In an interview with Kun.uz, Asror Arabjonov talked about how IT enterprises in Uzbekistan could work with Silicon Valley and the potential for increasing IT exports.

“We launched a platform uniting tech companies”

About 7-8 months ago, we launched a platform called "Silkroad Innovation Hub" in an office space near Stanford University. We work with startup founders from five Central Asian countries — Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan — as well as Mongolia, Azerbaijan, and Türkiye. We facilitate their arrival in Silicon Valley. Our goal is to establish a community of startup founders.

Some founders are somewhat behind, some have raised money from venture investors, and others are already selling their products in the US market. They have more information than those who are new, and sharing this information also occurs through this platform. Different community sectors in logistics or other developed industries in the US see each other at various events and conferences. However, when it comes to technological companies, there is no unifying platform for them. Although startups are all built around networking, as the more connections you have, the easier it is to attract venture capital and find initial customers. We facilitate the unification of people working in venture capital, startups, or any company if they are from the same region.

Suppose you have devised software and want to present it to the US market, and your customers are large technology companies, for example, people working at Google, Facebook, and the like. There are those responsible for purchasing software. If you meet these people through this platform, your work becomes much easier.

Arriving in Silicon Valley could be a big step to take for some. So, we realized after the pandemic that it's not necessary to sit here physically. Many may argue that not all changes derive from Silicon Valley because countries like India, Israel, and Belarus, which have similar conditions to ours, have also created their IT hubs. Nevertheless, Silicon Valley remains the leading IT hub.

“We need to strike deals with major IT companies in Silicon Valley”

One of the tasks set before the Ministry of Communication is to generate $5 billion in IT services for the world market by 2030. One way to achieve this is to offer services to foreign companies.

Our recent growth has been fueled by large companies coming to us, for example, EPAM has moved here for certain reasons. But still, $5 billion is a substantial figure. One way to achieve this is to directly sign contracts with major IT companies in Silicon Valley. This means that all IT companies in Uzbekistan should switch to an outsourcing mechanism and start offering their services to large companies here. Whether it's Google or Microsoft, they need to secure contracts. For instance, one of the biggest clients of India's Infosys company is Microsoft. Around Microsoft, they build offices to offer services to both the US and Indian markets. Uzbekistan is also on this path, which means our IT professionals have started to offer their services to foreign markets. But today, we cannot compete with markets like India when offering our services to companies like Microsoft or Google. On the one hand, prices in other countries are much cheaper than ours. Due to the recent shortage of IT professionals, our prices have also increased considerably. One way is to direct efforts towards offering service products to startups.

“If a company like Skype were to emerge from Uzbekistan…”

If we consider why the markets of Ukraine and Belarus, as well as the Central and Eastern European countries, have been transformed into major IT hubs, and why there is significant outsourcing from the US to these locations, the answer lies in the fact that they have begun offering products and services.

In Europe, Skype was the first company to reach Unicorn status (a private company valued at over one billion US dollars) and was highly valued as a start-up and subsequently sold to foreign investors. Following that, the country's own startup and venture ecosystem developed, resulting in the emergence of very large companies and startups.

Let's say a company similar to Skype emerges from Uzbekistan; it would offer its services to the entire world market. The first concern for the company founder would be the Uzbekistan market. With a population of 36 million in Uzbekistan, one million of them can converse in English, and 700 thousand have IT expertise and can code. The company would turn to the Uzbekistan market rather than paying an annual salary of $150 thousand to an employee in Silicon Valley, seeking more affordable labor. We are already seeing this trend: startups from Kazakhstan and Kyrgyzstan that I know and that are offering their products in the US market all have their main offices located in their home countries.

Our argument is about direct outsourcing of our markets, our IT companies. Firstly, we need to foster unicorns by offering IT products while supporting startups in our own country. While the revenue from growing unicorns may not always be higher than that from IT exports, the former is inconceivable without the latter. We need intelligent startup founders from the countries we operate in to come to us and engage in dialogue.

We are working on venture funds. If they want to raise money here tomorrow and connect with us, we would consider investing in them. We have embarked on supporting every startup founder.

Our objective is to gather the startup community and unite them, subsequently organizing training sessions and competitions, bringing in leading speakers from Silicon Valley, to create a platform and hub from which they can benefit.

"We need to start by solving the problems of larger and faster-growing markets"

Speaking with many Uzbek startup founders, I realize one of their mistakes is focusing on too small a market. They attempt to solve issues that have already been resolved in other countries.

Uzbekistan has a population of 36 million and a GDP of about $80-90 billion. However, this is still a meager market, and it is tough for unicorns to emerge from it. If I were to advise startups, I would tell them to start by addressing the issues in larger and rapidly growing markets.

For example, the Indian market is large and growing quickly, and so is Latin America. Europe is large, but it's not growing as rapidly, and the same goes for Japan. Therefore, we should look at large and fast-growing markets. If we think globally and offer solutions to global problems, I believe companies from Uzbekistan could also reach valuations of over one billion dollars.

Currently, the startups receiving the most funding from venture funds in Silicon Valley are those utilizing artificial intelligence and offering it as a product service. They are receiving the biggest valuations and raising money quicker and in larger amounts than others. This is the area we need to work on. To ensure we don't look back with regret in 20 years, we need to strengthen our schools in mathematics and physics; significant innovations in software are also happening in this direction.

Interviewed by Madina Ochilova