Relocation of IT specialists to Central Eurasia: pros and cons for the state

20 June, 2022

Many countries of Central Eurasia have become a new home for IT specialists from the countries of the region that were affected by the international conflict. The relocation of IT specialists has become an important sector development in Armenia, Uzbekistan, Kazakhstan, Kyrgyzstan and other countries of Eastern Europe and Central Asia. But how strategic is this approach? Irakli Kashibadze, founder of the Startup Central Eurasia platform and CEO of Future Laboratory, discusses what factors need to be considered to get a long-term and mutually beneficial effect from digital nomads. 

Record outflow of IT staff

In Belarus, a record number of IT staff was laid off in just a few months: over 8 thousand, which is 50% more than the number of IT staff that found jobs. In Russia, an outflow of about 40 thousand IT specialists is expected by the end of June. 

It is noted that the majority of those who have left are employees of development centres of foreign companies whose parent structures have decided to close their offices in these countries. Of this category, an average of 30% of all personnel who were asked to leave are migrating. The second largest category is companies that were operating in developed overseas markets but lost customers, forcing them to move their sales offices to other countries with a more favourable environment. The third category is freelancers.

A relocator is not a tourist but an expert and a future CEO

Many specialists relocate to nearby CIS countries, Georgia, Eastern Europe and Central Asia. And of course, these countries perceive the influx of developers and managers as an opportunity for their own economic growth. IT specialists, as a rule, have high incomes, and states benefit when a person spends this money in their territory – for rent, food, etc. To attract returnees, countries create special conditions by offering them special integration programmes. However, there are important parameters for host countries to consider.

1) An IT professional is not just a tourist. He is the holder of a large pool of knowledge and expertise. He or she may be fulfilling orders and working for the world's leading technology companies – IBM, Google, Amazon, or working with global banking, financial corporations. Such a specialist has specific knowledge in designing, supporting and developing very high-end systems and products. By concentrating only on these people becoming tourists, the state is making a mistake, because it is not taking advantage of the opportunity that has arisen. Even if a person, when moving, continues to work for his company, it is worth engaging him as a consultant, co-founder of local start-ups, member of the board of directors of start-ups. This will help improve the quality of local developers, the level of startups and innovative companies, and help understand how global companies work.

2) The IT migration rate is very high. One should not expect that a specialist who moved to Uzbekistan, Kazakhstan or Georgia will stay there forever. Which means that the investment that has been spent to help them relocate may not last long. It is important to create such conditions for integration into the country's ecosystem that the effect of his presence, even if temporary, will be maximized. 

Creating a new IT product means benefiting everyone 

Some countries outsource IT programmers for software development or for specific tasks. If a country wants to benefit from the relocation of foreign specialists, it must be involved in the development of full-fledged products. Firstly, a product company with a high intellectual component will generate more income, which is beneficial to both the developers and the government. Secondly, the specialist himself will have more reasons to stay. Third, even if the freelancer continues to migrate or returns to his home country, the company will continue to function, benefit the country and create a long-term attachment of the specialist to the ecosystem.  Products refer to systems that can enter the global marketplace and compete with identical products by providing a more innovative approach and service. There are excellent examples of creating such products in Estonia, where several unicorns have emerged in a short period of time.

For example, Pipedrive. It is a CRM software for communicating with customers and visualising the sales process. The startup became a unicorn in 2020. Today, this company generates meaningful revenue for the country, while programmers can work from anywhere in the world. 

Another example of a successful product startup from Estonia is the taxi service Bolt. It is a technology company that has also become a unicorn. According to the latest figures, it is valued at around €7.5 billion.

Strength in cooperation and integration 

The innovation ecosystem is made up of some kind of 'building blocks'. These include the tax regime, infrastructure, access to finance, and education programmes. But the main resource is people themselves. And it is necessary to look ahead, how to provide all these elements so that the startup ecosystem in each country develops. The main problem for specialists in our region is the lack of experience in creating global products with high added value. It is necessary to involve incoming specialists by creating special support programmes, grants, providing access to the infrastructure for innovations and working with local start-ups. This can only be achieved in cooperation with partners: technology parks from neighbouring countries, venture capital funds, ministries and other stakeholders.

Governments need to engage specialists to improve the overall parameters of the innovation ecosystem and fill gaps in its development. It is to meet this challenge that the Startup Central Eurasia team is working on.