MarketWatch: Armenia is Becoming a New Tech Hub in the South Caucasus

Over recent years, Armenia has emerged as a surprising tech hotspot in the Caucasus, joining the ranks of global innovation centers like Manhattan’s Silicon Alley and Scotland’s Silicon Glen. According to an article by the American publication MarketWatch, Armenia has fostered a thriving tech ecosystem that integrates major Western tech giants with a burgeoning local startup scene, following its independence from the Soviet Union.

The MarketWatch article highlights the rapid growth of the country’s technology sector, noting that the number of IT companies in Armenia has doubled over the past year, with a 30% increase in tech employment. This expansion is further underscored by Armenia hosting the World Congress on Innovation and Technology this October for the first time since 2019.

U.S. companies have played a key role in this development. As MarketWatch reports, Nvidia opened a research center in Armenia in 2022, while other American giants like Adobe, Cisco, Microsoft, and Synopsys have also established significant operations in the country. Synopsys, for example, is one of Armenia’s largest IT employers, with over 1,000 workers.

Armenian startups are also making waves globally. MarketWatch points to Picsart, an AI-powered photo and video editor founded in Armenia, which achieved a valuation of over $1 billion within a decade. While the company moved its headquarters to the U.S., it still maintains a large office in Yerevan with around 500 employees.

The roots of Armenia’s tech landscape stretch back to Soviet times when the country was known as the “Silicon Valley of the Soviet Union.” The MarketWatch article emphasizes that Armenia’s tech ecosystem benefits greatly from its global diaspora, particularly in the U.S., where leaders like Vahe Kuzoyan, co-founder of ServiceTitan, have fueled investment and collaboration between Armenian and international tech sectors.

Despite its small size and geopolitical challenges, Armenia’s strategic focus on technology as a driver of economic growth has paid off. As MarketWatch details, the country posted a remarkable 12.6% GDP growth in 2022, driven largely by the IT sector.

Another significant boost to Armenia’s tech boom, according to MarketWatch, has been the influx of Russian nationals, many of whom are IT specialists, following Russia’s mobilization during the Ukraine conflict. While many have since moved on, their presence has had a substantial positive impact on the development of Armenia’s IT sector.

Looking ahead, Armenia’s tech industry is poised for continued growth. With ongoing government support, strong international connections, and a resilient entrepreneurial spirit, MarketWatch suggests that the country is well-positioned to establish itself as a key player in the global tech arena.

Earlier, BMG reported that Armenia’s IT sector turnover in 2023 amounted to 837 billion drams ($2.12 billion), which is 252 billion drams (over $630 million) or 43% more than in 2022. Of this, approximately 87%, or 755 billion drams ($1.91 billion), was generated in external markets (i.e., exported), while 13%, or 114 billion drams, was realized in the domestic market.