Sergejs Kartasovs (Sergey Kartashov), the CEO of Generation Partners, explains the relocation of IT companies in 2020 and the main reasons behind the relocation. He participated in organization of Re.Locate.IT conference where the participants spoke about the best countries for IT development and the challenges associated with relocation.
The Reasons Behind Startups’ Relocation
Most of the IT companies prefer relocation to acquire a better and comfortable environment in terms of the protection of IP (Intellectual Property). Many people think tax is the main reason behind the relocation of IT startups, however, it is not. In terms of better protection of IP, the countries are divided into different categories. Sergejs Kartasovs says, “There are not so many countries in category A. It includes the USA, Germany, the Netherlands, Estonia, Lithuania, and Cyprus. Poland, the Czech Republic, Portugal, and a number of other countries are in category B.”
He adds that the companies relocate to a place where they can easily accommodate their teams. They consider real-estate costs, infrastructure development, and professionalism among the community in this regard. The businesses also consider flight time to home country and other key locations in the world.
Similarly, the companies also look for a comfortable business environment where they can perform financial and economic activities with ease. Kartashov gives an example of Latvia that is losing its position as a preferable place for relocation. The tightened anti-money laundering rules are making it tough for the companies to perform their business activities without having issues. Other considerable factors in this regard are venture funds, angel investments, and mentality.
Better Countries for Relocation
There are various countries in the world that offer a suitable and favorable environment for IT businesses to operate efficiently. There are various factors that are needed to be considered to choose the best among them. Most of the investors and developers, for instance, look for a country that has a strong community. For example, Cyprus is the best country for game development as it has a strong community of game developers. Similarly, Berlin has a strong community of machine-learning specialists.
Estonia has a favorable environment for IT startups as they can get registered easily and quickly there. The company registration process is completely online in Estonia. You can register your company without leaving your office.
Israel was considered a great country for IT development, however, it has become expensive and less-favorable as compared to Malta and Cyprus. Malta is also facing some issues including overcrowding. The overcrowding has pushed the prices up in Malta. Moreover, it is hard for companies to find a suitable location to open their office. It is also suffering from political, financial, and regulatory crises. So, Malta is considered as a bit less favorable country for the relocation of IT startups at the moment.
Tips for Successful Relocation
Sergejs Kartasovs provides some handy tips for companies that want to relocate their IT business to a favorable environment. The first and foremost thing is taking an experienced HR officer with you. It is important for a startup to find the local talent instead of taking a lot of people to a foreign country to save a lot of money.
Similarly, Sergejs Kartasovs says, “Dividing a team between two countries is also a common situation. The companies transfer intellectual property to a place with a more suitable jurisdiction, such as Cyprus, while keeping the developing or manufacturing part of the company in a country with a large choice of personnel.”