In recent years, Georgia’s IT services sector has grown from a small, promising industry into a major driver of the country’s economy. Backed by low taxes and a skilled workforce, the sector expanded rapidly between 2017 and 2023. But new data from the National Bank of Georgia shows that, in 2024, IT service exports dropped by 12% compared to the previous year.
A new report from the Policy and Management Consulting Group (PMCG) released in April 2025 shows strong growth in Georgia’s IT services sector, along with similar trends in the wider tech industry. The report says the tech sector grew quickly, with its real GDP jumping by nearly 70% in 2022. By 2023, it contributed GEL 4.2 billion—or 5.2% of Georgia’s total economy—mostly thanks to the fast-growing IT services sub-sector.
Impact of global events
The Covid-19 pandemic gave a boost to the global IT industry and led many companies to switch to remote work. This, in part, made Georgia more attractive to international firms thanks to its skilled workers, low labor costs, and favorable tax system. As a result, several large foreign IT companies set up operations in the country.
The IT sector’s share of total service exports grew from 1.5% in 2017 to 11% in 2023, thanks to supportive regulations and more international IT companies setting up in the country.
Between 2017 and 2023, the number of people employed in IT services increased more than fivefold. The war in Ukraine further accelerated this trend, bringing a wave of IT specialists from Russia, Ukraine, and Belarus to Georgia and contributing to rapid growth in the sector. The most dramatic surge came in 2022 and 2023, when employment rose by 61% and 30% respectively, reaching a total of 24,760 workers.
IT services performance
From 2017 to 2023, Georgia’s IT services sector grew rapidly in both earnings and economic impact. Turnover jumped from GEL 232 million to GEL 3 billion—a 13-fold increase—with the biggest growth happening in 2021 and 2022. The value the sector added to the economy also rose sharply, from GEL 153 million to GEL 2.4 billion, increasing 15 times. In 2022 alone, value-added grew by 74%, showing that the sector was not just making more money, but also creating real economic value. Growth continued in 2023, though at a slower pace, with turnover up 28% and value-added up 32%.
Trade in IT services
From 2017 to 2023, Georgia’s IT services sector consistently exported more than it imported, maintaining a positive trade balance. Exports saw the biggest growth in 2022, rising 235% to $512 million—six times higher than imports. The IT sector’s share of total service exports grew from 1.5% in 2017 to 11% in 2023, thanks to supportive regulations and more international IT companies setting up in the country.
In 2024, the revenue of the Georgian IT sector decreased to $688 million. According to statistics published by the National Bank of Georgia, the IT sector’s foreign revenue amounted to $688 million, which is 12%, or $96 million less than the previous year.
Sector representatives stress the urgent need for Georgia to introduce a dedicated IT residence permit
Industry insiders note that the recent decline was anticipated. The rapid growth in Georgia’s IT sector over the past few years was largely driven by a migration wave, as hundreds of Russian, Ukrainian, and Belarusian IT professionals temporarily relocated to the country. Their work was classified as IT services delivered from Georgia, significantly boosting the sector’s numbers. However, since 2024, many of these specialists have departed, leading to a natural cooling of that short-term growth surge.
“The main increase happened in 2022, when the war in Ukraine began, with a peak in 2023,” says Chairman of the Georgian ICT Association Tornike Sulaberidze. “Many migrants saw Georgia as a transit point on their way to other countries. At the same time, the country wasn’t fully prepared to absorb such a large influx of IT specialists. In the first two years, there were quite a few rejections of residence permit applications, which led many to continue on to other destinations.”
Established in 2020, the Georgian ICT Association works to promote the country’s IT sector through collaboration and advocacy. It currently represents around 20 international companies—including several AmCham members—that employ approximately 12,000 people across Georgia.
Industry experts predict a further decline in exports in 2025, but note that despite a decrease in trade, the volume of the sector is still exhibiting healthy growth. “The volume of the sector increased in 2024…by 10%,” notes Sulaberidze. According to him, “the sector itself has been growing quite a bit over the years, and it is expected to continue to grow in the future”—including in 2025.
Prospects and challenges
Georgia’s IT services sub-sector has seen notable growth, thanks in large part to policies and incentives designed to attract foreign investment and boost exports. A key measure is the International Company Status, introduced in 2020, which offers significantly reduced tax rates—5% on profit (down from 15%) and 5% on personal income (down from 20%)—to companies that export their services. However, the incentive is not available to domestic firms, which industry representatives say puts local companies at a disadvantage and increases the cost of serving the domestic market.
“For example, a banking service player wants to develop its own technologies, and it costs much more to hire a Georgian company than to hire it from another country. All this limits the market and the development of local technology companies. The sector should be taxed and have a 5% discount, it should not matter whether it is a Georgian company or an international one… and another problem is that if a company is granted the status of an international company, its employees are not allowed to work remotely outside of Georgia,” says Sulaberidze.
Sector representatives stress the urgent need for Georgia to introduce a dedicated IT residence permit. Such a measure would enable foreign IT professionals to stay and work in the country long-term, while also enhancing Georgia’s ability to attract skilled talent in the future. To further strengthen the sector’s competitiveness and resilience, PMCG recommends several key steps: improving access to finance, elevating the industry’s public image, updating remote work regulations, formalizing IT residency, promoting knowledge exchange, outsourcing public IT projects to local firms, and adopting a comprehensive national IT strategy.
By Lana Kokaia for Investor.ge
