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Russian IT companies navigate downturn

by Stuart Wilson, Friday 29 May 2009

Russian IT companies are facing up to a tough economic outlook in 2009. These companies are making the necessary changes to their organisations to emerge stronger once the market picks up. Research company PMR claims that the value of the Russian market could contract by 14% in 2009.

During the last few months several of Russia’s largest IT companies have reduced headcount in anticipation of slowing demand for IT solutions. According to PMR, consumer spending on hardware is also expected to fall due to the strengthening US dollar and upward pricing pressure. Manufacturers and distributors – accustomed to rapid growth in the last two years – must to adjust quickly to the softer demand environment for IT products and consumer electronics.

PMR reckons that the entire Central Europe and Russia region will see a ‘clear deceleration of the dynamic growth seen in previous years’ driven by economic factors, which will impact both business and consumer spending. The total value of the IT market in Russia, Ukraine and Poland combined is now expected to fall 10.5% year-on-year in 2009 to US$30.7 billion.

"Opinions of the largest IT companies present in Ukraine, which PMR surveyed at the beginning of 2009, are divided into those before and after the slump of the market in Q4 2008,” said Paweł Olszynka, PMR analyst.

“It was at that time that sales of some suppliers, especially those of hardware distributors, fell by up to a half in year-on-year terms, while the final quarter of the year was usually the time of record-breaking results,” Olszynka added.

The value of the Polish IT market is now expected to record minimal single digit percentage growth in 2009, according to PMR. Software and IT services companies – especially those with long-term customer contracts – continue to put in a solid performance with IT hardware distributors facing the most significant challenges.

PMR reckons that hardware suppliers in Poland will focus their energy on minimising losses as they deal with longer hardware replacement cycles. With cost-cutting high on their agenda, customers are expected to show a greater level of interest in energy saving and virtualisation technologies.

Despite the short-term economic issues, the long-term market outlook for major markets such as Russia remains bright. The current conditions have forced many to ‘rightsize’ their business, identify their core activities and begin planning in earnest for the eventual upturn in business. Vendors continue to invest in Russia, making sure that they are well positioned to develop a long-term and sustainable business model and go-to-market strategy.

Channel development in Russia & CIS has become a whole lot easier in 2009 with the launch of the first ever DISTREE IT Channel Week from June 17th to 19th in Moscow. The event unites Digital Consumer Channel (DCC) with Digital Business Channel (DBC) in one super sized event, letting vendors and channel partners achieve more in a shorter period of time. See www.dcc-cis.com for more details.

DISTREE IT Channel Week brings together the two premier events for channel development in Russia & CIS. The event will take place at Moscow Country Club and includes a compelling mix of pre-scheduled one-on-one meetings, conference sessions, awards, evening functions and networking opportunities.

DISTREE IT Channel Week – including both DBC & DCC - is organised and managed by DISTREE Events, a Paris-based company that has helped vendors engage with channel partners in markets across EMEA for more than a decade.

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