Prime Minister Karen Karapetian called for an even faster expansion of Armenia’s burgeoning information technology (IT) sector on Tuesday, saying that it would help the domestic economy take a “leap forward.”
Karapetian met with senior executives of Armenian IT companies and relevant government officials for further discussions on ways of addressing lingering challenges facing the hi-tech industry.
“I have high hopes for your sector so that we take a leap forward, make a difference,” he told them in comments publicized by his press office.
“If you expect us, government officials, to revolutionize this sector, then we are not the ones who do revolutions,” he said. “But in order to encourage a hard-working person seeking profits, we must channel all our subsidies into successful [entrepreneurs.]”
“I want you to come up with programs on what we should do to transform the sector,” added the former business executive.
IT is already the fastest growing sector of Armenia’s economy, having expanded by an average of over 20 percent annually in the past decade. According to the Armenian Economy Ministry, around 15,000 people currently work for 400 or so IT firms operating in the country.Their combined revenue of $550 million in 2015 was equivalent to over 5 percent of Gross Domestic Product.
Analysts believe that a more rapid growth of the hi-tech industry has long been hampered by a lack of skilled workforce. Armenian IT executives have long said that the inadequate professional level of most graduates of IT departments of state-run universities is the main cause of their personnel shortages. It is widely acknowledged that the quality of higher education in Armenia has declined since Soviet times.
According to a government statement, the personnel shortage was high on the agenda of Tuesday’s meeting. Karapetian was reported to urge the IT executives to propose “short-term and substantive programs” that would ensure “quick results.”
“In that context, they discussed issues related to reforms of the specialized education system and the efficiency of ongoing projects,” added the statement.
The government has already sought to address the problem by helping several multinational tech giants set up training centers in Yerevan and opening state-of-the-art “technology centers” in Gyumri and Vanadzor.
The Vanadzor facility was inaugurated by President Serzh Sarkisian as recently as recently as on October 29. It is supposed to not only help young people with training courses, sophisticated laboratories and counselling but also provide office space for new firms set up by them. The Enterprise Incubator Foundation, a government agency promoting IT, expects the center to train 500 IT specialists in Armenia’s third largest city.
About two years ago, the government also introduced significant tax breaks for IT startups employing up to 30 people. They can be exempt from profit tax until 2020 and are also eligible for a preferential income tax rate for their employees.
Karapetian’s predecessor, Hovik Abrahamian, said in June that more than 100 IT firms have been set up in Armenia since then. The vast majority of them have qualified for the tax privileges, creating a total of 470 jobs, he said.
The sector has until now been dominated by Armenian subsidiaries of U.S. software giants like Synopsis, National Instruments, Mentor Graphics and VMware.