Belarus’s IT industry is taking on strategic importance. Foreign demand for the products and services of Belarusian software development companies has seen strong growth in recent years. Today, mobile applications created by local developers are used by more than 1 billion people in over 150 countries of the world. Still, Belarus is a software development destination that an average Western European or American knows very little about. Check out comprehensive insight based on the recent research of IT industry in Belarus.
ICT Sector Insight
- Belarus’s IT industry is taking on strategic importance. ICT accounts for 10.5% of GDP in the service sector and 5.1% of total GDP (2016), with IT services making up 3.2% of total exports (2016).
- The ICT revenue structure is as follows: 41% — telecommunications companies, 25% — IT products and services, 22% — hardware production, installation and maintenance, and 12% — hardware sale, lease and service.
- More than half of the respondents (69%) noted that IT services outsourcing is their prevailing business line. However, business is steadily moving from basic models of IT services outsourcing to more mature and complicated forms. Therefore, 67% of companies are engaged in the development of customized technical solutions, 52% develop customized products, and 43% develop customized industry solutions.
- The most important development priority — attraction of new customers (52%) — is typical of outsourcing companies, while the next two — the improvement of software development technologies and processes (43%) and development of new technological competencies (38%) — are major functions of development centers.
- The median net monthly salary is USD 1,500 for developers, USD 2,000 for project managers, and USD 700 for system administrators.
For technology staff, the salary level largely depends on work experience: those with at least 5 years of experience are paid more than USD 2,000, and those with 7 years of experience are paid more than USD 3,000.
The salary level also depends on technology expertise, with the highest salaries paid to specialists who work with C++ (USD 1,949 on average), Objective C / Swift (USD 1,969 on average) and Python (USD 2,002 on average).
- An employer’s tax expenses are highest in Belarus (USD 727) and lowest in Ukraine (USD 349). As for the expenses of employees, the highest taxes and deductions from salary were in Latvia (USD 622) and the lowest in the Russian Federation (USD 260). However, Belarus and Russia have introduced measures of government support to stimulate the IT industry. Under these regimes, Belarusian Hi-Tech Park residents have the lowest expenses (USD 233), and their employees pay the lowest taxes (USD 200). The measures of government support provided to Hi-Tech Park residents thus substantially enhance an employer’s competitiveness in terms of sales and on the labor market.
Belarus Hi-Tech Park
- 15 companies with 2,506 employees became residents of the HTP in 2006. Currently, HTP residents include 181 companies employing more than 30,000.
- Among the HTP residents, the most common are small companies with up to 100 employees, accounting for 72.8% of the total businesses. At the same time, more than 50% of all HTP staff are employed in major companies whose headcount exceeds 500.
- Employees of HTP residents make up 28% of the total ICT workforce and 70% of those employed in the IT products and services segment (2015). HTP residents contributed 28.9% to total ICT sector revenue in 2015 and 85.7% to total exports of computer services.
- Software products that HTP residents developed in 2016 were supplied to customers in 67 countries worldwide, with 49.1% and 43.2% of exports going to Western Europe and the USA, respectively. The share of CIS countries in total exports has shrunk from 10.7% to 5.3% amid a 43% drop in exports to Russia in 2016.
- Hi-Tech Park companies will have a workforce of around 36-40 thousand by 2020.
- The HTP resident companies should have revenues of between USD 1.3 billion and USD 1.4 billion by 2020.
Export of IT Services
- Over 90% of the market for Belarusian IT companies is external and involves exports.
- Foreign demand for the products and services of companies in Belarus’s IT industry has seen strong growth in recent years. Exports of IT products and services increased by a factor of more than 30 in the period from 2005 through 2016, with the share of IT exports in the country’s total exports of goods and services rising from 0.16% to 3.25%.
- IT products and services is the fastest growing segment in terms of revenue and exports. Exports of computer services (WTO category) surged by a factor of 36 over 12 years to reach USD 956.8 million in 2016.
- Nowadays, mobile applications developed by HTP residents are used by more than 1 billion people in over 150 countries of the world.
IT Labour Pool
- The information and communication technology (ICT) sector currently has a workforce of over 85,000, including some 34,000 in the IT products and services segment. Another 30,000 IT specialists are employed in sectors of the economy other than ICT. There are currently no official statistics on the overall number of ICT specialists in Belarus, but we conservatively estimate the number at over 115,000.
- The headcount in IT products and services has been growing annually since 2011, although the overall sector headcount remains almost unchanged.
- The obvious conclusion regarding the age of people starting a career in IT is that the sector mainly attracts young talent. According to the survey, 49% of the respondents got their first job in the IT sector before they were 21, while still a student, and 27% embarked on an IT career at the age of 22-24, that is, after graduation. Some people (14%) joined the IT community at the age of 25-27. This age group mostly comprises those who completed two years of mandatory post-graduation employment and took a job in the IT industry once they gained an opportunity. Only 10% started their career in IT after 28.
- The percentage of experienced IT experts is constantly on the rise. Back in 2009, 51% of the survey respondents had work experience of more than 3 years, whereas in 2016, their share increased to 72%, and the share of respondents with more than 7 years of experience picked up to 28% from 17%. This suggests that IT professionals tend to stay in the sector rather than switch out of it or even look for a job abroad.
- Just five years ago, it was hard to find developers with any proficiency in English, whereas now the majority of highly-qualified technology specialists can speak English. An analysis of the level of English among job applicants shows that, of the 17,000 IT/telecom applicants listed on the website jobs.tut.by, 36% define their English skills as sufficient for interviewing.
- The demand for and affordability of higher education in Belarus can be judged from the World Bank’s Enrollment Index (the number of those who receive tertiary education over the total number of people graduated from school), in which Belarus placed second among 139 countries.
- A key feature of the ICT sector workforce is its large percentage of university graduates: some 76% of respondents have higher education, whereas the average figure for the economy is 30% of the working population or even less than that.
- Belarusian students have taken part in competitions such as ACM ICPC, Google Code Jam, Google Hash Code, TopCoder Open and IEEEXtreme. In 2004, the Belarusian State University team took third place and won a gold medal in the International Collegiate Programming Contest (ACM ICPC). From 2004 through 2016, a total of over 40 students achieved strong results, 29 of them taking prizes in individual or team competitions. Gennady Korotkevich, an internationally recognized programming prodigy, has won six consecutive gold medals in the International Olympiad in Informatics (IOI), first place in the 2014, 2015 and 2016 Google Code Jam and first place in the 2014 and 2015 Facebook Hacker Cup.
- As of today, technology companies have set up 52 joint laboratories in 15 educational institutions.
- Advances in information technology attract foreign investors: total investments in the ICT sector soared by almost 290% to USD 1.47 billion by 2014, from USD 505 million in 2011. The US, the Netherlands, and Russia were the main sources of foreign investments.
- In 2015 the ICT sector absorbed 12.96% of total foreign investments, compared with just 2.7% in 2011. The telecommunications services segment dominates the structure of foreign investments in terms of both share (88%) and growth (by a factor of 3.86 from 2011). By comparison, investments in IT products and services increased by a factor of 2.5 over the same period and accounted for 8% of total investments in 2014. This broad difference arises because the telecommunications segment is capital intensive and foreign investments in Belarusian companies are ultimately classified as investments in fixed assets. Alternatively, investments in IT products and services are usually linked to a transfer of ownership rights and take place outside Belarus, as most IT companies carry out these transactions via their foreign entities.
- Foreign direct investments in HTP companies were consistently on an upward trend, reaching USD 169.2 million in 2016. They account for a relatively small share in total foreign investments in the sector because most HTP residents use their own profit to drive organic growth rather than seek external investment.
- According to Mercer’s 2016 Cost of Living Survey, Minsk is one of the 10 least expensive cities among 209 surveyed and has the lowest cost of living in Europe.
Source: The IT industry in Belarus: 2017 and Beyond, Ernst & Young.