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IT outsourcing to Armenia


Armenia is one of the chief information technology (IT) zones among the neighboring CIS and Middle East countries. Traditionally, Armenia has been a leader in high-tech research, development, and production from the time of the Soviet Union. Armenia produced 35% of all the military electronics for the USSR countries. After gaining independence in 1991, the IT sector has gathered a momentum.


Over the past twenty years, the IT industry has been growing by an average of 25% per annum, mostly due to growing scale of IT outsourcing to Armenia. The Republic of Armenia has maintained its immense potential for the growth of technology and continues to be the regional leader in this sphere owing to its competitive labor, constant growth of businesses and also the total turnover.


Today, IT firms continue to be the fastest-growing sector of Armenia’s economy. Having a very small population of fewer than 3 million people, the IT sector employs over 20,000 specialists. Preliminary estimates by the Ministry of Economy show that the combined output of some 450 Armenian IT companies grew by nearly 25% to a level equal to $550 million. The sector has created a lot of new jobs, generating about 5% of Gross Domestic Product, according to government data.


The growth came when Diaspora Armenians in the American and European IT industries returned to Armenia mostly for the low-cost supply of highly skilled labor with good knowledge of English and communications. Thus, IT outsource to Armenia gained huge popularity. Today, many web design and development (PHP development) studios, as well as custom soft ware development companies, choose to create their team in Armenia. On average, a senior developer or a team lead in an Armenian web development agency can earn about $1,200 a month, five times the Armenian average wage. Still, it is a fraction of the average monthly salary of $4,300 earned by an entry-level programmer in the United States and 10 times less than a senior developer’s salary ($12,000), who is using the same tools and technology to follow web design trends and provide custom IT solutions.


After the 2000s, the world witnessed a booming growth of the number of successful IT companies in Armenia. For example, PicsArt became very popular as a mobile photo-editing application. It was recognized by Forbes one of the world’s “Hottest Startups of 2015”. Armenian Triada Studio created a puzzle app Shadowmatic, which won the prestigious Apple Design Award, as well as App Store Best of 2015. Another successful startup is SoloLearn, a mobile learning platform that offers free programming classes in thirteen disciplines. A very prominent Armenian initiative is Volterman- the world’s most powerful smart wallet with unique functionality. Another international company founded by Armenians is BetConstruct. The company has sales, development and service centers in more than 15 countries, where it provides award-winning software for gaming businesses.


The high potential of Armenia’s IT industry drew the attention of a huge number of investors and professionals. Such well-known brands as Microsoft Corporation, Alcatel, Siemens AG and Sun Microsystems Inc. opened representative offices in Armenia. Since 1999 one of the best IT companies- Synergy, has established a branch office and Global Learning Center in Yerevan, with over 200 full-time employees. Armenia’s expertise in chip design attracted Synopsys Inc., a global leader in EDA and VLSI design. Following the success of Synopsys and Virage Logic, Mentor Graphics Inc. established a presence in Yerevan in May 2008. In early 2000s, more foreign businesses launched development locations due to highly qualified labor force and competitive costs: Ericsson (networking and telecommunications company), CQG (analytics software and trading solutions), CISCO (leading provider of memory intellectual property (IP) licenses), EPAM Systems (offshore software development), and others.


In the year of 2000, the Government recognized the growing value of Armenian IT industry and declared ICT as one of the priority sectors of the country’s economy. In 2013, the Government of Armenia and IBM signed Memorandum of Understanding. Thus they started cooperation in education and research and development, establishing Innovative Solutions and Technologies Center.


A very prominent IT project is Gyumri TechnoPark- technological center for IT development. In Armenia, we also have one of the most original schools of its kind – TUMO center for creative technologies, a free digital learning center for teenagers.


With online business registration, e-governance, e-taxation and accounting methods, Armenia is ranked among the best places in Europe to start a business. Here dozens of startups are being registered each year. A number of incubators, accelerators, angel investors, venture funds and other institutions have been springing up across the city to support Armenian startups. World-known Granatus Ventures is Armenia’s first-ever Venture Capital fund. The HIVE Seed Fund invests in and partners with early-stage startups worldwide, from Silicon Valley to Armenia. The Roda Group is a seed stage venture capital firm, based in Berkeley, California focusing on Armenian startups among others.


As a conclusion, there are a lot of competitive advantages that make Armenia a favorable country in terms of web development outsource services.