Armenia’s rising e-generation

By bne IntelliNews May 13, 2015

Monica Ellena in Yerevan -


Mariam, 14, is carefully moving her mouse, sketching out a human figure. “This will be my main character,” she says without lifting her gaze from the computer screen. Next to her Vache, 16, is guiding his fully developed virtual person through a complicated maze. “I have almost finished my first game,” he says proudly.

Welcome to the Tumo Center for Creative Technologies, where experts are shaping the minds of Armenia’s next generation of digital artists. A state-of-the-art facility, Tumo offers Armenian youth free access to learning resources, in the field of animation, game development, web design and film making. World-class professionals like former Twitter vice president, Raffi Krikorian, or Rosaline Babayan, the designer behind Nickelodeon's multi award winning Kung-Fu Panda, flock to Tumo to teach.

“Tumo is on the border of art and technology,” says Aram Guymishyan, the centre’s deputy director. “It is also a choice based on our reality. Armenia is landlocked and has closed borders, but the virtual world is open and free, and we can exchange ideas, applications, film, programmes.”

A brainchild of the US-based Simonian Educational Foundation, Tumo has provided free IT learning to over 6,000 kids between 12 and 16 years old since its establishment in 2011 and is now expanding beyond the capital into Armenia’s regions.

Soviet Silicon Valley

Tumo looks at tomorrow’s potential workforce, but Armenia’s economic future begs plenty of questions. Closed borders with Turkey and Azerbaijan, a narrow export base and dependence on remittances from abroad, offer limited space to expand. Could digital apps and software development provide a solution?

It is not as improbable as it may sound. Dubbed “the Soviet Silicon Valley”, pre-independence Armenia had more scientists per capita than any other USSR republic and produced about a third of the hi-tech and microelectronic equipment used for Soviet defense and space systems. The now defunct Yerevan Research Institute of Mathematical Machines designed one of the first Soviet computer systems in 1959 and by the late 1980s it employed about 7,000 people.

This legacy came crashing down when the Soviet Union imploded in 1991, and Armenia’s war against neighbouring Azerbaijan added tragedy to an economy in tatters. However, the skills and modest wage demands of Armenia’s IT industry offered fertile ground for the new hi-tech sector that re-emerged in the late 1990s. US software companies, mostly owned by Armenians from the diaspora, chipped in capital and drove the trend.

The sector has been growing at an average of 22% between 2003 and 2014, according to the Enterprise Incubator Foundation (EIF), Armenia’s leading IT consulting firm. The 400 ICT companies in the country registered in 2014 generated revenues for $474.9mn, about 4.3% of total GDP and 10% of total export. In 2014 alone, the sector created 17 new start-ups and 1,100 new jobs.

In 2004, Synopsys, one of the world’s largest microchip designers, expanded to Yerevan and now employs over 500 engineers, making it the sector’s largest enterprise. Last year, the American-Armenian joint-venture Technology and Science Dynamics/Armtab Technologies launched ArmTab, the first tablet made in Armenia. Heavyweights like Microsoft and IBM built research centres and software hi-tech giants like National Instruments, Mentor Graphics and Cisco Oracles also set up shop in Yerevan. “The industry is thriving and is competing on a global scale,” believes Bagrat Yengibaryan, EIF’s director. “Armenia is becoming a place where the IT industry [players] come to find solutions to their future challenges. Not producing cheap chips, but developing the next idea  what can the next phone look like, which apps can I develop and add to it to sell it better.”

Around Yerevan legions of web entrepreneurs squeeze into small offices in the hope of becoming the next Picsart, the world’s premiere mobile photo editor app with over 220mn users which was fully created in Armenia. Started in 2000 with 10 people, today Picsart has over a 100 employees, most of them in their early 20s. “Anyone with good IT skills can get a job now, what is needed to sustain the double-digit growth is additional investment in education and training,” explains Hovhannes Avoyan, founder of Picsart, which is his fifth start-up. “IT is not just an industry by itself, but it can increase productivity for other sectors like health care, finance, education.”

The diaspora is also developing start-ups in the cyber-space to link Armenian techies around the world; Hive is the first virtual networking and start-up accelerator specifically designed to provide seed investment for tech start-ups as well as support technical education.

Building an e-society

The government is committed to re-energising the IT legacy and turning the country into a high skilled e-society. In 2008 a 10-year industry development strategy was adopted, focusing on building infrastructure, improving the quality of IT graduates, and creating venture capital and other financial mechanisms to support start-ups, like tax breaks and simplified procedures.

The education system is trying keep pace. “Initiatives at university level involving large multinationals like National Instruments are already in place, which aim is to mould specialists who can develop a creative application,” says EIF's Yengibaryan. “Competition today is in innovation, not in pure knowledge. Innovation is not in one sector, but borders different sectors. This is where Yerevan has a competitive advantage, because in a small place you have a high concentration of specializations in different sectors.”

The long-term vision is to create a knowledge economy. For Guymishyan, himself a web designer who returned to Armenia from Italy, Tumo is an integral part of this perspective. “We give children tools to develop their creativity and skills, and to show them they can use them here, in their country without migrating abroad.”


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