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Georgia – A next-wave eastern European location for outsourcing excellence

Georgia’s competitive profile in voice and non-voice business process services and IT positions the country as a next-wave destination for sourcing services. Several international businesses & IT services providers, as well as local small and medium-sized companies, are already serving international clients from Georgia, including Fortune 500 brands. Given the geographic location, time proximity, talent pool with an optimal mix of technical and foreign language skills, a significant cost arbitrage, Georgia is an excellent option for delivery centers that could serve western markets. Recently, Georgia has introduced new incentives for investors in IT and Business Process Outsourcing to further support the development of high-value-added, knowledge-based sectors in the country.

Recognized as a “Top Reformer” many times over the years, a small country on the crossroads of Europe and Asia has become one of the best places to do business. Georgia boasts the world’s third-lowest total tax rate (World Bank), is ranked 7th in Ease of Doing Business (World Bank), and is in 8th place on the FDI Regulatory restrictiveness Index (OECD). Georgia has an association agreement with the EU, which ensures alignment of regulations and high standards of personal data protection. According to the latest ranking of Kerney’s Global Services Location Index (GSLI 2021), Georgia is number 19th among 60 countries.

In just a few short years, Georgia has managed to attract anchor investors in the sector. The estimated amount of employees in offshore IT & BPO activities have already surpassed 7000. The real growth of the sector started in 2016 when foreign companies actively started entering the market. Companies that entered at that time were initially attracted to the country by multilingual voice services in German, English, and Russian languages. Soon after, non-voice business processes and IT became part of the growth of the industry. Key, large-sized companies in voice services with more than 2000 employees are Majorel and Evolution, followed by small and medium-sized companies, for example, CMX Solutions, Georgian Service Group. In IT, international companies such as EPAM Systems, Asseco, Olmait, Flat Rock Technology, Exadel, and others are also operating in Georgia.

Key service delivery locations in Georgia are Tbilisi, the capital of the country, followed by regional cities, like Kutaisi and Batumi. The mentioned largest cities of Georgia have international airports operating flights to major business hubs abroad, key educational institutions, such as universities, foreign language training centers, as well as German schools. Internet connectivity and power supply are fast and reliable allowing providers to operate with the traditional office model, as well as implement remote work solutions, so well adopted during the pandemic.

International BPO companies searching for new nearshore locations for the European market, or alternative offshore hubs for serving the wider English-speaking market will find Georgia as a place with a still untapped talent pool. Every year about 24 000 students graduate from higher education institutions and 75% of students complete programs such as Business Administration and Social Sciences, Law, Humanities, STEM, and related fields – potentially employable in IT & BPO. Most Georgians speak at least one additional foreign language. The most spoken foreign language is English, which is mandatory in all high schools and universities, followed by Russian and German. Turkish, French, Spanish, Italian are also quite common. Talents with competencies in some more rare languages of Western Europe and Asia are also available in Georgia. In the BPO & SSC study conducted by Deloitte, it is estimated that there are more than 500 thousand speakers of English, Russian, German, French, and Italian in major cities of Georgia.

In terms of tech skills, Georgia is strengthening its position in the region. Georgia’s Innovation and Technology Agency (GITA) is implementing a training program for 3000 specialists in the most demanded fields of IT. A newly opened Kutaisi International University at full capacity will host 60 thousand students. KIU operational model was developed in partnership with the Technical University of Munich and will offer vocational, undergraduate, graduate, and post-graduate degree programs as well as research possibilities in science and technology. KIU will join other high-profile universities such as Tbilisi State University, Tbilisi Technical University, and Ilia State University that in collaboration with San Diego State University offer ABET, ASC, WASC accredited courses in STEM fields. 

Georgia is a great location to add value and exceed growth targets for companies, but it could be great for saving costs as well. Monthly salaries for entry-level positions in customer service, HR, Finance vary between 400-600 USD, and for programmers is within the range of USD 1,000 depending on seniority level and skills. Salaries for desktop support specialists and software testers are quite competitive in IT, starting from USD 300 per month. According to evaluations conducted by Everest Group covered in the „Locations Spotlight – Georgia” report published in 2020, in comparison with well-established sourcing destinations such as Poland and UK, Georgia offers 55-80% cost-savings for annual operating costs per FTE in contact center services and IT.

In addition, taxes are low and taxation is quite simple. Personal income tax paid from salaries is a flat 20%. Reinvested or retained profits are taxed by 0% (profit tax is 15%). There are no social security taxes and premiums, there is only an insignificant amount of pension contribution – 2% paid by an employer, 2% by the employee and 2% paid by the Government. Georgia also offers preferential tax regime to IT companies exporting services from Georgia. “International Company”, a newly introduced incentive provides reduction of profit and personal income taxes to a flat 5%.

Last but not the least, Georgia has introduced a new incentive for key growth sectors for FDI attraction to Georgia, including Business Process Outsourcing and Business services. By employing a minimum of 200 associates and investing a minimum of 1.5 million USD in business services delivery projects, foreign companies can receive up to a 250 000 USD grant from Invest in Georgia as a reimbursement of costs related to staff training and/or infrastructure upgrade. Interested international BPO companies should apply for a grant through Enterprise Georgia, a state Investment Promotion Agency of the country.

For more information on the opportunities in Georgia please click on the attached PDF

 

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