Current State of IT and Software industry in Armenia

• Approximately 400 Armenian Information and Communications Technology companies generated an estimated $300-400 million in revenue from computer hardware, software and services in 2001. 
• Software development companies are the largest employers in the ICT sector, with some 100 indigenous and foreign software companies generated sales of $40-50M in 2001, and now employ some 3,850 software programming, systems engineering and hardware specialists.
• Of these, 42 are foreign firms (26 are US-based) that employ 60% of programmers and pay higher salaries, are essentially labor teams producing inputs for software marketed by head offices 
• Foreign firms are attracted to the low cost and high technical level of software development in Armenia. A recent study concluded that Armenia represented the best value location in the world for IT products, with a quality-price ratio even better than India. 
• Indigenous firms have generally lack international networking and marketing capabilities and have instead tended to fill domestic orders such as government, financial and banking software. 

IT Sector in Armenia

By 2004, the number of IT companies in Armenia reached 140, employing some 4,000 persons.
The major specializations in Armenian IT sector include embedded systems and semiconductor design and testing, multimedia design, industrial automation, Internet applications, custom software development, accounting and financial applications, multimedia designing, web-designing and development and Internet applications. Many companies are involved in the development of management information system (MIS) accounting, industrial automaton solutions, security and encryption, educational software development, artificial intelligence, computer aided design (CAD) and system integration.



Graph 1.1:IT Services Sector Potential,McKinsey &Company 2006
Intense business pressure has developed due to steady economic growth, a competitive environment, and a demand for higher productivity and a need for real-time information. Many seek IT solutions to address these demands.
Business and not-for-profit organizations are doing increasingly larger investments into software and IT solutions. The products with the largest demand by local companies are:
1. Enterprise resource planning system
2. Financial, accounting, payroll, sales, logistics, warehouse and analysis applications
3. Public administration systems
4. Banking applications
5. E-commerce / web development services.