IDFI: Georgia’s IT sector slows down

Georgia’s IT sector is showing signs of stagnation, with just 18 new companies registered in 2025, a slowdown that reveals deeper structural issues, as the new report published by Institute for Development of Freedom of Information (IDFI) says.

The report emphasizes that much of Georgia’s recent tech growth was driven by the post-2022 influx of Russian and Belarusian IT specialists fleeing war and repression. While this migration temporarily helped Georgia’s digital economy, the growth proved unsustainable. Many foreign professionals have since moved on, leading to a noticeable decline in activity, especially within large IT firms.

From 2022 to 2024, the number of ICT companies in Georgia nearly doubled. However, 99% of these were small businesses or sole proprietors, mostly registered by foreign nationals. IDFI notes that while these companies inflated the sector’s size on paper, their long-term contribution to Georgia’s economy remains limited.

As IDFI concluded, 56% of IT companies operating in Georgia are owned by Russian nationals. The dominance of foreign-owned businesses, combined with low commercialization, minimal tax revenue and high employee turnover, means that the broader economic benefits are not necessarily advantageous locally.

In response to the sector’s slowdown, the government has rolled out simplified residency rules for foreign IT workers. The new framework allows foreign professionals to obtain three-year residency permits but with a caveat: permits are revoked if holders spend more than 183 days outside Georgia in any 12-month period. Authorities hope the policy will grow Georgia’s foreign IT workforce from 6,284 to 24,000 over the next five years.

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