IT firms among Russia’s fastest growing companies

Representatives of the IT sector literally stormed to the top of the list of fast-growing companies in Russia. Former leaders — especially metallurgists and car dealers — can only reminisce about past achievements.

The potential for the recovery of the economy at the expense of a post-crisis side-jump has dried up. Business is more and more focused not on expansion at all costs, but on an increase of efficiency by way of reduced costs.

A collective portrait of the most dynamic companies in the country looks more attractive than the one that was drawn out on the results of the previous two years. In a similar rating for 2010, top positions were occupied by members of cyclical sectors of economy (mechanical engineers, developers and metallurgy), the rapid growth of which is only a natural rebound after the catastrophic losses suffered during the crisis of 2008-2009. The government contributed strongly to this rebound, supporting the so-called strategic sectors of the economy.

In the ranking for 2011, the top spots also went to companies whose growth reflected not so much their development, but rather resuscitation of business. In addition, many of them were "the leaders of laggards behind."

They were involved in the overall post-crisis recovery with some delay — not in 2010, but in 2011. There was nothing inspiring in the leaders’ list then, being, for the most part, very conditional. Among other things, anguish was caused by the fact that none of the private high-tech enterprises made it into the top 10.

The current rating is radically different from the previous two. Among the companies that occupied the first 10 spots, two belong to the IT sector. All in all, the list contains nine IT companies (the top 100 of 2011 had one less).

Their revenue for 2012, on average, increased by 43 percent, and, in the aggregate, by 39 percent. This is the best result among all sectors, representatives of which filled the rating. By comparison, similar rates of oil and gas companies — which also have nine in the top 100 — are about 15 and 12 percent, respectively. In general, including all participants, the numbers are 27 and 17 percent.

The eye-catching dynamism of the largest domestic IT companies is mainly explained due to a significant increase in demand for their services by enterprises and banks, which, in turn, reflects a focus on improving business efficiency.

All these products are eventually needed, in order to reduce costs and thus maintain more or less normal dynamics of profit during the sluggish recovery of the economy. The recovery rebound is in the past, and this is another conclusion that could be made by examining the growth factors of the leaders in the ranking.

Against the general background, the trade sector stands out. This sector had the most massive number of representatives on the list (32 companies, against 16 in 2011). The total and average growth of their revenue was approximately 28 percent.

In 2013, according to the statements of public companies during the first two quarters, the trading business continues to grow at a good pace. This is primarily a consequence of the fairly steady demand for goods and services by the population.

This is not surprising: Incomes, according to the Federal State Statistics Service, in Jan.–June 2013 were 12.2 percent higher than in the corresponding period of 2012.

Demand is strong this year, also, in the housing sector, as is evidenced by the quarterly reports of public companies (LSR Group, GC “PIC”). In the past year, six housing and construction companies included in the rating for 2012 (including the two aforementioned holding companies) showed an average increase in revenue by 33 percent. By comparison, the same index of the three companies involved in the construction of infrastructure (from bridges to utilities) rose by 22 percent.

The retail sector has been and remains the best in the "bad" economy of Russia. And, so far, nothing is really happening there that would change this. We can be assume who will be the leader on the basis of rankings this year — a company that is operating on the domestic consumer market and unceasingly cares about the effectiveness of business processes.

First published in Russian in RBC Daily.

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