LACK OF IT WORKFORCE — MAIN IMPEDIMENT FOR INDUSTRY GROWTH: EIF

news.am
Feb 9 2010
Armenia

Within last 10 years, the industry saw a sharp increase in the number
of newly formed companies, both local start-ups and branches of
foreign companies, reads the report by Enterprise Incubator Foundation
(EIF). Nearly 90% of the foreign companies were established in
2000-2009. The number of operating IT companies in 2009 reached 200,
registering nearly 17% growth in 1998-2009 period. On average, 20 IT
businesses set up each year in 2000-2009. This sharply contrasts with
1990s when only 5 companies were founded each year.

At the peak in 2008, annual number of newly established firms reached
around 30. These high rates, however, may be difficult to sustain
due to a shortage of qualified developers, engineers, and project
managers. So far, size of the workforce has been the primary factor
limiting industry growth.

In 2009, the number of foreign companies in Armenia reached 74 entities
or 38% from the industry total. Armenia’s expertise in software
development has been gaining more and more recognition outside the
country thus fostering foreign investments in the IT sector. Compared
to 2006, percentage of firms with Russian/CIS ownership increased by 9%
reflecting recent acquisitions in telecom and outsourcing areas. More
companies with U.S. and European ownership were also established during
the last 3-4 years with the majority of foreign branches today being
from the U.S.