Located at the crossroads of Europe and Asia, Georgia is ranked seventh globally in the World Bank’s Ease of Doing Business annual index. This small Eastern European country boasts not only an easy and accessible investment environment but also a rich, diverse cultural heritage and unspoiled nature coupled with a typically booming tourism industry.
Georgia’s labor market is flexible and literacy rates are close to 100 percent with about 60 percent of Georgia’s population living in metropolitan areas. The country has an Association Agreement with the European Union, which includes Deep and Comprehensive Free Trade Area and Visa-free travel. The cultural proximity to the EU is also supported by the legislation alignment and a mapped-out reforms agenda aimed at better integration.
Georgia boasts the world’s third-lowest total tax and contribution rate on profit of 9.9 percent and corporate income tax is levied only on distributed profits, making it an attractive business environment. Georgia also has the lowest labor tax rate in the world, according to the World Economic Forum. These tax rates relate to the mandatory contributions on labor paid by businesses.
Given the location, time difference, language ability and availability of skills at much-reduced costs, Georgia remains an excellent option for finding the right people and forming teams to help get quality services to Western markets quickly. In addition to that, the cultural similarities between Georgia and the CEE countries simplify the process for investors in terms of maintaining high standards, efficiency and effectiveness.
All of these factors have been driving the growth of Georgia’s BPO market. Several international global business and IT services providers and prominent local small- and medium-sized companies are already serving international clients from Georgia, including several iconic brands from Fortune 500. Services commonly provided from Georgia include multilingual customer interaction (CRM/Call centers), IT services and remote technical support, financial and accounting (F&A) services, architecture, design and engineering (ADE).
Why Georgia is fast becoming a new lucrative hotspot for sourcing of services in the changing landscape of the BPO industry:
Location: Strategically located where the two continents meet (GMT+4), Georgia is uniquely positioned to serve any country from Europe to Central Asia.
Education: The literacy rate in Georgia is 99.8 percent and 92 percent of the population have at least secondary education. There are 62 higher education institutions, 66 vocational education centers and over 150 language centers in Georgia. During the past five years, over 118,000 students graduated from Higher Education Institutes (HEIs) and Vocational Education and Training (VETs). Vocational training course fees are mostly financed by the government of Georgia.
Skills: The vast majority of the younger population has advanced or intermediate knowledge of English and Russian. German is the third most widely spoken European language. English is the primary language taught in most HEIs. However, 10 to 20 percent of students are choosing German and other European languages as their secondary option. According to BPO & SSC sector Investment Potential research conducted by Deloitte, there are 574,000 individuals in the five largest cities of Georgia to be employed in the BPO industry having language proficiency in English, Russian, German, French and Italian.
Cost efficiency: Georgia has one of the lowest average gross monthly salaries among competitor countries amounting to USD 500. Personal Income Tax is flat and amounts to only 20 percent. Utility costs are one of the lowest in the wide region at approximately 2.3 USD per square meter High class. Modern office spaces are available in major cities of Georgia with 1 million square meters of office stock.
Growing sector, unsaturated market: Business services outsourcing industry grew at a CAGR of 7 percent in the past five years. The biggest sector players that have already selected Georgia as a location are: Majorel, Evolution Gaming, CMX Solutions, Base 4, Asseco and others.
Government incentives: The government of Georgia provides financing and infrastructure for specialized vocational courses based on investors’ needs. Furthermore, salary subsidizing and training co-financing tools are provided by the government for certain BPO related professions. For incentivizing the ICT sector, the “Virtual Zone Entity” concept was introduced in tax code, meaning ICT services exporters are exempt from VAT and Profit Tax.
About Enterprise Georgia
Enterprise Georgia is a government economic development agency, operating under the Ministry of Economy and Sustainable Development of Georgia. The agency focuses on promoting and facilitating foreign direct investments, enhancing the county’s export potential and increasing the competitiveness of the private sector in Georgia.
Further development of the business services sector is a top priority for the agency and stands ready to assist global companies in exploring investment opportunities in Georgia and support their development plans.
- Information support -Tailored in-depth market and industry insights; Advice on business costs; Information concerning the local labor and legal framework
- Communication – Access to Government at all levels and connection to local partners
- Location scouting – Organization of site visits and accompanying investors
- Aftercare – Legal advising and supporting services
For more information, contact: Natia Parekhelashvili at email@example.com.
Natia Parekhelashvili is Senior Manager, Investor Relations at Enterprise Georgia.