Bagrat Yengibaryan: Head of Enterprise Incubator Foundation, on Armenia’s achievements in IT sector

Summarizing results of the first quarter century of Armenia's independence in various spheres.

Text: Bagrat Yengibaryan / Photos: UITE

From Soviet era to independence
 In the Soviet Union the information technology industry was quite developed in Armenia. From the first computer in the USSR and ending with the establishment of numerous enterprises, institutes, including Mergelyan (The Yerevan Computer Research and Development Institute), thousands of people were engaged in the technological development of the Soviet Union. By saying Information Technology we mean a sector that is developing rapidly and constantly, and you have to work hard to keep your leading position. In this regard, it’s important to note that Armenia was the leader in this field in the Soviet era. After declaring independence the economy of Armenia collapsed and in 2001 the government announced the IT sector as a priority.

 The competitive advantage of the country in the development of IT are people and the creative mind they have. Here we had all the work that had been done during the Soviet period, including the education, technological bases provided by the Yerevan Polytechnic Institute, Yerevan State University and many other science institutions as well as traditions and methods – which is something that many developed and developing countries spend huge money on to develop.. But years are needed to develop such traditions. When the borders opened, Armenia got access to global markets. It turned out that many of our compatriots living abroad have a great influence and play important roles in the IT field, particularly in the Silicon Valley, which is truly one of the biggest high-tech manufacturing centers in the world. Several years ago we conducted a research and found out that Diaspora is represented in almost 80% of Armenian companies whether as a co-founder, or a shareholder, or someone who provided links between the companies and the foreign partners. 

Making of Armenian IT sector

The first thing to do was how to use the traditions, experience and our international links we already had. In the Soviet Union all IT companies were state-owned whereas in the beginning of the 21st century we had to deal with private companies and private entrepreneurs. We had to build mechanisms so that the companies could unite and proudly represent Armenia in the global market. In 2002 a strategy was developed and the Enterprise Incubator Foundation was established within the framework of the World Bank’s “Enterprise Incubator” project. It has become one of the largest technology business incubators and consulting companies in the region, based in Yerevan, Armenia. The Foundation is called to support the development of information and communication technology sector in Armenia through creating a productive environment for innovation, technological advancement and company growth. So far thanks to the teamwork and efforts of the Foundation and the private companies we have an established and rapidly developing IT sector that has become a leading – if not the most leading – sector Armenia. Armenia now is on the IT world map, we have a clear idea and are able to support the development of engineering, high technologies and clean technologies.

This was a trial period, which we successfully passed and which showed that Armenia is able to keep up with other leading countries of the world IT industry. Meanwhile 15 years ago many people were doubtful about the success of the project. There were a few people who believed that thanks to the project ICT sector’s annual growth rate will be 20% on average, that the number of workplaces in the sector will exceed the number of those in the mining industry and that the IT development would have a pivotal role in the development of education, the private sector, the development of the country in general and become our flag on the international platform.

Thorny path

But the road was not easy, it consisted of three main phases. First one was to expand the scale of operations, get contracts from partners abroad, perform the best way we can do and show to the world that we can deliver quality products. Thus the number of employees in the sector increased as well: along with the increasingly large orders the “army” of IT industry was growing. In some ways, it was a stage of self-affirmation. Second phase was the involvement of transnational corporations, because the IT sector is evolving so fast that even the world’s developed countries are making great efforts to keep pace with these developments. The involvement of transnational corporations would mean inserting their achievements here instead of time-consuming process of development. This refers to Microsoft Innovation Center, IBM Innovative Solutions and Technologies Center and several other corporations that opened their representations in Armenia and in a short time brought the country’s IT sector to a level, at which they can cooperate with local companies. Now we are in the third stage, when we are working towards the development of new organizations and the promotion of Armenian production. Armenian solutions are being sold worldwide, and it is not only about phones or software packages, but entire organizations. Now everybody knows about Picsart, Joomag, Oracle and other companies that already cost millions of dollars. Now we focus on the newly created companies to develop and increase their value on the international market.

The future

We consider two models of IT sector development. The first model assumes that companies engaged in information technologies will try to find solutions to non-local problems and the earned money will come to Armenia. There is a number of large-scale problems which are not within the scope of our interests, but we have huge consulting companies, such as Synopsys Armenia, a research center that creates global products. The second model assumes testing a large amount of solutions here on a smaller scale and then spreading them in the region. Developing a solution to the problem is one thing, while its localization is completely different. In this regard, Armenia can become an interesting testing ground, where professionals will not only develop the idea, but also work on the localization, effectiveness and implementation.