The Russian IT industry is a sector in transition. After three years of explosive growth, fueled by the urgent need to replace Western software and hardware, the market has entered a new phase. The “gold rush” of emergency import substitution is over, and in its place, a more mature, competitive, and cautious industry is emerging.
From Boom to Slowdown
The period from 2022 to 2024 was a time of unprecedented growth for Russian IT. As Western companies like Microsoft and SAP curtailed operations, the market saw annual growth rates of around 20%. By 2024, the market was estimated at between 3.2 and 3.5 trillion rubles. The number of IT specialists grew to 1.7 million, and the Russian IT sector doubled its share of the country’s GDP.
However, 2025 marked a significant shift. While overall figures showed some growth, the rate of growth slowed dramatically. According to data from the Higher School of Economics, the wider Information and Communication Technology (ICT) sector grew by 12.6% in 2025 to 9.4 trillion rubles, with the pure IT segment growing by 14% to 4.8 trillion. At the same time, other reports indicated that the combined revenue of Russian IT companies fell by approximately 60 billion rubles (-0.75%).
Analysts at the IT holding T1 estimated that the overall corporate IT market (B2B) grew by only 3% in 2025, a stark contrast to the 20% growth of the previous year. This slowdown was a direct consequence of the market’s changing dynamics. The initial wave of emergency purchases was over. Companies were no longer rushing to replace foreign software at any cost but were instead focusing on optimizing costs and integrating the patchwork of new systems they had hastily adopted.
A Market in Transition: From Imitation to Competition
The central narrative of 2025 was the shift from the “emergency import substitution” phase to a more strategic and competitive environment. The market is moving away from fragmented projects and toward building holistic, efficient, and integrated technology stacks. Government officials confirmed this shift, stating that the country had moved from searching for replacements for Western products to actively implementing its own. A member of the State Duma’s Committee on Information Policy noted that Russia had passed the stage of dependence on foreign solutions and built its own ecosystems.
This is evidenced by the widespread adoption of domestic software, particularly in the public sector. By the end of 2025, Russian-made software accounted for 68.7% of programs used by regional governments and 76.3% in federal agencies and state corporations. For key economic sectors, over half (51.1%) of organizations had transitioned to domestic core and application software. This massive adoption represents a fundamental change from the pre-sanction era and has created a new landscape where domestic companies are now competing for the same corporate budgets.
The New Growth Drivers
While the general market slows down, certain segments are experiencing rapid growth, acting as the new engines for the industry.
- The Cloud Market: This segment is a major success story. In 2025, it grew by an estimated 29% and is projected to maintain growth of around 27% in 2026. The shift from companies building their own private clouds to using managed platform services is a key driver.
- Artificial Intelligence (AI): The AI segment is growing twice as fast as the rest of the IT market, with an estimated growth of 12% in 2025. The market is moving from pilot projects to pragmatic, industrial-scale applications.
- Russian Software and IT Services: This segment is the primary source of growth. Sales of domestic software and digital services exceeded 5 trillion rubles in 2025, a near 4.5-fold increase in six years. The software and IT services segment is expected to have grown by 4% in 2025 and is forecast to grow by 9% in 2026.
Challenges on the Horizon
Despite its successes, the Russian IT industry faces significant challenges.
- The Hardware Bottleneck: While the software sector thrives, the IT equipment segment contracted by 10% in 2025. This is partly due to companies building up stockpiles in previous years, but it also highlights a persistent dependence on imported hardware and components. However, a recovery is expected in 2026-2027 as companies upgrade their server fleets for AI and other data-intensive tasks.
- Investment Cooling: The era of “growth at any cost” is over. Venture capital investments in Russia remain low (around 15 billion rubles), and large corporations have dramatically reduced their venture spending. Investors are now seeking “workhorses” rather than “unicorns”—projects with clear economic viability and a quick path to profitability. The push for gradual withdrawal of IT tax benefits is also part of this drive for a more sustainable and competitive market.
Looking Ahead
The Russian IT industry is leaving behind its period of frantic growth and entering a “realistic” phase. While the headline growth numbers may be lower, the industry is arguably becoming more resilient, mature, and competitive. The focus is now on efficiency, integration, and the strategic deployment of technology. The “quick fix” era of import substitution is over; the era of building a self-sufficient, innovative, and sustainable digital economy has begun.
