| Market growth reveals talent shortage This year started promisingly for the domestic information technology and communications industry - with the decision taken by the country's president in support of it. And it ends as usual. The industry is developing at a pace significantly faster than the rest of the economy, but a breakthrough that can actually ensure the diversification of Russian exports is still too far away. Meanwhile, the resources of extensive IT growth are getting closer to exhaustion.
Unfulfilled
On January 11, a Novosibirsk meeting was chaired by Vladimir Putin with the participation of leading representatives of the IT industry and members of the government. The President, having returned from Bangalore, India, was determined to set up technology parks in our latitudes on the Indian model and ordered the adoption of a law on special economic zones, meaning the creation of conditions for the rise of the Russian programming industry. The Ministry of Finance, fearing the emergence of “black holes” through which taxes would be lost, together with principled opponents of industry preferences from the Ministry of Economic Development, was forced to accept the president’s order for execution. The bill became law in the spring, and the president signed the law into law in July.
But this turned out to be not at all the law that Russian programmers needed to compete with their Indian, Irish, Hungarian and Chinese colleagues, who had long ago received significant tax breaks from their states. At the final parliamentary hearings in the State Duma committee that preceded the adoption of the law “On Special Economic Zones,” deputy Vladimir Zhirinovsky, confusing special economic zones with free ones, said: “Crimea should be a free economic zone!” At the exit from the meeting room, Deputy Minister of the Ministry of Economic Development Andrei Sharonov was surrounded by lobbyists proposing to create an international airport as a zone (and at the same time a special economic zone in the capital of Kalmykia). Of course, there was not a single representative of the IT industry among the crowd.
Even then there was no doubt that the idea of “building a Russian Bangalore” would fail. By the end of the year this became a fact. Of the six special economic zones, the creation of which is already planned, only one - in St. Petersburg - is directly related to the IT industry.
As for the communications industry, the privatization of the Svyazinvest holding, postponed until next year, and the issuance of licenses to mobile operators for the deployment of third generation networks (3G) should be classified as “unfulfilled”. However, these planned but unrealized measures do not have a significant impact on the development of the industry. A delay in licensing 3G technologies may even be desirable. According to the Minister of Information Technologies and Communications Leonid Reiman, Russia took into account the negative experience of Europe, where companies unjustifiably paid tens of billions of euros for 3G licenses (for some, this reckless decision cost their business).
Communication-2005
It seems that the mobile communications market in Russia has its own Moore's Law: the number of subscribers increases annually, according to the aggregate data of the market participants themselves, by no less than 30%. In 2005, the number of subscribers was, according to official estimates, 120 million people (forecast at the beginning of the year - 100 million). Independent analysts provide different data, but one way or another they recognize the “100 million” figure as reliable and reliable. This year, the income of mobile network operators for the first time exceeded the income of fixed-line operators (they are growing annually by 50% versus 25% for fixed-line network operators, in absolute terms - $10.4 billion versus 10.2 billion, according to analytical company J'son & Partners). The reason is not only the growth of the mobile communications market, but also the ongoing government regulation of landline tariffs.
Liberalization of this market, however, has already begun. This year, the first licenses for long-distance communications were issued to telecommunications companies that are ready to compete with Rostelecom. Demonopolization of the long-distance communication market must be carried out by 2007 - this is one of the conditions for Russia's accession to the WTO.
The most important event was the adoption of regulatory documents necessary for the implementation of a universal communication service. There are more than 40 thousand non-telephone settlements in the country, most of which are located not beyond the Urals, but in the European part. This situation is supposed to be eliminated through the development of communication networks through centralized contributions from market participants. The first competitions among telecommunications companies for the right to provide universal communication services have already been held in the Khabarovsk Territory.
The Ministry of Information and Communications announced the introduction of a new principle of payment for services - “the caller pays” - in 2006. A bill to abolish fees for incoming calls has been submitted to the State Duma.
In 2005, Russian mobile operators competed with each other much more decisively than before in the markets of neighboring countries, and not only neighboring countries. Last week in Kyrgyzstan, Alfa Group’s struggle for Bitel resulted in an actual armed conflict with Mobile Telesystems (MTS) and the forceful seizure of the office of the Kyrgyz operator.
In the past year, there was a conflict in Ukraine between Alfa Group and the Norwegian Telenor in connection with the purchase of Ukrainian Radio Systems by VimpelCom. In Turkey, Alfa Group bought Turkcell, pushing TeliaSonera out of this market. As a result of this transaction, the winner will receive indirect (through the Finnish-Turkish holding Fintur Holdings BV - a joint venture of TeliaSonera and Turkcell) control over the largest Kazakh mobile operator - K-mobile, Azerbaijani Azercell Telecom, Moldavian Moldcell, Georgian Geocell and another Ukrainian GSM - operator - Astelit LLC (Life).
In June 2005, MTS bought BCTI, the main mobile operator in Turkmenistan (at that time the only one in the country). The deal again turned out to be fraught with scandal: the Ministry of Communications of Turkmenistan immediately revoked the newly issued license. The conflict, however, was quickly resolved, and in October MTS received full control over BCTI.
Software industry
According to the non-profit partnership Russoft, which unites export-oriented Russian software manufacturers, a group of “medium and large companies” with employees ranging from 300 to 1,200 people has formed in the country today. Growth in this market sector is 30-50% annually. The total number of companies “in the software development and export industry” was, according to Russoft, “about 500.” Taking into account the small companies that are members of the independent developers association (ISDEF), this number should be adjusted upward.
In 2005, the Russian software industry (meaning only export software and only outsourcing), again according to Russoft, exceeded a billion dollars for the first time.
The objective reason holding back the further development of the industry is the lack of development personnel. On this occasion, Russoft addressed the Ministry of Information and Communications with a document entitled: “Proposals of NP Russoft regarding the first steps aimed at correcting the catastrophic situation with training personnel in the field of information technology.”
It is obvious, however, that the focus of software only on outsourcing dooms the domestic programming industry to an insurmountable lag behind India - simply due to the unequal demographic situation in our countries. There are already more than a million programmers in India. In Russia, according to the most optimistic estimate, no more than 150 thousand (according to other sources, no more than 50 thousand). The strategic prospects for the development of the industry are objectively related to the orientation of the domestic IT industry towards the implementation of completed projects, and not towards participation in fragmented programming contracted out to foreign companies.
Manufacturing of computer equipment
A year ago, in a conversation with a Vremya Novostey correspondent, Alexey Kudryavtsev, who then headed the Kraftway company (one of the largest computer assemblers in Russia), said that “the computer boom in our country is just beginning,” meaning the emergence of mass demand in the PC market. The forecast is confirmed. This sector of the IT industry, while not attracting as much public attention as communications and programming, is growing just as quickly.
Vladimir Shibanov, vice president of the Aquarius group of companies (part of the National Computer Company holding), citing data from the analytical company IDC, emphasized: “The market is growing much faster than the world; Based on the results of three quarters of this year, the volume of the domestic market for personal computers grew by 13%, laptops by 76%, and standard architecture servers by 23% compared to the same period last year. The rapidly growing market makes our country especially attractive to global brands, which significantly aggravates the competitive situation in the market.” Transnational companies, according to Mr. Shibanov, have “a certain marketing advantage, their financial capabilities are greater than those of any Russian manufacturer, which allows them to maintain artificially low prices for a long time; however, a domestic manufacturer can counter them with better knowledge of the local market and a developed service network (Aquarius, for example, has 300 service centers in 135 cities) and a more attentive attitude towards its customers.”
In the coming years, participants in the personal computer market will face competition not only and, perhaps, not so much with Western companies. PC assembly is increasingly concentrated in the country bordering Russia - China. And, importantly, under Chinese, not Western, trademarks. Andrey ANNENKOV |
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