Armenian Tech Sector Keeps Growing Despite Recession

YEREVAN — Armenia’s technology sector continued to grow rapidly last year despite a recession primarily caused by the coronavirus pandemic, Minister of High-Tech Industry Hakob Arshakyan said on Tuesday.

“The combined turnover of [tech] companies rose by 20.6 percent to about 198 billion drams ($380 million),” Arshakyan told a news conference.

“Please note that this includes only high-tech industry companies and doesn’t include telecom operators,” he said.

The total number of such firms reached 1,228 in 2020, Arshakyan went on. The number of their officially registered employees jumped by 22 percent to 18,747, he said.

Many of them work for local subsidiaries of U.S. tech giants like Synopsys, National Instruments, Mentor Graphics and VMware. A growing number of other information technology (IT) engineers are employed by Armenian startups and other homegrown firms.

In Arshakyan’s words, 192 new IT firms qualified last year for tax breaks that were first introduced by Armenia’s former government in 2015. Local startups also attracted $50 million in mostly foreign investments, added the minister.

The official figures cited by him contrast sharply with the country’s overall macroeconomic performance. The Armenian economy contracted by an estimated 8 percent in 2020 mainly because of the COVID-19 pandemic. The six-week war in Nagorno-Karabakh, which broke out in late September, also contributed to the significant decline in economic activity.

The Armenian tech industry dominated by software companies appears to be the only sector of the domestic economy practically unaffected by the recession. It has been growing at double-digit annual rates for more than a decade.

According to Arshakyan, the sector’s average monthly wage rose from almost 544,000 drams in 2019 to over 580,000 drams ($1,113) in 2020. The nationwide average wage stood at less than 190,000 drams.

Despite their continuing rapid growth, local IT companies generated less than 3 percent of the Armenian government’s 2020 tax revenues. Arshakyan said the total amount of taxes paid by them exceeded 41 billion drams. Armenia’s largest mining company, the Zangezur Copper-Molybdenum Combine (ZCMC), contributed roughly the same sum to the state budget.

Arshakyan called on students seeking to obtain higher education to seek engineering professions, saying that this sector is growing rapidly in Armenia.