If you are a potential investor looking for the next hit idea in the tech industry, you should consider broadening your hunt to enterprises finding their start in Armenia. The ever-flourishing tech sector in the region has been making some noise, offering some amazing opportunities in the IT industry. This has encouraged a new wave of professional visits from potential investors, as Armenia is surprising the world with so many new developments. This year the World Congress on Information Technology is going to take place in Armenia, and the choice is not coincidental. Want to learn why? Read more!
Armenia’s reputation as a hub for innovation has recently earned it the nickname of the Silicon Valley of the ex-Soviet Union. Actually, technology has a long history in Armenia dating back before the year 1990 when Armenia produced nearly 40 percent of the mainframe computers used by the Soviet military. Not bad for a small land-locked country, right? In fact, this geographical condition made society in Armenia understand very quickly that their biggest form of capital was to invest in what they had an abundance of brainpower! The capital city, Yerevan, even had a secret building dedicated to computer research which single-handedly employed 5,000 highly skilled workers! Despite setbacks due to the collapse of the Soviet Union, Armenia managed to hang on to its competitive advantage when it comes to software development, industrial computing, electronics, multimedia, web design, information systems, system integration and the production of semiconductors.
The IT sector is booming and makes up a significant part of Armenia’s economy, accounting for more than 7% of the country’s GDP. The small nation of 3 million people has over 18,000 people working in the tech sector! And with over 800 Information and communications technology (ICT) companies actively operating (as of 2017) and an estimated average of 43 ICT companies being established each year, the industry is clearly on the rise. The demand is so high that Armenian educational institutions are struggling to keep up.
Over 7,000 students enrolled in Armenian higher educational institutions to study the field of information and high technologies in the school year of 2016-2017 alone! To help push things along, there are a number of projects in cooperation with international IT companies to help develop the ICT field in Armenia. These include collaborations between both the Armenian government and educational institutions and international donors as well as big-name companies such as Microsoft, D-Link, National Instruments, Synopsys, Mentor Graphics, VMWare, Intel, IBM, Cisco, GFI, ORACLE and more! Several of these companies also run their offices in Armenia and employ hundreds of software developers.
Many consider Armenia to be the next potential StartUp Nation, thanks to an abundance of brainpower and technical ingenuity and a lack of natural resources. The country has a history of entrepreneurship, and the people are quick to adapt, making it the perfect foundation for up-and-coming ventures and startups. Several engineers who participate in the programs mentioned above move on to found their own startup companies! With so many skilled mathematicians and engineers willing to work at a fraction of the price in Silicon Valley, Armenia is becoming a country you’d be careless to ignore.
The government was able to recognize the potential back in 2014 when it adopted a bill that would provide tax privileges for new IT companies until the year 2020. This included a 10% income tax break and an exemption from profit tax. The bill also reduces taxes for ICT startups with less than 30 employees with a five-year tax break, which extends to ICT employees as well. This attractive offer has led to an influx of companies establishing their companies (if not at least branches of) in the country, as it makes for extremely favorable conditions. And what investor wouldn’t want some perks from the government?
In fact, Armenia is exporting IT products at phenomenal rates with investments coming in from the USA and Canada (36.4%), the EU (28.5%), Russia and CIS (15.5%). More exciting still is that 52% of foreign companies operating in Armenia are actually from the US! Many foreign companies opt to carry out technical activities in Armenia, ranging in operations from R&D and coding to design and testing. Over time, some companies began to relocate business-related functions such as marketing or customer support to Armenia as well. Thanks to a huge Armenian Diaspora spread all over the world, it is not uncommon for experienced Armenian entrepreneurs to come from the US to pass on their experience and expertise.
Here is a quick list of IT-related happenings in Armenia worth keeping your eye out for. Many of these apps or centers may sound familiar as they have gained popularity and success internationally!
Research & Development
Synopsys: a global company in electronic design with annual revenue of over 2 billion USD launched its offices in Armenia in 2004 and today has over 650 employees.
Oracle: a multinational computer technology company signed an agreement in 2014 to acquire LiveLOOK, keeping the LiveLOOK office in Yerevan with a goal to develop it into a 300 person R&D center.
ISB: a leading Canadian manufacturer of electronic safety and automation products opened its first foreign, full-fledged R&D center in Armenia in October 2018, in what it considers to be a city of engineering. The company established a core team in Armenia and opened its office there.
Blockchain R&D Hub: This global network for R&D is making use of Armenia’s talent pool and experience in technology enterprising to create a worldwide resource for blockchain mobilization and facilitation.
PicsArt: a mobile phone editing application that was developed in Armenia and has an estimated valuation of 250 million USD.
Shadowmatic: an iOS application developed in Armenia by the local company Triada Studio, a computer graphics and animation studio with over 20 years of experience in the industry.
Krisp: a noise-canceling app developed by 2hz, a noise reduction technology company founded in Armenia with $1.98 m in total funding.
D’efekt: an app that allows you to apply different effects to video, founded in Armenia in 2017.
Teamable: an online platform acting as an employee referral program and diversity hiring platform which already cooperates with well-known companies including Facebook, Lyft, Uber, Stipe, Oracle, Intuit, Hipanalatics and more.
Zoomerang: an app enabling users to make videos with background music and effects with over 300,000 active users per day!
Education & Development
Armath Engineering Laboratories: a program aimed towards children aged 10-18 introducing them to science, technology, engineering, and math education using interactive after-school classes, fun competitions, innovative camps and more.
ViaSphere Technopark: a state-of-the-art technology park in Yerevan providing local startups and ICT companies commercial space to grow and develop.
TUMO Center for Creative Technologies: a free of charge after-school digital media learning center established in Yerevan in 2011, providing thousands of students between the ages of 12-18 with the opportunity to learn from media professionals and learn about technology using the latest digital tools.
COAF SMART Center: an educational center which opened in Lori Province in May 2018, providing residents of Armenia’s rural communities with an opportunity to receive non-formal education, skills, and training in information technology, art, communication, business, ecology and more.
Armenian Code Academy: is an educational center striving to help fill the demand for IT professionals in the country by offering an intensive and high-quality education to talented youth and later supporting them in finding employment with a competitive salary.
Instigate Training Center: founded in 2004, is another educational center that aims to bridge the gap between education and the industry by giving university graduates an opportunity to find employment and sharpen their skills and knowledge of the IT-sphere.
The IT sector has been advancing in Armenia over the span of several years, and it’s not about to stop progressing any time soon. In fact, the Armenia Development Strategy 2014-2025 promises to continue creating a healthy environment for the future growth of the tech and ICT sector in Armenia. If you are an investor, the time to jump on the bandwagon is now! And what better opportunity to get started than by feeling out the climate during the WCIT 2019?