Russian businesses embrace AI

Russian businesses embrace AI
Russian Industries that are looking at AI and ML solutions run the gamut – from retail and finance to telecom, construction and real estate sales. / bne IntelliNews
By bne IntelliNews November 30, 2023

Lately, Russian businesses have been actively adopting solutions based on artificial intelligence (AI) and machine learning (ML), while the government is also incentivising the use of these technologies.

Industries that are looking at AI and ML solutions run the gamut – from retail and finance to telecom, construction and real estate sales.

Exploring opportunities in retail

Among the industries with the highest adoption rate of AI solutions is retail. AI-based systems are often used as "advisors": they help to determine what goods exactly that a customer is likely to be interested in and automatically generate special offers for them.

All major Russian marketplaces, including Wildberries, Ozon and Sbermegamarket, actively use AI. X5 Group, Magnit, Lenta and many others also analyse customer behaviour in offline stores, such as frequency and amount of purchases, lifestyle, acceptable price level and favourite categories of goods.

Dmitry Demidov, head of the innovation laboratory at Norbit, told Russian business daily Vedomosti that retail companies often use a solution called BPMSoft, developed by local firm Lanit Omni.

With BPMSoft, AI tools built into the product can be used for automating various processes, including – in addition to sales – logistics, pricing, work with suppliers and service.

For instance, AI in BPMSoft can determine the probability of a delivery deadline failure, predict customer churn or analyse feedback from customers. Feedback texts are processed by ML-models that are able to determine customers' emotions and even independently decide whether it is necessary to engage a human for further communication with the customer.

"The system facilitates automating different stages of sales management, marketing, service and accompanying processes," said Demidov. "At the same time, data is collected in a common digital space, forming a single end-to-end process. It turns out that management decisions can be made quickly, with less effort and, which is most important, in a more educated way."

Striving for efficiency

Apart from increasing sales, ML and AI technologies can be used to monitor employees' working hours and various tasks. Time management has always been important for productivity growth.

There are many software solutions that monitor employee activity: how much time a person spends online, what sites they visit, who they talk to on the phone and for how long.

There are also solutions that allow you to monitor physical labourers, such as an intelligent monitoring system from a Russian firm named Solut.

Alexander Belousov, the founder and director of Solut, told Vedomosti that the system recognises any working and non-working actions of a person by the movements of their hands.

Each worker is given a wristwatch with sensors that accumulate data on hand movements during the shift and, with the help of AI, recognise activities typical for each specialty, process or task. Solut analyses the data and presents it in the form of reports. With their help, management can optimise processes and increase the efficiency of manual labour, Belousov explained.

The system identifies the time of inactivity of each worker, providing tools to combat it and understand why a specific employee isn't working at a specific moment. As Belousov noted, sometimes workers may not be involved in any productive activities due to planning errors or lack of materials, tools and assigned tasks.

AI boosts safety

Occupational health and safety is another area in which businesses are actively applying ML and AI-based solutions. For instance, AI technologies are used at the Bystrinsky mining plant to monitor and ensure the safety of employees.

Real-time analysis of video camera images helps prevent accidents: if the neural network detects the absence of protective equipment on employees, the management will immediately receive a corresponding signal.

At the same time, employees are identified by facial biometrics. Round-the-clock video surveillance is carried out in the most dangerous production shops: at the crushing, grinding, drying, finished product shipment, process section and central repair and mechanical workshops.

The smart video analytics system was implemented at Kola NPP back in 2019. According to the company, the system detects and registers 95-98% of violations, which has reduced the number of accidents by 8 times. It is planned that by February 2024 the system will be implemented at nine out of 11 Russian NPPs.

A firm called Computer Vision Systems is engaged in the development of such solutions, using AI for extracting information from images with the help of algorithms, primarily mathematical or based on neural networks.


The government fosters AI adoption

In a bid to foster AI adoption by companies from various industries, the Russian government plans to make the issue of state subsidies conditional on the use of AI-based solutions. This approach is to be tested as of 2024.

"On the president's instructions, the use of artificial intelligence will become mandatory for all companies that plan to receive any subsidies from the federal budget," deputy prime minister Dmitry Chernyshenko was quoted as saying by Russian state-run news agency TASS. "Starting next year, we will test this approach at companies with annual revenues exceeding RUB800mn (€8.2mn)."

Apparently, the Russian government expects AI to contribute to the growth of the country’s economy, which has been struggling since Russia’s invasion of Ukraine in February 2022 and ensuing Western sanctions. According to Chernyshenko, the adoption of AI-based tech could add as much as RUB11.3 trillion (€116bn) to the country’s GDP by 2030.

He noted that by 2030, the volume of computing power is expected to grow 10 times, the number of scientists whose work is published at top-level conferences will more than double, and the share of industries with a high level of AI implementation will grow to 95%.

"By 2030, an additional 70,000 AI specialists will be trained, and by the end of the decade, the volume of the AI solutions market will increase fivefold," Chernyshenko concluded.

Meanwhile, in November 2023, the Russian government announced that the federal project "Digital health services" will be launched. Prime Minister Mikhail Mishustin instructed the ministry of health and the ministry of finance to provide for the financing of this project starting from 2025.

Not all rosy

However, as experts say, the adoption of AI solutions in Russia may not be as easy and smooth as government officials would like it to be.

"The hardest part is getting the right data," Yuri Makarenko, head of the expert department at the company Umbrella IT, told the Russian business news website RBC. "It requires a lot of money and time. About 60% of resources and time are spent on data collection, and the other 40% on development. And although there are data storage centres, they are available only to large companies because of their high cost.

In addition, according to Makarenko, there are not enough qualified data scientists on the market. "Even if an experienced specialist can be found, he or she may leave if the company sets unrealistic goals," he explained. "In such cases, it may be worth considering looking for vendors that provide a full range of services for implementing artificial intelligence in business."

"The main danger of [a] neural network is the possible unreliability of the answers," he went on to say. "A neural network is a "black box": it is impossible to verify why it gives this or that result."

Another major issue that Russian companies adopting AI solutions may face is shortages of chips for AI. The world’s leader in manufacture of chips for AI is currently US-based Nvidia, which stopped exports to Russia in the wake of Russian aggression against Ukraine.

Earlier this year, the Russian company Baikal Electronics said it had begun developing chips for AI.

"Access to such specialised equipment determines a fundamental opportunity to participate in the international race of artificial intelligence technology development," Andrey Evdokimov, CEO of Baikal Electronics, told RBC.

"Russia should be able to compete in this segment, and we are purposefully going into it."

However, so far, Russia’s attempts to develop high-tech hardware have born little fruit.