Government Support Driving Explosion of IT Outsourcing Industry in Uzbekistan
IT Park head Farhod Ibragimov presented on ‘Empowering Excellence of Outsourcing: Unveiling initiatives and opportunities in Uzbekistan’ in October at ICT Week, a series of events dedicated to the information technology industry in this rapidly emerging outsourcing destination.
Ibragimov began his presentation by highlighting the robust potential of the country. Uzbekistan’s population stands at 36 million, representing approximately half of the total population of Central Asia. 20 million of that population is of working age, and 60% of the population is under 30. The country boasts 99% internet coverage and strong connections to the global business community, with direct flights to 22 destinations and visa-free regimes with 86 countries.
Training and education
Education is a key priority in Uzbekistan, with near-universal literacy, more than 650,000 school graduates every year and more than 125,000 university graduates annually. There are a total of about 210 universities, of which 65 are IT universities. English is widely spoken in the major cities, with a total of about 5 million English speakers nationwide. Additionally, there are more than a million Turkish speakers, more than half a million German speakers, and Korean, Chinese and Arabic are also fairly widely spoken.
IT Park looks to the future
IT Park has established a strong foundation for the future. There are currently 14 regional IT Park branches across the country, occupying 6.3 hectares. The One Million Uzbek Coders program produced 1.2 million graduates over its first stage in 2019-2022 and 293,000 participants were in the second stage in 2023.
The number of IT Park resident companies grew more than four-fold between 2019 and 2023, with the current number of companies exceeding 1,500. Likewise, the number of companies with foreign capital increased 16-fold over the same period, with 250 such companies in 2023. The volume of exports by IT Park residents increased 48 times during the period, growing to about $300m in 2023. Of these, 87% of exports were IT-enabled services (22% of which were business processes outsourcing, or BPO) and 13% were IT products. The number of professionals employed at IT Park companies increased five-fold over the period, to approximately 26,000 today.
This impressive growth is driven by generous incentives for resident companies. These include 0% VAT, corporate, social and property tax and a reduced personal income tax rate of 7.5%. Companies that participate in IT Park’s “Zero Risk” program receive free office space in the regions for up to a year, up to 15% of employee salaries paid for, reimbursement of a portion of HR expenses, free technical equipment for as many as 100 employees and up to $5,000 in grants for staff trainings. IT Park acts as a one-stop shop, handling registration of legal entities, supporting bank account opening and handling registration with the tax authorities. Relocation support includes no work permit required, IT Visas for investors, programmers and founders which is valid for up to three years. Finally, soft-landing services from IT Park include support for selection of office space and housing as well as allocation of places in schools and pre-schools.
Strategy 2030
IT Park’s vision for 2023-2030 is centered around building IT exports to a $5b industry by the end of the decade, Ibragimov said. The strategy centers on two pillars: nurturing local companies to expand globally and attracting foreign companies to Uzbekistan. By 2030, he forecasts it will have more than a million square meters of infrastructure, more than 10,000 companies and host at least 300,000 IT professionals.
A new strategic approach rolled out in 2023 centered on two programs: Zero Risk and Local 2 Global. Zero Risk program provides free office space for the first year in a location outside Tashkent, up to 15% of salary payments are covered for up to 100 employees, $500 in reimbursement of HR expenses and free technical equipment and training grants are provided. Under the Local 2 Global program, free Coursera courses are provided for certain users, travel to Uzbekistan for clients is sponsored, a portion of export consultancy services are covered as well as provision of an export mentoring program and overseas business trip compensation. Certain criteria are required for participation in each of these programs.
