Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Klebanov: Russia Will Never Be India

Russia's burgeoning information technology industry will never catch up with that of India or repeat the Asian giant's explosion in high-tech expertise, Industry, Science and Technology Minister Ilya Klebanov said Friday.

A huge pool of cheap labor in the high-tech field and a strong record in sciences, Russia is potentially a weighty player in the global IT arena, with some experts saying it could one day challenge established industry majors like India.

"We have closely examined India's experience in the IT sector. But we all know very well Russia will not be able to repeat their experience," Klebanov told a business lunch hosted by the American Chamber of Commerce in Russia.

"We just don't have the same level of state resources as India does when it comes to supporting this industry. But we are working on it."

Analysts say even if Russian software exports keep doubling every year, as they have in recent years, it could take decades before Russia catches up with India, which is responsible for about 90 percent of global offshore software development.

"Russia's annual export potential is about $150 million, while India's is about $8 billion," said Vijay Kaushik, head of the Russian Indian Heritage Academy, which is involved in a number of joint Russia-India software projects.

"I think it's not a question of catch up. It does not happen in two days. India's IT industry has been growing and developing for more than 20 years. Russia's has not," he said.

Russia's exports only match the revenue of India's sixth-largest firm, according to tech research firm Gartner.

Russia's total IT exports account for just over 1 percent of its total exports, compared to India's 16 percent.

However, a global IT sector slump can deal Russian software firms a strong hand and push Western clients into doing more business in Russia as demand for cheap offshore services in second-tier markets remains high.

Analysts say India's 50-year standoff with neighboring Pakistan over the disputed Kashmir region is also beginning to worry investors as part of a global security concern following the Sept. 11 attacks on the United States.

"A military conflict with Pakistan ... has hurt India's image. Clients are hesitating, and Russia has a great chance to lure a number of these hesitating clients," Diasoft, a Russian financial software company, wrote in a December report.