When, in 1993, two native Belarusians, Arkadiy Dobkin and Leo Lozner, set up EPAM (or Effective Programming for America), operating the business out of their respective bedrooms – one in New Jersey, the US, and the other in Minsk, Belarus – they had no idea how successful their modest enterprise would become.
Some 19 years later, in 2012, the Belarusian flag waved on Wall Street when EPAM was listed on the New York Stock Exchange. Last year alone, the global software engineering service company opened new offices in Hong Kong, Armenia and Australia, employed some 10,000 IT workers across 17 countries and four continents, and recorded revenue in excess of $550m.
When the Hi-Tech Park (HTP) was set up in Minsk in 2005, by the decree of president Alexander Lukashenko to support Belarus's software industry, EPAM was its very first resident.
“About 10 years ago, I attended a lecture in the US and visited a company producing simulators for planes. I found out that the chief engineer was originally from Belarus," says Valery V Tsepkalo, director of HTP and a former ambassador to the US. "This pushed my idea to set up a hi-tech park. If Belarusian engineers can be successful in the US, on foreign soil, why couldn’t they be successful in their own country, I thought.”
It was not long before EPAM was joined at the park by others, including Viber Media, the company behind instant messaging platform Viber, which has more than 360 million users across the world; ObjectStyle, a software development and outsourcing company that has designed, among other things, the US National Hockey League’s website, which gets 2.7 million visitors a month; and WarGaming, the developer of the ‘War of Tanks’ online game, which has 85 million registered users globally.
Today, WarGaming is one of the leaders in the free-to-play massively multi-player online gaming market, and has 16 offices worldwide. The company's goal is to expand and support the global online gaming community. While it likes to treat each market individually, “our roots are here [in Belarus]”, says Andrei Yarantsau, WarGaming's vice-president of global operations.
In total, there are 140 companies registered in the HTP and they work with a large number of respected clients: Barclays, Bank of America, Citibank, Western Union, the London Stock Exchange, Google, IBM, Expedia, BP, Chevron, Microsoft and Airbus, to name but a few.
“When I wrote a substantiation to the president to prove that it was necessary to create a hi-tech park I had a projection that in 10 years we would have exports worth $300m to $350m. It was a very optimistic projection because, at the time, the country exported software worth about $14m. Now, the reality is a bit different,” say Mr Tsepkalo.
In 2013, HTP’s production volume amounted to $527m, 41% higher than in 2012. Exports account for 88% all the software produced in the park. Of this, 45% is sold to Europe, 40% to the US and Canada, and 12% to Russia and other Commonwealth of Independent States countries.
HTP residents account for about 90% of all Belarusian IT companies. The country's per capita income from IT exports amounts to $58,000 and is higher than, for example, in India ($41,000), the US ($36,000) or Russia ($17,000).
In 2013, the International Association of Outsourcing Professionals’s Global Outsourcing 100 ranking included five HTP-based companies, while Software Magazine’s 500 Companies, ranking the world’s largest 500 software and services companies, included seven of the park's residents. Furthermore, in 2014, Belarus was named one of 30 leading locations for offshore services by US-based IT research and advisory firm Gartner.
According to Mr Lukashenko’s decree, all of the companies that operate in HTP and stay in the park until 2020 are exempt from corporate taxes, custom duties, real estate and land taxes, while income tax for employees of software and IT development companies in the park is held at a fixed rate of 9%.
These incentives are not the only reason that the IT sector has enjoyed such significant growth in Belarus, however. Its success is also owing to the efforts that have been made to nurture a highly skilled workforce.
In 2013, there were 18,000 IT and software engineers working in the park, 3000 more than in 2012. As well as possessing the technical skills needed for their job, about 90% of these engineers also have a good command of English.
Meanwhile, the country's universities are producing about 16,000 graduates with ICT and related technical skills every year. Most of them already have excellent technical knowledge but, to make them more employable, HTP wants to provide students with more practical skills, and so it has established 63 labs in universities across the country. These labs are open to students in their third, or sometimes second, year of university, and provide computer classes, which are run by companies from HTP, as well as mentors, who encourage students to work on practical projects from creating apps for mobile phones to working with the banking sector or creating games.
Initially, these labs were focused exclusively on software engineering; now they also teach business analytics and a number of other disciplines.
"If a new company wants to enter the market, it would definitely be able to find 20 to 25 employees who could become the core of their business at the outset. Then we would be able to make a commitment to set up a lab at a university and start working with the educational system to provide the best employees,” says Mr Tsepkalo.
Additional training is also available in education centres and directly in companies. This encourages companies to increase employment.
Six years ago, US-based app development company Softeq opened an office in Minsk, Belarus, with just five employees. Today, the company has more than 150 employees, most of which are based in Belarus, and it has plans for further growth.
“We are working with large global companies and our projects result in long-term relationships with our clients. We can see now that next year we will increase the number of employees by some 40%,” says Alex Kovalenko, business development director at Softeq in Belarus.
Of the 40 companies registered in HTP, 27% are wholly foreign owned, with 53% funded by Belarusian investors. The park's biggest companies are either joint ventures or foreign-owned ones, with the largest investors hailing from the US, Germany and Japan. And HTP wants to attract even more investors and IT businesses.
Work is just about to be completed on a 10,000-square-metre business incubator, which has been designed to house an ecosystem where innovators can meet engineers, and ideas for new business ventures can be born. It is developments such as this that have helped HTP's director, Mr Tsepkalo, maintain the same level of optimism that he started out with when the park opened, a decade ago.
“When we were setting up the park, we based our estimates on India’s software exports," he says. "It had taken India 20 years to reach $3bn. But, we have a stronger base than India because, apart from outsourcing, we also have our own products. If we keep up this pace of growth, next year we will reach the $1bn mark in just our 10th year of operation. That means that, within 20 years, we’ll make more than $3bn."