Galt&Taggart published a report on IT sector in Georgia. According to the report, the information and communication technology sector (ICT) has been the fastest-growing industry in Georgia since 2022, driven primarily by the IT sub-sector. The sector is focused on exports, which amounted to US$ 892mn in 2023. The growth potential is high, as indicated by the comparison of exports per capita. In 2023, ICT exports per capita from Georgia stood at $243, which is behind the levels of Armenia ($362) and EU countries such as Portugal ($442), Croatia ($478), Slovenia ($521), and Lithuania ($818).
Turnover of the IT sector increased to GEL 2.4bn in 2023, of which GEL 2.1bn was generated by services export. The largest share of exports (26%) was directed to the USA, followed by UK (15%) and Malta (11%).
The growth of the sector was initially boosted by tax incentives introduced in 2020. While, from 2022, the growth of the sector accelerated as a result of the relocation of international companies and IT specialists to Georgia after the Russia-Ukraine war. Other supporting factors include low internet prices, competitive co-working desk price and low living costs compared to other globally attractive locations. Attractiveness is also enhanced by acceptable environment for foreign specialists and favorable geographical location.
The number of employees in the IT sector in 2023 was 30.2 thousand people, according to our estimate, while the sector employed c.5,000 people in 2021. The average salary in this sector is GEL 6,940, which has doubled compared to 2021.
A total of 24,117 companies operate in the IT sector, with 72 companies classified as large and medium-sized enterprises. The majority of the remaining companies consist of foreign sole proprietors.
The key challenges of the sector are the lack of qualified labor force (which are indicated in international indices) and low internet speed. Also, a possible outflow of specialists in the form of both migrants and locals.
Given the rapidly growing demand for IT services globally and the involvement of Georgian companies in global supply chains, the export potential is high and exports are expected to double in the medium term. Moreover, tapping into the local market enhances the industry's potential as the level of technology use by businesses in Georgia is low and significantly below the EU average. In order to utilize this potential, it is desirable to extend tax benefits on IT services provided in Georgia, which will accelerate economic growth and increase productivity.
