Belarus — Key Facts
Size: 207,600 sq km, ranked 87th in the world by area (comparable to Kansas)
Population: 9.44 million, ranked 94th in the world by population
Time zone: (GMT+3)
Government: unitary presidential republic, although considered a dictatorship by many states; the US and EU do not recognize the current president as legitimate
Official languages: Belarusian, Russian
GDP per capita, PPP: $19,100 (2020 est.)
Human Development Index: 0.823 (ranked 53rd | 189)
Currency: the new Belarusian ruble (BYN)
Economy: market socialism
Main industries: metallurgy, mechanical engineering, chemical and petrochemical, light industry, food industry
Major urban areas (over 500K people): Minsk, Gomel
Ease of doing business: ranked 49th, DB score - 74.3
Digital competitiveness index: not classified
Corruption perception index: #63 out of 198
The WE Forum Global Competitiveness Report: not classified
A.T. Kearney Global Services Location Index: not included
Universities: 42 universities, three listed by QS World University Rankings® 2022 (ranked 295, and >750)
The largest IT companies: Itransition, Iflexion, ScienceSoft, N-iX, Wargaming.net
IT industry market share: 5.7% of GDP, 2.2% share in employment, 1,500 IT companies, ca. 54,200 IT specialists
EF English Proficiency Index: 38/112 countries; 28 of 35 in Europe (moderate proficiency)
International Olympiad in Informatics: 102 medals, 16 gold, 42 silver, 44 bronze
IT outsourcing in Belarus at a glance
Considering that 60% of its IT market is external or outsourced, Belarus has a strong reputation as a reliable IT outsourcing destination. Belarus's robust IT sector is believed to be growing four to five times faster than in other countries. Government-led initiatives such as public subsidies, tax incentives, and free economic zones for IT & tech companies encourage establishing private sector enterprises (see Deloitte report on Belarus for more details on this).
However, the domination of outsourcing in the IT services delivery is both boon and bane for the local IT market (and outsourcers). On the one hand, outsourcing skills in Belarus are readily available, allowing outsourcers for fast rollout and scaling of their software design, development, and testing teams. On the other, the overwhelming volume of outsourcing work may be at the expense of innovation. After all, most engineers in Belarus contribute to a third party's intellectual property.
Moreover, due to its compact size, Belarus may offer limited choice regarding experts well-versed in niche technologies (such as Go, TypeScript, or Rust) or combining varied skills (e.g., data analytics + programming). Instead, it has a vast pool of experienced, affordable IT professionals covering more popular languages and services.
IT outsourcing Belarus: average rates
A disclaimer: the data regarding average Belarussian rates in IT are very inconsistent. The amounts quoted by different sources sometimes vary by 4-8 times. Therefore, we are using the information that reappeared in several online publications. However, they might differ from what’s provided on other websites.
● A Junior Software Developer earns ca. $900/month (gross) on average
● A Senior Software Developer typically gets $2,600+/month (gross)
● An average salary of a Development Lead is about $3,600+/month
● The rates in Belarus sit in the mid-range compared to other Central & East Europe countries
● They are slightly above the Ukrainian and draw nearer the Polish rates
[Source: IT Outsourcing Review]
The high level of entrepreneurship in Belarus and its remarkable success in IT offshoring may be somewhat surprising, considering its political unrest. Belarusian authorities take definite actions to stimulate market growth in the IT sector. Yet, the widespread control over entrepreneurs comes with its share of risks, especially if we consider Lukashenko’s inclinations towards dictatorship and his close ties with Moscow.
Belarusians are pursuing the opening towards the West. However, it seems unlikely that Russia will let go of its influences any time soon. After the heavily disputed results of the presidential election in 2020 (which haven’t been recognized by most global leaders, including the European Parliament), mass protests erupted throughout the country. Since then, government-imposed connectivity and cellular service outages have been periodically disrupting work for thousands of digital workers, affecting their workflows and impacting service delivery.
Reacting to these events, IT specialists joined grassroots movements, and thousands of them signed an open letter calling for re-elections. Moreover, Belarus experienced a mass exodus of skilled IT workers, due to the alarming situation in the country.
Persecuted by the state authorities, many entrepreneurs left the country and relocated their operations. One such example is PandaDoc, a famous Belarusian unicorn. Following the repressions by the regime, the owners moved the company office and teams to the neighboring Ukraine. In August 2020, the dev.by website informed about 12 IT companies transferring employees abroad, 59 pursuing partial relocation, and 112 considering their options.
The shattered business climate in the country also made many global enterprises threaten the government to halt their investment plans. As of early 2022, the situation is only deteriorating, with the escalation of the migrant crisis on the border with Poland, disruptions to the supply of goods from Russia, and a recent 18-year prison sentence to opposition politician Sergey Tikhanovsky.
Investing in the Belarusian IT market
Software is the number one Belarusian export to the USA, comprising over one-third of its total exports. Its value in 2019 was estimated at ca. $2 billion.
According to the Ministry of Economy, about 15,000 Belarusian IT specialists are permanently involved in software export, carrying out projects for an international client base.
About 30% of Fortune Global companies have outsourced IT work to specialists located in the famous Hi-Tech Park, one of Europe's largest business incubators for IT and home to nearly 500 software & tech companies.
Major foreign investors
The diverse range of globally-recognized consumers of Belarusian software services includes Samsung, Whirlpool, British Telecom, T-Mobile Deutsche Bank, London Stock Exchange, and Deloitte PepsiCo, or Procter & Gamble, among other household names.
The local service companies are also quite successful in raising foreign investment and pursuing acquisitions, especially on the booming game development and mobile apps market:
- In 2016, Facebook bought a Belarusian startup Masquerade, which developed a once-popular face-swapping app MSQRD.
- In 2017, Google acquired a Belarusian AI startup, AI Matter, standing behind a selfie editor app.
- The same year saw Microsoft's investment in a document automation startup, PandaDoc. In 2020, Belarusian authorities raided the company's Minsk office, detaining its head and several employees, after the founders joined the protests against Lukashenko's regime. Following the persecutions, they moved the company to Ukraine. In 2021, PandaDoc’s valuation reached $1 billion.
However, when we look at foreign companies that decided to open their in-house centers in the country (some examples include Fitbit, Yandex, Netcracker, Viber, and Luware), the list gets remarkably shorter. The business is there, and the capital is flowing, but the country still struggles to convince global tech champions to roll out their local centers despite numerous tax incentives (see below).
The reasons may include the Belarusian IT outsourcing market's very nature, heavily prioritizing services export rather than attracting investors to launch regional offices. The state’s excessive (and unpredictable) interference with business, high level of corruption, and an ineffective judiciary don’t help, either.
Incentives to invest
- Six economic zones with a special legal regime facilitating carrying out economic activity across specified industries, including tech:
- 0% corporate income tax for 5 years;
- 10% VAT;
- Additionally, IT and tech companies can optimize costs and tax payments by setting up offices in the Hi-Tech Park, where preferential tax treatment also applies to the residents:
- 0% corporate income tax for 15 years;
- 0% VAT;
- To attract capital to disadvantaged locations, the authorities have also introduced generous tax benefits for organizations operating in small cities and rural areas: 0% corporate income tax for 7 years and 0% VAT for 5 years.
- The Belarusian government has also adopted a series of international agreements and state laws to regulate and secure foreign investors' rights in the country. These include, e.g., the freedom to repatriate profits outside of Belarus.
However, many of these incentives are only available to Belarusian legal entities and don't apply to a representative office. Therefore, the subsidiary is the most widespread legal form for foreign investors in Belarus.
More information about tax incentives and exemptions in Belarus and the legal requirements for setting up a business in the country is available in the official state information resources, Pravo.by and Belarus.by.
Higher education in Belarus
According to the State University website, the Belarusian higher education (HE) system currently comprises 42 state and 15 non-state HE institutions. Most of them are located in the capital, Minsk, with several Grodno, Brest, Vitebsk, Gomel, and Mogilev facilities.
- With nearly 250,000 students, the country has one of the highest student-to-population ratios in Europe.
- Belarus also claims one of the world's highest literacy levels, at the rate of 99.8% among the youngest generations (91% is the global average for this age group).
- Public higher education is free for Belarusians, with grants and scholarships available for underprivileged and gifted students.
- The courses usually take 4-6 years, with a breakdown into Bachelor's and Master's degrees. Third-level education is also available.
- The country's first and most prominent university, Belarusian State University, was established in 1919 and opened two years later. It offers various subjects, including Computer Science, Mathematics & Statistics, and Electrical & Electronic Engineering.
- Six Belarusian public universities are specifically dedicated to technical and technological subjects, including Belarusian National Technical University, Belarusian State Technological University, and Belarusian State University of Informatics and Radioelectronics.
- Only three Belarusian universities made it to the QS World University Rankings® 2022 (ranked 351 and >750).
- International students are allowed to study in Belarus, contingent on obtaining a student visa and paying the tuition fee, typically ranging between $1,000-3,500/year.
- The majority of courses are taught in Russian and Belarusian, with rare English-taught courses, which are usually more expensive.
Until recently, private HE institutions mainly offered education in humanitarian, social, and economic fields. This primarily resulted from the lack of sufficient budget to invest in adequate research facilities and equipment. Following the increasing demand for science and technology courses, they began expanding their curricula to account for the new trend and ensure a greater alignment between graduates’ skills and job market needs.
Belarus' startup ecosystem
The Belarusian startup scene has been showing remarkable growth in recent years, largely spurred by the 2017 Decree on developing the digital economy. The document created advantageous conditions for product-based companies. It also provided for the further development of the famous Hi-Tech Park. The technology hub was established in 2005 to nurture the growth of local tech enterprises and woo foreign investors with tax exemptions and incentives.
The strategy has pulled off. Since the law’s establishment, entrepreneurial projects have been booming in the country, with brand new startups launching every minute. It's estimated that over the last five years, Belarusian startups raised nearly $250 billion from venture deals, with a record of $77 billion raised in 2018 alone.
However, following the stormy events of 2020, the local startup scene has been losing its momentum lately. Currently, Belarus ranks 67th in 2021 Startup Blink's Global Startup Ecosystem Report, down by four spots compared to 2020. Minsk occupies 230th position on the cities’ rank, a dramatic fall by 33 spots over the year. The decline can be largely attributed to the escalating conflicts in the country, as well as the mass exodus of IT specialists and skilled workers.
Key startup cities
Minsk, Brest, Gomel-Raton, Vitebsk, Mogilev
Startup ecosystem in numbers
- 178 startups
- Hi-Tech Park, ca. 10 Special Economic Zones/Special Technology Parks
- Probably no more than ten local VCs, including Angels Band, Hackspace Capital, Quattro Capital, Zubr Capital, Haxus, and Bulba Ventures
- Just a few incubator and accelerator programs
- 50,000-100,000 IT specialists (data varies across resources)
Focus industries
AI/ML, AR/VR, Medtech, IoT, SaaS
Success stories
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Wargaming – the world-renowned game developer behind "The World of Tanks" was born in Minsk in 1998. By now, it has exploded into a global enterprise with nearly 1,800 employees located in over 20 offices worldwide. Over the years, the company has completed four acquisitions, undergone ten rounds of investments, and moved its headquarters to Cyprus. The current valuation of the business stands at $1.5 billion.
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FriendlyData – a natural language search interface for business databases. After securing a series of funding from local investors, the startup was bought in 2018 by an American software vendor ServiceNow for an undisclosed amount.
- Kino-mo (now HYPERVSN) – a breakthrough hardware-enabled technology platform enabling 3D holographic content creation obtained the total funding of $11.5 million in three rounds.
- Flo – founded in 2015 in Belarus, Flo Health is a smart period tracker that became the most frequently downloaded female health app globally. The ingenious product brought its creators $25.5 million in four funding rounds.
- Banuba – the company behind AR mobile experiences, raised $12 million from local and Russian investors reaching the valuation of $100 million after the second round.
Challenges
- Immature startup ecosystem (nearly 60% of startups "aged" 1-3 years)
- A low number of acceleration programs and limited access to mentoring
- Unfavorable legal environment hindering cooperation with foreign investors
- Unstable political situation in the country
Pros of software development outsourcing in Belarus
- Over 60% of Belarusian IT professionals involved in outsourcing
- Government support for IT businesses and the private sector
- The extraordinary growth of the IT services market
- Competitive rates between $20-40/h, which is on the Central & East Europe’s low end
- Ten of the top 30 IT outsourcing destinations in the world
- A large presence of multinational IT companies
- Plenty of special zones offering tremendous tax incentives for investors
Cons of software development outsourcing in Belarus
- Unstable political situation threatening international relations
- Low English proficiency index core
- Monopolist control of the state over the economy (75% of property owned by the state)
- A relatively low number of IT specialists with niche and complex skills
- Reoccurring (and random) internet and cellular communication shutdowns
- Strong dependence on the Russian government
- Intricate and less common legislative
