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Promoting Russia's technical expertise - rather then tax breaks - is needed to develop the country's IT sector.

Natalya Kaspersky, chief exec at AV firm Kaspersky Labs, said the high level of technical education in Russia made for good software developers, but not necessarily expertise in marketing. Russia's government could help by promoting the ability of its IT sector in handling more complex development projects, she says, rather than more simple outsourcing projects which are increasingly handed over by Western companies to firms in India or China.

This - rather than financial incentives - will be of greater help in helping Russian IT companies. Over-generous tax breaks could have the negative effect of encouraging organised criminals to enter the IT business, Kaspersky spokesman Denis Zenkin warns.

Russia is heavily dependent on the export of commodities (particularly oil, natural gas, metals and timber) which make up 80 per cent of its overseas trade. According to Mrs. Kaspersky, promoting the IT segment can help to redress this balance.

Kaspersky Labs was established in 1997 and currently employs 270 people including 100 developers. Two-thirds of the company's revenue (which it doesn't publicly disclose) originates outside Russia, mainly in the SMB sector.

The company's headquarters is based in the same building where Soviet-era scientists developed nuclear weapon's guidance systems, and visitors to the building must still hand over passports to enter its austere environs. Kaspersky's office, in contrast to the building it inhabits, is impeccably modern.

During a European press trip to Moscow last week The Register met a variety of other Russian IT companies including Abbyy, the forms document and language recognition vendor, and a number of software outsourcing firms.

The long-term fortunes of such companies depend not only on their own efforts but the overall business climate in Russia, which continues to be impeded the slow progress of structural reforms. Problems such as a weak banking system and lack of confidence in the Russian economy overseas pose a continued problem for Russian IT companies. ®

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