IT Exports Need Non-Financial Support

28 january 2016

The Analytical Center and the Eximbank Bank of Russia organized a breakfast meeting ‘IT for Export: Development of Potential through Export Financing.’ During the breakfast meeting experts talked about the existing practices of providing support for exports of IT products and services to foreign markets as well as measures to improve the financing tools available to Russian exporters of IT products and services.

Opening the event, Denis Yershov, the Head of the Department for International Cooperation of the Analytical Center, noted that emphasis is currently being placed on the promotion of exports and that Russian IT companies have a lot of export potential. "But IT exporters run into all sorts of problems, as they enter new markets they often do not understand the new rules of the game or some legal aspects," the expert said. Mr. Yershov believes that with limited financing it is important for IT companies to know how they can get hold of the resources they need to promote their products.

Mikhail Sneg, the Strategic Development Director of the Russian Export Center, pointed out that for a lot of transactions being carried out in the IT sector there is no real definition for what constitutes exports and so under the current Russian laws there are some business operations IT companies engage in that cannot be classified as exports. "The main problem is that software and other IT products are often virtual and cannot really cross the border in the physical sense," the expert explained.  According to him, the draft federal law on Exports' Support that is currently being reviewed in the Executive Office of the Government of the Russian Federation has already made the first attempt to define ‘exports of services.’

Sergey Gladkov, the CEO of Logrus LLC believes that there should be no VAT on exported services. "VAT makes it a lot harder for our companies to compete because other countries do not charge it on IT services," the expert explained. Information support is also important: people should be told about and share best practices, assistance should be provided in search of partners, Mr. Gladkov believes.

"VAT makes it a lot harder for our companies to compete because other countries do not charge it on IT services."

Sergey Gladkov,

CEO of Logrus LLC

Dmitriy Odintsov,  the Business Development Director of TRUKONF LLC, is convinced that companies are already sharing best practices and educating each other and the important thing now is to help them bring their products to western markets.  "Russian companies cannot enter western markets because they don not know how to do it. In addition, there are a lot of countries out there and you cannot really focus on just one. In addition, it is impossible to find partners on one’s own," the expert said. Mr. Odintsov believes that one way to help Russian IT companies penetrate western markets is by subsidizing trade fairs. Chinese companies have a lot of experience in organizing fairs, but over there the state pays for their booths, the expert noted.

"Russian companies cannot enter western markets because they don not know how to do it. In addition, there are a lot of countries out there and you cannot really focus on just one."

Dmitriy Odintsov,

Business Development Director of TRUKONF LLC

Dmitriy Kurashev, the founder of the non-profit partnership Independent Software Developers Forum, believes that the main problem is in export control that prevents Russian IT companies from offering their products internationally. In addition, banks do not give loans to IT companies because they have got no tangible collateral to pledge as security, the expert noted.

Participants in the discussions included representatives of leading exporters of IT products and services, representatives of the Ministry of Communications and Mass Media of the Russian Federation, and independent experts.

List of Participants (in Russian)

Program (in Russian)