Hurdles and Progress in Russian IoT Software Import Substitution
Obstacles
- Technological Independence: Achieving technological independence is crucial for import substitution. This requires substantial investment in domestic capabilities, infrastructure, and research to meet global standards.
- Regulatory Landscape: Implementing policies such as waste collection fees on imported telecom equipment can level the playing field for domestic products. However, these measures may increase costs and impact service quality if not properly executed.
Malfunctioning Machine Softness
Global Giants' Dominance: Russian software developers struggle against established international IoT software providers, making it tough to capture market share. The dependence on foreign tech, particularly from countries like China, creates major obstacles for local manufacturers.
Advancements
- Local Solutions Spotlight: Events like the Russian Week of High Technologies emphasize the significance of developing local solutions in IT and telecommunications.
- Government Backing: The Ministry of Digital Development and other government entities are boosting domestic IoT and telecommunications industries via initiatives such as concessionary lending and investments in AI, IoT, and cybersecurity.
- Integration and Innovation: Efforts to combine Russian software solutions with other technologies (e.g., navigation, cybersecurity) are underway, as demonstrated in forums and exhibitions dedicated to these topics.
However, ensuring that domestic solutions are both reliable and competitive remains a challenge. Persistent innovation and investment in R&D are vital for overcoming these barriers.
Insights from the Industry
Market Growth and Limitations
- The Russian market for industrial software has grown by over 17% in the past year, with an annual growth rate of approximately 11%. However, the industry's progress may be hindered due to the maturity of domestic products, low digitalization levels, and regulatory requirements from FSTEC and FSB [base article].
- The revenue of the prosthetics developer "Motornika" reached 4.2 billion rubles in a year [base article].
- The level of digitalization in Russian industry is only 25-30%, according to BPMSoft CEO Yuri Vostrikov [base article].
Import Substitution in IoT
- Russian software growth is expected to continue, but some clients may delay purchasing due to the possible return of foreign IT developers and high interest rates [base article].
- The process of IoT import substitution has already slowed down due to key interest rates and potential return of foreign companies, causing stagnation in the Russian IT market in 2025 [base article].
[5]: Chinafactor.com - The Impact of China's Manufacturing Dominance on Global Markets[2]: Forbes.com - Russia's Quest for Technological Independence: New Initiatives in AI and Cybersecurity[1]: Rostec.ru - Russian Week of High Technologies Focuses on Import Substitution Strategies for IT and Telecommunications
- Enterprises are finding success in the growth of the Russian industrial software market, which has seen an annual increase of approximately 11%, reaching over 17% in the past year, despite potential challenges such as the maturity of domestic products, low digitalization levels, and regulatory requirements from FSTEC and FSB.
- Despite the slowdown in the process of IoT import substitution due to high interest rates and the potential return of foreign companies, the Russian market for software is expected to continue its growth.
- In the field of education-and-self-development, having mastery of software like Autocad will likely be increasingly important as technologies like IoT continue to evolve and make more noticeable impacts on general news and various industries.
- As the effort to achieve technological independence progresses, the Russian government is promoting domestic IoT and telecommunications industries by providing concessionary lending and making investments in AI, IoT, and cybersecurity, amongst other technologies.
