IT Landscape in Armenia

Analysis

The rapid development of IT and its impact on every sector of economy is making IT industry the very basic industry for any developing economy. it is taking strategic importance in narrow meaning as the defense infrastructure and in broader, as the main tool to strengthen country's economy and increase its competitiveness in the international market.

This industry is the most perspective sector, which could play a leading role in the country's long-term economic development and have a great impact on other sectors of economy. Information Technology and its infrastructure is crucial for any country to operate successfully in the global marketplace. In addition to the fact that IT industry's infrastructure is absolutely necessary for all other industries development, all components of IT serve as a magnet for investment, both domestic and foreign. Thus, IT industry development is considered to play three-fold role in Armenia economic development: as the prosperous sector of industry itself, as a mean for other sectors development and as the infrastructure for investment. Moreover, another factor of It development could be considered as, its a tool for transforming the economy from industrial one to the information economy.

Armenia should deeply understand that it will pay the highest cost if stays away from this development. Without rapid and successful reforms, Armenia economic development will fail in many aspects: local products will fail in competitiveness in international market, manufacturers could lose market shares, because of very simple reasons as being unable to access the global trade networks and compete on equal conditions.

The Armenian IT industry performs relatively not bad growth. Two factors contribute to such performance: first of all, the IT growing dynamics in the world with some impact on IT industry in Armenia and inherited potential and current willingness of Armenian emerging IT industry and its workforce and find its own niche in the worldwide development.

Successful IT Development Prerequisites:

Armenia was on of the most technologically developed republic of the former Soviet Union with a special emphasis on the development of IT industry. There were about 40 R&D centers acting in this field, the biggest of them, Yerevan Research Institute of Mathematical machines had more than 10,000 employees and produced both hardware and software. Correspondingly, the country possesses a significant number of computer programmers. Most of them are graduates from the State University of Armenia and the Engineering University. The recent 10year of instability in the region have had a negative impact on the transportation dependent and primarily export-oriented Armenia industries, but had much less influence on the local software manufacturers.

IT Meets Criteria for the Priority Sector:

It met all criteria to be recognized as the priority sector fir Armenia economic development. The criteria are the following:

To have a large and unrestricted export potential;

IT has the most dynamic and fast growing global market with increasing manufacturing and export capacities in developing and transition economy. Total export of IT and telecommunication products were valued over US$300 billion in 1996. The market for only software is expected to increase to $450 billion by the year 2002. Export of IT products from Economies in Transition reached at US$ 6.0 billion. This sector represents one of the most promising export growth areas for the business community in countries with transaction economies.

To create new jobs;

There are about 5000 actively working qualified IT specialist, while there are approximately 3,100-3,600 other IT specialists that are largely unemployed or employed only occasionally.

The majority of these people are graduates of the State University of Armenia and the Engineering University, with a relatively high educational background.

Identified issues that I mentioned in this report could be sorted into groups of obstacles, which adversely affect IT industry development in Armenia:

Ø Some issues of regulating framework, deficiency in it s enforcement and its administration;

Ø Infrastructure problems – poor telecommunications, mostly Internet infrastructure, with high process; low capacitates and speed, poor quality of connection, lower level of security and service;

Ø Brain drain of young IT specialists and weakens strategic development of IT firms;

Ø IT Education

Solutions for the first three mentioned obstacles do not require relatively long-term efforts. Their improvements are mostly concentrated in the government decision-making power and could be easily solved or conditions be tangible improved upon political will.

IT educational issues consist of there problems: first, improvement of managerial and marketing skills, second, preparations and re-training of IT Instructors and the last problem re-training of workforce. All these issues asked for long-term efforts by all partners in the field: government, industry, and educational institutions.

At the same time there are trends that could be considered as a promising potential for IT development in Armenia:

Ø Slow, but growing number of exporting IT companies, mostly software;

Ø Growing demand for IT specialties, mostly computer programming and application use by IT and non-IT companies;

Ø IT education institutions slowly, but respond to the market demand for training and retraining of IT specialists;

Ø Growing demand for high quality IT education, mostly Computer Programming and System Analysts and other computer related specialists;

Ø Growing demand for Internet services.

RECOMMENDATION:

The Government is taking actions to improve the situation, but it seems new player should enter into the negotiation process between the Government and ArmenTel in the quality of intermediaries in order to make the talks more effective.

Any campaigns like IT trade fairs, IT conferences, publications in newspapers and magazines, focusing on the awareness of the average citizen about the benefits and opportunities they can yield from using IT for his/her problem solving should be supported. Other events related to IT are also highly recommended to raise public awareness on IT industry and information society.