Armenian ICT Industry overview and the role of the Union of Information Technology Enterprises in promotion of ICT/High Tech Development in Armenia

The main industry sectors were: Armenian industry inherited: ICT Industry Overview Before 1991 Armenia was regarded as a Silicon Valley of the former Soviet Union. The main industry sectors were: Chemical industry Energy industry Light Industry Mechanical engineering Electronics Armenian industry inherited: High quality technical workforce (according to the Brainbench Global Skills IQ Report for 2006, Armenia was ranked second in the world, after USA, in the number of IT certifications received per capita) Physical infrastructure (airways, roads, railways and telecom) Generally adequate manufacturing facilities coupled with scientific and design institutions

ICT Industry Overview Today ICT industry is one of the most dynamic and promising sectors of the economy 2008 The share of the sector in Armenia's $9.2 billion nominal GDP - 1.2% 175 ICT companies (56 foreign) About $111 mln in total revenue ($10 mln in 1998)

Major specializations include: ICT Industry Overview Major specializations include: Embedded systems Semiconductor design Multimedia design Industrial automation Web design and development Custom software development Financial applications Security and encryption Software development and outsourcing Educational software Management information systems Computer aided design Systems integration

ICT Industry Overview Geographical Distribution Share of local companies’ revenues in the industry’s total amounts to 38% ($42 million) Average revenue per company for locals - 30% ( 3% - branches) At the peak in 2004, annual number of start-up ICT firms reached 25-30 (26% growth per year) In 2008 total number of ICT companies established with foreign investment reached 56 (32% from the industry total)

RA Government ICT industry Development Strategy Armenian Networked Readiness Index (NRI) 2008–2009 – 114 Azerbaijan (60), Russia (74), Georgia (88), Moldova (99), Turkey (61), Colombia (64), Kenya (97) and Nigeria (90) Variables Armenia Azerbaijan Georgia Total tax rate (hard data) 52 64 57 Government success in ICT promotion 119 20 89 Mobile telephone subscribers (hard data) 126 88 98 E-government readiness index (hard data) 91 81 82 ICT use and government efficiency 127 34 76 Internet users (hard data) 105 85 96 Company spending on R&D 67 121

RA Government ICT industry Development Strategy New ICT sector development concept (2008) Key milestones: Short-term (1-3 years): Build world class ICT infrastructure to support Armenian ICT industry and information society development Mid-term (3-5 years): Strengthen Armenia’s ICT infrastructure and ensure the presence and penetration of “Armenia ICT brand” in the global market Long-term (5-10 years): Achieve full “Armenia ICT brand” penetration in global markets and particularly in targeted high-growth market segments. Contribute to the growth of ICT, increase in sector revenues and development of knowledge-based economy through ICT infrastructure and Information Society development.

RA Government ICT industry Development Strategy Information society and IT Industry growth target indicators: Key Data 2006 2018 Home computer penetration 5% 50-70% Educational computer penetration 10% 80-90% Public sector computer penetration 100% Consumption of local IT products in the internal market – GDP 0.5% 2-4% Share of e-services provided by RA state entities against the total <1% 80% Number of IT companies From which those with foreign capital committed 160 50 1000 200 Workforce 5000 20000 Industry revenues 84 million (USD) 1 billion (USD) IT R&D companies <10 100-200 Large technology cities Techno-Parks & incubators 2 1 >10

IT D E V E L O P M E N T ACTION PLAN 2008-2018  Design, develop and build world class ICT infrastructure serving major regions, cities, government & private industry 2008-2018 Develop & launch targeted programs aimed at increasing Armenia IT graduates and workforce. 2008-2013 Equip and operate national Tele-Centers serving citizens in key Armenian regions & towns. 2008-2011 Build Armenian Techno-Park supported by world class ICT, municipal infrastructure and services 2008-2011 Select, develop and rollout E-Government pilot projects (Rollout (3) pilot projects in 3 years)

IT D E V E L O P M E N T ACTION PLAN 2008-2013 Establish Armenian Software Engineering Competence Center to certify & train Armenian software developers to ensure compliance with global Capability Maturity Model Integrated standards 2008-2018 Develop , design & rollout world class strategic marketing & promotional campaign to position “Armenia brand” in targeted high growth IT markets. 2008-2015 Replicate EIF business incubator model and establish university-based technology transfer centers (TTC) to stimulate IT innovation & product development 2008-2018 Establish Armenian IT Enterprise Development Fund to promote private IT companies; attract foreign direct investment & venture capital to develop and commercialize IT innovation & product development

THE UNION OF INFORMATION TECHNOLOGY ENTERPRISES

The Union of Information Technology Enterprises Main Strategic Directions (2010): Education and workforce development (strategic goal: the number of qualified ICT specialists is 10000) Legal framework/collaboration with state bodies (strategic goal: ICT is a priority industry in Armenia in practice) Development of ICT/High Tech sphere/Formation of Information Society (strategic goal: higher level of use of ICT in other businesses) Development and enhancement of the association (strategic goal: UITE is an influential and powerful institutional organization serving the interests of its member enterprises)

The Union of Information Technology Enterprises UITE in brief Participation in CeBIT (2000-2009) Intellectual Property Rights Protection Campaign Custom legislation improvement project Tax legislation improvement project Membership Development Initiative Development of ICT/High Tech Portal (www.uite.org) DigiTec Expo 2005-2008 ICT/High Tech exhibition (www.digitec.am) ICT Industry Leaders and Stakeholders Meetings UITE is the official counterpart of CBI, the Netherlands’ Centre for the Promotion of Imports from developing countries Active participation in the development of state concepts, relating to ICT/High Tech field and Business Environment Legislation. ICT/High Tech Educational Consortium

The Union of Information Technology Enterprises 2009 Action Plan Education and workforce development ICT/High Tech Consortium Establishment Develop and provide special leadership development, effective financial management, startup business essentials and promotion modules trainings to beneficiaries Promotion of startup business support programs in the regions of Armenia (Armenia) Legal framework/collaboration with state bodies Promotion of tax & custom legislation improvements Media campaign

Development of ICT/High Tech Industry/ Promoting Regional Cooperation Develop Armenian High Tech Virtual Community Portal Assist Government in Techno City establishment in Gyumri Organize DigiTec 2009 / DigiTec Business Forum Organize Armenian Open Robotics Contests(robotics.digitec.am) Promote regional cooperation initiatives of UITE member companies Develop and organize regional study tours for the representatives of leading Armenian ICT/High Tech companies and vice versa Co-organize Armtech 2009 Congress Organizing the series of ICT Leaders Meetings

The Union of Information Technology Enterprises The main problems that hinder Armenian ICT industry development The lack of authorized state body responsible for Information Society development Limited financing for ICT sector Insufficient interaction among the entire scope of the sector’s infrastructure, including the Science, education, telecommunication, state ministries and the private sector Low level of government investments in R&D Excessive Custom and Tax administration (applications of “estimated prices” custom clearance method for ICT goods for importing and VAT levy at the border for importing) The lack of tax benefits for educational investments The lack of qualified ICT specialists

THANK YOU