By Emil DanielyanLycos Europe, a leading European Internet firm, reportedly plans to relocate dozens of its French computer programmers to Armenia as part of a massive cost cutting aimed at balancing its books.
French media reported on Tuesday that the company intends to lay off 75 employees of its 109-strong Paris division and has offered 34 of them employment in its expanding subsidiary in Armenia. Some of the other employees were offered to move to the Lycos Europe headquarters in Gueterslow, Germany, the reports said.
“We are going to transfer the European management of our e-mail and web hosting services to Gueterslow, Germany and Yerevan, Armenia, taking into consideration the employees’ rights and the existing legislation,” Olivier Soussan, the company’s marketing director, was quoted by the French daily “Liberation” as saying. Soussan said the planned staff relocation should help the company stop incurring millions of dollars in losses by the end of next year.
Lycos Europe, which runs one of the continent’s most popular Internet portals, gained foothold in Armenia three years ago with the purchase of the local branch of Brience Inc., a U.S. firm specializing in mobile phone software. The subsidiary called Lycos Armenia has since undergone rapid expansion and currently employs about 170 workers, virtually all of them software specialists.
“Due to growing demand we are currently hiring new staff and plan to employ 220 employees in the course of this year,” Lycos Armenia says on its web site, adding that it is now “the biggest [software] development location for Lycos Europe.” “Many Lycos products are partly or fully programmed in Armenia,” it says.
Lycos Europe has branches in all major European capitals and its total workforce is estimated at 900. The company’s single largest shareholder is the U.S. group Terra Lycos which created one of the world’s first Internet search engines in the mid-1990s.
The AFP news agency quoted Michel Chereau, a representative of the Lycos employees in France, as saying that the company’s French programmers would be paid between 300 and 500 euros ($650) a month in Armenia, far less than their current salary 2,000-3,500 euros. “I guess life is cheaper there,” he said, adding that the company is also ready to pay for their transportation and accommodation.
But individuals familiar with Armenia’s information technology (IT) sector consider the reported figure low even by Armenian standards. They say an experienced Armenian programmer now earns at least $1,000 a month.
Information technology is seen as one of the most promising sectors of the Armenian economy. Foreign and mostly U.S. IT companies, attracted by the country’s relatively cheap and skilled labor, have been the main driving force behind the industry’s rapid growth over the past decade. At least a dozen of them now have branches in Armenia.