Software development outsourcing market was one of the first to have been hit by the world economic downturn. In 2009 the ITO contracts reduced by 15-20% compared to 2008.
Unlike its neighbors Ukraine and Russia, in Belarus the economy has not yet been transfomed into a market economy. Like in the Soviet times, it is still a planned government-backed economy. Although the economy is considered to be stable, it largely depends on relationships with Russia. For instance, Russia’s intentions to establish export oil and gas prices for Belarus may significantly undermine Belarusian economy.
At the moment more than half of all Belarusian ITO services are exported to the United States, while only nearly 35% – to Western Europe.
Currently, Belarusian ITO services providers are focused on vertical market specialized solutions for the industrial sector, banking and finance, retail/e-commerce and education.
Belarus has a rather limited domestic demand for the IT labour force, which is a positive factor for availability of skilled specialists to be involved with IT outsourcing.
Foreign investments are hindered by the president’s actions towards protecting the national economy from foreign takeovers. Belarusian law is both complicated and contradictory. Additionally, the country is on the „watch list“ of the US Coalition “International Intellectual Property Alliance” (IIPA) as the country with the gravest copyright violations. Belarusian president Lukashenka is regarded as ‘persona non grata’ in a long list of democratic countries.
Although the president’s recent initiatives such as the ‘Park of high technologies’ and ‘electronic Belarus’ intent to set a basement for development of the ITO industry as a high-priority goal, such factors as hard taxation burden, excessive regulation, and bureaucracy create an unfavorable environment for its fast-paced development.