Microsoft, Oracle, and other big software companies doing business in Russia are having a hard time in the country, as more local organizations switch to software developed locally because of the international sanctions imposed by the United States and the European Union.

The Russian software company is estimated at $2.9 billion (€2.5 billion), and according to a report by Bloomberg, three quarters went to imports, with Microsoft and Oracle getting the lion’s share.

But due to concerns of international sanctions following the military conflict in Ukraine, Russian companies are switching to homegrown software, hurting sales of American companies, such as Microsoft and Oracle, which were seeking contracts with local organizations.

OAO Sberbank’s life insurer and OAO Gazprom’s oil division have both decided to choose non-Microsoft software for their businesses, going for open-source alternatives that are either based on Linux or developed by their own software engineers.

President Putin to support local software development

This decision comes as no surprise, as the United States was the pioneer of internal sanctions for Russian companies and oligarchs because of the military conflict in Ukraine and allegedly involving Russian troops.

More than two dozen individuals and several banks were targeted by the sanctions, with the US and the EU asking payment operators, such as Visa and MasterCard, to stop processing transactions for a number of Russian businessmen and organizations, including OAO Bank Rossiya, a large Russian joint stock bank based in St. Peteresburg.

One of the shareholders of OAO Bank Rossiya is JSC Accept, which owns 3.93 percent of the company, and which in its turn is owned by the grandson of Vladimir Putin's uncle Michael Shelomov.

Local reports claim that three of the top Russian banks are now planning to switch to domestic software too, as part of a nationwide plan that has President Vladimir Putin encourage more firms to do it, including defense companies that were also targeted by international sanctions.

Putin is one of the pioneers of a new law that would provide domestic software developers with financial support as part of a 3 billion ruble ($55 million / €48.8) budget. The law has already passed the first regulatory approval and is very likely to get the go-ahead later this year.

Microsoft is yet to provide a statement on the way its business is affected in Russia, but Chief Financial Officer Amy Hood already said earlier this year that declining revenues were expected in the country because of the changing business climate.