German IT companies and the Ministry of Economy began negotiations on easing the law on state software orders in Russia

    The Ministry of Economy and German IT companies are discussing the prospect of selling foreign software to government agencies on new conditions. Foreign companies offer to partially transfer the production of software to Russia and soften the law banning the supply of foreign software to government agencies.

    Last week, at a meeting with entrepreneurs from Baden-Württemberg (Germany), localization of software production in Russia was discussed by the head of the Ministry of Economy, Alexei Ulyukaev. Representatives of the Ministry of Communications were invited to the meeting, but were not present.

    “The greatest concern of German entrepreneurs is the definition of Russian software stipulated by the law signed in the summer by the beneficiary of the company that owns the product. In order to stimulate the investment activity of foreign IT companies in Russia, representatives of the German business community suggest considering the possibility of amending the legislation and using criteria for the degree of localization to determine the origin of software, ”the correspondence
    between the ministries says .

    The representative of the Ministry of Economy, Elena Lashkina, confirmed that "the localization of foreign software developers was one of the issues discussed." In addition, a representative from SAP attended the meeting . In addition to it, an IBM research and development center is based in Baden-Württemberg .and HP .

    The law obliging government agencies to provide a written explanation of the purchase of foreign software from January 1, 2016 was signed by Russian President Vladimir Putin at the end of June.

    Starting January 1, 2016, the state customer will have to argue its choice in favor of foreign software if its Russian counterparts are in a specially created register of domestic software. The law so far affects only state bodies.

    The software should belong to the state, municipality, Russian non-profit organization or company with a share of Russian beneficiaries of more than 50% - this is the main criterion that allows us to consider software domestic.

    Include localized foreign software in the created register of domestic software earlierrequested by the Association of European Businesses. The largest foreign IT companies represented by the Director General of the Association of European Businesses ( AEB ) Frank Schauff requested to postpone the date of entry into force of the law from January 1 to July 1, 2016. Over the past six months, the association has invited Russian departments to develop joint criteria for localizing foreign IT companies in Russia so that their software can also be included in the unified register of Russian software.

    Mr. Schauff also notes that “the European business has made significant investments in the Russian Federation in the last decade and planned to invest in the future,” however, now foreign IT companies can suspend investment programs and even leave the Russian market under conditions of fuzzy game rules, citedtranslation of his words Kommersant.

    Vyacheslav Orekhov, SAP CIS CEO, notes that localization of production in a company means "procedures for transferring the process of creating software to Russia: development, training, service support and data centers." “Specific criteria in order to consider a company or product localized should be defined in the dialogue between the business and the regulator,” he said.

    In March, the Russian representative office of SAP turned to the Ministry of Communications and the Ministry of Industry and Trade with a proposal to conclude an investment agreement under which SAP is committed to invest in the development of technology in the country. Later, the Minister of Communications Nikolay Nikiforov said that SAP is in talks with Rostecabout the creation of a joint venture in Russia, but then the top management of SAP in Germany did not support this idea.

    According to the National Association of Electronic Commerce Participants, in 2014, SAP was the most sought-after software developer in the Russian public sector, which purchased its solutions worth 5.6 billion rubles. Next come Oracle (4.6 billion rubles), IBM (3.3 billion rubles), Microsoft (3.05 billion rubles) and Cisco (1.9 billion rubles).

    "Russian companies fear that localization will further strengthen sales of foreign software," saidKommersant, director of the Association of Computer and Information Technology Enterprises Nikolay Komlev. Foreign players, adds Mr. Komlev, fear that in the shrinking Russian IT market, in the future, they may be completely pushed away from the public sector, which in Russia is the largest consumer of IT.

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