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Round Table Discussion "Problems and Prospects of IT Business in Russia”A. Boiko A round table discussion «Problems and Prospects of IT Business in Russia» was held on February 19, 2005 in the city of science — Dubna. It was organized by the State Committee «Intelligent resources of Russia» as a part of the International Forum «Intelligent Russia». The forum was presided over by S.M. Mironov, Chairman of the Council of Federation, while O. L. Kuznetsov, the president of the Russian Academy of Natural Sciences (RANS), was the head of the forum's steering committee. Mforum.ru, March 2, 2005
The organizers send out invitations to participate in the round table discussions to all companies producing IT solutions. And the round table turned out to be impressive — not only due to well-known participants, but due to people dealing with the production of their own solutions, rather than with distribution; and due to people's familiarity with problems and issues of the production of competitive high-end solutions in Russia. Participants: Andrey Morozov, CBOSS Association; Ali Abubakirov, Dania Polyanina, Konstantin Kon’kov, Phystech-soft Ltd.; Maxim Bakhrakh, SPC Infosfera; Mikhail Berebenya, Amicon Ltd.; Eduard Voronetsky, OJSC K-Systems; Nikolay Glebov, Firma «Svetets» Ltd.; Alexander Komarov, Russian informational and technical Association; Andrey Masalovich, Inforus; Nikolay Mikhailov, FCA System; Alexander Nedotko, Russian Academy of Public service; Dmitriy Novikov , OJSC Scientific Center Concern; Vyacheslav Rudnikov , E-Style; Mikhail Slotin, Info-Park; Alexander Sokolov, Elvis-Plus; Alexander Fisher , INEK Group, etc. Andrey Morozov, a representative of the largest developer company, was appointed as the leader of the round table discussion. «The program of IT business development in Russia should have a precise goal» — was proclaimed in Dubna. For example, the goal can be to increase the share of IT business in the Russian GDP by a few percent by 2010. In the opinion of the participants of the round table discussion that took place in the Moscow region, this figure is considerably lower today, i.e. if the share of the IT sector in the GDP is 1.2%, the IT business share is merely 0.3%. Till recently the state has paid little attention to IT business development. However, today it is a part of the national program and one of the priorities in the development of the national economy. The members of the round table discussed the issues concerning the contribution of the business to this process, adequacy of state support, and environment for its implementation. Unfortunately, « the state is in such a position that it is not able to create, handle or develop any national projects — remarked one of the participants, head of the TV-Center Director Council, Alexander Muzikantsky, a former member of the Moscow Government. — And as for IT technologies, the problems mentioned become graver still. It was said here today that the state could be the customer. The state won't become a good customer who is really interested in thorough spread of IT in the nearest future, as this means open society, transparency of the governing institutions, and de-bureaucratization; it implies an e-government with weaker influence and functions of the bureaucracy. The state can’t agree on this now. This is proved by the 3 year-running experience of the „Electronic Russia“ program. But using our „gray matter“, we can approach the market at least at the level of India. If we work at this level for 3-5 years, we'll accumulate experience and resources that will allow us to conquer the foreign market with our own software. I think this way of initial experience and resource accumulation is the only possible way for present-day Russia». However, the industry is hardly able to wait for such a long time. As Andrey Morozov figuratively put it, «the window of opportunities is closing. If some time ago the majority of sales on the IT market were registered by the USA, now it is China who is invading the market. They don't follow the Indian scheme, don't try to sell the programmers' work. They have an extremely powerful government policy promoting their business all over the world. China is a player who won't give us a chance to enter the international market, if we now lose time on accumulation of initial capital». The current situation, with the share of native manufacturers in IT consumption in Russia hardly above 11%, can no longer continue either.We need changes now. But how should they be made? The participants of the round table agreed upon the need to regard the program of native IT business development as a large-scale business project; to work out a business plan for IT breakthrough, including promotion of the «Made in Russia» brand, in cooperation with the state. The state in its turn must take a firm position to support the Russian IT business in the country and abroad. How can the state back up the IT business? The following suggestions were expressed at the round table discussion:
What is the role of business in achieving the goal? — First of all, it is the introduction of unique experience into the national program of IT development — says Andrey Morozov, CEO of CBOSS Association— Many people here have lengthy work experience with excellent results and ad-hoc knowledge. Knowledge is an intangible but very important category, upon which the results depend. And we have this knowledge. We also have technology and staff. This combination allows for achievement of the set goals. The business ought to efficiently use the state program to reach the set goal. The issue of interrelation between the IT business and the state with regard to information security was further touched upon by the CEO of Elvis+ Alexander Sokolov: — In 1996 we launched our information security product in the US market. The US State Department immediately interfered, and we couldn't make sales without their permission. However, as Mr. Sokolov put it, our state still supports the information security branch. In this respect it emulates mature countries that have restrictions for such foreign production. However, attempts to eliminate these restrictions have been made many times. Another urgent issue was touched upon in the course of the discussions, i.e. technoparks. Nikolai Mikhailov mentioned that the FCA System, the University, and administration of Dubna had decided "to create a technopark Dubna-System. This technopark will be created regardless of whether the law concerning special economic zones is issued or not, and whether it is good or bad". The president's advisor from RANS, Alexander Mochinin, suggested using the existing experience in this field: — In Japan, for example, there exists an infrastructure of IT development. There is a Development Corporation and there are production centers. They are actually technoparks. There exists well-organized state assistance to IT production by means of low taxes for IT products, soft-window facilities, etc. Is the experience of other countries important for the Russian IT industry? This issue was touched on by A.G. Morozov, but from another viewpoint: — What is easier sold: labor or products? Labor can be sold faster. But labor is a raw material and its cost-effectiveness is limited. Let's take India, for example. This country has an enormous base of IT production, but the products are sold to the USA, which implies losses. They are relative of course. We know how much India earns on the services provided to IT corporations, but we don't know how much it spends on acquiring products from these corporations. Moreover, Russia can't compete with India in the offshore programming market. Firstly, India possesses much more human resources that can be engaged in production. Secondly, the labor prime price in offshore programming depends on employees' wages. Russia already needs good IT professionals. The wages in this industry will inevitably grow with development of the IT industry. The cost of offshore programming will increase as well. Thus, the prime cost will rise and competitiveness will decrease. Tax preferences slightly reduce the prime cost, but it still remains higher than that of leading players in the outsourcing market. Thus, Russian competitiveness in the labor market remains insecure. Regarding the product sales cost within the country, it's not worthwhile to be concerned with the prime cost growth. With replicability rate being high, prime cost is not the main price formation factor for IT products. Therefore, the actions proposed to reduce the prime cost shouldn't be crucial for IT business growth. The actions put forward and announced today cannot contribute to labor sale, while the product sale can, but only based on a comprehensive approach. To make a business plan (recommendations) for reforms in IT industry it's necessary to create a special permanent committee — that was the final conclusion made by the round table participants. In general, the round table discussion «Problems and prospects of IT business in Russia» appeared to be a fruitful dialogue between IT business representatives that touched upon the urgent issues of IT development. It is not the last event of this kind and it will undoubtedly help to determine what actions are efficient for the creation of an innovative economy and higher competitiveness due to the native-IT-producer-friendly economic conditions and due to support from the state. Even more so as the Forum's President, a co-chairman of the State Committee «Russian intelligent resources», S. M. Mironov said «innovational potential of our society is quite high. Many countries became more successful in the innovation sphere starting from a weaker position. But we can lose our chance if we don't learn to take into account all the varieties of economic interests engendered by the innovative economy». |
The aim of the forum was to discuss ways of implementing the program of IT business development announced by the Russian president; to formulate and present proposals for achieving the explosive growth of the IT business and for promotion of the «Made in Russia» brand at home and abroad; and to integrate active Russian IT structures for the sake of the efficient development of the industry.