In the last few years Armenia has become a hot bed for tech talent, with a growing number of software engineering professionals and startups emerging in the country. Since the inception of SmartGateVC, I have witnessed the tremendous potential of the Armenian tech industry first hand as part of the investment team at the fund. Over the years, throughout my work with our portfolio and pipeline companies I have come to appreciate the unique advantages that Armenia offers when it comes to building high-performing engineering teams.
Since the establishment of Hero House in Glendale, which is a tech and entrepreneurship hub in SoCal I have had the opportunity to engage with numerous entrepreneurs, technology enthusiasts, and executives based out of CA. A recurring theme among these interactions has been the potential to establish R&D and software engineering teams outside of the United States, specifically in Armenia.
The United States, particularly California, presents a challenging environment for recruiting and maintaining engineering teams due to high costs and intense competition for talent. As a result, many founders seeking to rapidly scale and expand their engineering and research teams are exploring options outside of the United States. When considering Armenia as a potential location, Hero House and SmartGateVC are often among the first places they turn to. This article aims to serve as a comprehensive guide for setting up a software engineering team in Armenia.
There are a few reasons why you might be considering Armenia as a destination for your team. Some of the possible reasons may include:
Setting up an engineering team in Armenia can be a major advantage for a newly launching company. The engineering costs in Armenia are 3 times cheaper (or even more if your alternative is California) than the United States. So hiring R&D in Armenia might mean 3 times longer runway and way less dilution early on.
Regardless of the reason, you've come to the right place. Armenia offers a skilled workforce, a growing tech ecosystem, and a neutral political climate, making it an ideal location for your R&D team.
Armenia has a long-standing tradition in technology, dating back to the Soviet era when it was the "silicon valley" of the Soviet Union. After the collapse of the Soviet Union, some Armenian entrepreneurs from diaspora among them Al Esaian, Adam Kablanyan, Sam Simonian and others recognized the potential of the country's talented workforce and established their engineering and R&D teams in Armenia. In the years that followed, several of these startups were acquired by major tech corporations such as Synopsys, National Instruments, Oracle, VMWare, Cisco, Mentor Graphics, Teamviewer, and D-Link. These corporations not only established their presence in Armenia but expanded their teams, thereby contributing to the training of high-quality and globally competitive engineers. This laid the foundation for Armenia to become a premier tech destination.
Today, Armenia is a hub for tech companies of various sizes and stages, including series seed to late-stage startups, tech corporations, and small and large tech outsourcing companies. The software talent pool is more diverse than ever, consisting of juniors, and seniors with 10-15+ years of experience in building tech products and technical teams. The country's skilled and experienced workforce, combined with its growing tech ecosystem, make it an ideal location for companies looking to establish or expand their R&D operations.
When companies consider hiring engineers in Armenia, one of the first decisions they must make is whether to hire an outsourced software development agency or an in-house development team.
Armenia has a wide range of software development agencies, ranging from small boutique firms to larger companies with teams of 150-200 people. The process typically is the following:
Software development Agencies to consider
If you decide to hire a software development agency a simple google search would give you a wide range of options to choose from. I suggest you check out the trello board which is a very good summary of Armenia's current tech scene. If you check out the “Service Providers'' card on the trello board you will find most of the development agencies with details.
If you would need help on making a choice feel free to reach out to me directly. I would be happy to hear about your needs and offer you my suggestions:
Scenario 2: Hiring an In-house Development Team
Many tech companies, among them startups such as Service Titan and Disqo have chosen to establish an in-house development team in Armenia instead of hiring a software development agency.
Think of hiring an in-house engineering team in Armenia as setting up a company branch in the country. The crucial things to consider are the following
Service providers who can help you set up an office in Armenia.
Throughout my work at SmartGateVC I interact with numerous recruitment agencies, tech recruiters and experts who work with tech companies that are already established in Armenia and new startups who are seeking to set up offices in Armenia.
Feel free to reach out to me directly or schedule a call via Linkedin and I will be happy to share advice based on the most recent info I have.
Setting up a company and the legal requirements for an R&D office in Armenia are among the easiest in the world. You can register your company in 30 minutes or less, and the government provides a number of tax incentives for software companies. We won't go into detail about what type of entity to choose or where to open a bank account, but if you're curious, my colleague Ashot Arzumanyan, Partner at SmartGateVC, has written a comprehensive guide with all the details you might need. You can find the article here.
Typically, if you hire the right accounting and legal team, they can take care of all the legal requirements for you. If you need recommendations for an accounting or legal firm, I'm happy to share my picks with you.
Now that you know your options when it comes to hiring an engineering team in Armenia it’s time to understand what would be the costs for this. See below the chart summarizing the cost for each engineer:
Average net salary of a developer in Armenia:
The below chart summarizes the after tax salaries for the Software Engineers in Armenia based on their years of experience. The data is based on the research implemented by a jobs and careers marketplace called Staff.am that has been working with Armenian tech companies for the last few years helping them with recruiting new hires.
If you decide to hire a software development agency instead of hiring a group of engineers on your own, the agency might charge you a small premium to cover their back office expenses.
The time zone difference between California and Armenia is 11-12 hours depending on the time of the year. This can be both a challenge and an opportunity. On one hand, it may be difficult to accommodate calls between the time zones as both teams will be forced to do calls either early in the morning or late in the evening. On the other hand, the positive side of this is that while the team in one continent is sleeping, the other continent can pick up the load and move it forward, meaning the work never stops.
The majority of the tech talent in Armenia will speak and understand English very well. In rare cases, you may come across engineers who understand English but have difficulty speaking it. This may be a challenge, but most of the time it should not make the work impossible.
I hope the article answered your most important question and that you're now in the process of hiring a team inArmenia. The tech industry in Armenia has been booming lately and it's really cool to see both big and small tech companies moving there.
If you still have some unanswered questions, feel free to reach out to me! You can find me on Linkedin.
And even if you don't have any specific questions, don't hesitate to connect with me! Drop me a note on LinkedIn and let me know what you think of the article. We at SmartGateVC and Hero House always appreciate feedback.