Technicians from Russia and Belarus find solace in Uzbekistan. Can they attract Western subcontractors?
It’s a terrible time to be a Russian (or a Belarusian, for that matter). The war in Ukraine has led massive sanctions against RussiaAnd one go out Western companies like Fordand Capital cityof the country too.
Even companies that are not sanctioned have faced their own kind of self-censorship, with outsourced software engineers particularly affected. Nobody wants to have outsourced partners in Russia anymore, no matter how good (and inexpensive) they are. It may sound bad.
Some Russians left. Some went to Estonia. Others spread throughout Europe. And a handful of them have moved to Tashkent, an ancient city in the heart of Central Asia, in landlocked Uzbekistan.
Their government has also spent a small fortune training computer scientists, hoping they can now pitch to Silicon Valley as an outsourcing partner. The technical talent is there. Much of it is Russian anyway. And the English skills are there. But who knows anything about Uzbekistan?
“Among ex-Soviet countries, we have had the highest population increase, so the human capital is here,” Sherzod Shermatov, Uzbekistan’s IT minister, said in a phone interview during a telephone interview. trip to San Francisco the last week of June. “And over the last three and a half years, we have implemented government projects called English Speaking Nation and another called IT Nation, with the goal that most of our graduates are fluent in English and can earn a living in the computer business,” he said, adding that they have “the best tax regime for businesses” — because there is no federal income tax. “You can’t find this anywhere else,” he says. Shermatov was in the United States last week to sell Uzbekistan as an alternative IT service center to Russia and Belarus for software development and business process outsourcing (or BPO).
Uzbek IT delegation met with US executives from Plug and Play Tech Center start-up accelerator, Apple
According to Shermatov, around 6,000 Russians and Belarusians have arrived in Tashkent since the start of the conflict, some as part of relocations by American companies. EPAM Systems and Exadel reportedly flew “thousands” of software engineers out of Minsk, Belarus, and put them on flights to Tashkent organized by Uzbekistan’s IT park.
Silicon Valley Losses, IT Contractor Gains
San Francisco is sort of slowing down and laying off workers. If Uzbekistan succeeds, will it gobble up the software and back-office jobs cut across Silicon Valley this month?
India is another big winner. IT job losses in the United States tend to turn into job gains for contractors. Four companies announced major layoffs in the last week of June, around the time Uzbeks were launching their wares in Silicon Valley. Pokémon GO developer Niantic said it was cutting 8% of its staff, according to TechCrunch.
The company is abandoning numerous projects, including “Transformers: Heavy Metal”, a collaboration with Hasbro
Sub-stack is laying off 13 of its 90 employees about a month after scrapping plans for an IPO.
Silicon Valley was not alone. Parallel Wireless Vice President Eugina Jordan announced in a LinkedIn position that the New Hampshire-based global telecommunications company is in layoff mode.
Seattle-based data storage provider Qumulo is supposed to cut 80 people, including IT staff.
Who will take over when the growing season returns? Bengaluru? Manila? Tashkent? It will certainly not be Minsk and Moscow.
A few years ago, around 2017, Uzbekistan launched a program for coders called The One Million Uzbek Coders program. Millions have signed up. It is not known what licenses were granted to them at the end of the course, but alongside this decision, the government and the private sector created an IT park in the city in 2019.
It now has around 650 companies including Exadel and EPAM Systems. The two companies did not return requests for comment.
“Last year, EPAM employed about 300 people in Uzbekistan, but for next year it plans to increase employment up to 3,000,” Shermatov said. “So, 10 times more in three years. At present, we are having much more success with companies already working in the region, but we want to convince other companies to consider Uzbekistan as an emerging market.
Nodir Ruzmatov, co-founder and CEO of New York-based company RevoTech, is one of the Uzbek globetrotters trying to connect California with the distant land of Uzbekistan. He is also an investor in Irvine, Calif.-based Loadstop, a subscription software company for logistics operators.
“We were offering our services (BPO) to an (American) insurance company and they were saying that they were not very satisfied with an Indian company that they were working with,” explains Ruzmatov. “So I said ‘OK, we have an option’ and then I started talking about Uzbekistan and my back office based in Tashkent, and slowly started introducing Uzbekistan from this way. They don’t know Uzbekistan. But the quality of work is good and the rates are competitive with India.
RevoTech was a startup in 2018 with just four employees. It now has more than 450 workers in Tashkent and is building a 20-story office tower in Tashkent IT Park.
“Tashkent is an ancient city with a super modern landscape and is growing faster than any city in the region,” says Izzat Shukurov, CEO of Payze Central Asia, a Tashkent-based payment infrastructure company. “I had clients from all over the world. I would never say that the price is the main factor in their choice. Our engineers can manufacture products to a very high standard and the government supports the IT sector tremendously,” he says of the three-year-old IT park.
Uzbekistan’s goal is to reach $1 billion in annual IT exports by 2028, up from around $100 million estimated for 2022. Although this is only part of the market American of outsourcing, it could make IT outsourcing the nation’s second-largest export after gold and a key pillar in this ancient world’s effort to alleviate poverty.
Around 80% of Uzbekistan’s IT exports currently go to the United States, which takes the lion’s share of the global IT outsourcing market.
When Russian tanks entered Ukraine, Uzbekistan’s IT recruitment efforts intensified. In an operation dubbed “Tash Rush”, the country organized flights to the Belarusian capital, Minsk, to transport tech professionals to Tashkent. The computer park presented a package of benefits, visas, credit cards and helped to find apartments and schools, to attract even more workers to the Russian-speaking city.
Between 50,000 and 70,000 tech workers have left Russia since late February, Sergei Plugotarenko, the head of the Russian Electronic Communications Association, told a parliamentary hearing March 22. He warned that a “second wave” of as many as 100,000 IT workers could leave the following month.
Russia had about 1.8 million IT professionals in 2000, according to the Moscow-based Association of Computing and Information Technology Companies.
The Uzbek trade mission held meetings in New York, Washington, DC and Silicon Valley before concluding its tour in Irvine, the home of Ruzmatov’s Loadstop. “This is an opportunity for Uzbekistan to become a developed country through IT,” says Farhod Ibragimov, CEO of IT Park Uzbekistan.
Few know where it is. He has a lot of competition. The question is also whether Russian and Belarusian technicians – accustomed to a more upscale lifestyle in Minsk and Moscow – will find life in Tashkent suitable for what they are used to.
For American companies facing layoffs, Tashkent doesn’t need rooftop bars and bike lanes. But if Uzbekistan can create a new tech-ready IT labor market from scratch, and assuming the price is right compared to the go-to outsourcing hubs of Manila and Bangalore, then this could be all it takes. who counts. Silicon Valley’s downsizing will lead to a search for new low-cost contractors if companies are to maintain their growth trajectory during the current economic downturn.
“I would like to draw the attention of all Western companies to the Uzbek market,” Shukarov said in an email from Tashkent. “We may not have the global experience, but we’re not afraid to take risks.”