The last word: How Uzbekistan can become a regional tech hub

tashkent uzbekistan

Not being aware of developments or opportunities does not mean they do not exist.

I had another chance to confirm that notion this past week in Uzbekistan, where I joined the Uzbekistan Outsourcing Forum and the Start-Up Summit, which were part of ICT Week.

First of all, I was blown away by the talent. I had a series of quite random and short meetings with start-up founders. 

I was highly impressed by a young female entrepreneur’s idea of how to fight breast cancer. She has done plenty of research, developed a solution, and now wants to help women in Uzbekistan and beyond. Another female founder is creating a platform to make STEM education more accessible and affordable. 

Two male founders are developing a cloud service that is already gaining popularity. Another male founder has teamed up with a pharma professional and has developed management software for pharmacies. His other tools enable patients to confirm the availability and cost of medicines, as the vast majority of pharmacies are already in his network. He has expanded to the United Arab Emirates and has further plans to enter new markets.

A team of four young people, Maftun Ziyamova, Yasmina Ablaeva, Behruz Azam, and David Alkamyan won the President Tech Award of 100,000 US dollars—announced during ICT Week’s opening ceremony.

A massive cohort

These are just a few examples, but there is far more. Uzbekistan has a population of over 36 million, as large, almost, as the other four Central Asian countries combined. The average age is 29. More than five million Uzbeks speak English and over a half million have a good command of German. During my stay I didn’t face a single language-related challenge. On the contrary, be it a start-up, restaurant or a bazaar, I could communicate in English quite easily. 

Each year over 120,000 young people graduate from universities. There are 65 universities that have an IT programme and 35 foreign educational establishments that offer international programmes. Also, many young people graduate from universities abroad. Some of those that I met studied in South Korea, Poland, the US. Those who cannot afford university can choose from a wide range of informal courses offered by private organisations, including language schools and IT academies, and Tashkent alone is abundant in those. 

There are also over 200 IT centres run by Uzbekistan’s IT Park, which also operates the Digital IT University, the first one in Central Asia, as well as several online courses in maths skills, data science, programming and artificial intelligence (AI).

Graduates often complain that domestic universities release graduates that require additional training. Couldn’t the educational system in formal establishments be improved? Of course, it could. But I learnt a lot about how those interested in improving their skills are committed to doing so. 

Quick results

And the results are being chalked up. The IT Park already has over 1,300 residents employing over 20,000 people. For now, the companies are mainly local or foreign with roots in the broad region, but more international firms and start-ups are joining. In general, the number of foreign companies has grown from just 12 in 2019 to almost 200 now.

IT Park residents jointly export IT services amounting to 300 million US dollars. IT Park expects to exceed the one billion US dollar threshold in 2025.

Helping achieve that objective is a preferential tax regime. IT Park residents pay no corporate income tax, no social contributions and no VAT on imported goods. The only tax payable is on personal income—7.5 per cent compared to the 12 per cent paid by those operating outside the IT Park. Additionally, no work permits are required; investors, IT specialists and start-up founders are eligible for IT visas which are valid for up to three years. They also have access to a one-stop-shop helping them with company and tax registration, bank accounts and office space.

The new ‘zero risk’ approach provides free office rent outside Tashkent for one year, free technical equipment for up to 50 employees, up to 15 per cent coverage of salary per employee, training grants of up to 50 per cent and compensation of HR services. 

This aggressive approach is meant to help Uzbekistan acquire a bigger chunk of the global business services market now worth over 300 billion US dollars. 

How to do more

During my talk at the Outsourcing Forum, I looked at global trends and made suggestions about how Uzbekistan could achieve its goals.

In 2020, the country released an ESG report, and as Environmental, Social and Governance are increasingly important for international businesses, topics related to the impact on society and the environment, anti-corruption, treatment of employees, diversity, respect for individuals and their civil liberties, forward-looking ESG targets, should remain high on the country’s agenda.

Making sure that the country is a sustainable source of skilled talent speaking a wide range of languages is a no brainer but showcasing Uzbekistan as a place where international companies could implement the so-called impact sourcing is also important. Marginalised communities that are typically excluded from employment, such as people with disabilities, older workers, those living in remote, isolated, or depressed areas, or those who simply lack access to education need to be engaged. This is particularly important in Uzbekistan’s regions.

Building awareness about opportunities is a constant battle with other countries that have the similar goal of attracting foreign companies. In that regard, Uzbekistan could perhaps try to work with Central and Eastern European countries and global business service (GBS) provider, which have become global GBS superpowers over the last two decades and which themselves once started from scratch.

The potential to repeat these success stories and build a regional tech hub is definitely there. The country needs to develop a strategy and take smart steps to achieve that goal.

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