TBY talks to the heads of two top hardware companies on the development of the sector and its attractiveness for investment.
How did your company come about?
ZAUR MAMMADZADE We started off in 1999, mainly distributing PCs. Around that time we began working with Intel, distributing its central processing units such as Pentium. Our business picked up after the Intel deal, and we then began to integrate computers. To integrate computers spare parts are required, and so we began to work closely with multinational companies that produced PC components and we imported their products into Azerbaijan. After about five years we started our own production and registered our trademark, Nexus, which stands for “Next with us.” We produce laptops, servers, notebooks, and PC accessories. It’s been a very successful project and business is still growing rapidly. We now supply laptops and computers to schools and universities in Azerbaijan. We’re no longer just a distribution company, but at the same time we are system integrators and provide software solutions. On the software front we partnered with Microsoft, with which we have different contracts for software distribution in our market. We are also partners with Oracle for business intelligence databases. As well, we provide solutions for the banking sector, for insurance companies, for e-government, health care, education, and so forth. We consider ourselves as a wide range IT-solutions company in Azerbaijan.
RASSIM IBRAHIMOV The company started off with four partners who came together to form the company in 1991, right after independence. They were software programmers, and their major product was the software programs that they developed. Their customers showed interest in hardware products as well, and the company started providing hardware. System integration became a core business for our company, and we became a multi-business company in retail, systems integration, corporate sales, distribution, and assembly. Our PC is the first Azerbaijani-branded PC, and it was first released in 2003. Ours was the first, and now other brands have also appeared in the market.
What makes Azerbaijan attractive to investment in the IT sector?
ZM Politically it’s open, pragmatic, and stable. Geographically it’s very central between Europe and Asia. Legally it’s good too because Azerbaijan has a good business environment for foreign investors. IT is a sector that is developing very rapidly. Furthermore, the government has stated that it wants to invest money from the oil and gas sector into developing industries like IT. The IT market is growing by at least 30% year-on-year. I’ve been in this business 11 years, and every aspect of the sector has always been on the up, from revenues to the number of projects on the go, the amount of development, and the level of integration both domestically and internationally.
The government has put a lot of emphasis on the IT sector, and it’s become a major growth driver for the economy. Have you felt the effect of this on your own business?
RI Yes. The government’s policy has been “to convert black gold into the gold of knowledge”. Naturally, IT has been a major component of that strategy, and the e-government project is a big part of that. We’re involved in a number of projects, too. We supplied some equipment to various projects through resellers. We have direct distributor contracts with the biggest companies in the world, like HP, Microsoft, Toshiba, Samsung, and the like. Most of these companies now have a local presence in Baku and we cooperate closely with them. Additionally, together with Microsoft, we’ve performed a localization of Windows XP into the Azerbaijani language.
What potential does Azerbaijan have to attract foreign investors into its IT sector?
ZM The country’s stable political situation, along with its booming economy and growing GDP are attractive to investors. The IT sector, like many other sectors, has good potential. We currently live in quite a unique situation, where old regulation structures are changing and the implementation of IT solutions is a key target for the government. The country itself has good financial capabilities to purchase and implement new technologies and solutions. The government has also fostered good relations with multinational companies that are willing to invest here. There is a good investment environment, and that is thanks to a willing government and strong laws and regulations.
How do you see the IT market developing in Azerbaijan over the medium term?
RI I think the market will be the same as any European market or that of the US. The right strategy is to focus on creating good infrastructure for the whole country, and IT is a fundamental part of that. When you have good infrastructure then the whole economy and the whole country benefit. Broadband access and fiber optic networks have to be developed in Azerbaijan as internet speeds need to be increased. We’re on the right track, though.
© The Business Year