IT INDUSTRY. More than 1,000 IT companies with over 30,000 employees. The share of IT sector in GDP - 5.1%

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1 IT industry

2 2 IT INDUSTRY IT stands as the most attractive branch of the Belarusian service sector. The country hosts more than 1,000 IT companies with over 30,000 employees. The share of IT sector in GDP is 5.1%. According to the Ministry of Statistics of Belarus, computer and IT services is the third largest service sector in the country, following transport and construction services. In addition, the share of IT services is the second in the total exports of services, following transport services. Boasting many well-educated, highly-qualified specialists who offer a very favourable cost/quality ratio, the country provides excellent hi-tech outsourcing services for foreign enterprises. IT firms maintain close contacts with Belarusian universities, providing special trainings for students, taking on interns, and hiring recent graduates. These graduates constitute 11 per cent of IT employees, while one third have a 7-year working experience. In 2017, 74.6 thousand students became graduates of Belarusian universities, including 2.2 thousand students in the field of Natural Sciences and 12.9 thousand students in Technologies. Thus, with an average age of 28.6, young people dominate the Belarusian IT industry. About 64 percent of employees in the industry work in outsourcing companies and 36 percent of employees work in product development companies. More than 1,000 IT companies with over 30,000 employees. The share of IT sector in GDP - 5.1% Belarus systematically develops ICT infrastructure and makes it affordable for the population, which creates a favorable environment for new ICT-services and ICT-usage growth. According to the report Measuring the Information Society 2017, published by the International Telecommunications Union, Belarus is ranked 32nd among 176 countries on the ICT development index (IDI). IDI is a composite index that covers access to ICTs, the use of ICT, and ICT skills. As a result, Belarus is one of the regional leaders in ICT development while leaving behind the neighbouring EU states as well, including Latvia (35th), Lithuania (41st), and Poland (49th). Since 2012, Gartner has been including Belarus in the top 30 locations for offshore services. In 2016, IBA Group submitted Belarus for the European Outsourcing Association (EOA) Awards and was announced as a finalist in the Offshoring Destination of the Year category. 75% of the territory of Belarus covered by 3G/4G networks

3 IT industry 3 ICT development index Country Index ranking Iceland 1 Korea (Rep) Germany 2 12 Belarus Lithuania Russia Poland China 80 ICT sector revenues reached almost USD 4 billion in 2016 Revenue from products (works, services) by ICT entities, USD billion ,26 4,41 5,49 5,01 4,29 3,94 IT products and services increased their contribution to total revenue in from 14% to 25% Source: IT-industry in Belarus: 2017 and beyond. Report by Ernst and Young

4 IT industry 4 High Load Systems and Big Data are the most widespread areas of software development in Belarus. Software development areas,% High Load Systems Big Data IoT Cloud Computing Fintech Machine Learning AR/VR Uberfication Robotics Blockchain Belarus in world trade in ICT services Information and communication technology (ICT) services was the most dynamic sector among other commercial services in This is due to a regular global demand for cost-efficient technologies, the development of innovative software in various sectors such as manufacturing, finance, insurance, healthcare and education, as well as the pressing need to address IT security concerns. Computer services represented around 72 per cent of ICT services exports, or 353 billion USD, in 2016 growing by 4 per cent according to the WTO Secretariat estimates. Exports of computer services in selected economies, 2016 (annual percentage change) Israel Ukraine Belarus Brazil Japan United States of America Sri Lanka India Argentina Annual percentage change Source: ITC estimates

5 IT industry 5 In 2016, Belarus ranked 16th by the export of computer services in the world. 0.3 The share of Belarus in the world export of computer services, % Computer service export of Belarus, mln USD Belarus managed to outrun such recognized world leaders in the IT sphere as India, the United States and Korea in computer services exports in Thus, in 2016 the computer services exports in Belarus totaled about $ per capita, while in India the same index equaled $39.24 and in the United States $ Export of computer services in 2016 per capita, USD Israel United Arab Emirates Canada Belarus United States of America Philippines Korea, Republic of Ukraine India Russian Federation Japan

6 IT industry 6 High Technology Park (HTP) The HTP was created in 2005 to foster development of the IT industry. The HTP is an area in the eastern part of Minsk with a special legal regime lasting until Residents of the HTP may be companies that carry out software development activities or other activities in the field of information technology, including: џ design, development, maintenance, implementation, operation of software and / or firmware based on or with the use of the registry of transaction blocks (block chain), distributed databases; џ creation, training of neural networks and other algorithms in specialized sections of artificial intelligence, the implementation of the results of this activities; џ development, maintenance, operation and implementation of unmanned vehicle control systems; џ development or separate stages of development of medical technologies, biotechnologies, as well as the implementation of the results of such developments; џ business process outsourcing activities; џ publication and promotion of software; џ mining, the activity of the crypto-currency exchange, the activity of the crypto-exchange point, other activities using tokens; џ activities in the field of e-sports. This list is not closed. The Supervisory Board of the HTP is entitled to determine other types of activities that the company will be able to become a resident of the HTP. Within the framework of the special legal regime of the HTP, the following preferences are applied: џ exemption from income tax and VAT (as a general rule). Instead of this HTP residents pay 1% of gross proceeds in favor of the HTP administration; џ income tax payment from individuals at a reduced rate (9%), as well as contributions to the Federal Tax Service, calculated from the average salary in the country, and not from the actual one. Additional benefits are provided aimed at stimulating the activities of product development IT companies: џ exemption from VAT for foreign organizations that provide HTP residents with marketing, advertising, consulting and some other services (work); џ zeroing of the tax rate on income of foreign organizations, in relation to the income from the alienation of shares, stakes in the statutory fund, shares in the property of HTP residents (subject to continuous ownership of at least 365 days), as well as royalties, advertising revenues and some other income paid to them by HTP residents. Residents have the right to: џ make transactions with electronic money without a number of restrictions; џ open accounts with foreign banks and other credit and financial organizations without the permission of the National Bank, receive money into them; џ conduct, in the notification procedure, foreign exchange transactions related to the movement of capital, carried out on the basis of permission of the National Bank; џ draw up individuallyp rimary accounting documents when doing business with non-residents of the Republic of Belarus. Legislation on the procedure for conducting and monitoring foreign trade operations for transactions involving HTP residents does not apply. Investing can be carried out according to British law. Residents of HTP are directly entitled to conclude agreements used in international business with third parties: џ agreements on granting an option to contract and option agreements; џ convertible loan agreements; џ agreements on compensation for property losses;

7 IT industry 6 џ џ џ agreements providing for liability for enticing employees; non-compete agreements with employees with payment of compensation, over the duration of noncompete obligations; issue irrevocable powers of attorney. As of January 2018, 192 companies operated in HTP. According to the HTP annual report, the volume of production of computer programs in 2016 amounted to million US dollar, providing an annual growth rate of 142 percent.the volume of exports of the High Technologies Park in 2016 increased by 16 percent and amounted to million US dollars. The share of exports in the total production of the Park was 91 percent. The software developed in the Park in 2016 was delivered to customers from 67 countries of the world, with 49.1 percent of exports accounted for Western Europe, 43.2 percent - for the United States. The share of the CIS countries in total exports decreased from 10.7 percent to 5.3 percent due to a drop in exports to Russia by 43 percent.the main customers importing software developed in the HTP are from the US, UK, Germany, Russia, Ireland. In 2016, the residents of the Park first entered the markets of the Philippines, Vietnam, Turkmenistan, Mexico. The leading areas of activity of the HTP residents are: outsourcing services (69 percent), development of custom solutions (67 percent), custom product development (52 percent), development and support of software for internal needs (48 percent), and development and support for proprietary software for enterprises (43 percent). Thanks to the High Technologies Park, in the whole country, the export of computer services became the second most important item in shaping the positive balance of foreign trade in services. Thus, according to the data of the NBRB for 2016, the balance of computer services in Belarus amounted to million USA dollars, while the share of computer services in the total volume of services increased from 12.3 to 14.1 percent. About 86 percent in the export of computer services is the export of software and services of HTP residents. In 2016, the High Technology Park attracted million USA dollars of foreign direct investment, 16 percent more than in the previous year. Export and Import of computer services in Belarus and HTP share Balance Export Import HTP residents' export Share

8 It industry 8 Some facts about IT industry in Belarus According to the International Association of Outsourcing Professionals, six HTP residents companies (Bell Integrator, Ciklum, EPAM, IBA Group, Intetics and Itransition) are included in the top 100 outsourcing companies in the world. 10 companies from the world's largest software companies ranking Software 500 have development offices in Belarus: EPAM (107), Bell Integrator (281), IBA (281), Itransition (368), Coherent Solution (393), SoftClub (409), Artezio 416), Intetics (419), Oxagile (456), IHS (482). Belarus was number one in the general ranking of Google Code Jam from 2003 to On August 11, Gennady Korotkevich won the competition once again. Mobile applications created by HTP residents are used by more than a billion people in 150 countries. World of Tanks, the game developed in Wargaming, is one of the five most profitable MMO-games with more than 140 million registered users. IT products and services are the fastest growing segment of the economy in terms of revenues and exports. The export of computer services has grown 36 times in 12 years. Technological companies of Belarus created 52 joint laboratories in 15 educational institutions of the country. In the IT industry in Belarus, there are a large number of employees with a higher education - about 76 percent, while on average in the economy their number is no more than 30 percent. IT Industry Overview in Belarus 1) The main event of 2016 for Belarusian IT became the purchase of the technological startup Masquerade by the technological giant Facebook. The team led by Belarusians Evgeny Nevgen, Sergey Gonchar and Russian Evgeny Zatepyakin developed mobile application MSQRD, which made it possible to superimpose graphic effects on the video and photo images of the users' face. By the end of the year MSQRD was among the best applications of the year on Google Play and the App Store. 2) In 2016, successful IT entrepreneur in Belarus Yury Melnychek launched several projects to create "new MSQRDs" - the Varaig platform, a mentoring project for scientific and engineering start-ups and the venture fund Haxus, investing up to $ 2 million in teams with developments in AI, AR and VR. In the fund's starting portfolio there is the already well-known Prisma, the Fabby application for replacing the background of the selfie with the help of neural networks and the "woman's monthly and ovulation calendar" Flo, developed in Minsk by the team of Dmitry Gursky. 3) Startup founders of Viber Igor Magazinik and Talmon Marco announced in 2016 that they were developing the service of online taxi Juno, which could press Uber due to the "human" approach to drivers (half of the company's shares for them). Starting on the roads of New York, Juno attracted $ 30 million of investment quickly gaining speed: a closed test drive began in the winter, the service started working at full capacity in late summer - and soon reported the first million rides. Now the startup is negotiating to raise $ 50 million to go beyond New York. 4) In 2016, EPAM ranked 7th in the top 25 fastest growing technology companies in the world by Forbes.

9 3IT industry 9 5) On December 22, 2017 the long-awaited document - Decree No. 8 "On the development of the digital economy" was signed, which would create comfortable conditions for the work of investors in the Belarusian start-up environment. The document not only prolongs benefits for HTP members, but also introduces a number of revolutionary measures, including elements of English law, legalization of block-technologies and crypto-currency. 6) In 2017, Google bought AIMatter. The application developed by the company Fabby, changing the background or hair color in the photo, is a demonstration of the technology of playing neural networks on the phone. This is the first time that a large IT company completely acquires a company from Belarus, rather than an intellectual property or an affiliated company in another jurisdiction. 7) In 2017, Wargaming launched the Wargaming Forge educational program for those wishing to learn the Data Scientist specialty. The program was devoted to software engineering and data analysis. 8) Dmitry Birulya is the first Belarusian startuppers that have managed to get into the "most influential in the world" start-up accelerator Y Combinator. His project IQBoxy is a program for automation of business expenses management, digitizing documents based on machine learning. 9) In 2017, the PULSE robot was developed from the Belarusian startup Rozum Robotics. The Belarusian development costs about 15 thousand dollars depending on the model, by one-third cheaper than solutions of competitors. Almost all the spare parts for the collaborative robot the startup also produces by itself. 10) The FriendlyData start-up created by the Belarusians got into one of the world's largest accelerators 500 Startups. In May 2017, the project received the support of Google, becoming a participant in the program Grow with Google. And a few months after the release, the Belarusians were selected for the prestigious Plug and Play technology center, the leader in the Silicon Valley venture capital market. One of the world's most important sources of news about API ProgrammableWeb recognized the FriendlyData REST API created by the Belarusians as one of the most interesting projects of 2017.

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