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Most Russian companies already substituted foreign IT solutions — industry experts

Anton Nemkin recalled that the new sanctions are aimed at services and software that some Russian companies still rely on, rather than private users

MOSCOW, June 13. /TASS/. Most Russian companies have already substituted foreign IT solutions, thereby protecting themselves from sanctions pressure, but those who have not done it will face difficulties due to new sanctions imposed by the US Treasury, experts interviewed by TASS say.

According to Anton Nemkin, member of the State Duma Committee on Information Policy, private users will not be affected by the new sanctions and smartphones will not stop working, despite the risk that difficulties will arise with installing updates.

He recalled that the new sanctions are aimed at services and software that some Russian companies still rely on, rather than private users.

"Each such product already has a counterpart on the domestic market, or it is already at a high degree of completion. Most prudent enterprises have basically already replaced foreign IT solutions with domestic developments or combined solutions that use solutions from suppliers from friendly countries," Nemkin said.

The expert added that for the remaining part of the companies that have not yet gone through the process of import substitution, new sanctions could become an incentive to quickly switch to domestic solutions; the deputy also proposed considering new sanctions exclusively in the paradigm of accelerating the pace of import substitution in Russia.

President of the Russoft Association Valentin Makarov noted in an interview with TASS that those software consumers on the domestic market who were hoping for the restoration of the status quo will soon understand the futility of their position and will begin to look for replacement products and Russian partners capable of implementing and supporting them.

"In my opinion, these "most recent sanctions" will not be able to have a serious impact on software exports from Russia, since the risks of secondary sanctions have already prepared Russian software exporters to work with any markets," he added.

In his opinion, there will be no critical changes or deterioration in the situation in ensuring the operation of IT systems, but on the contrary, the process of import substitution will accelerate. Imported software supply channels will continue to operate, but interest in them should weaken.

Opinion of developers

In turn, Andrey Toloknov, head of business development for software developer Basis, pointed out that new US sanctions on the provision of software and IT services will seriously complicate the lives of those who, for some reason, have still used the products and services of American vendors. As an example, the expert cited the services of the developer VMware, which until 2022 occupied more than 80% of the Russian market, but over the past three years, most government agencies and about half of large companies have already switched to domestic solutions. However, many companies are still in the process of import substitution, and some still use previously purchased licenses and receive technical support one way or another.

"With the introduction of new sanctions, the use of workarounds will be strictly monitored and suppressed, and not at the level of the business of a foreign vendor, as was previously the case with Microsoft, but at the state level. Not only large businesses that still use their own clouds on American software are at risk, but also cloud providers that work with medium and sometimes small businesses. The consequences for them will be a complete lack of technical support, consulting and the loss of all client data and services deployed in the cloud," the expert noted.

General Director of My Office Pavel Kalyakin told TASS that he expects an active transition of Russian companies to domestic cloud services, since the continued use of foreign software can lead to operational failures and a decrease in the stability of the Russian IT infrastructure.

"We will probably soon see how domestic solutions will take a place in key business processes of Russian companies, and foreign software will cease to be widely used," he added.

Ban on IT services

The US Treasury Department will prohibit the provision of a number of services to Russia related to information technology and cloud services, according to a document posted on the department’s website.

As the US Treasury announced, that in consultation with the Department of State, it has issued a new determination, which "prohibits the supply to any person in the Russian Federation of (1) IT consultancy and design services; and (2) IT support services and cloud-based services for enterprise management software and design and manufacturing software. The determination will take effect on September 12, 2024."

An exception is allowed for companies managed by a US citizen, as well as in cases where the company is in the process of liquidation or disinvestment, or with the appropriate permission of the US authorities.