{"id":7927,"date":"2020-12-15T09:00:00","date_gmt":"2020-12-15T03:00:00","guid":{"rendered":"https:\/\/kglabs.org\/usaid-it-2019-recommendations\/"},"modified":"2020-12-15T09:00:00","modified_gmt":"2020-12-15T03:00:00","slug":"usaid-it-2019-recommendations","status":"publish","type":"post","link":"https:\/\/kglabs.org\/ru\/usaid-it-2019-recommendations\/","title":{"rendered":"What the Report Recommended, and What the Pandemic Settled"},"content":{"rendered":"\r\n

A friend who works at one of the larger HTP-resident outsourcing companies sent me a message in April 2020. It was three weeks into the first round of lockdown. The company had moved entirely to remote work. He wrote: «You remember that section in the report about the bank transfer delays for foreign payments? It just got fixed in two weeks. People forget when the constraint is theoretical. Then it suddenly isn’t.»<\/em><\/p>\r\n\r\n\r\n\r\n

He was being slightly unfair to the bank. The transfer delay had not been «fixed» in two weeks; the way Kyrgyz commercial banks process international Visa transactions was structurally unchanged. What had happened, in those two weeks, was that the same actors \u2014 the National Bank, the commercial banks, the State Tax Service, the HTP Directorate \u2014 had begun making the case for several of the changes the report had recommended over a year earlier, with a confidence and a speed of agreement that had not been present before. The pandemic moved several recommendations from «interesting» to «mandatory.»<\/p>\r\n\r\n\r\n\r\n

This post is the last in the series. It takes the recommendations the original report submitted to USAID in June 2019, ranks them against what respondents themselves said was needed, and tracks what has actually moved between then and December 2020. Some of what we recommended was already happening by mid-2020. Some has been stuck for the entire 18 months and is likely to remain stuck. The pattern of what moved and what didn’t is, in itself, the most useful lesson the series has to offer.<\/p>\r\n\r\n\r\n\r\n

What respondents said they needed, in their own words<\/h2>\r\n\r\n\r\n\r\n

Before getting to what we recommended, here is what 106 IT-sector respondents told us they needed, in their own words, ranked by frequency of mention from the survey.<\/p>\r\n\r\n\r\n\r\n

\r\n \r\n\r\n WHAT IT-SECTOR RESPONDENTS SAID WAS NEEDED, RANKED\r\n % RESPONSE RATE \u2014 MULTIPLE-CHOICE SURVEY, 106 RESPONDENTS, FEB 2019\r\n\r\n \r\n \r\n 0%\r\n 20%\r\n 40%\r\n 60%\r\n 80%\r\n 100%\r\n\r\n \r\n \r\n \r\n \r\n \r\n\r\n \r\n\r\n \r\n Up-to-date curriculum + practitioner-teachers\r\n \r\n 75.6%\r\n\r\n \r\n More employees in the field\r\n \r\n 43.3%\r\n\r\n \r\n Favourable environmental conditions\r\n \r\n 40%\r\n\r\n \r\n Optimised legal framework\r\n \r\n 40%\r\n\r\n \r\n Developed electronic payment system\r\n \r\n 36.5%\r\n\r\n \r\n Local-customer contract execution\r\n \r\n 36.5%\r\n\r\n \r\n Availability of venture capital\r\n \r\n 32.2%\r\n\r\n \r\n More offices \/ workspaces\r\n \r\n 23.3%\r\n\r\n \r\n Increased country recognition\r\n \r\n < 10%\r\n\r\n \r\n Simplified document circulation\r\n \r\n < 10%\r\n\r\n SOURCE: USAID ECP \/ KG LABS \u2014 IT SECTOR ANALYSIS, MARCH 2019. MULTIPLE-RESPONSE SURVEY: % OF OBSERVATIONS.\r\n\r\n<\/div>
Horizontal bar chart of the conditions IT-sector respondents named as necessary for the development of the IT sector in Kyrgyzstan, in February 2019: actual curriculum and practitioner-teachers ranked first at 75.6 percent of respondents; more employees in the field at 43.3 percent; favourable environmental conditions for life at 40 percent; optimised legal framework at 40 percent; developed electronic payment system at 36.5 percent; local-customer contract execution at 36.5 percent; availability of venture capital at 32.2 percent; more offices and workspaces at 23.3 percent; increased country recognition among foreign customers under 10 percent; simplified document circulation under 10 percent.<\/figcaption><\/figure>\r\n\r\n\r\n\r\n

The shape of this ranking is the first thing to read. Three-quarters of respondents named the curriculum-and-teachers issue as a binding constraint. By comparison, the country-recognition issue \u2014 which the outsourcing chapter spent significant pages on, because it was the constraint that locked Kyrgyz firms out of certain international contracts \u2014 was ranked tenth out of ten, named by under one in ten respondents.<\/p>\r\n\r\n\r\n\r\n

That gap doesn’t mean the practitioners were wrong, or that the report was wrong. It means the two views were operating on different time horizons. The practitioners were asked what would help their working week now. The report was asked what would help the sector grow over three to five years. Both questions have valid answers, and both answers are in the same data.<\/p>\r\n\r\n\r\n\r\n

The recommendation clusters<\/h2>\r\n\r\n\r\n\r\n

The report’s recommendations are most usefully grouped into seven clusters. The original document organised them differently \u2014 partly by chapter, partly by stakeholder \u2014 but if you re-arrange by what kind of action they called for and who they called on, they fall into these seven groups.<\/p>\r\n\r\n\r\n\r\n

1. Specialist training, short and long term<\/h3>\r\n\r\n\r\n\r\n

Short term:<\/strong> Create training centres run by existing IT companies on the basis of universities and vocational colleges. The Belarus model was named explicitly. Launch a migration programme to issue residence and work permits faster for IT specialists from elsewhere in Central Asia.<\/p>\r\n\r\n\r\n\r\n

Long term:<\/strong> Work with higher-education institutions and the Ministry of Education on curriculum updates \u2014 blockchain, AI, big data, NLP, business analysis, data science. Develop a mechanism to retrain existing university teachers, with foreign specialists brought in for long-term residencies. Add communication and English-language coverage at undergraduate level.<\/p>\r\n\r\n\r\n\r\n

What changed by end of 2020.<\/strong> Partially. The Belarus-model training centres have not been established at scale, but several private-sector training initiatives at HTP-resident companies effectively serve the same purpose. The Ministry of Education curriculum-update workstream began in 2019 and has been slow. The migration programme for Central Asian IT specialists has not happened.<\/p>\r\n\r\n\r\n\r\n

2. International quality standards and certification<\/h3>\r\n\r\n\r\n\r\n

Open regional certification centres in Kyrgyzstan for the C language (CPP Institute), Python (Python Software Foundation), and IBM\/Microsoft data-science and AI tracks. ISO-9001-2008 certification for HTP residents to enable bidding on larger international contracts.<\/p>\r\n\r\n\r\n\r\n

What changed by end of 2020.<\/strong> Limited. Certification activity has remained at the individual-developer level rather than at the country-infrastructure level. Some HTP residents have invested in ISO certifications directly. The regional certification-centre proposal has not been formally adopted.<\/p>\r\n\r\n\r\n\r\n

3. Country recognition as an IT destination<\/h3>\r\n\r\n\r\n\r\n

HTP to obtain accreditation from international outsourcing associations (gsa-uk.com, iaop.org). Publication in international professional venues (clutch.co, hackernoon, themanifest.com). Participation in international outsourcing exhibitions. Diaspora networks in the United States, Europe, the UK, and South Korea as recognition channels. Self-organised local championships of programmers at international sites (HackerRank, CodeChef, TopCoder) to surface Kyrgyz talent to global recruiters.<\/p>\r\n\r\n\r\n\r\n

What changed by end of 2020.<\/strong> Limited. The pandemic suspended most of the in-person mechanism by which this recommendation was supposed to operate. Several of the HackerRank\/CodeChef international-presence ideas continued informally but the formal accreditation paths the report recommended did not move. The diaspora-network recommendation became more relevant in 2020 (because remote-work norms made diaspora-employed Kyrgyz developers more visible to foreign employers), but the formal mechanisms for converting that into country recognition have not been set up.<\/p>\r\n\r\n\r\n\r\n

4. The payment and banking infrastructure<\/h3>\r\n\r\n\r\n\r\n

This is the cluster that moved most.<\/p>\r\n\r\n\r\n\r\n

International technical and legal standards for the interoperability of Kyrgyz domestic payment systems with PayPal, 2Checkout, Google Wallet, WePay, AliPay. Ministry of Economy proposals to enable Kyrgyz citizens to receive payments to Kyrgyz domestic bank accounts from Behance.net, Upwork, and other international labour exchanges, with the legal classification of that income clarified. National Bank-led reform of the 35% rejection rate on inbound international Visa transactions. National Bank-led reform of the 1\u20133-day verification delay. Adoption of the single QR-code standard across all Kyrgyz banking apps and operator wallets (this last one had been launched on 21 February 2019, immediately before fieldwork closed, and the report flagged it as a major step in the right direction).<\/p>\r\n\r\n\r\n\r\n

What changed by end of 2020.<\/strong> Substantially. By April 2020, the Upwork income-recognition channel had become a near-mandatory policy priority because every Kyrgyz freelance developer suddenly working from home needed it. The bank-side rejection rate has come down on inbound transactions, though not all the way to international norms. The single QR-code standard has become functional national infrastructure. The PayPal\/Stripe interoperability problem has not been fully solved \u2014 but several workarounds (foreign-resident corporate vehicles, Payoneer-to-bank flows) became more legible to the State Tax Service over 2020 than they had been in 2019.<\/p>\r\n\r\n\r\n\r\n

The single most-important shift, by end of 2020, was a change in the conversation. The recognition of Upwork income, in 2019, was a niche complaint from 300 freelancers. In 2020, it became a structural question about how the Kyrgyz IT workforce is paid. That shift has not yet produced final legislation, but the pre-conditions for legislation have been laid.<\/p>\r\n\r\n\r\n\r\n

5. Investment and venture capital<\/h3>\r\n\r\n\r\n\r\n

Prepare and adopt a draft law on venture activities. Stimulate creation of a business-angels institution through information campaigns and training events. Stimulate the private sector to purchase products from domestic software publishers through preferential loans for business automation and digitalisation. Create a normative framework for clearer interactions between investors and software publishers (share allocation, share delineation, convertible bonds, equity terms).<\/p>\r\n\r\n\r\n\r\n

What changed by end of 2020.<\/strong> Not much. The venture-activity law, drafted and redrafted, has not been adopted. The business-angels institution does not exist as a formal entity, though informal investor networks have continued to operate. The «no successful precedent» problem the publishing chapter identified is the same problem at end-2020 as it was at start-2019. Behavox in London is now valued at significantly more than the $300M USD it was at when the report was drafted, but no Kyrgyz-resident-founded publisher has reached even a fraction of that scale.<\/p>\r\n\r\n\r\n\r\n

6. Digital signatures, electronic reporting, and Kyrgyzpatent reform<\/h3>\r\n\r\n\r\n\r\n

Speed up implementation of digitalisation of government services. Deploy digital signatures. Make electronic reporting forms the default. Reform Kyrgyzpatent to enable online and remote submission of IP registration requests, with payment through electronic systems, so that local companies and inventors could register their intellectual property without serious delay. Encourage private-sector use of WIPO’s Madrid system as a short-term alternative until Kyrgyzpatent reform completes.<\/p>\r\n\r\n\r\n\r\n

What changed by end of 2020.<\/strong> Partially. The digital signature infrastructure existed in 2019 and continued to be rolled out through 2020 at an accelerated pace because of the pandemic. The Madrid Protocol path was being used by more companies in 2020 than in 2019. Kyrgyzpatent reform itself has not happened, but the work-around (going via WIPO) has become standard practice for any IT firm registering brand or IP for international markets.<\/p>\r\n\r\n\r\n\r\n

The recommendation from the publishing and animation chapters that Kyrgyzpatent introduce online and remote submission was the part that has moved least and is most worth raising again now. The bureaucratic registration process remains a binding cost for software publishers and animation studios trying to protect IP.<\/p>\r\n\r\n\r\n\r\n

7. Innovative hubs and partnerships with global IT companies<\/h3>\r\n\r\n\r\n\r\n

Open training centres for international companies (Microsoft Innovation Center, Google Learning Center, IBM Learning Center, Facebook Learning Center, Adobe, SAP) on the basis of existing educational institutions. Use these as platforms for cross-sectoral interaction. Discussions and hackathons to involve specialists in developing common-industrial solutions in open source.<\/p>\r\n\r\n\r\n\r\n

What changed by end of 2020.<\/strong> Several training-centre relationships exist informally \u2014 Microsoft and Google in particular have run educational programs through HTP-affiliated channels. Formal innovation-hub arrangements have not materialised. The pandemic disrupted the in-person mechanism, and most international IT companies have not yet prioritised formal training-centre footprints in Kyrgyzstan.<\/p>\r\n\r\n\r\n\r\n

Recommendations that the pandemic settled<\/h2>\r\n\r\n\r\n\r\n

If I were re-drafting this report’s recommendations now, in December 2020, with the benefit of 18 months of hindsight, several of the recommendations would shift in priority.<\/p>\r\n\r\n\r\n\r\n

The payment-system interoperability recommendation<\/strong> would move to the top. It is the recommendation that the pandemic most clearly proved necessary. The work-arounds the report documented in 2019 \u2014 Payoneer for freelancers, corporate vehicles in Estonia or the UAE for studios receiving Google payouts, manual currency handling for tourism platforms working with Booking.com \u2014 are now visibly the way a significant fraction of the IT workforce is paid. The country needs to recognise this formally, not so that it can extract more tax revenue (the tax recovery is modest) but so that the workforce can buy houses, sign contracts, and operate as full economic citizens.<\/p>\r\n\r\n\r\n\r\n

The Upwork income-recognition recommendation<\/strong> would become its own line. In 2019 it was a sub-point under payment systems. By end-2020, with thousands of Kyrgyz developers working remotely for foreign employers, it is the single largest policy gap the report identified that affects the largest number of people directly.<\/p>\r\n\r\n\r\n\r\n

The Kyrgyzpatent reform recommendation<\/strong> would also move higher. It is the slowest-moving structural blocker in the report’s recommendations and the one whose absence creates real, ongoing costs for publishers and animators. Going via WIPO works but it adds 18\u201324 months to the IP-protection timeline.<\/p>\r\n\r\n\r\n\r\n

The country-recognition cluster<\/strong> would move down. Not because it doesn’t matter \u2014 it does \u2014 but because the pandemic has accelerated the migration of Kyrgyz IT talent into globally-distributed remote teams, where individual reputation has been substituting for country recognition in ways the report did not anticipate. A Kyrgyz senior developer at a US fintech company is now well-known to that company’s recruitment network, even if Kyrgyzstan as a country is not yet on Clutch.co.<\/p>\r\n\r\n\r\n\r\n

The venture-capital recommendation<\/strong> would stay where it was, with the addition that the absence of a Kyrgyz «successful precedent» remains the binding constraint. Behavox-from-London is a precedent for someone who left. The precedent the country still needs is for someone who stayed.<\/p>\r\n\r\n\r\n\r\n

What the 2019 report could not have anticipated<\/h2>\r\n\r\n\r\n\r\n

Two things the report did not see coming, but which now belong in any update of it.<\/p>\r\n\r\n\r\n\r\n

The relocation of senior Kyrgyz developers to Estonia and Almaty.<\/strong> The pandemic accelerated a movement that was already happening but kept it largely visible only to the people leaving. By the end of 2020, several Kyrgyz outsourcing firms have either fully relocated their corporate registration to Estonia (via the e-Residency programme) or opened a parallel office in Almaty. The reasons are mixed: regulatory predictability, ease of receiving international payments, easier hiring of cross-Central-Asian talent. The country is losing not just developers \u2014 which was the brain-drain story the 2019 report described \u2014 but corporate entities. That is a different kind of leak.<\/p>\r\n\r\n\r\n\r\n

The animation sub-sector’s pandemic boost.<\/strong> The 2019 report flagged animation as the late-addition surprise. It did not predict that 2020 would be the year YouTube viewership grew sharply enough that the Kyrgyz studios producing for the children’s-content market would see meaningful capacity-constrained growth. The 44%-female-workforce sub-sector \u2014 the only IT sub-sector in the country with women’s participation at parity \u2014 is also the one growing fastest. The recommendation cluster around state support for animation infrastructure (film studios, formal training programs) is more urgent at end-2020 than the 2019 report had judged it.<\/p>\r\n\r\n\r\n\r\n

The recommendations that still need someone to lead them<\/h2>\r\n\r\n\r\n\r\n

Three recommendations in this report have not moved at all, are not currently on any minister’s desk, and are the ones I would press hardest in any 2021 follow-up engagement:<\/p>\r\n\r\n\r\n\r\n

A formal angel-investor network with shared term-sheet standards.<\/strong> The Bishkek angel community exists, knows each other, and has been investing for years \u2014 but every deal is bespoke and negotiated from scratch. A common term-sheet standard, even an unofficial one published by KSSDA or by the HTP, would substantially reduce the friction of every early-stage round.<\/p>\r\n\r\n\r\n\r\n

Kyrgyzpatent online registration.<\/strong> The single highest-leverage process improvement available at low cost. Online submission, electronic payment, remote response. The patent office is the bureaucratic node that affects every IP-generating IT firm in the country.<\/p>\r\n\r\n\r\n\r\n

A working Outbound Logistics solution for small-scale sellers outside Bishkek.<\/strong> The e-commerce chapter’s bind. Without it, the 50%-female-workforce e-commerce sub-sector remains 100% concentrated in Bishkek, and the merchants in Naryn, Jalal-Abad, Talas, and Issyk-Kul keep being excluded.<\/p>\r\n\r\n\r\n\r\n

Closing<\/h2>\r\n\r\n\r\n\r\n

We started this series with the Karakol focus group in February 2019 \u2014 students who had decided to enrol in six-month certificates rather than complete their degrees. We end it 22 months later, in a country that has gone through a pandemic and a political transition since the report was filed. The students from that focus group are, by now, working developers somewhere. Some of them are in Bishkek; some are in Almaty or Tashkent; some are still in Karakol, freelancing through Upwork. Their decisions, taken individually, have produced the labour-market shape the report described. Their decisions over the next two years \u2014 about where to live, where to be paid, and whether to keep the country as the place they invest their working life \u2014 will produce the next one.<\/p>\r\n\r\n\r\n\r\n

The report we filed in 2019 was, in the end, an account of what those decisions were adding up to. The work that comes next \u2014 the policy work, the regulatory work, the institutional work \u2014 is the work of making sure the country remains a viable answer to that question.<\/p>\r\n\r\n\r\n\r\n

This is the last post in the series.<\/p>\r\n\r\n\r\n\r\n

\r\n\r\n\r\n\r\n

Source: USAID Enterprise Competitiveness Project (2019). Analysis of the Information Technology Sector in the Kyrgyz Republic. Implemented by KG Labs Public Foundation; commissioned by USAID ECP \/ Nathan Associates \/ ACDI-VOCA, June 2019. Recommendations chapter as filed, plus December 2020 review based on KG Labs follow-up engagement with HTP, KSSDA, the National Bank, and the State Tax Service, and on ongoing dialogue with the IT-sector firms and freelancers originally interviewed in February and March 2019.<\/em><\/p>\r\n","protected":false},"excerpt":{"rendered":"

A friend who works at one of the larger HTP-resident outsourcing companies sent me a message in April 2020. It was three weeks into the first round of lockdown. The company had moved entirely to remote work. He wrote: «You remember that section in the report about the bank transfer delays for foreign payments? It […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[357],"tags":[755,756,734,727,201,13,461,754,728],"class_list":["post-7927","post","type-post","status-publish","format-standard","hentry","category-research-and-evidence","tag-covid-19","tag-digital-kyrgyzstan","tag-htp","tag-it-sector","tag-kyrgyzpatent","tag-kyrgyzstan","tag-policy","tag-recommendations","tag-usaid"],"translation":{"provider":"WPGlobus","version":"3.0.2","language":"ru","enabled_languages":["en","ru"],"languages":{"en":{"title":true,"content":true,"excerpt":false},"ru":{"title":false,"content":false,"excerpt":false}}},"_links":{"self":[{"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/posts\/7927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/comments?post=7927"}],"version-history":[{"count":0,"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/posts\/7927\/revisions"}],"wp:attachment":[{"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/media?parent=7927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/categories?post=7927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/kglabs.org\/ru\/wp-json\/wp\/v2\/tags?post=7927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}