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    Overview of Uzbekistan’s IT market

    Over the past few years since the establishment of IT Park and the country’s commitment to digitization, the IT industry in Uzbekistan has evolved into a key driver of economic development.

     

    Today, as part of the “Digital Uzbekistan 2030” strategy, the republic sets ambitious goals for comprehensive digital transformation, with the primary objective of the IT sector being the increase of IT services export to $5 billion annually.

     

    To achieve this, favorable conditions are being created in the country to attract foreign companies and prepare qualified professionals. Special government-supported programs, along with various incentives and preferences, are being implemented to support IT companies.

     

    Growing market volume and export diversification

     

    The IT sector of Uzbekistan is currently experiencing a period of rapid growth, with over 100,000 individuals employed in this industry, and the market volume approaching the $1 billion mark. The export volume of IT services for the first 9 months of 2023 reached $238.7 million, nearly tripling compared to the corresponding period last year ($89.2 million). By the end of the year, this figure is expected to surpass $300 million.

     

    Both the geography and structure of IT service exports are undergoing notable changes. While in 2022, 78% of IT service exports were directed to the United States, the current distribution is as follows:

     

    • North America: 43%
    • EU and the United Kingdom: 37%
    • Singapore: 6%
    • Gulf Countries: 4%
    • Other countries: 10%

     

    In terms of service distribution, in 2022, over half of IT service exports were attributed to BPO, the current distribution is as follows:

     

    • Software Development: 42%
    • BPO: 20%
    • Licensing: 15%
    • Technical Support and Enhancement: 14%
    • Game Development: 9%

     

    Such diversification allows the IT sector to avoid dependency on a single country or direction. The prominence of software development as the primary sector indicates the emergence of a larger pool of qualified professionals in the country. Furthermore, software development opens up substantial opportunities and potential, considering the global development market is valued in the hundreds of billions of dollars.

     

     

    Infrastructure and IT education

     

    Key factors contributing to the development of the IT industry and digital transformation in the country include modern IT infrastructure and high-quality IT education aimed at preparing highly skilled professionals.

     

    The internet connection bandwidth continually increases, reaching 3200 Gbps by March 2023, with nationwide internet coverage at 99%. Its users amount to 31.1 million people, and Uzbekistan ranks 15th globally in terms of internet affordability.

     

    More than10 thousand schools across the country are equipped with high-speed internet. Within the projects like “English speaking nation” and “IT nation”, a digital education ecosystem has been established in the republic, enabling the initiation of one's path into the IT sphere from the school.

     

    Approximately 60 IT universities exist in the country. The Tashkent University of Information Technologies, with its six branches in various regions of Uzbekistan, as well as universities like INHA University, Amity University, and others, annually graduate over 29 thousand highly educated professionals in areas such as artificial intelligence, data science, information security, engineering, and more.

     

    The number of private educational institutions, residents of IT Park benefiting from state incentives and preferences, has grown to 305. They offer over 400 educational IT courses, which have already passed more than 15,000 people. In collaboration with EPAM Systems, IT Park University was established, currently educating around 400 students.

     

    Almost two-thirds of the country’s 36 million population are individuals under 30, with a high level of literacy and proficiency in foreign languages. For instance, over 5 million young people are proficient in the English language.

     

    Meanwhile, the average salary for IT-outsourcing specialists in Uzbekistan starts at $500, proving to be quite attractive for international companies.

     

     

    Business friendly environment: State and IT Park support

     

    In recent years, the government of Uzbekistan has implemented several significant reforms aimed at improving the business environment and stimulating economic growth. These include the liberalization of the currency market, tax reform, and simplification of business procedures.

     

    Furthermore, the state provides comprehensive support to IT companies. Specifically, the resident status of IT Park confers substantial tax incentives. Non-residents pay corporate tax ranging from 5-12%, while residents are exempt from it. Social tax for non-residents is 12%, whereas for residents, it is 0%. Income tax for non-residents is 12%, and for residents, it is 7.5%. Non-residents are subject to VAT on imported services, whereas residents are not.

     

     

    Thanks to these conditions, as of today, about 1600 companies have obtained the status of IT Park Uzbekistan residents, including 411 with foreign capital participation. Notable organizations among them include East Games, iTransition, Epam Systems, Data Orchestra, AER-CA, Qulix, AMC Bridge, and others.

     

    Furthermore, IT Park provides IT visas valid for up to 3 years, facilitating the access to a full range of social services, including healthcare and education in public institutions, on an equal basis with citizens of Uzbekistan, as well as to purchase real estate of any value.

     

    IT visas are available to IT sector investors, founders of IT Park resident companies, and IT professionals with an annual income exceeding $30,000.

     

     

    Conclusion

     

    In conclusion, it can be noted that the IT market in Uzbekistan continues to demonstrate impressive growth and notable diversification, enhancing its resilience. Particularly noteworthy is the increased share of software development in exports, signaling the emergence of highly skilled professionals and substantial prospects in the global IT market.

     

    The country aims to strengthen its position on the global IT stage through the enhancement of IT infrastructure, workforce training programs, governmental business support, and the creation of a business-friendly environment.

     

    Tax incentives provided to IT Park residents make Uzbekistan a competitive destination for IT business development, while the introduction of IT visas and social benefits for IT professionals contributes to talent attraction and investment.

     

    Overall, it can be affirmed that Uzbekistan’s IT sector is currently in a stage of rapid growth, and perhaps, it is an opportune moment to become a part of it.

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