By James Patrick
Uzbekistan, a key waypoint for trade between East and West back in the days of the Silk Road, now intends to retake that global position – this time as hub in the new information-based economy.
“Truly, Uzbekistan is the next land of massive untapped opportunities,” declared Rasulov Sultonmurod head of the Export Development Department for IT Park Uzbekistan, to an audience at the country’s ICT Week in October.
Brazen declarations are almost obligatory in tech circles, but so far, the Central Asian country’s ambitious program appears to be working. Uzbekistan’s IT outsourcing industry has jumped from roughly $6 million in 2018 to more than $300 million in 2023.
“This is probably one of the most striking figures I’ve seen in my career,” said Sandra Sargent, Senior Operations Officer at the World Bank’s digital technologies department. “It reminds me of the dawn of the internet in the 1990s.”
Now Uzbekistan’s government is aiming to create 100,000 tech outsourcing jobs and at least $5 billion in IT exports by 2030. At the ICT Week in Uzbekistan’s capital, Tashkent, tech professionals, policy makers, investors and media discussed the key steps in this state-led effort can create an IT sector so quickly.
Step 1: Generous incentives
Closed off from much of the world during Soviet times and its aftermath, Uzbekistan has ditched many of the repressive tendencies of former ruler Islam Karimov since his death in 2016.
In its effort to modernize, new President Shavkat Mirziyoyev’s government has greatly reduced the direct role of the state so that the private sector can more expansively participate in the economy. This has included ending lack of foreign exchange, high import duties and entry visas. In the tech realm, Uzbekistan is courting foreign investors with generous incentives.
Central to enticing investment and so-called digital nomads are the more than 200 IT Park facilities built by Uzbekistan’s Ministry of Information Technologies across the country. These provide comprehensive support to tech companies, including reduced rent, technical equipment and a 0% tax rate, as well as support for company registration and staff recruitment.
EPAM Systems, a US-based software engineering firm, now has some 1,000 employees in the country. Plug and Play Tech Center, a Silicon Valley venture capital fund, is another significant presence in Uzbekistan, investing in different startups.
“The IT industry in Uzbekistan is now one of the key priorities of the economy. Unprecedented measures to support companies in the industry, and rapid response to changes in legislation have become the foundation for the support that IT Park now provides to business and tech industry specialists,” said Farkhod Ibragimov, CEO of IT Park.
Step 2: Education and skills development
While opening up to the world, Uzbekistan is transforming its education system to produce graduates with the necessary critical thinking, problem solving and practical skills for the information economy, particularly targeting improvements in mathematics, ICT and English language abilities.
With a young, growing population proficient in Russian, English, Turkish, German, Arabic, Korean and Chinese, the Uzbek government says it has the ideal demographics to produce a critical mass of qualified workers for competitive outsourcing contracts across the globe.
Over the last several years, some 1.7 million of 36 million Uzbeks have been trained in some form of digital skills. The country is targeting 30,000 university graduates in computer science by 2030. Plans for 2024 include launching a World Bank-backed digital inclusion program focusing on women.
IT Park is also central to the development of Uzbek tech skills; it has engaged some 500,000 youth in the fundamentals of coding in the a “One Million Programmers” project and in 2022 began offering bachelor’s degrees in Software Engineering at its new IT Park University.
“We now have 60 IT universities in operation across the country. And every primary school in Uzbekistan has been connected to broadband since 2021. No other country in Central Asia can say that,” said Minister of Digital Technologies Sherzod Shermatov.
Step 3: Infrastructure development
On top of its IT Park network, Uzbekistan is well on its way to providing high-speed internet access to the whole population. In 2022 alone, Uzbekistan’s Ministry of Digital Technologies laid 50,000 km of fiber optic cable and erected 8,300 mobile towers.
As a result, the cost of mobile internet access in the country has dropped from $3.27 for 1 gigabyte of data in 2019 to an average of $0.30 in 2023, shooting up from 69th to 15th place in globally affordability.
The theory is that making reliable, affordable high-speed internet available in every corner of the country will support the development of digital natives as well as IT workers, incubators and startups.
While many businesses have now adopted advanced digital tools such as customer relationship management software and cloud-based computing services, the country has embraced e-government, building the infrastructure and beginning the training needed to make its governance and administration paperless and more transparent and efficient. So far, more than half of the country’s 715 public services have been digitized, in what the country sees as a necessary part of its development.
“One thing needs to be clearly understood,” President Mirziyoyev said during a 2022 meeting about the work to turn Uzbekistan into a tech hub. “If this sector does not develop, no other sector will move forward.”
Indeed, a flourishing tech sector would provide invaluable support for the country’s plan, announced last year, to double its GDP from $80 billion to $160 billion in 2030.
Sticking to the plan
To pull this off, Uzbekistan will need to keep up friendly relations with the globe’s fiercest geopolitical adversaries.
A vibrant tech sector requires significant investments from the dominant US players. While courting prospective IT Park residents in Silicon Valley, as well as London, Amsterdam and Dublin, Uzbekistan still has deep ties with Russia, with many of its citizens working there and sending money home to their families. Meanwhile, China is Uzbekistan’s largest trading partner and dominant infrastructure developer. Much of the equipment for the national data network is supplied by Chinese telecom giant Huawei. “They offered the best prices and financing,” said Minister Shermatov in an interview with foreign journalists.
And although it has made significant improvements from the old regime, it’s unclear how well Uzbekistan can lure talented digital nomads while the country’s users still face various forms of restrictions and state control.
Among those forms of control, in 2021 it explicitly criminalized insulting President Mirziyoyev online. Over the past few years, the country has jailed dozens of bloggers who have investigated local elites and criticized authorities, and late last year a 19-year-old Uzbek man was sentenced to 2.5 years in prison for insulting the president in a comment on Instagram.
To continue on its trajectory to becoming a global IT investment hub, Uzbekistan would be well served to follow the president’s previous pledges to allow freedom of speech.
