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ICT Industry Overview
Before 1991 Armenia was regarded as a Silicon Valley of
the former Soviet Union.
The main industry sectors were:
• Mechanical engineering
• Electronics
• Chemical industry
• Energy industry
Armenian industry inherited:
• High quality technical workforce (according to the Brainbench
Global Skills IQ Report for 2006, Armenia was ranked second in
the world, after USA, in the number of IT certifications received
per capita)
• Physical infrastructure (airways, roads, railways and telecom)
• Generally adequate manufacturing facilities coupled with
scientific and design institutions
ICT Industry Overview
Today ICT industry is one of the most dynamic and
promising sectors of the economy
2006
• The share of the sector in
Armenia's $5 billion
nominal GDP - 1.3%
• 160 ICT companies (50
foreign)
• About $84 mln in total
revenue ($10 mln in 1998)
ICT Industry Overview
2008
About 200 Companies with 6000 employees, of
which 72% are technical specialists
Major specializations include:
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•
•
•
•
Embedded systems
Semiconductor design
Custom software development
Financial applications
Security and encryption
Software development and
outsourcing
• Multimedia design
• Industrial automation
• Web design and development
• Educational software
• Management information systems
• Computer aided design
• Systems integration
ICT Industry Overview
Geographical Distribution
2006
2003
• At the peak in 2004, annual number of start-up ICT firms reached
25-30 (26% growth per year)
• In 2007 the total number of ICT companies established with foreign
investment reached 60 (30% from the industry total)
• Share of local companies’ revenues in the industry’s total amounts to
40-45% ($37 million)
• Average revenue per company for locals - 80% ( 8% for branches)
RA Government ICT industry Development Strategy
Armenian Networked Readiness Index (NRI) 2007–2008 is 106 compared to
that of Azerbaijan (67), Russia (72), Georgia (91), Moldova (96), Turkey
(55), Colombia (69), Kenya (92) and Nigeria (94) *
Variables
Total tax rate
Government prioritization
of ICT
Government success in ICT
promotion
E-government readiness
index
ICT use and government
efficiency
University-industry
research collaboration
Spending on R&D
Armenia Azerbaijan Georgia Russia Turkey
5,44
5,14
5,3
4,41
4,85
4,07
5,05
4,11
4,2
4,46
3,4
4,74
3,59
3,5
4,08
3,32
3,64
3,63
4,01
3,8
3,02
4,4
3,65
3,65
4,6
2,49
2,63
3,18
3,41
2,27
2,51
3,17
3,42
3,32
3,24
* Global Information Technology Report 2007-2008, World Economic Forum
RA Government ICT industry Development Strategy
ICT Industry Development Strategy of the Armenian
Ministry of Economy (2001)
“the current situation in ICT industry in Armenia may be characterized as an
aggregate of mainly partial achievements, the results of which in terms of the
global market can not be considered as significant”*
• No ICT-specific tax policy that would encourage the rapid
growth of the sector
• Tax and Custom administration mechanisms in places are
underdeveloped
• No tax benefits for Educational and R&D investments
• No fiscal and export incentives in forms of reduced tax rates, tax
subsidies, waivers and exemptions to SME
• Enterprise Incubator Foundation - the only agency engaged in
the development and incubation of ICT SMEs in Armenia
• One private techno-park - VIASPHERE
* IT Development Concept Paper, the Ministry of Economy of Armenia, 2007
RA Government ICT industry Development Strategy
New ICT sector development concept paper (2007)
Key milestones:
Short-term (1-3 years):
Build world class ICT infrastructure to support Armenian ICT
industry and information society development
Mid-term (3-5 years):
Strengthen Armenia’s ICT infrastructure and ensure the presence
and penetration of “Armenia ICT brand” in the global market
Long-term (5-10 years):
Achieve full “Armenia ICT brand” penetration in global markets
and particularly in targeted high-growth market segments.
Contribute to the growth of ICT, increase in sector revenues and
development of knowledge-based economy through ICT
infrastructure and Information Society development.
RA Government ICT industry Development Strategy
Information society and IT Industry growth target indicators:
Key Data
2006
2018
Home computer penetration
5%
50-70%
Educational computer penetration
10%
80-90%
Public sector computer penetration
10%
100%
Consumption of local IT products in the
0.5%
2-4%
internal market – GDP
Share of e-services provided by RA state
<1%
80%
entities against the total
Number of IT companies
160
1000
From which those with foreign capital
50
200
committed
Workforce
5000
20000
Industry revenues
84 million (USD) 1 billion (USD)
IT R&D companies
<10
100-200
Large technology cities
0
1
Techno-Parks & incubators
2
>10
IT D E V E L O P M E N T
ACTION PLAN
2008-2018
Design, develop and build
2008-2018
world class ICT
Develop & launch
infrastructure serving
targeted programs aimed
major regions, cities,
at increasing Armenia IT
government & private
graduates and
industry
workforce.
2008-2011
Build Armenian Techno-Park
supported by world class ICT,
municipal infrastructure and
services
2008-2013
Equip and operate
national Tele-Centers
serving citizens in key
Armenian regions &
towns.
2008-2011
Select, develop and rollout
E-Government pilot projects
(Rollout 3 pilot projects in 3 years)
IT D E V E L O P M E N T
ACTION PLAN
2008-2013
Establish Armenian Software
Engineering Competence Center to
certify & train Armenian software
developers to ensure compliance with
global Capability Maturity Model
Integrated (CMMI) standards
2008-2015
Replicate EIF business
incubator model and establish
university-based technology
transfer centers (TTC) to
stimulate IT innovation &
product development
2008-2018
Develop , design & rollout world
class strategic marketing &
promotional campaign to position
“Armenia brand” in targeted
high growth IT markets.
2008-2018
Establish Armenian IT Enterprise
Development Fund to promote private
IT companies; attract foreign direct
investment & venture capital to
develop and commercialize IT
innovation & product development
The Union of Information Technology Enterprises
Main Strategic Directions:
Education and workforce development
(strategic goal: the number of qualified ICT specialists is 10000)
Legal framework/collaboration with state bodies
(strategic goal: ICT is a priority industry in Armenia in practice)
Development of ICT/High Tech sphere/Formation of Information
Society
(strategic goal: higher level of use of ICT in other businesses)
Development and enhancement of the association
(strategic goal: UITE is an influential and powerful institutional
organization serving the interests of its member enterprises)
The Union of Information Technology Enterprises
2007 in brief
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•
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Participation in CeBIT (2000-2007)
Intellectual Property Rights Protection Campaign
Custom legislation improvement project
Development of ICT/High Tech Portal (www.uite.org)
DigiTec Expo - 2007 ICT/High Tech exhibition (50
companies, about 8000 visitors)
• ICT Leaders Meetings
• UITE became the official counterpart of the CBI, the
Netherlands’ Centre for the Promotion of Imports from
developing countries for assisting local ICT companies’
outsourcing.
• Participation in new Armenian ICT development
concept drafting
The Union of Information Technology Enterprises
2008 Action Plan
Education and workforce development
• UITE participation in Stockholm Challenge-2008 award ceremony
• Training center formation within UITE
Legal framework/collaboration with state bodies
• Drafting the package on tax & custom legislation improvements
• Media campaign
Development of the sphere of ICT/High Tech
• UITE members participation in CeBIT 2008
• Armenian High Tech Virtual Community Portal (www.uite.org)
• Assisting Government in Techno City establishment in Gyumri
• Organizing Armenian delegation participation in World Congress
on Information Technology 2008 in Malaysia
• Organizing DigiTec - 2008
• Organizing Robotics Contest
Development and enhancement of the association
• Organizing the series of ICT Leaders Meetings
The Union of Information Technology Enterprises
The main problems that hinder Armenian ICT industry
development:
The lack of authorized state body responsible for Information
Society development
Limited financing for ICT sector
Insufficient interaction among the entire scope of the sector’s
infrastructure, including the National Academy of Science,
industry, state ministries and the private sector
Low level of government investments in R&D
Excessive Custom and Tax administration (applications of
“estimated prices” custom clearance method for ICT goods for
importing and VAT levy at the border for importing)
The lack of tax benefits for educational investments
The lack of qualified ICT specialists
AMD appreciation (in recent years the AMD has appreciated on
average by 20%)
Meri Duryan
UITE
email: [email protected]
url: www.uite.org