Armenia – a new crossroad in tech industry
Armenia – a new crossroad in tech industry
Historical events that influenced Armenia’s ICT and high-tech sectors
Armenia’s tech industry has been evolving at a quite predictable and stable pace for the last five years. And this pace might have continued or grown steadily if not for several groundbreaking historical (already historical) events we all witnessed. To understand the current situation and make some predictions about where we are going and what we will have in the future, let’s take a look back.
Historical events that influenced Armenia’s ICT and high-tech sectors
2018, Change of Government
The growth of technology companies in Armenia began in the late 2000s, but the great developments began to be registered after 2015, when more and more startups began to appear, attracting investments and entering global markets. The next pace started with the change of Armenia’s Government back in 2018, and it was a major surge. Already a year later, in 2019, the average wage in the ICT (information and communication technology) sector was 2,5 times higher (68.000 AMD) compared to the previous year’s wage (55.000). The change of the government also brought governmental tax incentives for IT agencies resulting in a 25% increase in the number of registered IT companies. The advancement of the sector created a more favorable environment for foreign investments.
2020, The global pandemic
There were other major and minor improvements but let’s move on to the next driving factor, the pandemic. The devastating Covid-19 stroke the whole world, paralyzing almost everything. In a small country, such as Armenia, even a single paused economic segment badly collapsed the economy. What about the IT sector? Unlike tourism, another major economic segment, Armenia’s tech industry grew by 20% in 2020, becoming the fastest-growing sector.
The increased digitization of businesses throughout the country definitely contributed to the sector growth, but outsourcing had become the main power that pushed Armenia to the new international platforms. It was the beginning of Armenia’s transformation into a regional tech hub competing with other countries in Eastern Europe and becoming an attractive outsourcing destination for the rest of Europe and North America.
What about foreign investments?
Those historic events again played a significant role the foreign investments. After the revolution and during the pre-covid period, in 2019, the volume of foreign investment registered 19% growth (from 8% in 2018). In 2020, though, it had a 39% decline due to the global crisis. When the global economy could more or less stabilize, Armenia got a 54% increase in 2021.
The present of the IT sector in Armenia
Finally, we are in 2022, having the government change, the pandemic, and the war behind us, and global and local political fluctuations at present. I will certainly not be mistaken if I say that Armenia’s IT sector is living its most disruptive “days.” The new realities and unstable situation affected the whole world. While Europe and the US observe the situation, Armenia’s economy feels the influence of those events. Still, not everything is unambiguous. Despite war-related disruptions to other sectors of the economy, Armenia’s IT hub is making significant strides toward geographical expansion.
Armenian rising star startups
For over 15 years, Armenia’s Information & Communications Technology sector has been experiencing steady growth. In the past couple of years, however, it has moved at a faster pace. The segment with the bright future already has a large portion of the contribution to the country’s growth. For the 2021 third quarter, the sector was valued at $137 million, the highest peak in segment growth.
What are the latest news and events in the industry?
As some surveys and statistics show, artists [designers, photographers, journalists] moved to Tbilisi, while IT talents moved to Yerevan, which will for sure provide a large influx of money into the economy and positively influence the country’s IT infrastructure. Moreover, the influx of foreign emigrants can help small businesses grow in a short time, that in its turn, will positively impact the country’s economy.
In recent years (skipping 2020), events on technology, startups and innovation business themes are increasing every year in Armenia, attracting more and more people all over Armenia and abroad. In addition to annual techno events such as Digitec Expo, Digiweek, JS Conf, Devfest Armenia, Yerevan Tech forum, Orion Summit, Buissup conferences with various pitching, acceleration and hackathon programs, as well as other contextual events. All this leads to the fact that every week after the arrival of spring, events on 3-4 important topics take place in Yerevan, Gyumri and Vanadzor, oversaturating the sphere of Armenian techno-events.