Information Technologies in Armenia

8 m.   |  2019-07-24

IT is one of the core fields in the Republic of Armenia, which has been a priority area since the first decade of the 2000s. Unlike other branches of economy, its peculiarity lies in the fact, that if the main development issues of a number of branches are related to the economic and political cooperation with neighbors, this field has a lot more opportunities for freedom. 

According to the data of 2018, there are around 10 thousand specialists involved in IT field and around 800 active organizations. However, the whole potential existing in the Republic of Armenia, which can also lead to the development of the whole country’s economy, is not used to its full potential. It is related to a number of issues: first one is the lack of highly qualified specialists. This is one of the most important reasons, for what many companies and organizations are obliged to execute jobs or try to hire and attract specialists from abroad. Moreover, very often it prevents from opening foreign organizations’ branches in our country, in Armenia. It is also linked to a number of issues in the field of education, in case, when instead of education’s serving highly qualified professionals for IT field, nowadays very often it is IT professionals, who prepare new professionals through non-formal educational trainings. In Armenia good professionals, who have grown, developed and educated, frequently not having good and favorable working conditions here, are obliged to emigrate and work in other countries. It’s due to the fact, that many developed countries have the issue of attracting new specialists in this field and unlike Armenia, they can both provide with a good salary and favorable environment for the employees and actually become a place for the brains.

Although this is a priority field, it has problems related to statistical comparability and statistical data collection. This is because of the two reasons: first, is that actually it is not easy to control the field, as many organizations operate in the shade and it is too difficult to understand how much is their turnover. The second problem is related to the fact, that many departments related to this field have their own calculation methodology, which creates an incompatible picture of indicators. It hinders the overall turnover of the field or the assessment of results in the country, and state control as well as state mechanisms should act, in order to make a comparable and united registry at least related to the organizations’ turnover and registration.

Many issues of IT field are objectively related to the state control. If we try to present a good example, it will be the adoption of the Law on State Support for IT, which we can call a crucial launch of the field. After it, the statistical data also prove that many new, start-up organizations, by being certified, have ensured intense activity in this field. That means, both sides have advantages: on the one hand, activity and development in the field, and on the other hand employees involvement. Finally, we can state, that a considerable shadow redundancy has been noticed as a result of the change in the law. If comparing the average monthly salary of employees in this field with an average monthly salary of 170-180 thousand AMD drams in our country, we can say that it is 2 to 3 times more than the average. Taking into account this tendency, we can state that by creating an activity in this field we can actually provide an increase in the average salary level and form a middle class. Besides all the advantages and reforms, the law also had shortcomings and omissions. For improving all the shortcomings and omissions after a 1-1,5 year break, in April 2019, the National Assembly already adopted a new law “On Making Additions and Amendments to the RA Law on State Support for IT”. In fact, it provided all those privileges already present in the previous law: particularly replacement of 20% profit tax by 0% and 25% of income tax by 10%. There was a prevision in the draft law, according to which international organizations should be provided with some privileges. The existence of this provision was explained by the fact that international famous and competitive organizations would bring a new culture by coming to Armenia. However, as a result of healthy debates with stakeholders and private sector, finally the provision was removed from the project, by taking into account all the risks and by reasoning that after these changes those companies will come to Armenia who simply want to enjoy the benefits of the law and not those who are really competitive.  Nevertheless, the law has provided some clearness related with the criteria for certified organizations. I think, it may be related to the fact, that there were probably cases, when the organizations tried to hide their activities in the past and by taking advantage of this great opportunity, they applied for certification. So what does this mean? The organizations that had formerly been or whose owners had previously been the founder or co-founder of another IT organization or shareholder of an already existing and dissolved organization cannot apply for certification. On the other hand, types of certification activities have been expanded.  Another important fact is that the new law has clarified a considerable amount, by allowing organizations to carry out technical-technological purchase and upgrade, which was not in the previous law. That is, based on the previous law, if the company was carrying out another activity and was refreshing its technique and technology, was deprived of the certificate. Another fact, which is of no less importance, is that the new amendments and tough points which are in the law do not refer to the companies already certified before the adoption of this law and the certificates for the companies certified by February 1, 2018 are valid for 5 years.

Summing up this field, we can state, that the recent changes, tendencies and step for continuous improvement of the law are good examples from the viewpoint of state-private sector activism, cooperation, as well as continuity of previously made reforms.