BMI View: Russian IT spending collapsed in 2015 as the economy turned downwards, with sharp rouble depreciation rapidly reducing the affordability of imported devices and solutions. The outlook is for a further, albeit slower, contraction in IT spending in 2016 as economic conditions remain challenging - before a recovery from 2017. We are however cautious about the recovery, despite the pent-up demand across the market after deferred spending in 2015-16, as we envisage little of the erosion of purchasing power to be recaptured by 2020. Russia's international relations and policy umbrella for the ICT sector generates additional uncertainty, for instance through data localisation and technological independence initiatives, though these policies are creating pockets of opportunity within the market that vendors could tap with targeted strategies. For total IT spending, we envisage a CAGR of 7.1% over 2016-2020 to a total value of RUB1.2trn.
Latest Updates & Industry Developments
Hardware: RUB446.9bn in 2016 to RUB551.1bn in 2020, a compound annual growth rate (CAGR) of 5.4%. Pent-up demand from the economic crisis in 2015-2016 has potential to see spending bounce back from 2017, but a subdued economic outlook means purchasing power will remain below 2013 levels, and consequently we believe lower volumes and greater share for low-cost brands will remain characteristic of the segment.
Software: RUB185.2bn in 2016 to RUB242.5bn in 2020, a CAGR of 7.0%. Enterprise software investments should bounce back more fully than hardware spending, but the policy of switching to domestically produced solutions could become a bottleneck and be a drag on software spending growth.
Services: RUB280.0bn in 2016 to RUB407.0bn in 2020, a CAGR of 9.8%. Weak economic outlook and the extent of investment in datacentres since 2014 provides a positive outlook for cloud services, which we believe will drive segment outperformance, but we caution that data sovereignty and aim of technological independence could dampen performance.
|The Worst Is Over, But Outlook Is Still Weak|
|Russian IT Spending Forecast, RUB vs USD|
|e/f = BMI estimate/forecast. Source: BMI|
The Russia Information Technology Report features BMI Research's market assessment and independent forecasts covering personal computers and software; semi-conductors, memory chips, integrated circuits and general components; the internet and IT solutions. It analyses analyses regulatory changes (licensing, customs and intellectual property protection) and competitive landscapes comparing IT companies by products, sales, market share, investments, projects and expansion strategies.
BMI's Russia Information Technology Report provides industry professionals and strategists, corporate analysts, IT associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the IT industry in Russia.
- Benchmark BMI's independent IT Industry forecasts for Russia to test other views - a key input for successful budgetary and strategic business planning in the Russian IT market.
- Target business opportunities and risks in Russia's IT sector through our reviews of latest industry trends, regulatory changes, and major deals, projects and investments in Russia.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering IT, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the IT sector and within the broader telecommunications, political, economic and business environment.
BMI Industry Forecast
Historic data series (2010-2013) and forecasts to end-2019 for all key industry and economic indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecast, including:
- IT Sector: Industry value (USDmn); IT sector contribution to GDP (%); value of hardware, software and services industry (USDmn); PC, peripherals and software imports and exports (USDmn); PC, peripherals and software sales (USDmn); number of PCs (‘000); PCs per 100 inhabitants; internet users (‘000); internet users per 100 inhabitants; broadband subscribers (‘000); broadband subscribers per 100 inhabitants.
- Economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).
Information Technology Risk Reward Index
BMI’s Risk Reward Indices provide technology manufacturers, service providers, and IT vendors/leasing agents looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
Country Market Overview
Structure, size and value of the industry sectors including hardware, software and services; overview of the industry landscape and key players; assessment of the business operating environment and the latest regulatory developments and government authority.
BMI Macroeconomic Forecast
BMI forecasts for all headline macroeconomic indicators to end-2019 including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt.
Full analysis of the competitive landscape within the hardware, software and services sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
Cross-border analysis of country markets in the region, commenting on IT penetration (PC and internet) and market growth drivers (IT market size and IT market compound growth).
The information Technology Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.