Georgia’s technology export sector: growth drivers and structural constraints

In 2025, Georgia’s information technology sector generated $1.15 billion in export revenue—a 67% increase year-on-year and more than a thirteen-fold rise from the sector’s 2017 baseline. This paper traces the policy, diplomatic, and private-sector decisions that produced that outcome. It then examines three constraints—labor market restrictions on foreign workers, the absence of government as a technology customer, and Georgia’s exclusion from U.S.-led AI infrastructure investment—that directly affect whether the sector’s growth continues.

IT export revenue reached $1.15 billion in 2025, up from $688 million in 2024 and $784 million in 2023. The broader information and communications sector grew by 28.7% in 2025. Employment in the sector rose from approximately 30,600 in 2021 to 54,500 by the end of 2025.   For context, sector turnover stood at approximately $93 million in 2017 (at the 2017 annual average exchange rate of approximately 2.49 GEL per dollar), with a workforce numbering in the low thousands. The compound annual growth rate between 2017 and 2023 was 37.9%.

The United States is the largest destination for Georgian IT exports, accounting for approximately 26% of the total, followed by the United Kingdom at 15% and Malta at 11%. In 2023, 60% of IT companies operating in Georgia were established with foreign capital. U.S.-based technology companies alone have created an estimated 8,000 to 9,000 jobs in the country, paying salaries roughly three times the national average and contributing approximately $740 million to $925 million annually to the Georgian economy.

How the sector was built

Institutional foundation. The Georgian Innovation and Technology Agency (GITA) was established in 2014 under the Ministry of Economy and supported by a $23.5 million World Bank grant through the Georgia National Innovation Ecosystem project. Its mandate was to create conditions for a startup market: grant financing for early-stage ventures (up to approximately $55,000), matching grants for later-stage companies (up to approximately $240,000), and physical infrastructure, such as technoparks and incubators. By 2022, GITA had invested in more than 200 companies, 37 of which raised approximately $130 million in follow-on capital.

Access to U.S. capital markets. In May 2016, the Georgian government launched Start-up Georgia, a competitive program that selected Georgian startups for presentation to American investors in Silicon Valley. The program attracted 726 applicants in its first year; eight finalists pitched to approximately 50 investors in 2017. The program established an annual engagement pattern that demonstrated sustained demand for a permanent presence for commercial diplomacy on the West Coast. Georgia’s Consulate General in San Francisco, opened in 2019, formalized that presence: maintaining investor relationships between annual events, co-hosting engagements with major U.S. technology firms, and coordinating with the embassy in Washington on commercial promotion. Having worked on this effort from Washington, I can say that the consulate’s continuity in San Francisco—maintaining relationships between annual events—was more valuable than the events themselves.

Tax framework. The diplomatic and promotional work of 2016–2019 demonstrated that foreign technology companies needed more than access—they needed a tax and legal structure competitive enough to justify relocating operations rather than simply attending events. The most consequential single policy decision for the sector was Government Decree No. 619, issued October 8, 2020, which created the International Company Status (ICS) for IT businesses. The ICS reduced the corporate income tax on distributed profits from 15% to 5%, the personal income tax for employees from 20% to 5%, and eliminated the dividend tax. EPAM Systems—a U.S.-listed software engineering company with revenues exceeding $4 billion—was among the first major American firms to establish operations in Georgia under the new regime, followed by Flat Rock Technology, FlashGrid, Exactpro Systems, and Lineate.

Private-sector coordination. EPAM and Lineate are members of the America–Georgia Business Council (AGBC), a Washington-based organization that promotes bilateral commercial activity. The AGBC has served as an intermediary between U.S. companies evaluating Georgia as a location for operations and Georgian policymakers—a role that becomes particularly important when the broader U.S.–Georgia bilateral relationship is under strain. The ICT Association of Georgia (ICTA), founded in 2020, has taken on a parallel function domestically: aggregating private-sector positions on tax policy, labor regulation, and procurement, and coordinating with the AGBC on advocacy that requires engagement in both Tbilisi and Washington.

The 2022 influx. Russia’s invasion of Ukraine in February 2022 produced a large-scale relocation of technology companies and professionals out of Russia and Belarus. Georgia, along with Armenia, was a primary destination: visa-free for most nationalities, with a functioning banking system, low taxes, and English-language infrastructure adequate for remote work. The number of IT companies operating in Georgia rose from approximately 13,700 to over 24,100 between 2022 and 2024. The employment and revenue figures for 2022–2025 reflect this influx as much as they reflect organic sector growth. The two should not be conflated: the former represents a one-time stock adjustment; the latter determines the sector’s baseline going forward.

Structural constraints

Labor market access. Georgia’s domestic IT labor supply is insufficient to sustain the sector at its current scale. The PMCG sector snapshot published in April 2025 identified workforce availability as the sector’s primary constraint, and industry representatives have been consistent on this point since at least 2023. Recent legislative changes restricting foreign labor market access, combined with the continued absence of a long-term technology residence permit, increase the cost and uncertainty of employing international professionals in Georgia. Companies operating under the ICS regime face the additional constraint that employees cannot legally work remotely from outside Georgia—a significant disincentive for senior talent considering relocation. These frictions did not prevent growth during the 2022–2023 period when the external supply shock was large enough to override them. They are more consequential now that the one-time influx has stabilized.

Government procurement and digitalization. Georgia’s public sector is the country’s largest single economic actor and one of the least digitized. There is no coordinated national program for cloud migration across government agencies, no systematic policy directing public procurement toward locally developed technology solutions, and no AI-based public service deployed at scale. This matters for the technology sector because government demand creates a domestic anchor: sustained contracts that support company formation, workforce retention, and product development that can subsequently be exported. Estonia’s e-governance model is the regional reference point—not because it is exceptional, but because it shows what is achievable and what Georgian governments have not attempted. The absence of this demand channel makes the sector more dependent on external conditions that it cannot control.

AI infrastructure and U.S. export licensing. Access to frontier AI hardware—NVIDIA’s most advanced GPU clusters, in particular—is governed by U.S. export licensing. Licenses are issued based on bilateral trust and compliance with U.S. technology security requirements. In February 2026, the U.S. government approved the export of 41,000 NVIDIA GB300 GPUs to Armenia as part of a $4 billion AI infrastructure project  developed by Firebird, a U.S.-based AI infrastructure company, in partnership with the Armenian government and NVIDIA. The project was announced by U.S. Vice President JD Vance during a visit to Yerevan and positions Armenia as one of the five largest AI GPU hubs globally. The authorization followed an AI and semiconductor cooperation memorandum signed between the United States and Armenia in August 2025, itself a product of sustained high-level diplomatic engagement. Georgia has not pursued a comparable agreement. The gap is not technical—Georgia has the tax framework and the established U.S. company presence to support such a project—but diplomatic and political.

The U.S.-Georgia technology relationship

Georgia’s technology sector’s growth is disproportionately tied to the United States. The U.S. is the sector’s largest export market. American companies account for most high-paying jobs in the industry. American capital—through the AGBC, direct investment, and USAID-supported programs—provided much of the external validation that enabled GITA’s early-stage work to reach international markets.

The U.S.–Georgia bilateral relationship has deteriorated over the past two years. In May 2024, the Georgian parliament adopted legislation on transparency that drew formal objections from the United States and the European Union, arguing that it was incompatible with Georgia’s stated Euro-Atlantic commitments. The U.S. response included the suspension of $95 million in security assistance, visa restrictions on Georgian officials, and a downgrade in diplomatic engagement. The practical consequence for the technology sector is direct: access to the instruments that matter most for the sector’s next phase—frontier AI systems, advanced semiconductor exports, and strategic infrastructure partnerships of the type Armenia has secured—is conditioned on a level of bilateral trust that is currently absent. This is the condition under which Georgian technology companies are operating today.

Armenia offers the clearest available comparison. Both countries are small economies in the South Caucasus with established technology sectors, competitive cost structures, and English-language workforces. Armenia’s $4 billion AI infrastructure commitment from the United States followed a deliberate foreign-policy reorientation—anchored in the U.S.-Armenia Strategic Partnership Charter signed in January 2025 and the AI and semiconductor MOU signed in August 2025—that positioned Yerevan as a trusted partner for U.S. technology exports in the region. The divergence between the two countries on this dimension is recent and, in principle, reversible—but it is widening.

Conclusion

Georgia’s $1.15 billion in IT export revenue in 2025 reflects a decade of targeted institutional, diplomatic, and regulatory decisions, amplified by the 2022 exodus of technology workers from Russia and Belarus, which the country was well-positioned to absorb due to the groundwork laid earlier. The three constraints identified in this paper are not independent. The deterioration of the U.S.–Georgia bilateral relationship is the proximate reason Georgia is currently excluded from the U.S.-led AI export licensing framework that produced the Armenia investment. It also removes the external incentives that previously drove domestic policy reform: when the prospect of a deeper U.S. technology partnership was credible, it created pressure to keep the tax framework competitive, the labor market open, and the bilateral commercial relationship active. That pressure is weaker today. All three constraints become more tractable if the bilateral relationship is restored to the level at which strategic cooperation is possible. Until it is, the sector’s growth will continue to depend on conditions it cannot itself determine.

Giorgi Tsikolia served as Deputy Chief of Mission at the Embassy of Georgia in Washington, D.C., including two tenures as Chargé d’affaires (2015–16 and 2022). He is currently Executive Vice President at Lineate, a U.S.-based technology company with operations in Georgia and Armenia and serves as a board member of the American Chamber of Commerce in Georgia.