What are we looking at?
Armenia's information and communications technology (ICT) sector is rapidly expanding, with many international companies hiring Armenian professionals with expertise in software development, industrial computing, electronics, and semiconductors. The industry has experienced significant growth in recent years, and new companies continue to emerge, creating more job opportunities. The sector currently comprises over 1,000 active firms and employs over 25,000 people, generating over one billion dollars in revenue each year. The industry's growth rate stands at 20%, and it may continue to increase as more high-skilled IT workers from abroad may come to Armenia, following Russia's escalation of conflict in Ukraine.
With a population of just over 3 million, Armenia has managed to establish a vibrant and innovative tech industry that contributes significantly to the country's 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 $200 million.
Armenia's ICT industry encompasses various notable business areas, such as customized software, web design, and development, IT services and consulting mobile app development, chip design, and testing, computer graphics and multimedia, and games. Additionally, emerging business areas, including data science, artificial intelligence, quantum computing, and electronic design automation, hold significant potential for growth and expansion. These areas are of particular interest to Armenia as ICT companies explore opportunities to sustain aggressive growth in the sector.
One of the key factors driving the growth of the Armenian IT sector is the government's commitment to developing the industry. The government has implemented various policies and initiatives to attract foreign investment and support local startups. These policies have helped create a favorable business environment that encourages innovation and growth.
Another factor that has contributed to the success of the Armenian IT sector is the availability of a highly skilled workforce. Armenia has a strong mathematics and science education tradition, and the country's universities produce thousands of IT graduates each year. These graduates have helped fuel the growth of the industry, and many of them have gone on to work for leading tech companies around the world.
The executive has recognized the ICT sector’s significance and prioritized its development by establishing partnerships with foreign governments and multinational companies. The authorities are committed to transforming Armenia into a digital society, as demonstrated by the approval of the Digitalization Strategy in February 2021. This strategy aims to foster the digital transformation of the government, economy, and society by promoting innovative technologies, cyber security, data policy, e-government systems, coordination of digitalization processes, and the creation of common standards.
Armenia has established technology centers, innovation districts, and free economic zones to back up the high-tech sector. Startups have been incentivized with tax privileges, while grants, study tours, educational programs, and the creation of investment funds have been used to support high-tech ventures. These measures demonstrate the nation's commitment to fostering the growth and development of the ICT industry.
Primary Business Niches
It is fair to observe, that Armenia's ICT industry is primarily focused on software, web design and development, mobile application development, system design, and IT consulting services. These areas have been instrumental in propelling the industry's growth and attracting international companies to establish a presence in Armenia. Moreover, the emergence of new areas such as data science, artificial intelligence, quantum computing, and electronic design automation is also expected to contribute significantly to the industry's sustained growth in the coming years.
However, Armenia has also established a niche market due to the presence of leading electronic design automation firms in the country, a factor that must not be underestimated. Several multinational firms have launched their operations in Armenia, including major players such as Synopsys, Adobe, DISQO, Optym, Xilinx, Microsoft, D-Link, National Instruments, Siemens, Intel, Cisco, IBM, Oracle, VMWare, ServiceTitan, VOLO, Microsoft, Oracle, Salesforce, and BostonGene.
Also, one of the developments that cannot be overlooked is the migration of tech professionals from Russia, Ukraine, and Belarus to Armenia. This event was triggered by the Russian invasion of Ukraine in February 2022, which resulted in the imposition of sanctions on Russia and a significant brain drain. Several large companies closed their offices in Ukraine; others relocated their employees outside the country due to fears of losing new investments. With its thriving tech ecosystem and proximity to Russia, Yerevan became an attractive destination for many seeking to leave their home countries. A number of Russian companies have increased their activities in Armenia, with some opening new offices in the country.
Since Armenia has become a hub for major industry events that attract global attention, such as the World Congress on Information Technology in 2019, which brought together over 2,500 participants from more than 70 countries. In addition, the Foundation for Armenian Science & Technology hosts an annual Global Innovation Forum, which features top speakers from around the world. Other industry groups also organize conferences and events, such as the ArmTech conference hosted by the Enterprise Incubator Foundation and the DigiTec conference organized by the Union for Advanced Technology Enterprises.
The development of educational establishments and innovation districts is also creating new opportunities in the ICT industry by nurturing talent and building ecosystems for new companies. For instance, the Engineering City project currently underway on the outskirts of Yerevan is expected to support local firms, incubate startups, and offer access to cutting-edge technologies once completed, helping to further bolster the country's ICT industry.
Leading players
Armenian is home to a diverse range of companies, from startups to well-established players with a global presence. These companies operate in various areas of the industry, from software development and IT services to chip design and multimedia.
The industry has attracted the attention of major multinational firms, such as Microsoft, IBM, and Intel, who have established operations in the country. As a result, a vibrant startup culture has emerged in Armenia, with many innovative new ventures entering the market and driving innovation. With a skilled workforce and supportive government policies, the Armenian IT industry is poised for continued growth and success in the coming years. Here are a few key players in the industry:
PicsArt: This all-in-one photo and video editing platform for creatives, content providers, and businesses. The platform offers a wide range of tools, including advanced AI-powered editing, filters, templates, and creative user-generated content. PicsArt has a global community of over 160 million monthly active users, with over 1 billion downloads to date. The company was founded in 2012 and is headquartered in San Francisco, with offices in Yerevan, Armenia. Armenian unicorn, rapidly incorporated generative AI technologies into its collection of tools this year. In addition to a text-to-photo generation tool, they added new features that allow users to add backgrounds and swap objects in images. Picsart also released a feature called “AI Avatar,” which produces an avatar of the user using an image they supply.
Renderforest: The company is an all-in-one branding platform that helps individuals and businesses create professional videos, logos, websites, and more. It provides users with access to an extensive library of customizable templates and tools for creating high-quality visual content in minutes. The platform is used by millions of users worldwide and is trusted by leading brands and creative professionals. Renderforest's mission is to democratize video creation and branding by making it easy, affordable, and accessible to everyone. Renderforest was founded in 2013 and has since grown to serve over 10 million users worldwide.
BetConstruct: This software provider for the gaming industry offers a range of products and services, including sports betting software, online casino software, and more. BetConstruct is a global award-winning technology and services provider for the online and land-based gaming industry. The company employs more than 6000 people in 16 countries and has more than 400 partners worldwide. BetConstruct’s vision is to empower operators with the technology and services they need to deliver outstanding player experiences in the fast-paced world of gaming.
Teamable: Teamable is an AI-powered talent acquisition platform that discovers the best talent from employees' networks. The platform integrates seamlessly with existing HR workflows to drive faster, more cost-effective, and higher-quality hiring outcomes. With a mission to create a more diverse and inclusive workforce, Teamable's technology provides unique insights to help companies optimize their referral programs and create more equitable hiring practices.
ServiceTitan: The tech company was founded by Ara Mahdessian and Vahe Kuzoyan. The company has since become a pioneer in the home services industry and is the first Armenian-founded tech unicorn. ServiceTitan's software technology platform is designed to help small business owners in the trades sector manage and grow their businesses more efficiently. With over 12,000 customers and more than 3500 employees spread across Glendale, Atlanta, and Yerevan, ServiceTitan is a leading player in the trillion-dollar global industry. The company offers a comprehensive software solution for field service businesses, which is favored by the most successful companies in the plumbing, HVAC, garage door, electrical, and related industries. Their all-in-one platform includes a variety of features such as customer relationship management, ntelligent dispatching, customizable reporting, marketing automation, mobile solutions for field technicians, and integration with accounting software like Sage Intacct and QuickBooks.
Forbes recently highlighted two Armenian IT companies, Krisp and Podcastle in an article featuring 14 "mind-blowing" AI tools that everyone should try out. Krisp, a noise-canceling app that uses AI to remove background noise during voice and video calls, was praised for its ability to provide crystal-clear audio even in noisy environments. For startups based on scientific research such as Krisp, an additional crucial stage comes between the idea and product development stages, which is creating novel technology.
Podcastle, a podcast transcription and editing service that uses AI to automate the process, was also mentioned as a tool that can save time and improve the quality of podcasts. The article noted that these companies are part of a growing Armenian tech ecosystem that is gaining recognition for its innovative solutions and talented workforce. With such recognition from a major publication, Krisp, and Podcastle are likely to attract even more attention and customers in the coming months.
Synopsis is another significant player in the Armenian IT industry. The company is a leading provider of electronic design automation (EDA) software, which is used to design and test electronic systems such as microprocessors, memory chips, and other electronic components. The company's tools are used by engineers and designers in the electronics industry to design and verify complex integrated circuits and systems-on-chips (SoCs). Synopsys' IP is used by semiconductor and electronics companies to accelerate the development of their products. The company also provides consulting services to help customers optimize their design flows and improve their productivity. Synopsys has a global presence, with offices in more than 25 countries around the world.
The company has a strong research and development focus, and it has pioneered many innovations in the field of electronic design. Synopsis boasts a large development center located in Yerevan, that is focused on developing software for chip design and verification, and it has played a significant role in the growth and development of the Armenian IT industry. Overall, the company is a testament to the technical expertise and talent of Armenian engineers, and it has helped put Armenia on the map as a hub for advanced technology and innovation. The company's success is a source of pride for the Armenian IT industry, and it has inspired many other companies and entrepreneurs to pursue their own innovative ideas and technologies.
What to look forward to
To summarize, Armenia's ICT sector, including the startup industry, is still in its nascent and embryotic stages and faces numerous obstacles to emerge as more internationally competitive. The tech community has identified the need for enhancements in the education system and increased funding for scientific research as crucial components for the industry's sustained growth.
With a highly skilled workforce, a supportive government, and a growing network of tech startups and established companies, Armenia's IT industry is well-positioned to continue its upward trajectory. The strong foundation in mathematics and computer science education,on the other hand, makes Armenia a deep pool of talent in these areas. As the country continues to invest in technology and innovation, we can expect to see even more growth and success in the years ahead. Hence, if you are looking to be a part of a thriving tech community, Armenia is definitely a place to watch.
Armenia is exploring new avenues and opportunities to enhance its competitiveness and move up the ICT value chain. By focusing on developing cutting-edge technologies, the nation can and should position itself as a preferred destination for contract research and development. The industry is well-suited to offer services such as software testing and prototyping to global clients. Looking ahead, it is clear that various sub-sectors, including artificial intelligence research and engineering, semiconductor design and electronic design automation, and data science as well as fintech have significant potential for growth in Armenia.
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