Nizhny Novgorod is Russian Silicon Valley

Nizhny Novgorod is Russian Silicon Valley

Photo: http://pixabay.com

Popular journalists like Yury Dud are unlikely to come to Nizhny Novgorod to shoot a video about its Silicon Valley, but it is definitely worth visiting. During the Soviet times its enterprises and universities became the pioneers in many areas that gave rise to today's high technologies.

Light years away

In 1963, the Gorky State University (currently, Nizhny Novgorod State University) in the city on the Volga opened the Department of Computational Mathematics and Cybernetics, the first in the Soviet Union. The department started various research projects including new methods of pattern recognition, and made the first steps in artificial intelligence studies. The group of scientists was headed by Academician Yuri Neumark, a world-famous heavyweight in the sector of technical cybernetics.

In the 1990s, Nizhny Novgorod began to develop its own IT sector. Many worked in offshore programming developing software for international clients. The money they earned helped them turn their small firms into full-fledged companies.

In 2013, BaseRide Technologies was included in the top 20 best startups in Russia. It sold its software to the United States, Canada, Europe and Southeast Asia. Today, the company is based in Singapore. It became a partner of AStar, a Singapore high-precision computing institute. The Singapore fund IncuVest invested $600,000 in the company.

Even the Viber app can be found on the long list of the projects on which Nizhny Novgorod’s IT experts ever worked. WOWCUBE is a less known, but very promising project, owned by Nizhny Novgorod resident Ilya Osipov who is now living in the United States. Steve Wozniak, a technology entrepreneur and co-founder of Apple Inc., was interested in the project. Business angels invested $1.4 million in WOWCUBE in 2019.

Today's reality

All these stories refer to things of the past and IT specialists who left the city. Is there anyone else left in Nizhny Novgorod? Of course.

In 2020, the Nizhny Novgorod region ranked third in terms of the export of IT-services after Moscow and St. Petersburg.

The regional Ministry of Information Technologies and Communication estimated that international clients bought packages for their businesses worth $115.92 million from the Nizhny Novgorod IT-sector, up 25 % from 2018. Last year, the region imported $19.71 million worth of IT services.

More than 1,400 IT companies are currently registered in the Nizhny Novgorod region, a 25 % increase from 2019.

Last December, Russia passed a law on preferential tax rates for regional software developers. It is 1% if income is taxed and 5% if the “income minus expenses” scheme is applied. Nizhny Novgorod IT businesses will save about 93.7 million rubles ($1.29 mln.) by the end of this year, while subsequent annual savings are estimated at about 187 million rubles ($2.57 mln,), the regional Ministry of Economy said.

There are branches of international IT behemoths working in Nizhny Novgorod including Harman-Samsung, Huawei, Five9 and Netcracker. The largest Russian companies working in the IT sphere such as Yandex, Mail.ru Group, Artezio, Auriga, CROC and Lanit also have their offices there.

Intel considers Nizhny Novgorod to be a key region of its presence in Russia, said Intel's chief operating officer Darya Kiryanova. Over two decades of its presence in Nizhny Novgorod, the corporation increased its staff there by 20 times.

Every year, Nizhny Novgorod region needs 3,600 IT specialists and falls short of 1,700 or more, Nizhny Novgorod region governor Gleb Nikitin said.

The ICity project that will create 15,000 high-tech well-paid jobs is expected to solve the staffing problem. It will increase budget revenues as 85 % of personal income tax goes to the regional budget and 15% to the municipal one. Kiryanova believes that Nizhny Novgorod IT-cluster will be of interest not only to local firms, but also to companies based in other cities.

Lad Group CEO Dmitry Petrov also supports the ICity project. In his opinion, the cluster will help develop the urban environment and improve residents’ comfort and quality of life.

Nizhny Novgorod mayor Yury Shalabaev believes that the project will partially solve the problem of the outflow of highly qualified young specialists from the city.

Key to the future

CYPR-2021, the 6th annual federal forum on the digital economy held on June 23-25, 2021 also showed Nizhny Novgorod to the best advantage as a city with a promising IT future. The forum summed up the results of the “digital five-year plan” and launched Russia’s first ever hackathon on artificial intelligence in a series which will run till 2024, said Russian Deputy Prime Minister Dmitry Chernyshenko.

The federal center allocated 850 million rubles ($11.66 mln) for the Nizhny Novgorod forum.

There is no recipe for success in IT-sphere. It is always a mixture of talent, persistence, the right place and time, available capital and good luck, said Internet entrepreneur Mikhail Balakin.

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