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Armenia is known for its continuous development of the IT sector and gained its reputation as the main caucasian hub of software development, industrial computing, and electronics.

Due to the increasing number of investments in the field, IT is one of the most significant sectors in the Armenian economy.  According to Armenian National Statistics Service, the ICT sector grew by 5,3% in the last year and its value was estimated at more than $170 million. 

Based on numbers provided by the Enterprise Incubator Foundation, in 2019 there were more than 900 companies in the ICT sector, and compared to previous years the number reveals a growth is around 10% annually

The cost per hour in Armenia is comparingly low to the neighboring countries, which makes it a competitive country even globally. With a cost of only $19-39/hour Armenian tech professionals earn on average a salary of $3300 USD/month, and thus, is a great destination for other companies to relocate or to source the labor force.

According to Anna Khachatrian from CodeRiders, Armenia has a growing and dynamic ICT industry that has become one of the most promising sectors of the country's economy. The ICT business environment in Armenia is characterized by a highly skilled workforce, favorable government policies, and a supportive startup ecosystem. The country has a robust IT infrastructure and a growing number of tech companies, ranging from startups to established software development firms, that provide services in software development, IT outsourcing, and digital marketing.

On the other hand, Anahit Ghazaryan from Addevice mentions that corruption, bureaucracy, and a lack of transparency remain significant challenges. In addition, the country also faces geopolitical tensions with neighboring countries, which can have an impact on its business environment. 

Why Working with Armenian Companies

Aside from the fact that it’s a great budget choice, Armenian tech professionals enjoy a good reputation on the global and regional stage. The fields and specializations which they prove to be competitive vary from a good experience with multinational companies up to above average English proficiency and creativity skills. 

At the same time, the Founder and CEO of Rocket Systems, Garik Khachanyan states that one of the biggest advantages of outsourcing IT services to Armenia is the cost savings. The cost of living in Armenia is lower than in many other countries, which means that salaries for IT professionals are also lower. In addition to cost savings, outsourcing IT services to Armenia offers other benefits, such as:A strong educational system that produces a high number of graduates in STEM fields.

However, if we could break down the reasons why it's good to work with Armenian IT Companies, we could have the following list: 

1. Highly skilled talent pool: Armenia has a strong tradition of math and science education, which has helped to develop a highly skilled workforce in the IT industry. Many IT companies in Armenia employ engineers and developers with advanced degrees and experience in cutting-edge technologies.

2. Cost-effectiveness: The cost of living and doing business in Armenia is relatively low compared to many other countries, which means that IT companies in Armenia can offer competitive rates for their services without compromising on quality.

3. Cultural compatibility: Armenia has a Western-oriented culture that is similar to that of many European and North American countries. This makes communication and collaboration between local IT companies and their clients from other countries easier and more effective.

4. Supportive government policies: The Armenian government has implemented a number of policies aimed at promoting the growth of the IT industry in the country, including tax breaks and other incentives for IT companies.

5. Proximity to major markets: Armenia is strategically located between Europe and Asia, with easy access to major markets in both regions. This makes it an attractive location for IT companies looking to expand their operations globally.

What to be aware of when working with an Armenian Companies

When working with a local IT company from Armenia, there are several things to keep in mind:

• Language Barrier: Armenian is the official language of Armenia, so communication with the local IT company may be in Armenian or Russian. English is spoken by many IT professionals in Armenia, but not all, so make sure to clarify communication channels before starting any project.
• Time zone: Armenia is located in the GMT+4 time zone, so make sure to consider the time difference when scheduling meetings or deadlines.
• Cultural Differences: As with any international business partnership, it's important to be aware of cultural differences. In Armenia, punctuality is highly valued, and it's considered impolite to arrive late to meetings. Additionally, personal relationships are important, so taking the time to get to know your Armenian colleagues can be beneficial.
• Quality of Service: Armenia has a growing IT industry, and many local companies offer high-quality services. However, it's important to research potential partners thoroughly and ask for references to ensure that you're working with a reputable company that can deliver the results you need.
• Legal and Financial Considerations: Armenia has its own legal and financial systems, so make sure to consult with a local expert to ensure that you're complying with local regulations and tax requirements. It's also important to clarify payment terms and any other financial arrangements before starting any project.

Are companies from Armenia reliable? 

With all challenges mentioned above, the Armenian web companies still deliver high-quality IT services, in a decent time frame, and a good budget outcome. 

How does Armenia relate to its neighbors in terms of IT? 

With only Georgia and Azerbaijan as neighbors, Armenia lacks serious competition in terms of IT. Based on a study executed by Forbes, Armenia is the most reliable country in the Caucasus due to the bilingual capacities of human resources, adaptability, and strong image on the global stage having as a background its neighboring countries. 

Armenia has become an attractive destination for ICT investments due to its accessible human resources and continuously developing industry supported by government policies. With the latest government changes, the country expects more than 125 web agencies to relocate or source IT services from Armenia in the next 2 years. 

The Ease of Starting An IT Business In Armenia

Armenia has made significant efforts to create a favorable business climate for entrepreneurs, particularly in the IT sector.

The government has implemented a range of reforms to streamline business registration and licensing procedures, reduce bureaucracy, and improve access to financing. Here are some key factors to consider when starting a new IT company in Armenia as a local entrepreneur

• Business Registration: The process of registering a new company in Armenia is straightforward and can be completed within a few days. The country also offers online company registration, which can make the process even easier.
• Tax Incentives: Armenia offers various tax incentives for IT companies, including a 0% corporate income tax rate for software development companies and a 10% flat tax rate for other IT companies.
• Access to Financing: The Armenian government has established various funds to support IT startups and SMEs, including the Innovation and Technology Fund and the Enterprise Incubator Foundation.
• Skilled Talent Pool: Armenia has a highly skilled and educated workforce, particularly in the IT sector. Many universities in the country offer computer science and engineering programs, and there is a strong emphasis on STEM education.
• Location: Armenia is strategically located between Europe and Asia, making it an attractive location for IT companies looking to access both markets.

However, it's worth noting that Armenia still faces some challenges when it comes to business climate, and a relatively small market size.

Despite these challenges, the country has made significant progress in recent years and is a promising location for local entrepreneurs looking to start an IT company.

Armenian Government Support for IT Businesses

The government of Armenia has been actively promoting the IT sector and has introduced various policies and programs to support local entrepreneurs. For example, the government has established several technology parks and business incubators to support startups.

Based on the feedback gained from three Armenian-based IT companies - CodeRiders, Addevice and Rocket Systems, the Armenian government supports the local IT industry in the following ways: 

• Funding opportunities: The government has established several funding programs to support the growth of the IT sector, including the Enterprise Incubator Foundation, which provides seed funding, mentoring, and office space to startups.
• Education and training: The government has invested in IT education and training programs, such as the TUMO Center for Creative Technologies, which provides free after-school programs to students interested in technology and design.
• Legal framework: The government has established a legal framework to protect intellectual property rights and facilitate business registration and licensing for IT companies. International partnerships: The government has established partnerships with international organizations and companies to promote the growth of the IT sector in Armenia, including the World Bank, USAID, and Microsoft.
• Startup incubators: The government has established several startup incubators to support the development of new IT businesses. These incubators provide resources and support to early-stage companies, including mentorship, funding, and office space.

Digitain, Picsart, Synopsys - Dominant Companies in Armenian ICT

Anahit Ghazaryan from Addevice also mentions that the local ICT market is dominated by several big companies. 

One of the most well-known is Synopsys, a global leader in electronic design automation (EDA) and semiconductor IP. Synopsys has a large development center in Armenia and employs over 500 engineers, making it one of the largest technology employers in the country. The company has been operating in Armenia for over 15 years and has contributed significantly to the development of the local tech industry.

Another prominent IT company in Armenia is PicsArt, a popular photo editing and social media app with over 1 billion downloads worldwide. PicsArt was founded in Armenia in 2011 and has since expanded to over 30 countries, employing over 500 people globally. The company has received several awards for its innovative technology and has helped to put Armenia on the map as a hub for tech startups.

At the top, there is also Digitain, a leading provider of online gaming and sports betting solutions. Digitain has over 1,000 employees globally, with a significant portion based in Armenia. The company has been recognized for its innovative technology and has won several awards for its online gaming products.

However, beyond the title of dominant companies, there are other companies worth mentioning. Of course CodeRiders, RocketSystems, and Addevice stand out in the Armenian IT stage. Among them, there are other Armenian IT companies that have a proven track record and can also be considered the best in their country.

Yerevan, Gyumri - The Best Places in Armenia For IT Companies

While Armenia is a relatively small country, the IT industry is concentrated in a few cities and regions. Two of the best locations for IT companies in Armenia are Yerevan & Gyumri. 

Yerevan is the capital and largest city in Armenia, with a population of over one million people. It is home to the majority of the country's IT companies, including some of the largest and most successful ones. Yerevan has a well-educated workforce, with many universities and technical schools offering degrees in IT-related fields. The city also has a growing startup ecosystem, with several incubators and accelerators supporting early-stage companies. 

Gyumri is the second-largest city in Armenia and is located in the northwestern part of the country. It is known for its strong engineering and technical talent, with many IT companies setting up operations in the city. Gyumri has a lower cost of living compared to Yerevan, which can be attractive to startups and smaller companies. The city is also home to the Gyumri Information Technologies Center, which provides training and support to IT companies and entrepreneurs.

Overall, Yerevan and Gyumri are two of the best locations for IT companies in Armenia due to their talented workforce, supportive ecosystem, and favorable business environment. However, it is important to note that there are other cities and regions in Armenia that also have a growing IT industry, such as Vanadzor and Dilijan.

Talent Pool and Workforce

Armenia has a highly educated and skilled workforce, with a particular focus on STEM fields such as IT. The country's educational system places a strong emphasis on science and technology, with many universities offering IT-related courses at both the undergraduate and graduate levels. As a result, there is a large pool of talented and experienced IT professionals in Armenia. Many of these professionals are fluent in English and have experience working with international clients, making them attractive to foreign companies looking to establish operations in Armenia.

There is also a strong desire among young people in Armenia to pursue careers in the IT industry. The industry offers high salaries, opportunities for professional growth and development, and the chance to work on innovative and exciting projects. Additionally, the government has implemented various policies and initiatives to support the development of the IT sector and promote IT-related education and training, further fueling interest in the industry.

Final Thoughts

Overall, the local talent pool in Armenia is highly skilled, motivated, and attracted to the IT industry, making it an ideal location for IT companies looking to establish operations in the country.

 

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This article was created together with prominent figures and professionals coming from reputable Armenian IT companies. Special credits: Anahit Ghazaryan, Anna Khachatrian, Garik Khachanyan