Armenian ICT Industry overview and the role of the Union of Information Technology

Enterprises in promotion of ICT/High Tech Development in Armenia

• Mechanical engineering• Electronics

ICT Industry OverviewBefore 1991 Armenia was regarded as a Silicon Valley of

the former Soviet Union.

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

The main industry sectors were:

• Chemical industry

• Energy industry

• Light Industry

2008• The share of the

sector in Armenia's $9.2 billion

nominal GDP - 1.2%• 175 ICT companies

(56 foreign)• About $111 mln in

total revenue ($10 mln in 1998)

ICT Industry OverviewToday ICT industry is one of the most dynamic and

promising sectors of the economy

•Custom software development

• Financial applications

• Security and encryption

• Software development and outsourcing

ICT Industry Overview

•Educational software

• Management information systems

• Computer aided design

• Systems integration

Major specializations include:

•Embedded systems•Semiconductor design

•Multimedia design•Industrial automation•Web design and development

ICT Industry OverviewGeographical Distribution

• Share of local companies’ revenues in the industry’s total amounts to 38% ($42 million)

• Average revenue per company for locals - 30% ( 3% - branches)• At the peak in 2004, annual number of start-up ICT firms reached 25-30 (26%

growth per year)• In 2008 total number of ICT companies established with foreign investment reached

56 (32% from the industry total)

RA Government ICT industry Development StrategyArmenian Networked Readiness Index (NRI) 2008–2009 – 114

Azerbaijan (60), Russia (74), Georgia (88), Moldova (99), Turkey (61), Colombia (64), Kenya (97) and Nigeria (90)

Variables Armenia Azerbaijan Georgia

Total tax rate (hard data) 52 64 57

Government success in ICT promotion 119 20 89Mobile telephone subscribers (hard data) 126 88 98

E-government readiness index (hard data) 91 81 82

ICT use and government efficiency127 34 76

Internet users (hard data) 105 85 96

Company spending on R&D 96 67 121

New ICT sector development concept (2008)

RA Government ICT industry Development Strategy

Key milestones:Short-term (1-3 years): Build world class ICT infrastructure to support Armenian ICT industry and information society developmentMid-term (3-5 years): Strengthen Armenia’s ICT infrastructure and ensure the presence and penetration of “Armenia ICT brand” in the global marketLong-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 2018Home computer penetration 5% 50-70%Educational computer penetration 10% 80-90%Public sector computer penetration 10% 100%Consumption of local IT products in the internal market – GDP

0.5% 2-4%

Share of e-services provided by RA state entities against the total

<1% 80%

Number of IT companies From which those with foreign capital committed

16050

1000200

Workforce 5000 20000Industry revenues 84 million

(USD)1 billion (USD)

IT R&D companies <10 100-200Large technology cities Techno-Parks & incubators

02

1>10

2008-2018 Design, develop and build world class ICT infrastructure serving major regions, cities,

government & private industry

2008-2011Select, develop and rollout

E-Government pilot projects (Rollout (3) pilot projects in 3

years)

2008-2018Develop & launch targeted programs aimed at increasing

Armenia IT graduates and workforce.

2008-2011Build Armenian Techno-Park

supported by world class ICT, municipal infrastructure

and services

IT D E V E L O P M E N T ACTION PLAN

2008-2013Equip and operate

national Tele-Centers serving citizens in key Armenian regions &

towns.

2008-2013Establish Armenian Software

Engineering Competence Center to certify & train Armenian software

developers to ensure compliance with global Capability Maturity Model

Integrated standards

2008-2018Establish Armenian IT Enterprise

Development Fund to promote private IT companies; attract foreign direct investment &

venture capital to develop and commercialize IT innovation &

product development

2008-2018Develop , design & rollout

world class strategic marketing & promotional

campaign to position “Armenia brand” in targeted

high growth IT markets.

2008-2015Replicate EIF business incubator model and

establish university-based technology transfer centers

(TTC) to stimulate IT innovation & product

development

IT D E V E L O P M E N T ACTION PLAN

The Union of Information Technology Enterprises

Main Strategic Directions (2010):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

UITE in brief

• Participation in CeBIT (2000-2009)• Intellectual Property Rights Protection Campaign• Custom legislation improvement project• Tax legislation improvement project• Membership Development Initiative • Development of ICT/High Tech Portal (www.uite.org)• DigiTec Expo 2005-2008 ICT/High Tech exhibition (www.digitec.am)• ICT Industry Leaders and Stakeholders Meetings• UITE is the official counterpart of CBI, the Netherlands’ Centre for the Promotion of Imports from developing countries• Active participation in the development of state concepts, relating to ICT/High Tech field and Business Environment Legislation.•ICT/High Tech Educational Consortium

The Union of Information Technology Enterprises

Education and workforce development

• ICT/High Tech Consortium Establishment• Develop and provide special leadership development,

effective financial management, startup business essentials and promotion modules trainings to beneficiaries• Promotion of startup business support programs in the

regions of Armenia• (Armenia)• Legal framework/collaboration with state bodies• Promotion of tax & custom legislation improvements• Media campaign

2009 Action Plan

– Develop Armenian High Tech Virtual Community Portal– Assist Government in Techno City establishment in Gyumri– Organize DigiTec 2009 / DigiTec Business Forum– Organize Armenian Open Robotics Contests(robotics.digitec.am)

– Promote regional cooperation initiatives of UITE member companies

– Develop and organize regional study tours for the representatives of leading Armenian ICT/High Tech companies and vice versa

– Co-organize Armtech 2009 Congress– Organizing the series of ICT Leaders Meetings

Development of ICT/High Tech Industry/ Promoting Regional Cooperation

The Union of Information Technology Enterprises

The lack of authorized state body responsible for Information Society developmentLimited financing for ICT sector Insufficient interaction among the entire scope of the sector’s infrastructure, including the Science, education, telecommunication, state ministries and the private sector Low level of government investments in R&DExcessive 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 investmentsThe lack of qualified ICT specialists

The main problems that hinder Armenian ICT industry development

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