The company opens a software development center in Russia

Foreign IT companies are trying to gain a foothold in the Russian market in the context of the import substitution program announced by the authorities. As Kommersant learned, the German software developer SAP is opening a custom software development center in Russia. At the first stage, there will be only eight programmers in the Russian office, although competitors such as Luxoft and EPAM have several thousand of them here.

SAP will open a custom software development center in Moscow on September 9, the company told Kommersant. “The work of the new center will begin with eight developers who will be focused not only on creating local products taking into account the specifics of Russian clients and Russian legislation, but also on implementing projects for foreign clients,” SAP said. The company notes that the center will work on the tasks of automating specific business processes in key industries for the Russian economy.

SAP announced the availability of custom software development for Russian customers in 2012, but all these years foreign programmers have been writing software for Russian customers. SAP has 14 custom software development centers: in Germany, the USA, Brazil and Asian countries (Bangalore, Delhi, Shanghai). The company previously said that about 50% of custom software development is provided by development centers in India. SAP clients in this area are BMW, Hyundai, Siemens, etc. “We plan to expand the staff of the Russian center in the future, especially since the growth dynamics of the custom development business in Russia is quite high: in 2014 alone we had 17 new projects,”— Ara Aguzumtsyan, director of consulting and support for SAP CIS, told Kommersant.

In the IT outsourcing market, the largest service provider, according to IDC, in 2014 was IBM Corporation, whose revenue in this segment amounted to $13.8 billion. The top three also included CGI ($2.8 billion) and Cognizant ($2.7 billion ). Capgemini and Wipro are next with revenues of $2.6 billion and $2.3 billion, respectively.

The most famous companies from the post-Soviet space that specialize in custom software development are Luxoft, whose majority shareholder is the IBS Group of Anatoly Karachinsky and Sergei Matsotsky, and EPAM Systems, founded by Belarusian entrepreneur Arkady Dobkin. At the same time, Luxoft and EPAM each have approximately 2 thousand employees in Russia. According to Luxoft CEO Dmitry Loshchinin, the company is not worried about the opening of a custom SAP software development center in Russia: “Most likely, the company is doing this not to compete with existing players, but for its own projects, to solve internal problems, and also from the point of view of positioning on Russian market". He notes that the Russian market is shrinking, domestic companies are especially suffering - it is more difficult for them to compete with global players, and the geopolitical situation is not helping.

The head of APKIT, Nikolay Komlev, notes that SAP is one of the successful players that have gained a foothold in the public sector and the segment of large enterprises, but due to the import substitution policy, the company has serious limitations. “Perhaps, by creating a center for custom software development, they are trying to get some preferences, as well as increase the degree of adaptation of the program to the client, which is often higher for local developers. This is the right strategy. It’s not only about sanctions and import substitution, but also in the fall in the volume of the IT market. In conditions when budgets are being cut and there will not be enough for all companies, those who cannot adapt will be forced to leave the market. SAP, I think, is trying different strategies,” says Mr. Komlev.

Maria Kolomychenko, Anna Balashova

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