billion, and the contribution of foreign companies to this sum
amounted to more than $4 billion. These sums are spent on the construction
of technoparks which focus on innovations and IT in seven Russian regions.
In the next four years, the government will allocate 8 billion rubles ($309
million) on their development; all in all it is planning to spend about 20
billion rubles ($772 million) to this end. Private companies have put eight
times more money than the government into techoparks.

Both expect handsome return on this huge investment. Russian Minister of
Information Technologies and Communications Leonid Reiman predicts that by
2010 the domestic IT market will grow three-fold compared to 2006 to reach
up to $40 billion. IT exports should grow from the current $1.5 billion to
$10 billion.

A joint study by the Russoft association of exporters and
Outsourcing-Russia.com shows that software is one of the most dynamically
developing sectors in the Russian IT market. Programmers amount to more than
one fifth of the IT market turnover. In the past few years, Russian software
exports have been growing by 30%-50% every year. In 2006, these exports went
up by 53.8% to reach $1.495 billion.

In the estimate of the NeoIT consulting company, at the world market of
software exports, Russia ranks third after India and China. Russoft experts
believe that credit for this goes to high-tech software that only Russian
programmers can write. Quite often, in Western software companies Russian
programmers write the most challenging parts of the product, which is then
produced under a famous international brand. Russian companies also produce
software for export. Russian anti-virus software and programs for the
optical recognition of texts and faces are some of the best in the world.

Russian software producers are actively trading on the domestic market. In
the IDC estimate, the share of hardware on the IT market is gradually going
down. Today, software sales and services account for 31.6% of the whole

Experts predict that the software market will be going up at a rate of
20%-30% a year until 2009. No wonder famous foreign players have been drawn
by such prospects. World software leaders have been on the Russian market
for several years now. The demand for their produce grows annually by 3%-4%
in industrialized countries, whereas in Russia they can increase sales 1.5
times a year without much effort.

Experts agree that the Russian software market would be even more attractive
if it were not for piracy. The share of counterfeit and stolen software
remains unacceptably high. Judging by the latest IDC/BSA (Business Software
Alliance) report, in 2006 the level of software piracy in Russia went down
to 80%. This share was 72.1% in the corporate market and 86.9% in the
private sector. Russians still prefer to buy counterfeit disks because of
the high prices on licensed products. Last year, piracy cost software
companies $2.2 billion.

However, experts admit that getting ready for the WTO entry the Russian
authorities have stepped up their efforts to suppress software piracy. In
the last few years, the share of counterfeit software has been steadily
dropping by 4%-5% a year. Last year, the number of criminal cases involving
violations of intellectual property rights went up by 3.5 times. On January
1, 2008 Russia will enact new copyright laws (the Criminal Code's Part 4)
that not only fully conform to world standards but even surpass them. The
piracy software supply is also dwindling. Almost half of new computers sold
in Russia are supplied with licensed software. Experts believe that a
reduction in the share of counterfeit software by 10% by 2010 will create up
to 34,000 well-paid jobs for programmers, increase budget revenues by $832
million and increase profits by $23.5 billion a year.

The opinions expressed in this article are the author's and do not
necessarily represent those of RIA Novosti.-0-