Sanctions Could Cause 39% Drop in Russian IT Spending

Information technology spending in Russia this year could fall as much as 39% in the wake of sanctions imposed in response to the country’s war on Ukraine.

As The Wall Street Journal reported Friday, the sanctions will depress IT spending in Russia this year by $12.1 billion, compared to the $31.2 billion forecast last year.

According to the Journal story, Russian IT leaders expect the sanctions will bring about widespread shortages of hardware and will cause difficulties while they replace Western software with open source or locally developed alternatives.

See also: Officials: EU Considers New Round of Russia Sanctions

Russia in 2017 ordered its majority state-owned companies to begin weaning themselves off software made in Western nations, but many of these organizations were still relying on that tech when the invasion began, the news outlet said, citing research from the International Data Corporation (IDC).

“Pretty much no one is expecting the sanctions to be lifted anytime [soon],” said Oleg Aksenov, a Moscow-based IT executive who has served as a division CTO at Russia’s largest bank, Sberbank. “Most everyone is just taking this as, ‘This is a new reality.’ We are going to adapt to it. It’s going to be like the days of the Soviet Union,” he said.

Karen Kazaryan, Moscow-based chief analyst of the Russian Association for Electronic Communications, told the Journal there are hardware makers based in Russia, but their production has been hamstrung by global supply-chain constraints.

Read more: US Senate, House Strip Russia of ‘Most-Favored-Nation’ Trade Status, Ban Russian Oil Imports

This news comes one day after Congress passed legislation revoking Russia’s most-favored-nation trade status and banning imports of the country’s oil as added sanctions over the invasion of Ukraine, now approaching its second month.

The bills would remove both Russia and its ally Belarus from the most-favored category, raising tariffs on some imports from both countries and giving President Joe Biden the green light to increase duties on some products, including aluminum, wood and wood veneer products, and chemicals including fertilizer.