This year’s TechIsland Summit once again embodied the spirit of collaboration, bringing together the tech industry, government, and other stakeholders to discuss and promote actionable ideas for Cyprus’ tech-driven future. This annual gathering highlighted the significant progress and potential of Cyprus as a burgeoning tech hub.
Valentinos Polykarpou, Chairman of TechIsland and Executive Director of Global HR Ops & Services, as well as General Manager of Cyprus at Wargaming, delivered a compelling keynote speech. Polykarpou underscored the exponential growth of the wider tech sector, noting its direct contribution of over €3 billion to the Cypriot economy in 2023. This achievement is a testament to the strategic efforts to attract international tech companies and highly skilled experts to Cyprus.
“These experts are helping to build the expertise on the island, which is still relatively low,” Polykarpou said, emphasising the importance of upskilling and reskilling local talent to match the sector’s growth.
ICT Growth and Employment Trends
According to a study by KPMG, even though Cyprus is among the top three EU countries in terms of ICT growth, with a 283 per cent increase in gross value added (GVA) from 2011 to 2023, the employment rate of ICT specialists remains at the EU average of 4.6 per cent. This indicates that the country may need more ICT specialists to catch up with the growth of the ICT sector.
“Our strategy has been to attract highly skilled experts from third countries to help upskill and reskill local talent. A lot has been done, and we thank the government,” he said. “Within the framework of this strategy, we identify the gaps and try to find solutions. And this panel is about a significant gap which concerns the mobility of these experts,” he added.
According to a large-scale survey conducted by TechIsland and IMR among tech companies and their employees in Cyprus, lack of connectivity and limited mobility are among the top disadvantages of working in Cyprus.
For tech companies, the tax incentive for first employment is the most highly rated incentive, while the EU Blue Card is the most anticipated potential incentive.
Economic Contributions and Future Potential
The ICT sector in Cyprus has shown remarkable progress, with significant contributions to the economy. According to KPMG, the sector’s GVA grew by an exceptional 19 per cent during 2019-2020, supporting the overall economy even during economic slowdowns. In 2023, the ICT sector’s direct contribution to the Cypriot economy was 9.4 per cent, significantly higher than the EU27 average of 5.4 per cent.
The KPMG report detailed that the ICT sector achieved an estimated total impact of around €4 billion, with a direct impact of €2.46 billion and an indirect impact of €826 million. Moreover, the sector’s growth has been robust, with a 283 per cent increase in GVA from 2011 to 2023, positioning Cyprus fourth in the EU27 for ICT growth.
Employment in the ICT sector has also seen a positive trend. In 2023, Cyprus’ ICT sector employed 17,000 individuals, with the contribution per employee amounting to €142,000, making Cyprus fifth in the EU27 for GVA per ICT employee. Notably, the share of non-Cypriot ICT employees increased significantly from 17 per cent in 2019 to 39 per cent in 2023. For every foreign national employed in the sector, there are two Cypriots, highlighting the increasing demand for ICT talent in Cyprus.
Despite these achievements, the sector faces challenges, particularly in connectivity and mobility. The survey by TechIsland and IMR revealed that these are among the top disadvantages of working in Cyprus. The tax incentive for first employment is the most highly rated incentive for tech companies, while the EU Blue Card is the most anticipated potential incentive.
Polykarpou emphasised the importance of identifying gaps and finding solutions within the framework of the national strategy. “Our strategy has been to attract highly skilled experts from third countries to help upskill and reskill local talent,” he said, expressing gratitude to the government for its support in these efforts.
The KPMG report provided comprehensive data on the sector’s impact and future potential. Cyprus ranks second in the EU27 on ICT contribution to GVA, with ICT’s contribution at 9.4 per cent compared to the EU27 average of 5.4 per cent. The report also highlighted the resilience of the ICT sector, noting that during the period 2019-2020, while the overall GVA of Cyprus decreased by 3 per cent, the GVA of the ICT sector grew by 19 per cent.
Moreover, the report pointed out that the ICT services sub-sector has been the primary driver of growth within the EU27, contrasting with the contraction of manufacturing and telecommunications sub-sectors. This trend is mirrored in Cyprus, where the services sub-sector has shown substantial growth.
Looking ahead, there is a strong emphasis on increasing the number and capacity of private schools, developing and improving digital skills among the population, and promoting STEM (Science, Technology, Engineering, and Mathematics) career paths to ensure a steady pipeline of talent for the tech industry. The digital transformation of schools and government services is also a priority, along with building a transparent legal system and quick legal processes to foster a conducive business environment.
The TechIsland Summit demonstrated the dynamic interplay between the tech sector, the country, and other stakeholders, reaffirming their collective commitment to driving Cyprus forward as a leading tech hub. As Polykarpou aptly noted, “A lot has been done, and we thank the government. Within the framework of this strategy, we identify the gaps and try to find solutions.” This collaborative spirit will undoubtedly continue to shape the future of Cyprus’ tech industry.
