In 2022, the Russian software market witnessed a 7.9% increase, reaching a value of $10.4 billion, despite the global challenges posed by geopolitical tensions. This growth momentum is expected to continue, with the market forecasted to expand by 49% to achieve a valuation of $15.5 billion by 2027. Business process applications (BPA) emerged as the dominant segment, contributing 20.2% to the total market value, reflecting Russia’s 3.9% share in the European software market.

Rivalry within the Russian software sector remains intense, fueled by both established international players and a steady influx of new entrants bringing innovative business models. The competitive landscape is marked by the presence of large multinational and domestic software companies, including notable Russian firms like Kaspersky and Croc, alongside global giants such as Novartis, Sanofi, and Bayer. These players are increasingly focusing on cutting-edge technologies like cloud services and AI to maintain their market positions.

The market’s growth trajectory has been influenced by a 30% surge in demand for hybrid clouds in 2022, with cloud spending in Russia expected to grow annually by 5.3% until 2024. Despite this positive trend, the software market’s growth slowed down in 2022 due to the Russia-Ukraine conflict, which led to European cloud service restrictions and a significant hike in cloud service costs in Russia, ranging from 60–80%.

The business process applications segment led the market in 2022, generating $2.1 billion in revenues, driven by the need for automation, cost reduction, and enhanced efficiency across various industries. The IT management segment also made a substantial contribution, accounting for 15% of the market’s total value with $1.6 billion in revenues. The demand for BPA underscores a broader shift towards digital transformation, with businesses increasingly adopting cloud-native solutions to streamline operations and reduce expenses.

Anticipated to grow at a compound annual growth rate (CAGR) of 8.2% from 2022 to 2027, the Russian software market’s expansion is poised to be significantly influenced by technological investments, particularly in the military sector. Russia’s commitment to advancing military software and technologies, including a $2.91 billion investment in AI research and development through 2024, underscores the strategic importance of cutting-edge technologies in enhancing national security and operational capabilities. This focus on innovation, coupled with the market’s adaptability and resilience, sets the stage for substantial growth in the coming years, cementing Russia’s position as a key player in the global software industry.