INSUBCONTINENT EXCLUSIVE:
Russia's IT industry is increasingly concerned that renewed competition from foreign firms could deal a serious blow to local tech players
as discussions intensify around the possible return of Western companies that left following the 2022 invasion of Ukraine.Meanwhile, the
since the invasion.Return of Western companies discussedSince the first contacts between the U.S
Alexei Yakovlev, director of the Finance Ministry's financial policy department, floated this possibility again in early April."Obviously,
"Market conditions with additional considerations applied given the sectors of their activities, are basic."Earlier, Deputy Finance Minister
Ivan Chebeskov said his ministry was drawing up a list of requirements for the return of foreign companies to the country as requested by
President Vladimir Putin.Meanwhile, although relations between Russia and the U.S
are considered to be gradually "warming," no real steps have been taken to lift U.S
Senior Russian officials have repeatedly said that the lifting of sanctions would be the main condition for any return of foreign
companies.And although foreign companies that left Russia are reportedly considering their options for returning, very few are ready to make
fearfulDespite the uncertainty around a possible return of Western firms, Russian IT companies are concerned that increased foreign
competition might make their already precarious situation yet more difficult.Three years after the massive exodus of global tech firms from
Russia, it's already clear that the Russian IT sector has been unable to capitalize on this window of opportunity
Even in a situation when competition was insignificant and the government extended some privileges to the tech industry, local IT firms were
able to show only modest growth.Now that this government support is ending, the first signs of problems are already emerging
Starting from late 2024, major Russian IT companies have been laying off personnel
Some large companies, including Sber, VK and MTS, have reportedly laid off entire development teams
The market has begun to shrink, and new areas that have not yet proved their economic efficiency are apparently few.In an article published
by the RBC business daily, Valentin Makarov, president of RUSSOFT, an association of Russian IT firms, claimed that foreign tech firms are
eager to return to Russia, as their absence in the local market results in substantial unrealized profits
According to Makarov, some IT firms might return to Russia indirectly, operating through intermediaries, which will already create problems
"They understood that, given their extensive experience and well-established operations in Russia, doing so would be unprofitable for their
Therefore this decision was driven not by their own desire, but by the political situation along with primary and secondary sanctions
against Russia imposed by Western countries, primarily the U.S
government."According to Makarov, although a return to the pre-2022 status quo when foreign IT firms had practically unlimited access to the
Russian market is unlikely, local IT firms still need protection from returning Western competitors."Any changes could significantly
progress, the transition remains uneven
However, any such return must be strictly aligned with national interests and paired with accelerated development of domestic
alternatives."The key now is not just replacing imports, but supporting the export potential of Russian IT companies," Makarov said
Russian solutions or learn from its approach to import independence.Still, the potential re-entry of foreign software providers poses
substantial risks for the local IT sector
Makarov warned that their return could trigger renewed anti-Russian sanctions and raise security concerns, particularly the danger of
cyberattacks enabled by foreign software used in critical infrastructure and information systems."Protecting technological sovereignty is
essential if we are to safeguard the gains made by the Russian IT industry," he said.Small profits for those who stayedAt the same time,
foreign tech companies that have stayed in Russia are showing profits for the first time since 2022.In a surprising turn, Sony posted a net
according to figures from the Federal Tax Service
suspending operations of the PlayStation Store in the country.By 2024, Sony had sold off its remaining inventory in Russia
However, the company still generates some income from warranty services and administrative support
Notably, the company said that it has no intention of closing down its legal entity in Russia
Meanwhile, a separate Russian subsidiary owned by Sony Mobile Communications has been in liquidation since October 2023.Meanwhile, the
based on filings with the Federal Tax Service
data have been made public for either 2023 or 2024, but the subsidiary was officially declared bankrupt and has been in the process of
liquidating assets since October 2023.As part of the liquidation proceedings, Valery Talyarovsky, the court-appointed manager of Google in
Russia, has filed numerous lawsuits against advertising companies
Since early 2024, he has initiated at least 13 legal actions in the Moscow arbitration court, seeking claims that total approximately 10
billion rubles ($119 million)
