Russian IT market: moving towards maturity.

Though by and large the Russian IT market is perceived to be an emerging market, but in certain industries, notably banking and telecom, the demand seems to have become sophisticated enough and the market seems to be attaining a certain level of maturity in 2011. Moreover, the IT implementations in the main retail players have reached some saturation, at least in terms of infrastructure deployments that can easily match the IT systems of global retailers.

Overall though, in 2011, the local IT market continued to be more dependent upon hardware, compared to the mature IT markets from Western Europe as PAC figures show. Laura Hurmuz, Consultant at Pierre Audoin Consultants (PAC) Eastern Europe considers that "in the software and IT services market, in 20I 2 the boost in IT consumption will come from sectors such as transportation, healthcare and utilities. In transportation, the demand is mainly driven by the government investments as it undertakes significant infrastructure development, such as modernization of several airports and of the railway network through system automations and industry-dedicated solutions implementations, such as traffic management solutions and SCM".

From a horizontal perspective, Russia shows new interesting opportunities in IT security, databases, mobility solutions and vertical-solutions implementations.

The priority for Russian IT services suppliers in 2012 would be to find new niche business in the verticals where they already have strong competencies, and in the same time, to invest significant resources in building new capabilities in new markets. "The ERP solutions in industries such as manufacturing (mainly oil & gas), telecom and retail have become to a large extent, a commodity. The challenge now is to implement new solutions, on top of the existing systems, in order to speed up the collection and processing of large amounts of data, as well as its storage. Therefore, demand for databases remains high" comments Laura Hurmuz.

The current year offers an interesting perspective for several reasons. First, due to a change in the political landscape, the first half of 2012 may be a rather conservative period in terms of IT deployments driven by the public sector as plans have been put on hold until May 7, when the new president takes charge. Public sector remains one of the top three IT consumers, therefore a strong influencer of the local IT landscape.

Second, the appetite for "going public" on western stock exchange markets has been built by EPAM's IPO on the NYSE at the beginning of this year. Now others such as Luxoft are also seriously looking at the public listing. Last, but not least, the large players in banking and telecom domain, namely Sberbank and Rostelecom, have decided to launch their own captive IT companies. The launch of such captives, backed by very large IT consumers, will definitely have a major impact on the landscape and will affect the traditional players such as independent Sis.

With 2012 beginning with such an eventful QI, surely the Russian IT market will continue to be dynamic and active in transforming/developing itself structurally as well as in level of maturity.

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