An event in London brings the potential of Uzbekistan’s IT sector to the attention of the UK’s buyers and investors.
Ever since I returned from the Uzbek ICT Week in Tashkent, Uzbekistan, in October, I have been taking a closer look at the country’s IT sector.
I have previously outlined how and why I thought Uzbekistan could become a regional tech hub; Connecting it with the UK and exploring opportunities for UK companies was a natural next step, so I was delighted to have hosted a seminar in London earlier this week designed to do just that.
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Although Uzbekistan is currently focused on the development of its IT sector, its software development experience is nothing new.
According to Abdukarim Kadirov, Investment Director at Realsoft, an Uzbek company operating in the country for two decades and now present in several other geographies, software development in Uzbekistan dates back to the 1980s, although it was the independence of Uzbekistan three decades ago that gave the sector a significant boost.
“Right after independence, the government was the biggest buyer of software solutions, so we started by digitising the inefficiencies in government processes,” he said during the session in London.
Biyi Oloko, CEO at Stephen Simeon Limited headquartered in the UK, who recently brought three companies from his portfolio to Uzbekistan, talked about some of the experiences one of his companies had with implementing facial recognition technology.
“We walked into Uzinfocom and they already had that running. They have an entire building operational with face ID used every single day. That interaction showed us that the skillset exists there,” Oloko said.
While lower costs are a factor in companies selecting Uzbekistan, so is the government’s commitment to developing the IT sector.
“We are actively engaged with the Uzbek government where there is a lot of appetite to digitalise and to integrate with the rest of the technology world. Over the last six or seven years the country has been among the global front runners of digitalisation,” Kadirov said.
The World Bank is committed to supporting the development of the Uzbek digital economy and broadening access to digital skills and employment opportunities in information technology-enabled services for young people in rural and remote locations, and last week granted a 50 million US dollars concessional loan to implement the Uzbekistan Digital Inclusion Project.
According to the 2030 National Development Strategy, by 2030, Uzbekistan plans to become a Central Asian IT hub, increase the annual volume of IT exports to five billion US dollars, attract 1,000 foreign IT companies to launch operations in the country and provide employment opportunities for 300,000 youths in the IT sector.
Focus on education and expertise
“Uzbekistan is a very young nation where over 60 per cent of the population is below the age of 30. The best way to provide the opportunities and prospects for this new generation is to provide them with jobs that are in high demand all over the world. They are active, hungry for new knowledge and new skills,” Kadirov added.
I saw this firsthand during my visit to the country—just how many initiatives promoting education there are in Uzbekistan, both public and private, and how much demand there is for educational services, language courses and IT-related skills.
Even if public universities do not keep up with the demand, the private sector steps in and fills the breach. Several international universities have opened subsidiaries in Uzbekistan, including Westminster University and Webster University.
Rohitashwa Aggarwal, Partner, Global Business Advisory and Research at Everest Group, first started looking at Uzbekistan several years ago.
“When we look at firms operating in the UK, about a quarter make use of IT talent based in the UK, another quarter is based in Europe, another quarter in India, and the fourth quarter is based throughout the rest of the world,” he said.
“The problem is that most of alternatives to India are very small, and you cannot immediately find more than 1,500 people. It takes time. We have been tracking some of these locations that we call the dark horses. Talent, hunger and investment: these are positives that needs to be sustained.”
Aggarwal also mentioned that about 40 per cent of buyers in Everest Group’s research indicated cost as their top concern. Considering the wide range of incentives that Uzbekistan’s IT Park has to offer, including the ‘Zero Risk Programme’ which provides rent-free offices, free technical equipment, training grants of up to 5,000 US dollars, and subsidies covering up to 15 per cent of the salaries of 100 employees, Uzbekistan could be a viable alternative.
The digital skills gap in the UK is estimated to cost the economy 63 billion UK pounds per year in lost potential GDP and is expected to widen, resulting in a workforce inadequately equipped to meet the demands of the digital age.
Employers say that only 48 per cent of people leaving full-time education have the advanced digital skills required, and many companies cite the lack of available talent as the single biggest constraining factor to their growth.
Going forward
According to IT Park Uzbekistan’s data, services exported to the UK by resident companies currently amount to 27 million UK pounds annually. Software development accounts for almost two thirds of that amount, the rest made up by game development business process outsourcing.
There is room for growth.
“This is my introduction to Uzbekistan. I’m learning about the available talent about the government and investment endorsement, and it’s just phenomenal. But I’ve never received any information about Uzbekistan’s value proposition,” said Kerry Hallard, CEO of the Global Sourcing Association, Founder of the Global Technology and Business Services Council.
“I did a presentation six years ago about the Lviv IT Cluster in Ukraine and its biggest problem was that nobody knows its name. Obviously, now everybody knows about Brand Ukraine and what it stands for. I think Uzbekistan has got the same opportunity. The opportunity of building brand Uzbekistan is phenomenal. But you’ve all got to come together and do it collaboratively—every individual, every company, as well as the government,” Hallard added.
Kadirov confirmed that a lack of awareness was a key issue in bringing more British partners on board. “Uzbekistan is a sleeping dragon on Asia’s IT landscape,” he added
“If Uzbekistan can become one of the default options that executives look at when thinking about where to go next, I would consider that a success,” David Rumble, Director at Maistro Group and Managing Partner at On Consultancy, concluded.
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