Georgia’s IT sector has reported a remarkable 70% year-on-year increase in foreign revenues in 1Q2025, reaching USD 266 million. While on the surface this may appear to signal a booming industry rebound, several economists, including Giorgi Khishtovani, are questioning the sustainability and validity of this growth.
Speaking to BM.GE, Khishtovani described the revenue spike as “anomalous and unnatural,” especially given current trends in employment and operational activity within the sector.
“The number of employees in international IT enterprises is actually decreasing,” said Khishtovani. “We’re seeing the opposite of what we’d expect in a sector experiencing real, organic growth.”
In 2024, the IT sector saw a downturn, partly due to the departure of foreign IT professionals who had temporarily relocated to Georgia. Despite new measures introduced by the government, such as IT residency programs to attract and retain talent, Khishtovani questions whether these steps alone can explain the dramatic rebound.
“Such growth would imply either a near doubling of service prices or an unlikely surge in productivity,” he noted. “Both scenarios seem implausible without a more detailed breakdown of what’s truly driving this increase.”
Khishtovani outlined two scenarios that might explain the figures:
The revenue growth could be driven by international enterprises exporting IT services abroad, many of which employ foreign nationals, primarily Russians and Belarusians, who do not pay taxes in Georgia. In this scenario, local citizens and the state budget see little to no benefit, despite the impressive macroeconomic indicators.
“Government officials speak of economic growth, but this might be growth that doesn’t translate into real gains for Georgian society,” he warned.
Khishtovani raised the possibility that the revenues may not be entirely generated by traditional IT services. For instance, operations such as call centers or other outsourced digital services might be contributing to the totals, but these may be classified as IT exports despite differing significantly in scope and value from genuine software development or tech innovation.
“It’s worth examining whether all of these contributors are actual IT companies. The inclusion of other types of operations could be distorting the real picture", - Khishtovani said.
