The IT sector is stuck between East and West

The Russian IT sector is successfully coping with the impact of sanctions due to the steady growth rates gained in recent years and high financial stability, SPARK-Interfax analysts note in their review. The IT industry has provided positive dynamics for the entire sector of information and communication technologies (ICT), which, as follows from the statistical data published by the HSE Institute of Statistical Knowledge and Economics (ISSEK), since 2017 has been growing faster than the economy as a whole, and provided in 2021 year 3.2% of GDP. At the same time, according to the forecast of analysts of TAdviser who came out earlier, according to the results of this year the volume of the IT market can be reduced because of leaving of the most part of the western players and problems at east partners.

The financial stability achieved in recent years and steady growth rates allow the Russian IT sector to maintain stability in the face of sanctions, experts at SPARK-Interfax note in their review of the state of the industry. The state support system also influences the situation in the sector. Now the IT industry has more than 73 thousand operating companies, and it is growing much faster than other sectors – over 5 thousand new companies were registered in March-August.

The turnover is also increasing – in June it amounted to 354 billion rubles, which is 21% more than the same period in 2021. Also, the absence of a noticeable debt burden and good payment discipline speak of the high financial stability of the industry. The share of high-risk companies (those that are likely to lose solvency within 1–1.5 years) is only 14% of the total number of organizations in the industry. Of the negative, experts single out only a decrease in the profitability of the IT sector – its net profit in 2021 decreased by 9% after growing by 59% in 2020.

The so-called dynamically developing companies are the driver of the IT sector, providing more than half of its total revenue. We are talking about 2.1 thousand organizations that demonstrate an average annual increase in revenue above 10% at constant prices over the past three years and its volume is more than 81 million rubles, as well as having non-negative net assets and an average or low financial risk index “SPARK- Interfax.

It should be noted that it is the IT industry that ensures the positive dynamics of the entire ICT sector. In addition to IT, these are four more segments: other IT services, telecommunications, ICT production and wholesale of ICT goods. From the data of the statistical collection “Digital Economy Indicators: 2022” published by ISSEK, it follows that in 2018–2021, the share of the IT industry in the gross value added of the sector increased by almost a third, from 31% to more than 40%. The contribution of the entire ICT sector to Russian GDP last year amounted to 3.2% – the same as that given to it by industries such as metallurgy or education. At the same time, the growth rate of the ICT sector since 2017 has outpaced the dynamics of the economy, and the covid 2020 was no exception, when, with a 3% drop in Russia’s GDP, the industry grew by 7%.

At the same time, the situation in the IT market by the end of 2022 may change. According to the previously released forecast of TAdviser analysts, even an optimistic scenario assumes a decrease in the volume of the IT market within 10% (for 2021 it was estimated at 2.22 trillion rubles). According to the pessimistic scenario, a fall of more than 20% is expected. The outlook foresees the exit of a large part of Western players and a partial suspension of the activities of partners from the East, caused by the disruption of supply chains and fears of secondary sanctions. Note that both scenarios assume a significant increase in the revenue of software developers and companies in the field of information security.

Venera Petrova