IT in Tbilisi

By bne IntelliNews August 15, 2011

Molly Corso in Tbilisi -

Georgian-made computers, mobile programmes and Apple applications are feeding Tbilisi's ambitions to turn the country into a regional IT hub. Georgia's limited pool of programmers could stifle the sector's growth, however.

Georgian President Mikheil Saakashvili - never one to shy away from the latest fads - is enthralled with the idea of Georgia becoming a regional IT capital.

During the July 25 opening of a new computer factory built by local company Algorithm in cooperation with Intel, Saakashvili predicted future generations of Georgian programmers and inventors would learn computer skills on locally produced computers. "We are attending a historic process indeed, because it is a high-technology and modern production in Georgia," he said. "A generation will be raised in Georgia that will think in an absolutely different way and will invent absolutely different product... In several years, we will reach such a level when Georgians will invent such products by their own sources and will even export them abroad."

With Latin letters and Georgian programmes, the small netbooks that will be assembled at the plant are a radical departure from the Russian language computers and software that Georgians have grown accustomed to. "For the region, this is a good issue politically - that in the Caucasus region, Georgia will be the first to produce these netbooks," Algorithm director Givi Korakhashvili said.

The computer factory, set to produce 60 thousand netbooks for the country's first-graders, was a GEL32m (approximately €13.5m) investment for Algorithm. An estimated 60 workers will produces the computers with Intel processors. Korakhashvili, a 58-year-old engineer who has built his career - and business - on the Georgian computer market, says Georgia is ready to produce technology, not just consume it. "Over the past five years, Georgia has been developing very quickly," he says. "This is also part of the development. This is needed, I think."

CEE expansion base

The new computer factory in Tbilisi is the latest in a wave of recent investments to create IT products in Georgia.

Another US investor, Open Revolution, chose Georgia over 50 other potential countries to headquarter its mobile payment platform, Mobipay. Allen Gilstrap, chief executive officer at MobiPay, says Georgia's pro-business environment and the absence of corruption helped convince the company to come here. "The complete absence of business corruption, fervency of the government to promote foreign investment - Georgia has a fantastic future in front of it," he says, adding that the country's strong mobile phone network coverage and pool of good programmers helped Open Revolution choose Georgia.

Today, two years after its initial investment, Mobipay is using its Tbilisi offices - and Tbilisi programming staff - to expand operations to countries around the region, including Ukraine and Poland. "We are a poster child for what we think they [the government] wanted to do," Gilstap says.

But while Gilstrap was encouraged by the programmers and IT specialists who applied for jobs at Mobipay, other industry insiders warn the shortage of skilled workers - and strong IT programmes - could stifle Georgia's potential as an IT hub.

Giorgi Chirakadze, head of Georgia's largest IT provider UGT, says the government is "really trying" to push the sector and find investors - Vera Kobalia, the minister of sustainable economic development, made Silicon Valley the focus of her trip to California last year, talking to Cisco, HP and other big industry players - but the lack of affordable IT specialists is an obstacle for the sector's development. "The government is really trying to find potential investors in IT [and] there are definitely some very positive movements," he says. "The biggest challenge right now is the cost of labour for IT in Georgia. Costs for labour are very high and until there will not be a bigger supply of IT trained professionals, it will be very hard for the bigger, larger companies to see a competitive advantage to investing here rather than investing somewhere else."

Chirakadze notes that there are countries like Bangledesh and India where you can hire an IT specialist for a third of the cost of the equivalent worker in Georgia.

New investment, however, could change that. In July, Cisco Networking Academy partnered with the United Nations Development Program (UNDP) to open an academy in Batumi - its first in the country. The academy, an international education program with over a million students in 165 countries, will teach students at Batumi Professional College how to design, build and troubleshoot computer systems. The government is also planning to build a university for IT and technical skills in Batumi.

Chirakadze stresses that the main question is how fast the government's plans will produce IT specialists. "There are pretty positive moves from the government, from the Ministry of Education, from the universities...there is more interest in IT which is very important," he says. "But how much more is needed to create that critical mass that bigger companies will be interested in? It is a question of time."

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