Government remains one of the key vertical markets in Russia, says IDC

Prague, November 3, 2004 -- The IT market in Russia reached $7.10 billion in 2003 and is expected to expand by 26% in 2004. Over the next few years, growth will be driven by investments from both traditional Russian IT spenders, like resource extraction, government, and financial vertical markets, and younger, fast-growing industries such as retail and telecom. By 2008, total spending on IT is expected to exceed $17 billion.

In 2003, Russia enjoyed a period of unprecedented economic growth that fueled spending in both the business and consumer segments of the IT market. All corners of the economy benefited, and IDC estimates that every vertical market covered in its new study grew compared with the year before. "Although economic growth for 2004 will be a little lower than the previous year," says Sergei Sleptsov, Vertical Markets Analyst at IDC Russia, "it will remain solid, further stimulating investments in IT hardware, software, and services."

The government sector accounted for the largest share of IT spending in Russia. Process manufacturing and agriculture, construction, and mining tied for second, with the home vertical a close fourth. Altogether, these verticals represented almost 48% of IT spending in Russia in 2004. While all four of these are expected to exhibit solid growth over the next few years, education and wholesale will be the two fastest expanding verticals in the Russian ICT market, though these two sectors are starting from relatively small bases. Banking and financial services will also expand apace, with banking becoming one of the top-three verticals by 2008.

"The government will remain one of the largest vertical investors in IT," says Sleptsov. "Federal agencies, like the Ministries of State Customs, Taxes and Revenue, and Economics and Trade, that have sufficient influence to get their budgets approved will continue to upgrade their systems. Regional administrations will invest much smaller amounts; the exception being the Moscow government, which will continue to implement various IT projects both in its offices and in the companies it owns."

Though hardware remains by far the largest segment of the Russian IT market, it's share fell from 68.6% in 2002 to 66.6% in 2003. "This reflects changing priorities in Russia," says Sleptsov. "Spending by both larger corporations and small medium-sized business is gradually moving away from purely infrastructure related investments to focusing on solutions that address specific business objectives."

IDC's Russia Vertical Markets Forecast and Analysis 2003-2008 provides a detailed overview of IT spending trends and forecasts for 17 vertical markets (or industry sectors) and 16 product categories including hardware, packaged software, and services in Russia. The study highlights major projects in different verticals and also includes tables detailing IT spending by vertical market for each product in 2003 and forecasts for 2004-2008. IDC provides detailed analysis and major projects of each of the vertical markets covered in this report. The analysis is based on continuous research, monitoring of end-user IT spending and emerging purchase patterns, and supply and demand-side research.

For more information, please contact Mikhail Novikov (+7 495 975 00 42) in Russia or Tatiana Hinova (+420 221 423 140) in Central and Eastern Europe.

About IDC
IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

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For the Emerging Markets in the CEMA region, IDC retains a coordinated network of offices and agents in Budapest, Vienna, Moscow, Kiev, Minsk, Almaty, Warsaw, Bucharest, Sofia, Zagreb, Ljubljana, Istanbul, Johannesburg, and Tel Aviv, supported by regional research centers in Prague and Dubai.