Uzbekistan’s Tech Transformation: An interview With Minister Sherzod Shermatov

Sherzod Shermatov, Minister of Digital Technologies of the Republic of Uzbekistan

In recent years, Uzbekistan has sought to transform its economy by opening its doors to international investment and pass reforms aimed at stimulating economic growth. Central to this transformation is the prioritization of the technology sector as a key driver of development. In an exclusive interview, Uzbekistan’s Minister of Development of Information Technologies and Communications, Sherzod Shermatov, sat down with Joseph Epstein, director of legislative affairs at a US-based think tank, to shed light on the rationale behind Uzbekistan’s tech-focused approach and the strategies employed to foster both domestic talent and international collaboration.

Joseph Epstein: Uzbekistan has witnessed significant development in recent years, particularly in facilitating international investment. Why has the country prioritized the tech sector for growth, and what competitive markets are you targeting?

Sherzod Shermatov: Uzbekistan’s focus on the tech sector stems from the urgent need to create employment opportunities, particularly considering our substantial population growth. Moreover, being a double-landlocked nation poses challenges for traditional industries, making the ICT sector a strategic choice due to its potential for job creation and talent retention. The government has fostered favorable conditions for IT companies, including tax incentives, leading to a remarkable growth in ICT exports in recent years. This growth positions Uzbekistan competitively in global markets, particularly in IT outsourcing.

JE: Regarding talent acquisition, is the ministry primarily concentrating on attracting foreign tech professionals, fostering domestic talent, or both?

SS: We adopt a dual approach. Uzbekistan is committed to enhancing domestic talent through reforms in educational curricula and partnerships with IT training institutions. Simultaneously, we actively attract foreign professionals through initiatives like the IT visa program, fostering a diverse and skilled workforce.

JE: Which countries are the specialists predominantly originating from?

SS: Initially, we saw specialists primarily from Belarus, Russia, and Ukraine due to them being displaced by the conflict, but our outreach efforts have attracted talent from various countries.

JE: So, you mentioned initially there were Russians, Ukrainians and Belarusians. They must have come following the breakout of the war in Ukraine. However, they really, it seems were able to integrate in Uzbekistan. This hasn’t been the case everywhere.

SS: Yeah, definitely. Actually, there are two main core values of Uzbekistan, for the safety and security of Uzbekistan. First, we respect all the nations. We don’t put some indigenous nation as kind of superior to some other nations. We have 150 different nationalities living peacefully together. So this is one core value. It’s the way it has always been and keeps Uzbekistan safe. Second, we respect all religions. Despite being a Muslim-majority country, we are a secular state and thus see all religions as equal. So these two principles make the integration process much easier in Uzbekistan. Foreigners will feel at home when they come.

JE: What have been the primary challenges in attracting foreign talent and fostering domestic tech growth? How is the government addressing these challenges?

SS: The primary challenge lies in raising awareness about Uzbekistan’s opportunities. To combat this, we have launched awareness campaigns and participated in international events. Additionally, we focus on upskilling our youth through education reform and incentivizing certification and training programs.

JE: What are the inherent advantages of working within Uzbekistan’s tech sector?

SS: Uzbekistan offers a unique blend of affordability, safety, and a welcoming atmosphere. With its stable infrastructure and young population, Uzbekistan serves as an ideal regional hub for companies seeking growth opportunities.

JE: What have been the main challenges when it comes to attracting foreigners, but also growing the tech sector domestically? And what are you guys doing to address these issues?

SS: The main challenge we are currently facing is that people do not know about Uzbekistan. So in response, we have launched awareness campaigns to show the opportunities we offer. Our main message is that we help you grow your business with us. So far we have organized events in the United Arab Emirates and Qatar. We have the Uzbekistan Outsourcing Conference tomorrow in New York and the next one will be in Germany. Another challenge is upskilling our youth. As I mentioned, we are doing lots of institutional changes in the school education and universities. But there are still a lot of young people who really need upskilling. So, we are very much interested in inviting training companies and even compensate workers who upskill. For instance, we offer full compensation for international language certification like TOEFL or IELTS certification. Additionally, we are fully compensating IT certification as long as it is internationally recognized. We also subsidize the training institutions when their graduates successfully enter IT outsourcing companies. For each graduate we offer $2,000 and if they are disabled then we offer $3,000. We know that our demographics are good but that we must focus on the quality of our labor to accomplish our goals.

JE: How do you envision the tech sector evolving over the next five years?

SS: Our 2030 strategy aims to achieve significant milestones, including $5 billion in IT exports – up from $344 million in 2023. Furthermore, we want 300,000 employed in the tech sector, and a top 30 ranking in e-government. We are committed to realizing these goals through continuous development and strategic partnerships.

JE: Are there similar initiatives in neighboring countries to develop their tech sectors?

SS: Yes, neighboring countries like Tajikistan and Kyrgyzstan are also prioritizing the development of the tech sector. Rather than viewing them as competitors, we want to collaborate to promote Central Asia as an emerging IT hub.

JE: Could you highlight successful homegrown startups in Uzbekistan’s tech ecosystem?

SS: Certainly. Startups such as Iman, Don’t Waste, MyID, and Mohirdev exemplify Uzbekistan’s innovation. Initiatives like the President Tech Awards further support and recognize such endeavors.

JE: Is the tech sector accessible to English-speaking populations?

SS: Absolutely. We have over 5 million of our younger population who are fluent in English.

JE: It has been reported Uzbekistan’s emergence as a major outsourcing destination. How has the government encouraged this development?

SS: The government’s comprehensive approach, encompassing favorable taxation, infrastructure development, and international partnerships, has catalyzed Uzbekistan’s emergence as a major outsourcing destination. Continuous legislative updates and collaboration with partners like USAID and the World Bank further support sector growth.

JE: Lastly, what message would you convey to digital nomads considering relocating to Uzbekistan?

SS: We extend a warm invitation to digital nomads to explore Uzbekistan’s opportunities firsthand. Our commitment is clear: we facilitate business growth. For those seeking expansion in our region, Uzbekistan offers an ideal destination with its supportive ecosystem and promising prospects.