The gulf states and the former Soviet nations of Central Asia are poised to become a new hub of tech activity, according to a recent analysis by Strategeast, a non-profit organization that works to develop the digital economies of Ukraine, Georgia, Kyrgyzstan, and Kazakhstan. The analysis suggests that the region has the potential to offer offshore tech services and business process outsourcing businesses, as well as foster innovation and entrepreneurship in the tech sector.
Strong foundations for tech talent
One of the main advantages of the region is its strong educational system, which emphasizes maths, physics, and chemistry. These subjects provide the necessary foundations for learning IT skills and developing tech solutions. The region also has a large pool of young and talented people who are eager to learn and work in the tech industry.
According to Anatoly Motkin, president of Strategeast, the region has produced successful tech companies such as EPAM, which was created in Belarus but is now based in New Jersey and listed on the New York Stock Exchange. He also pointed out the strength of Ukraine’s tech sector, which demonstrated resilience and growth before and during Russia’s illegal invasion.
Supportive policies and incentives
Another factor that makes the region attractive for tech activity is the supportive policies and incentives offered by the regional governments. Motkin said that the governments are keen to develop new industries and realize that IT businesses are an obvious candidate. He added that the IT services industry lacks the complications of established industries, such as mining, which feature ticket-clippers who must be accommodated.
The governments have also provided tax concessions and other benefits for tech businesses, making the region more competitive and appealing for global buyers. Motkin said that while the region is not well known to those buyers, they are looking for new sources of skill and talent amid the global demand for tech solutions.
Cultural affinities and synergies
A third factor that contributes to the potential of the region as a new tech hotspot is its cultural affinities and synergies with the gulf states. Motkin said that there is a huge hunger for knowledge and leadership in Saudi Arabia and Qatar, which are also striving to develop their digital economies. He said that the gulf states have shown interest in investing in and collaborating with the tech businesses in Central Asia.
Motkin also said that there are many startups emerging in Central Asia, which have attracted venture capitalists from the gulf region. He said that these startups are solving local problems with innovative solutions, such as fintech, e-commerce, edtech, healthtech, and agritech. He said that these startups have the potential to scale up and expand to other markets.
Challenges and opportunities
Despite the promising prospects of the region as a new tech hub, there are also some challenges and opportunities that need to be addressed. One of them is the security issue, which may deter some buyers from trusting the tech businesses in the region. Motkin said that he has seen an offshore center working for a US aerospace company in the region, with appropriate physical security in place. He said that the tech businesses in the region understand that security is a priority and work assiduously to ensure their own affairs are in order.
Another challenge is the language barrier, which may limit the communication and collaboration between the tech businesses in the region and their global clients. Motkin said that this challenge has largely been overcome, as all internal communication in regional companies is now in English. He also said that there is a need to improve the delivery skills and management capabilities of the tech businesses in the region, which can be achieved through sharing best practices and gaining more experience.
The region also faces some opportunities that can enhance its position as a new tech hotspot. One of them is to leverage its geographical location, which connects Europe and Asia. Motkin said that this can create more opportunities for trade and cooperation with other regions. Another opportunity is to tap into its rich cultural heritage and diversity, which can inspire more creativity and innovation in the tech sector.
