US software giant Microsoft is set to join Russia's Skolkovo project, pumping millions of dollars into Russian start-ups.

This is according to a memorandum signed by Microsoft CEO Steve Ballmer and Skolkovo President Viktor Vekselberg.

They have agreed that in exchange for stronger ties with the state sector, Microsoft will invest millions of dollars annually in Skolkovo – mainly in the field of research and development.

Part of the funds will be used for construction and support of Microsoft’s own R&D center in Skolkovo specializing in two main areas, Oleg Syutin, head of Microsoft technological policy department, was quoted as saying by Vedomosti newspaper.

First is creating business applications for enterprise resource planning and client relationship management. The second – new even on a global scale – concerns high-performance computing used in process simulation in different fields of science. Engineers from the US and China will also be involved in the project.

Ballmer also promised to invest in collaborative research projects with Russian universities and research institutions.

In addition, Microsoft plans to extend Russian innovative start-up assistance programs. In a couple of years, the IT giant is going to finance about 100 start-ups, giving each from $50,000 to $500,000.

For Microsoft, Skolkovo is a perfect opportunity to both promote its technologies in Russia and to boost cooperation with the state sector.

Currently, state contracts account for 10 per cent of all Microsoft revenues in Russia – about $1 billion per year. In order to widen the market, Microsoft plans to offer considerable discounts on government software.

Meanwhile, Microsoft’s cooperation with the Russian government is far from perfect. The MS license for the software used by Russian schools expires on January 1, 2011. So far, it has not been extended. Many schools are now testing Linux open-source software.

Government bodies are also considering switching to Linux. Furthermore, 161 million rubles in the 2011 state budget and 490 million rubles in the 2013 budget are allocated for development of a “national operational system”.