Sergejs Kartasovs (Sergey Kartashov), the CEO of Generation Partners, expresses his views on the relocation of IT startups this year. He also highlights the main factors that affect the relocation of companies. Recently, he participated in the organization of a conference on relocating IT businesses, Re.Locate.IT. There were many speakers who identified the challenges in the way of relocating IT companies to other countries.
There are various reasons for the relocation of IT businesses. Most of the businesses mainly relocate to a favorable country where they get high protection of Intellectual Property (IP). Some IT businesses relocate in pursuance of tax benefits. In terms of the protection of IP, the countries are divided into various categories. However, there are not many countries in category A. Sergejs Kartasovs says, “The category A includes the US, Germany, the Netherlands, Estonia, Lithuania, and Cyprus.” On the other hand, category B includes Poland, the Czech Republic, Portugal, and various other countries.
After getting the protection of IP, the companies prefer to get affordable accommodation for their teams. Real estate prices, infrastructure, and professional communities are important features of the accommodation. Kartashov also considers flight time from home country to the relocation country and other important locations in the world important for the companies.
Some IT companies relocate to get a better business infrastructure. They prefer an efficient environment for economic and financial activities. Some countries are losing their position as an IT development location as they are failing to provide economic and financial benefits. Latvia is a perfect example in this regard. Sergejs Kartasovs notes, “Latvia is losing its position as one of the best relocation countries in Eastern Europe. The reason is the tightening of AML (anti-money laundering) rules.”
There are various countries in the world that are highly suitable for developing IT companies. IT companies must have to do some research work before choosing a country from the list of best countries for IT development. IT developers and investors always look for a strong community. Different countries have different types of communities in this regard. For example, Cyprus has a high-class gaming community while Berlin has a great machine-learning community. Estonia is offering the easiest process of registering a company.
Some countries are failing to provide benefits to the IT companies after getting a huge reputation. For instance, Israel has become an expensive country to live in. The cultural and political norms of the country are making it tough for IT startups to prevail. Malta has also become overcrowded. Moreover, it is suffering from political and economic crises during the recent years. So, it is certainly not a good option for relocation at the moment.
After deciding where to relocate, IT companies should look for various things to establish successfully. The first thing is to take an experienced HR manager with them. It is a better option to hire local talent as compared to moving a whole team to a new country. There is also an option of operating from two countries. For example, a company based in Belarus or Ukraine can relocate 20% of its employees and CEO to Cyprus to get better IP protection. The rest of the team can operate from the home country. Moreover, the IT companies should relocate to a country where they have friends and people who are aware of the local jurisdiction, according to Sergejs Kartasovs.
