Last word: The Belarus IT sector adapts to new realities

Geopolitical events have left the IT firms of Belarus scrambling to adapt. But there is hope for the future.

In mid-May, I was in Prague, where I joined the 30th-anniversary celebrations of one of emerging Europe’s leading IT service companies — IBA Group. The company was originally set up as a joint venture between IBM and local IT organisations in Minsk, Belarus, and then moved to the Czech Republic in 2005. Now, IBA Group has offices in 15 countries and development centres in nine. It has been ranked in the Global Outsourcing 100 by the International Association of Outsourcing Professionals (IAOP) for quite some time. 

In Prague I had a chat with IBA Group’s founder and CEO, Sergei Levteev, about the current developments in the IT sector in the emerging Europe region.  

“This anniversary shows that we are a new company. And we were prepared for the changes that have taken place over the last three years,” Levteev tells me on the sidelines of the celebrations. “We have had some losses in terms of people, in terms of business, but they are not dramatic for us. And we are moving out of the Russian and Belarusian markets entirely. IBA Group already has no customers in those two markets.” 

The company is no longer relying only on its development centre in Belarus. 

“This is also an advantage because we are, with our developers, closer to our customers. In the past, we would have our sales offices, representative offices [that were outside Belarus], now it’s our developers, and we have more developers outside Belarus than in Belarus.” 

Currently, some 60 per cent of these developers are based in other locations. The political situation in Belarus has also contributed to that as many people no longer felt safe there and have left. IBA Group has been very supportive of their employees and helped them relocate. 

“If we talk about technology, all of these people work with the same technology. People from Belarus, Ukraine; the bring their experience to Poland, for example, like in our case, and they continue working in the same field. Of course, the competition is growing but a lot of these companies work for international customers. It might change in the future but for now the local markets are not hugely affected.” 

The future will, according to Letveev, also be dependent on how the social, economic and, most importantly, political situation will develop in the near future. 

A shrinking sector 

That conversation about Belarus and its IT potential reminded me of meeting I had with Valery Tsepkalo, a presidential candidate in the country’s 2020 election and a former director of Hi-Tech Park in Minsk, which I had almost a decade ago. He told me then how he came up with the idea to set up the park. 

“I attended a lecture in the US and visited a company producing simulators for planes. I found out that the chief engineer was originally from Belarus. This pushed my idea to set up a hi-tech park. If Belarusian engineers can be successful in the US, on foreign soil, why couldn’t they be successful in their own country, I thought,” Tsepkalo told me back then. 

And the IT sector in Belarus grew exponentially. In 2013, there were 18,000 IT and software engineers working in the park, 3,000 more than in 2012. As well as possessing the technical skills needed for their job, about 90 per cent of these engineers also had a good command of English. 

The 20th anniversary of the Hi-Tech Park will take place in 2025. Until quite recently, the IT sector was one of the largest and fastest growing industries of the Belarusian economy. In 2016, it accounted for three per cent of the country’s economy and grew to 5.8 per cent of the gross value added (GVA) in 2021.  

The German Economic Team, supported by the German Federal Ministry for Economic Affairs and Climate Action says that as a result of that growth, the share of the information and communication sector in Belarusian GDP was among the largest in Europe. With 7.4 per cent of the overall share in GDP in 2021, Belarus was at the same level with Estonia and outpacing all other neighbouring countries. 

There were several reasons the sector performed so well: private IT companies enjoyed special treatment compared to the generally restricted Belarusian private sector; the hi-tech park allowed its residents to use significant tax and social security benefits, there was little or hardly any administrative control from the state until 2020 as well as the free movement of capital, visa benefits and simplified residence permit procedures for foreign employees and founders.  

According to the Future of IT in Emerging Europe report, in 2021, there were 144,300 people employed in the ICT sector in Belarus. The average gross salary amounted to 1,535 euros and accounted for 319 per cent of the average salary in the economy.  

The Belarusian IT industry is strongly export-oriented. In 2021, exports of ICT services amounted to 2.7 billion euros and 4.7 per cent of the country’s GDP. 

Hope for the future 

The recent internal and external political developments, including the rigged presidential elections in August 2020 and Russia’s invasion of Ukraine in 2022, have been changing conditions and the image of the Belarusian IT sector.   

Some of the largest IT companies closed their businesses in Belarus, such as Wargaming, PandaDoc, Flo, Wannaby, OneSoil, WorkFusion, EIS Group, Vochi, Playrix. 

According to the German Economic Team, between March-December 2022 small, medium and large IT companies lost 17.200 employees, which accounts for close to 20 per cent of the total number of employees in the IT industry. For the first time the sector shrank by 2.2 per cent in 2022 (compared to 9.2 per cent growth in 2021).  

“There is still a chance that there will be fewer relations with Russia and more relations with neighbours from the West in Belarus, [and the situation will improve]. Today, it is really important will happen in Ukraine, also for Belarus. We really hope that Belarus will not be part of Russia. Some steps have already been taken. There is already a border between Russia and Belarus – there had been no border for almost 20 years. And there is passport control,” Levteev told me. 

That provides hope for the Belarusian IT sector and for companies with Belarusian roots that they will soon have a wider presence in the country again. 

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