Tbilisi (GBC) – Shorena Kopaleishvili, Chairperson of the Association of Georgian Virtual Zone Persons, gave an exclusive interview to Georgian Business Consulting (GBC), where she shared her insights on the prospects and challenges facing Georgia’s IT sector. The interview covers export dynamics, growth factors, current challenges, and future opportunities for the industry.
The export of IT technologies in Georgia has reached a record level, exceeding 2 billion lari. Experts consider tax incentives, enjoyed by companies with the "Virtual Zone Resident" status, as the primary factor driving the industry’s growth. Despite rising trends in the sector, challenges remain, the overcoming of which could accelerate its development in the country. Shorena Kopaleishvili, Chairperson of the Association of Georgian Virtual Zone Persons, discusses the current state of the IT sector, trends, and challenges.
What has been the dynamics of IT technology exports in Georgia in recent years?
– The export of IT services from Georgia has grown significantly in recent years. A particularly notable increase began in 2022. Looking at the dynamics of the last few years, it’s worth noting that export revenues quadrupled between 2021 and 2023, reaching 892 million USD in 2023, with a total turnover of 5.1 billion lari. Thanks to this rapid growth, the ICT sector took eighth place among the largest economic industries in 2023. However, in 2024, the income of Georgia’s IT sector decreased by approximately 12% compared to the previous year. This was due to objective reasons, as nearly all business sectors faced various challenges in 2024. Nevertheless, the first quarter results of 2025 exceeded all expectations: during this period, the sector’s external revenue reached 266 million USD, a 70% increase—or 110 million USD more—than the previous year. The primary market for Georgia’s IT service exports remains the United States of America.
In your opinion, what has contributed to such growth in the sector?
– The growth and development of the sector were initially supported by tax incentives. Since 2022, the growth rate accelerated due to the relocation of international companies and IT specialists to Georgia, prompted by the Russia-Ukraine war. Additional incentives include affordable internet costs, relatively low living expenses compared to other attractive locations, and the country’s favorable geographical position. Moreover, local companies are actively adapting to global trends, further enhancing Georgia’s investment appeal.
In my view, tax incentives remain the key factor in the attractiveness of IT business in Georgia. Specifically, when considering the context of benefits for virtual zone companies. The "Virtual Zone Resident" status offers unique opportunities for IT companies operating on Georgian territory. This status provides significant tax advantages, fostering both the development of existing companies and the establishment of new businesses in the technological sector. Virtual zone residents are fully exempt from profit tax on income derived from IT services provided abroad. This benefit is particularly crucial for fast-growing tech companies, allowing them to direct all profits toward development and expansion. Exemption from value-added tax (VAT) is another significant advantage. Companies do not have to pay the 18% VAT on services provided to foreign clients, enabling them to offer more competitive prices on the international market.
How many international IT companies are registered in Georgia today, and what has been the dynamics of their numbers in recent years?
– As of July 1, 2025, 38,525 entities are registered in the information and communication technology sector, of which 24,265 are active. The number of medium and large companies is around 200, with the rest primarily consisting of foreign individual entrepreneurs, a trend linked to migration effects. The share of IT companies of foreign origin in this statistic is significantly higher than that of local companies, accounting for approximately 80%.
Interest in conducting business in Georgia in this field continues to grow. The interest in the virtual zone status also remains strong. Between January and July 2025 alone, this status was granted to 28 legal entities, which is a positive and encouraging trend for the sector.
Do challenges remain for international IT companies in Georgia, and if so, what problems do tech companies face?
– Despite rapid growth and positive trends, IT companies operating in Georgia encounter various structural and operational challenges. In my opinion, several key factors can be highlighted:
1. Deficit of Qualified Personnel
There is a noticeable shortage of mid- and high-level specialists on the market, particularly in areas such as software engineering, cybersecurity, and DevOps.
A trend of "talent drain" is observed: a portion of highly qualified professionals opts for careers and high-paying positions abroad.
Most specialists live and work in urban centers, confirming that, despite the potential for remote work, the sector remains highly centralized.
2. Limited Local Market Size
Local demand for IT products and services is limited, increasing companies’ dependence on external markets.
3. Challenges in the Education System
Educational programs at universities and vocational institutions do not always meet the real needs of the market. The imbalance between formal education and the private sector’s requirements significantly reduces the quality of professional training.
4. Technological Infrastructure
Although internet infrastructure in Georgia is actively developing, regional coverage and reliability issues persist.
5. Regulatory and Legal Environment
Foreign investors and companies note that Georgian legislation is insufficiently predictable and stable, especially in the area of tax regulations.
6. Political and Geopolitical Factors
Regional security challenges and the risk of political instability encourage investors to exercise greater caution.
7. Competition on the Global Market
Georgia’s IT sector must compete with strong regional and international hubs such as Ukraine, Poland, and the Baltic states, where the workforce is represented on a larger scale.
What prospects do you see for this sector despite the challenges? Will it continue to grow in the coming years?
– The outlook is promising. Georgia’s IT sector is at a pivotal stage of development. The growing potential of its workforce, close collaboration with international partners, and the trend toward integration into global markets create a solid foundation for the country’s technological progress. With the right state policies, education reforms, and strengthening of business infrastructure, the sector can not only solidify its position in the region but also become a significant innovation hub.
