IT training centers
IT training centers
Business Model Description
Through a public-private partnership, establish IT training centers in collaboration with IT companies (as future employers) and the Government (as partner and provider of facilities and infrastructure), with an aim to re-specialize existing workforce to effectively meet the requirements of the ICT sector.
Expected Impact
Enhance IT education opportunities to equip especially youth with skills for quality jobs in order to support the sector's growth and secure Armenian's livelihoods.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Armenia: Shirak
- Armenia: Kotayk
- Armenia: Lori
- Armenia: Yerevan
Sector Classification
Technology and Communications
ICT is a dynamically developing sector, accounting for 7.4% of GDP in 2018 with about $1 billion revenue. It provides 20,000 high quality, high wage jobs, of which 15,000 are in software. Annual employment growth in the last 5 years was over 11% (23). In 2018 / 2019, 6.5% of all students selected ICT specialization. ICT is also a key enabler for the development of other sectors (23, 24).
Under the Government Protocol Decree 35 of 28 August 2008, Concept of ICT development and Law on State Support to the IT, the Government supports IT and business education centers, IT research, as well as promotes public-private partnerships in IT education (5, 6).
ICT is a major provider of high quality jobs to young boys and girls (of 16-29 age) who suffer from higher than average unemployment. ICT also helps marginalized segments of the society to have better access to public and private services (7).
Software and IT Services
Pipeline Opportunity
IT training centers
Through a public-private partnership, establish IT training centers in collaboration with IT companies (as future employers) and the Government (as partner and provider of facilities and infrastructure), with an aim to re-specialize existing workforce to effectively meet the requirements of the ICT sector.
Business Case
Market Size and Environment
10% - 15%
The ICT sector already provides 20,000 high quality, high wage jobs, of which 15,000 are in software development (23, 24).
Annual growth of employment in the ICT sector in the last five years was over 11%, which can be used as a proxy for the market's growth overall (23, 24).
In 2018/2019, 6.5 % of all students selected an ICT specialization in their courses (23, 24).
Indicative Return
> 25%
Based on stakeholder information, the suggested business model for the establishment of IT training centers can provide an IRR of approximately 30% (2, 26).
More broadly, based on experiences in some European countries, investments in human capital can provide IRRs of up to 23% (26).
Investment Timeframe
Short Term (0–5 years)
IT training centers are expected to be able to generate returns within less than five years (2, 26).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - Market requirements
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
High level of unemployment is a key challenge in Armenia. Among the employed population, still 22% are classified as poor (4, 24).
As a landlocked country, Armenia has connectivity problems and fases challenges in linking to global value chains.
Armenia's ICT sector, which provides great GDP and employment potential (23) and could enhance global linkages, lacks educated and skilled labor force. The educational system is unable to supply sufficient number of high quality graduates (2).
Gender & Marginalisation
Armenia's youth (of 16-29 age) suffer from higher than average unemployment. Average unemployment in 2018 was about 19%, while unemployment among 16-24 aged was 33.1%, and among 25-29 it was 21.1% (4).
Expected Development Outcome
Enhanced job creation; the ICT sector provides 20,000 high quality, high wage jobs.; its annual growth of employment in is 11%. In 2018/2019, 6.5 % of all students selected ICT specialization (23, 24, 25).
Enhanced export potential via insourcing software and IT engineering operations from large corporations, which is key for improving connectivity and linking to global value chains.
Support towards the development of other sectors of the economy, as well as improving governance in public and private sectors.
Gender & Marginalisation
Improved access to high quality jobs for Armenia's youth of 16-29 age, who suffer from higher than average unemployment (4).
Enhanced access to public and private services for marginalised segments of the Armenian society through improved ICT systems.
Primary SDGs addressed
4.4.1 Proportion of youth and adults with information and communications technology (ICT) skills, by type of skill
8.6.1 Proportion of youth (aged 15–24 years) not in education, employment or training
8.5.2 Unemployment rate, by sex, age and persons with disabilities
8.5.1 Average hourly earnings of employees, by sex, age, occupation and persons with disabilities
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Corporates
Outcome Risks
IT training centers, if established in urban areas, may increase the migration of qualified Armenians to Yerevan, resulting in higher skill gaps in rural areas of the country.
Impact Risks
IT training centers may struggle to adapt their curricula to the fast changing sector requirements, which may limit the impact of the centers.
Impact Classification
What
IT training centers help to reduce unemployment by closing the labor market gap in the sector, and enhance economic productivity and growth on the international market.
Risk
The model is proven and IT training centers already operate in Armenia and can be scaled up to enhance its impact.
Impact Thesis
Enhance IT education opportunities to equip especially youth with skills for quality jobs in order to support the sector's growth and secure Armenian's livelihoods.
Enabling Environment
Policy Environment
The Concept for the Development of the IT Sector in Armenia prioritizes partnerships between the Government and the private sector towards the promotion of IT education (21).
Under the Law on State Support to the IT Sector, the implementation of educational and research programmes in the field of information technologies is supported by the Government, and can benefit from tax exemptions (22).
Financial Environment
Fiscal incentives: Tax holidays are set out in the Law on State Support to IT. Certified IT companies can benefit from 0% profit tax and decreased rates on income tax for employees (10% instead of 23%) (22, 29).
Regulatory Environment
Armenia's educational activities are regulated by the Ministry of Education; no specific requirements are in place for IT training centers. Licensing is required if a center issues diplomas that are accepted by the Government (27).
Certificates issued by the Ministry of High Tech Industry of Armenia allow for eligibility for tax exemption for training centers providing educational and research programmes in the IT field (22, 28, 29).
Marketplace Participants
Private Sector
Education centers offering IT courses such as TUMO Creative Center; IT Engineering laboratories such as ARMATH; various small and medium IT firms.
Government
Ministry of High Technology, Ministry of Education.
Non-Profit
Union of IT Enterprises.
Target Locations
Armenia: Shirak
Armenia: Kotayk
Armenia: Lori
Armenia: Yerevan
References
- (1) Government action program 2019-2023, https://www.gov.am/am/Five-Year-Action-Program.
- (2) UNDP interviews with stakeholders, 2019.
- (3) Decree No 58 of December 28 2000, Recognizing Information technologies sector has as a priority sector in Armenia.
- (4) Statistical Committee of Armenia, Social Snapshot and Poverty, 2019. https://www.armstat.am/am/?nid=82&id=2217
- (5) Government Protocol Decree 35 of 28 August 2008, Concept of ICT development, http://www.irtek.am/views/act.aspx?aid=45457.
- (6) Law on State Support to IT Sector, https://www.arlis.am/DocumentView.aspx?DocID=138979.
- (7) Statistical Committee of Armenia, Labor Market in Armenia, 2019, https://www.armstat.am/am/?nid=82&id=2226.
- (21) Government Protocol Decree No 35 of 28 August 2008, Concept for the development of IT sector in Armenia, http://www.irtek.am/views/act.aspx?aid=45457.
- (22) Law on "State support to Information Technologies", https://www.arlis.am/DocumentView.aspx?DocID=138979.
- (23) Enterprise Incubation Foundation, Annual Periodicals, www.eif.am.
- (24) Statistical Committee of Armenia, Labor Market in Armenia, 2019, https://www.armstat.am/am/?nid=82&id=2226.
- (25) The Ministry of Education of Armenia, www.edu.am.
- (26) The Rate of Return to Investment in Education: Case Study of Lithuania, 2014, https://www.researchgate.net/publication/291241142_The_Rate_of_Return_to_Investment_in_Educaton_A_Case_Study_of_Lithuania.
- (27) Law on Licensing, https://www.arlis.am/DocumentView.aspx?DocID=150834.
- (28) Government Decree No 312 of 19 March 2015 on Licensing of Enterprises in the IT Sector, https://www.arlis.am/DocumentView.aspx?DocID=132551.
- (29) Tax Code, https://www.arlis.am/DocumentView.aspx?DocID=152750.