Focus: IT Sector

At a Quick Click

At a Quick Click

May. 5, 2013

The increasing utilization of computers at home and in the workplace is a boon for domestic hardware and software producers and e-commerce providers.

As of end-2011, 38.3% of households had a computer, up from 30.3% in 2010. The number of households with internet access also rose to 53.7%, up from 45.1% in the previous year. Corporate IT utilization is also on the rise, with 62.9% of enterprises using computers and 39.6% with internet access at end-2011, up from 47.3% and 27.9% in 2010, respectively. The growth of an IT culture has resulted in exports of hardware and software products growing four fold over the last three years, with domestically produced hardware also accounting for 60% of hardware available locally. The presence of international IT giants, including Cisco Systems and Microsoft, has contributed to the strengthening of the overall ICT sector, which now employs 60,000 people. Naturally, the development of e-government and e-commerce has followed, with the authorities expected to have sunk a reported $200 million into the launch of online government services by 2015.

HARDWARE & SOFTWARE

The domestic production of IT hardware is carried out by 60 companies in Azerbaijan. An additional 27 companies, many of which are SMEs, assemble and manufacture telecoms and radio equipment. Innovation is high on the agenda for local firms. Teymur Kuseba, Founder of RA Elektronika, underlined to TBY his company's desire to see its portable mobile charging solution “distributed worldwide." Kuseba is also optimistic for the future of the sector and its investment potential as he seeks partners and financing for his project. “People need to learn that Azerbaijan is about more than just oil and gas… They need to understand that opportunities in this country exist across a wide variety of sectors," he explained.

The main software segment is comprised of 40 companies, most of which develop software applications and offer systems integration, web hosting, and web-design services. The sector is no stranger to FDI, with many of the world's top IT firms present, including Microsoft, Cisco Systems, Hewlett Packard, IBM, Intel, Oracle, and Google. Large local firms include R.I.S.K, a leading systems integrator and supplier of computer systems and aeronautical applications, and Caspel, which provides a full range of IT and telecoms services utilizing its own fiber-optic network, which covers the entire country.

The government has been key in promoting the development of the information economy, which it sees as a key part of diversification efforts. In 2011, work began on the Regional Innovation Zone (RIZ), a high-tech industrial park boasting investment incentives for both foreign and local firms. The project is expected to boost the export of IT products. Other state initiatives include the 2012 establishment of the High Technologies Park, a part of the country's Special Innovation Zones framework. According to Ali M. Abbasov, the Minister of Communications and Information Technologies, the park will assist in the “creation of resource centers, the development of SMEs, the increase of export opportunities, and the training of ICT specialists."

E-COMMERCE & E-GOVERNMENT

Although e-commerce remains a small business, representing just a minor percentage of the country's total retail sales—or AZN363,700—over the first four months of 2012, domestic firms are looking to provide that extra confidence needed for Azerbaijanis to begin splashing the cash online. GoldenPay is one local company contributing to future growth, offering companies or individuals the ability to receive payments via online sites for services or products. The company also runs the country's largest online portal, through which users can “pay their utility bills [and] top up their mobile balance," Farid Ismayilzada, Founder and CEO of GoldenPay, told TBY. Interest in online commerce is growing, with 11,000 people using the government's state e-commerce portal in 2012, a gateway that offers support to potential entrepreneurs entering the online marketplace. The service has also garnered much international interest, a fact reflected by the variety of foreign e-commerce players already in the market. Be Smart, a Kazakhstani coupon company, expanded into Azerbaijan in 2012 and is bullish about its prospects. “The main motivation for being here in Azerbaijan is because there is great opportunity to provide better services and better access to those services from a financial perspective," said CEO Alex Apetrei, who also outlined the challenges the sector faces if it wants to grow; “What would really help Azerbaijani business is better internet penetration, better education, cheaper access to hardware and equipment, and stronger development of financial and IT infrastructure."

The government is certainly not shying away from the challenge, with its own e-government services program gathering pace. According to Minister Abbasov, 162 of 417 government services are provided online, with the number of citizens utilizing those services currently at 10%. “Our target for 2020 is to fully digitalize state services, providing 100% access to e-services," said the Minister.