Large companies working in Armenia’s information technology (IT) sector as well as industry specialists see encouragement of local startups as a way to go for Armenia. They say long-term progress cannot be sustained by enterprises based on foreign capitals alone.

The 1990s ushered in a new era in the development of information technologies in Armenia as a number of American programming companies founded their affiliates in Yerevan. In 2000 the Armenian government declared the sector to be a priority for the country’s economic development.

At present, the IT sector in Armenia expands at an extraordinary pace of some 25 percent a year. Annually, the sector gets funding from the state budget of about 80 million drams (about $208,000).

Today Armenia’s IT sector comprises 350 companies (compared to 175 in 2009) and about 62 percent of their products go for export to more than 20 countries, including the United States, countries of Europe and the former Soviet Union.

The Union of Information Technology Enterprises (UITE) set up in 2000 to champion the economic interests of enterprises and companies working in the IT and telecom sectors and promote business and research in the telecom sphere is implementing a number of projects that are largely aimed at ensuring the advancement of information and telecommunication technologies in Armenia.

UITE Executive Director Karen Vardanyan says compared to the rest of the region Armenia is on top in terms of its IT solutions, but it is still behind neighbors Azerbaijan and Georgia in terms of application.

According to the specialist, one of the sector’s problems in Armenia is the absence of a governing body, as well as a lack of education ambitions among young people.

“Business is mostly administrative and lacks a competitive environment. And when there is no competitive environment, you don’t exert too much effort. Progress in the sector depends more on society than the government,” Vardanyan told ArmeniaNow. “When people set goals and understand that for achieving their goals they need to cooperate also with others, then they will start setting up serious companies that will have a competitive field and by competing they will spur progress.”

(The need for nurturing creativity among young people was also stressed by Steve Wozniak, the co-founder of the Apple corporation who paid a two-day visit to Armenia earlier this month at the invitation of the country’s government and IT industry).

Hovik Musayelyan, director of Synopsys Armenia, one of the country’s largest IT companies, also believes start-up companies are needed to ensure headway in the industry.

“Large companies based on foreign capital cannot ensure progress in the industry alone. Until companies based on local capital are set up and development trends are provided for them, the sector cannot make major headway,” says Musayelyan, adding that different events organized with the sponsorship of Synopsys Armenia and Armenia’s leading mobile operator VivaCell-MTS, such as an International Microelectronics Olympiad, encourage young people to strive to realize their ideas. He says that ideas advanced by youths are prerequisites for start-up companies.

VivaCell-MTS General Manager Ralph Yirikian, too, says the company is aware of IT sector development being a key priority for Armenia and, therefore, has invested more than 100 million drams (about $260,000) to support projects that are being realized in the field.