Leaders digitizing tomorrow
Etched in Armenia’s history and intellectual legacy is Information Technology. Across a spectrum of technology segments, it was once the central hub of the USSR’s scientific and R&D activities. It then transitioned to software development and IT services following the nation’s independence. During its peak in 1987, it is estimated that Soviet Armenia produced 100,000 specialists in this sector. These ripple effects have led to the formation of a sophisticated and talented labor force that Armenia has become celebrated for amongst the CIS countries.
Possession of this strong technical knowledge base creates the blueprint for a prosperous industry. This competitive advantage enables Armenia to distinguish itself from other emerging countries who have traditionally been the frontrunners when it comes to delivering cost-effective solutions. The tech pillar is foreseen as the catalyst to lift the Armenian economy long-term -- and one of the most exciting to watch.
The State of the Industry ICT Report 2015, stipulates promising figures: total industry revenue, reached $559.1 million USD in 2015, an increase of 17.7% over 2014’s total of $474.9 million. The IT sector contributed to almost 5% of the GDP in 2015 with approximately 450 IT enterprises operating in the country.
“The government of Armenia promotes the country as a leading innovation and technology hub, offering products and technological solutions to local and international markets,” said Minister of Transport, Communication and Information Technology, Vahan Martirosyan. “It has empowered Armenia to attract foreign investments and build up an internationally competitive workforce, product, and services.”
The domestic and foreign investment will be a necessary driver to showcase the sector’s ability to deliver on returns. Martirosyan emphasized that “enabling business plays a critical role.” In regards to IT companies specifically, IT startups enjoy 0% profit tax, and 10% corporate income tax. Armenia’s software and services industry is rather young, with most of the companies, nearly 82%, founded during the period from 2000 to 2015, per the Armenia ICT Sector 2015 report.
“We are always working with the private sector to attract high value-added investments and create business enabling environment incentives to make them more efficient and effective,” said Martirosyan. Rankings for doing business in Armenia have continued improving over the past decade. Subsequently, The World Bank ranked the nation 9th in easiness of starting a business.
There are almost 200 startups in the country with most becoming pioneers in their respective specialties: TSD (Technology and Science Dynamics) is producing the first Armenian smartphone and tablets, Triada Studio launched the Shadowmatic app, a 2015 Apple Design Award winner. There is also Joomag, a cutting-edge digital content publishing platform, or leading mobile photo editor app, PicsArt -- the list goes on. Aiming to promote startup company formation and new job creation, the National Assembly enacted the Law on State Support to Information Technology Sphere.
“The paramount challenge, however, is to implement growth and competitiveness-oriented policies, strategies grounded in economic, social and environmental sustainability and enhance our institutional capacity to carry out full-blown reform agenda as identified by the government of Armenia,” said Martirosyan.
With IT development having a residual impact across all economic sectors, the government has ambitious bigger-picture views for Armenia’s transformation. “I would like to see a fully digitalized country with high technologies embedded in every aspect of our life (e.g. the digitalization of roads, transport systems, development of roads). Hence, the country’s digital transformation is our vision of future,” said Martirosyan.
“As we consider creating more value for money and private investment opportunities, negotiations are underway to establish long-term strategic alliances and collaborative relationships with interested and qualified private-sector stakeholders,” states Martirosyan.
A disruptor in the space is BetConstruct, the leader in gaming software in Armenia. In 2016 the company was recognized as the Technology Provider/Supplier of the Year by the International Gaming Awards, also known as the gaming Oscars.
BetConstruct was opened in 2011 with Vivaro/VBet, a gaming operator, being its precursor. When large international suppliers refused to work with this small company, the owners decided to develop proprietary technology. Soon they realized that what they created is quite competitive and can stand on its own on the global stage. Vahe Baloulian, CEO of BetConstruct, says one of the unique points of company pride is “everything that the company has created was done in Armenia. BetConstruct was not founded abroad and then discovered Armenia because of its qualified and affordable workforce.”
They enhance their relationships by treating their clients as partners, offering a portfolio of services outside a standard IT services suite.
“BetConstruct is not just a technology company, we are also a provider of services, such as risk management, trading, customer relationship, payments and everything else required by our partners for a successful operation.”
BetConstruct wants to give a chance for innovative companies to work with them, regardless of their size. “In our industry, we stand out for many reasons not least of which is that we don’t ignore small companies. When we were just starting, we could not find a company to agree to provide us with technology.” He clarifies. “Our goal is to provide everyone with the same ammunition and let them compete on equal terms.”
The headquarters are in London, reaching that decision once learning that partners did not know the location of Armenia. “When we started offering our products to the international markets, we realized that a lot of our potential partners did not even know where Armenia is and would rather deal with a company registered in a familiar jurisdiction,” said Baloulian. They currently power over 200 partners globally, with only one exclusive partner in Armenia. “For our growth, we look outside of Armenia. BetConstruct is always working with innovative companies willing to profit from our technology and services, from our accumulated expertise.”
“BetConstruct probably brings more people to Armenia than your average travel agency,.”
The company has most recently expanded their footprint by opening offices in Austria and France as of February 2017.
Los Angeles is home to the offices in the U.S. The savvy business decision has allowed them to capitalize on LA’s proximity to other key cities in gaming. “Los Angeles is not far from Nevada, where our technology is now being licensed to supply land-based casinos. If this process is successful, our product will probably be the first by an Armenian company to be licensed in Nevada,” said Baloulian.
Almost 1500 people are employed with the majority of them in Armenia. With the company’s growth, this figure has increased nearly 30% every year. In one of its next moves, BetConstruct will be creating an educational facility, with courses focusing on software engineering and marketing. “By employing them, we don’t simply provide them with jobs and an anchor to stay in Armenia. We create a learning environment where new specialists with important skills are born. We compete internationally, and that requires a different mindset.,” said Baloulian. “Our employees are hard-working people, and each one of them is wonderful in his or her way. We would be nowhere without their drive and desire to amaze the world.”
This sophisticated work output is a model of what is being accomplished to increase Armenia’s name recognition globally. “Everyone in our industry is aware of BetConstruct and where we come from. We made sure that a company from Armenia has its impact on the gaming industry and has basically initiated that industry in Armenia.” He also wants foreign investors to take notice of these character attributes when hiring and establishing their operations in Armenia: “We are a country on the eastern edge of Europe with a stable outlook towards what’s good. We are a very individualistic nation. You get very ambitious employees who want to learn and do business better than you,” said Baloulian.
Synergy International Systems, also known as “Synergy” is a global software company that empowers organizations to become more data-driven in achieving their impact. Originally founded in 1997, CEO Ashot Hovanesian opened operations in Armenia in 1999. When discussions of expanding outside of the USA transpired, he knew that Armenia was capable of greatness. “We have been doing a very particular type of development, high-value, and high-volume, software. We realized that such a talent exists in Armenia and would be exactly what we are looking for,” said Hovanesian.
Services range from software development and systems integrations to consulting, support and training. These services appeal to their variety of clients including country governments, international development agencies, NGOs, and private companies. They employ 200 people worldwide -- and in Armenia, have offices in Yerevan, Artsakh, Stepanakert, and most recently in Gyumri, the second-largest city in the country.
As trailblazers in Armenia, Synergy considers themselves at the crossroads of technology and international development.
