BCG warned about the backlog of “digital” in Russia for 20 years


Although the Russian regions in recent years has tightened to Moscow at the level of digital development, in General, the country lags behind global leaders such as Denmark and Sweden — digital development at five to eight years, and this gap may increase, according to a study by Boston Consulting Group (BCG).

The gap regions from Moscow to digital development since 2011, it has decreased almost two times that found in BCG: if then the gap was 2.6 times by 2016, decreased to 1.35 times. A significant role was played by the development of appropriate infrastructure to access digital services: since 2011 the indicator regions on average increased by 2.6 times. Thus, for example, frequency of shopping in online stores around the country homogeneous, although the average check in Moscow is 25% higher than in the regions.

To catch the leaders

Moscow and Saint Petersburg, which over the past five years had overtaken the capital in terms of digital development, maintain the leadership in the country. However, Moscow remains in the second ten largest cities in the world on its “digital maturity”, says BCG, citing two ranking 2014 — Ranking of smart global cities and Networked society city index.

Two more groups — developing and developing sparsely populated regions. The former relates to most regions of Central and southern Russia, the Urals and some regions of Siberia and the Far East, second North regions and sparsely populated regions of the Far East, for example, Murmansk, Tyumen, and Arkhangelsk oblast, Chukotka Autonomous Okrug, Kamchatka Krai.

Lagging regions — the Chechen Republic, Ingushetia, Karachay-Cherkessia, Dagestan and Kabardino-Balkaria. “Despite the relatively small gap from the main group in terms of development infrastructure, they are significantly behind the average values as the level of development of online spending, and the level of engagement in the digital economy”, the review says BCG.

The classification is based on the index of digitalization of the region’s economy for 2015 to the last available value of GRP (2013).

Says BCG

Index of digitization economy, e-Intensity is a weighted average of three sub-indexes: infrastructure development (weight 50%), online spending (25%) and user activity (25%). The first covers, for example, such indicators as the speed of the Internet, sales of smartphones as a percentage of all sales of mobile devices, penetration of broadband access. The second sub-index considers the share of Internet sales in all sales and proportion of spending on online advertising in the total advertising budgets. The last indicator includes three indices for business, consumers and the state, and reflects such factors as use of the Internet by businesses, the proportion of the population using the Internet, Network access in schools, and also includes a number of indicators of activity in the Internet, hope UN. The same methodology is used to assess the digitalization of regions — with the replacement of a number of parameters estimated by the UN and the world economic forum, on data of Rosstat and the HSE.

Common to all regions is the untapped potential of the digital transformation of industries, noted in the BCG. The company, consistent digitalization of major sectors by 2021 (it is, for example, the introduction of resource planning systems — ERP) will ensure the creation of added value by 5-7 trillion a year. “Thus, the use of digital technology in distribution centers to reduce costs by 5-10%, increase revenues by 1-2%”, — cites the example of the BCG for retail.

As A Result Russia

The position of Russia in the rating of BCG over the past five years has not changed, and the country is ranked in 39th place out of 85 in the development of the digital economy. In 2011, she was on the 43rd place in 2012 to 39th in 2013-m — 40-th row. The index of the Russian Federation (e-Intensity) grew with an average annual rate of 24% and in 2015 amounted to 113. The leader Denmark has an index value of 213. In the top-3 also includes Luxembourg and Sweden (212 and 208, respectively). However, the performance of China are growing extremely rapidly, averaging 33% per year, and by 2025 it may take first place in the ranking, gives the figures a BCG partner Bart Bank.

In the baseline scenario ranking last BCG was expected that the contribution of the digital economy in Russia’s GDP will grow from 1.6% in 2011 to 2.6% in 2016. In fact the figure came in below forecast values — 2.1% of GDP, which is 1.3 times more than in 2011, but is 3-4 times lower than that of the leaders of the rating. For example, in the UK the figure is 11.4 per cent. The reason for the slowdown in the Russian indicators — stagnant volume of investment and high import component. The individual components have expanded exponentially: for example, online consumption in Russia grew by 27% annually and reached $ 2 trillion, the Contribution of net exports in the digital economy is now equal to minus 800 billion rubles., estimated at BCG, Russia imports about 90% hardware and 60% software.

Generally associated with the digital economy markets in Russia has increased since 2011, from 5 trillion to 27.7 trillion rubles. for Example, in 2015 the Russian market the Internet-advertising grew 15% decline in the total advertising market 10%. In five years the penetration of Internet has reached 70,4%, 3G available 95% of the population, LTE — 60%.

BCG experts believe that there are three scenarios for the future digital development of Russia. The first is an increasing gap between the most developed countries from the current five to eight years to 15-20 years. Stagnation quickly leads to delays, and digital development of the Russian Federation has slowed down in 2014. If not applied extra effort, the country could go the way of Venezuela, where the gap from the leaders of the rating over the last five years has increased more than 1.5 times.

If the government will create favorable conditions for the development of online markets and services, by 2021, the contribution of the digital economy will exceed 3.2 trillion roubles and will amount to 3% of GDP. But the gap from the leaders of the rating will still increase up to eight to ten years. In the case if taken the “Asian” course, selected, for example, China, is a focus not only on basic components (infrastructure, online expenditures, and engagement), but also on the increasing investment of private and public sector in the long-term trends (Internet of things, big data, the development of IT products and services with high export potential), the share of the digital economy may reach 5.6% (projected at the European level of 7.5% by 2020). “The scale of the expected effects up to 5-7 trillion per year,” — estimated at BCG.