As a Briton developing a world-class data center in Russia, I’m frequently asked “Why do you believe this market is important? Why would we trust our data or applications to a commercial data center in Moscow?” There are five main arguments to do so, particularly for an ambitious business with a global scope.
Any rapidly developing business faces the choice between building an internal data center and trusting it to external provider. Even though both approaches have benefits, most large businesses are moving their data and applications to colocation providers. This trend is particularly visible for decentralized global locations. In the era of globalization, companies must maintain global service standards, including quality, availability and security. To compete successfully, they need an efficient data infrastructure and fast channels. These requirements create demand for professionalism and quality data center service. Maintaining this level of service in house is difficult and expensive, whereas outsourcing it is cheaper and less risky.
The Russian data center market is mature enough to offer a range of services that satisfy a variety of demands. Locating a corporate IT hub in a Russian data center can be profitable, reliable, secure and efficient, as many of our customers can attest.
The Most Internet Users in Europe and a Huge Consumer Market
To start, Russia is an extremely promising market. Its GDP was $1.283 trillion—the sixth largest in the world by purchasing-power parity (PPP). In addition, the Russian economy continues to develop rapidly at an estimated annual GDP growth of 1.7%. For any global business, Russia is a multimillion-dollar market that’s impossible to ignore. Its sheer size, infrastructure and availability of talent, along with low language barriers, make it a good place to locate a center for CIS or even eastern European operations.
Moreover, Russia boasts the most Internet users in Europe. According to the latest data, that number exceeds 109 million people. For the year, the Russian Internet audience has increased by 2%. Therefore, any global Internet business focused on consumers— retail, mobile or financial services—will find an attractive market in the country.
Strong IT and Telecommunications Infrastructure, Favorable Geoposition
The geographical location of a company’s data center is important. Even in the digital age, instantaneously transmitting massive amounts of data is impossible. With the rapid growth of real-time everything (FIFA championship playbacks is a good example), distance to the end user is crucial to preventing slow and erratic service. The shorter the distance to the next hub, the faster the data reaches the right place. Russia is situated at the crossroads of Europe and Asia, right in the middle of the One Belt, One Road, making it an attractive digital channel. If your company is situated physically in western Europe and your customers are in China, communicating through Russian data hubs is an effective option.
In addition, the Russian telecom market is the largest in Europe, supported by a population of about 143.9 million people. Russia has also emerged as one of Europe’s fastest-growing markets for fiber-based broadband, with Rostelecom’s fiber broadband access network covering more than 33 million premises. Moscow is a technological and telecommunication hub through which millions of terabytes pass daily. The growth of fixed-Internet traffic in Russia for 2016 was just over 15%. The consumption of mobile traffic is growing even faster: 48% for 2016, reaching 3.8 billion GB. Analysts note that the growing number of mobile-Internet users was 7.5%, while average monthly traffic grew by 34%.
Сenter of IT Competence
Despite the fact that the Russian data market has yet to mature fully, multiple data center providers offer service of the highest global standards. For example, IXcellerate guarantees 99.999% uptime (equaling no more than 5 minutes and 13 seconds of downtime per year), and it has a history of 100% uptime.
One reason that IXcellerate and other providers can deliver this level of service is the availability of highly skilled IT and engineering talent. Russia has more engineering, manufacturing and construction graduates than any other nation in the world; every year almost half a million students with these specialties leave high schools, almost twice as many as in the U.S. Russian teams repeatedly win in major international programming contests. For example, in 2018, the St. Petersburg University ITMO won its seventh student’s world championship in programming at the ACM ICPC. Russia also holds leading positions in cybersecurity. According to the Global Cybersecurity Index rating compiled by the International Telecommunication Union and published in 2017, Russia was among the top 10 leaders in the field of information and communication technologies.
Data-Sovereignty Laws in Russia
Russian Federation law FZ242 stipulates that the collection, processing and localization of personal data of Russian citizens should occur on the Russian Federation territory, similar to laws in the EU, Australia and Canada, among others. Many companies simply must begin locating their data and processing infrastructure in Russia to avoid violating the law.
Conclusion: It’s the Right Time to Set Up in Russia
Russia is to some extent the last Eldorado for the world’s biggest web players. Globalization doesn’t leave anyone aside, and the Russian tech-user market is busy catching up. Since Russia is at the crossroads of trade and IT routes, it is increasingly hosting regional content hubs. In addition, some data centers in Russia have already reached the highest level of service quality to satisfy the most demanding international clients.
About the Author
Guy Willner has over 20 years’ experience in the technology industry. In 1998 he cofounded IXEurope, a market leader in data center operations that was later purchased by Equinix for $555 million. After gaining industry experience, Guy started to explore emerging markets and created IXcellerate. As a CEO of IXEurope, he raised approximately $100 million in venture capital, and the company’s revenue grew over 600% in its first three years. Before founding IXEurope, Guy worked for Compagnie Generale des Eaux (now Vivendi Group) between 1992 and 1998 both in the U.K. and in Hungary establishing a telecommunications operator culminating in $210 million EBRD funding. He began his career with Philips NV in Paris and Vienna, working in CD-ROM, smartcard and Minitel technologies. Before the company sold to Permira in February 2015, Guy was a nonexecutive director of Teraco Data Environments, a South Africa–based data center. He currently holds a nonexecutive-director post at Lamda Hellix in Athens.