Information Technology Industry in Belarus – Ernst & Young report 2017

Ernst & Young, one of the “Big Four” audit firms, has released a report titled “The IT industry in Belarus: 2017 and Beyond”. It goes through many statistical and analytical points about the Belarusian IT industry based on interviews with the people at the top of many IT companies and surveys conducted among the top Belarusian IT companies, including SaM Solutions. Belarus created a great climate for IT investments and the market is experiencing a boom. Let’s look at the main points of the report and address the main reasons why this boom is happening and where it is going.

The Industry Overview

According to the survey, there are more than 115.000 IT specialists currently employed by the industry in Belarus. Around 34.000 of those work in the product and services and 30.000 of them are employed by the members of the Hi-Tech Park that accounts for 80% of all the IT exports in Belarus. In the last 10 years, the industry experienced a boom that was based on the availability of the talent, orientation on export and government’s support.

Infrastructure

Belarus is rated highly in the discussions about its business infrastructure. Minsk, the capital of the country is one of the least expensive cities to live in and the average salary in the country is $378. This makes Minsk a very good spot for setting up an office. Good access to the Internet is ensured due to the small size of the country.

Between 2010 and 2015:

  • Internet access capability doubled from 5.4 million to 10.3 million
  • The bandwidth increased by 12 times.
  • 98.2% of the Belarusian territory became covered by cellular network
  • 99.8% of people received some kind of mobile connection.
  • 74.8% of the territory was covered by 3G and 4G networks.

IT companies don’t get any cuts in costs for using utilities, but it doesn’t affect the business in a negative way due to the moderate pricing on the utilities.

There are commercial data centers available for hosting, VPS, SaaS, PaaS, IaaS and colocation. All of them are located in Minsk and Minsk region, except for the government’s telecommunication company Beltelecom. Over 70% of surveyed companies use their own servers that are located in Belarus. 35% use foreign cloud infrastructure and 11%- from local providers.

The Role of Hi-Tech Park

HTP (Hi-Tech Park) has been a very important instrument in the rapid growth of the industry. First established as a support organization for companies that are working in the spheres of outsourcing, nearshoring and services, it is still a major part of HTP’s base. This part of the base (SaM Solutions included) provides industrial developers and QA engineers, develops complex custom solutions or created dedicated development centers. Most companies have a market not locally, but in USA, UK, EU, etc.

The IT industry in Belarus 2017 and Beyond

Source: “The IT industry in Belarus: 2017 and Beyond”

According to the report more than 30% of Fortune Global 200 companies have worked with HTP-companies. This includes such big names like Oracle, HP, PepsiCo, Facebook, Microsoft, Xerox, Disney, Apple, IBM and many others.

HTP members are exempted from paying 18% of Corporate profit tax and 20% VAT. They are also enjoying many benefits like decrease of personal income tax for employees among others.

Education

There are 313,000 people currently studying to get a higher education diploma. 24% of them are STEM (Science, Technology, Engineering and Mathematics) students.

A big number of them study in 70 IT fields that are in great demand by the IT industry at the moment. The country is now going through the process of joining the European Higher Education Area, that brings new international standards of education and the STEM is getting more and more funding from the budget and with the help of major IT companies that invest into education by establishing labs that provide IT-specific courses and future employment for the students. SaM Solutions opened several joint science and innovation laboratories as well.

Start-ups

Start-up culture has a very strong base in Belarus. Belarus still lacks a legal background for a functional venture financing of startups. The funding is usually found outside the country or the necessary investment is made by the founders. Usually, they are started as small projects by local teams and then bought by foreign investors. Good examples include Viber, Maps.me, MSQRD and Juno. While not having a reputation of a startup land,  big and high-profile purchase of a startup happens at least one per year. After the acquisition the teams usually become dedicated teams that work on the same project, providing support and further development.

Business incubators, including HTP ones, support startups by creating a favorable environment for them by providing lower lease rates for example.

Salaries in IT

According to Hi-Tech Park, salaries in IT are substantially greater than the national average and HTP’s salaries are 16% higher than in companies that are not members of HTP.

The IT industry in Belarus 2017 and Beyond1

Source: “The IT industry in Belarus: 2017 and Beyond” p.50

When talking about salaries in Belarusian IT market one should understand real incomes and expenses in this business. The table below shows tax expenses are the highest ones in Belarus and lowest for Ukraine.  We see that Belarussian Hi-Tech Park has many clear advantages to other markets due to government’s support.

The IT industry in Belarus 2017 and Beyond2

Source: “The IT industry in Belarus: 2017 and Beyond”

The IT industry in Belarus 2017 and Beyond3

Source: “The IT industry in Belarus: 2017 and Beyond”

Conclusion

By 2020 the HTP workforce will reach 36-40 thousand people and the revenues between $1.3 and $1.4 billion. HTP infrastructure provides great ground for continuous growth and increases in the number of people working and investing into IT will result in even more startups starting in Belarus. The success of IT in Belarus is tremendous with an average salary in IT being three times higher than the country average and one of the biggest revenue growth compared to other industries.

EY concludes that Belarus deserves more attention from investors and businesses that are looking for technological partners. We believe that Belarus has much potential still not depleted and due to bigger global trends, it is able to extend the expectations. The government’s interest in developing the industry has worked for 15 years and keep producing great results for both local businesses and foreign investors and partners.  

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Eugene

A copywriter at SaM Solutions, Eugene is fond of writing about innovative technologies and solutions that improve living standards and add value to business operations.

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  • I’ve learned some new things through the blog post. Thanks a lot

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