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Fintech in the CIS Countries: The Competition for Talents

The CIS countries have common history rooted in the Soviet past. Nowadays we see how strong economic ties still exist. The Eurasian Economic Union (EAEU or EEU) plays a significant role. It economically unites five countries, with an aggregate GDP exceeding $2.5 trillion and with a population more than 185 million. Indeed, Russia is the heavyweight in this Union in terms of both population and economic output.

Migration Trends

The deep economic ties mean the creation of the common labor market of Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia. Moreover, the former two states developed closer ties under the framework of The Union State of Russian Federation and Republic of Belarus.

The migration flows between the countries of EAEU are very intensive since there is a common labor market. Fintech business and innovative startups try luring talents to create a pool of professionals with various backgrounds to make their ideas come true.

Russia faced a remarkable wave of young people relocating in 2022. Most of them were distant workers having gigs in IT and fintech spheres. Their relocation fostered the acceleration of development of digital infrastructure in Armenia, Kazakhstan and Kyrgyzstan. Russian migrants created an additional demand for digital services and for fintech solutions that made it easy to transfer money from and to Russia. Online trade and banking got a special boost.

The period of adaptation of Russian migrants to new countries has been shortened due to favorable migration laws and the common historical background of recipient countries. Many people in EAEU speak Russian and local languages also include some Russian words that only underline the specific cultural influence on the territory of the former USSR.

A Digital Russia

Meanwhile, Russia still remains an attractive country for foreigners to work. The high speed of mobile internet became a usual thing not only in key cities of the country. The GovTech in the form of Gosuslugi and Multifunctional Centers help to fix many issues. The divide between Russia and the West, the U.S. and European sanctions not only created the obstacles for Russian economic development but generated a vast demand for local IT and fintech decisions and people working in these spheres.

The enormous governmental support for the IT and fintech sector such as lowering the tax burden for relevant specialists, the preferential mortgage program in 2023-2024 did its job: some Russians who relocated earlier or even lived abroad for many years came back to the Motherland due to new economic incentives.

The U.S. and European sanctions locked the great part of financial capital produced in Russia inside the country. It unleashed the Moscow stock market boom in 2023 - Ruble-based IMOEX skyrocketed 43.87% while official inflation was just 7.42%. Dollar-based RTS gained 11.63%.

These phenomenal results underline that investors are eager to provide money for interesting projects. A historic shift is unfolding in the Russian stock market. For the first time, a wave of truly substantial retail investors is emerging, with individual investment entries exceeding $10 million.

So Russian fintech businesses have some options to get financing. Some of them can start to be a governmental contractor, others can successfully seek private financing inside the country. In any case the government gives a “green light” to such activities since it is seen as very important in the situation when a number of IT and digital services Western vendors left the country and there is a strong necessity to fill a gap.

Russia's Deficit of Fintech Specialists Remains Resilient

Russia continues to recruit specialists from other CIS countries. In the first half of 2024 the federal government started work on the legislative amendments that would give a way for the designated recruiting of foreign specialists. Russia is going to maximally digitalize this process starting from the application of biometrics to the creation of digital profiles of migrants. The country wishes to make the migrant flow digitally transparent to defend the interests of its own economy and migrants as well.

Despite successfully attracting some specialists into the fintech and IT sector, Russia still critically lacked about 600,000 people in these fields in 2023, according to the governmental estimates. The cadre deficit lured some students to drop from local education institutions and come to the labor market for work full time before they graduate.

The key issue in recruiting specialists, in the fintech sphere in particular, is to find the optimal match. Moscow leverages AI technology for job seekers, it offers them virtual reality glasses to try some professions. It shows that Russia follows global innovative trends.

CIS Countries: A Drive for Diversified Economic Relations

Despite the fact that CIS countries have a common history and have strong economic ties, some countries actively develop economic, logistic ties outside the territory of the ex USSR, and it leads to the migrants flowing in new directions. Azerbaijan tilts towards Turkey, Kyrgyzstan actively develops connections with China.

In 2024 Nikol Pahinyan, the PM of Armenia, and his team accelerated the movement into full cooperation with the EU and USA. It is very interesting that women's participation in fintech is relatively higher in Armenia in comparison with other CIS countries though there are no prescribed rules.

Kazakhstan: A Unique Case

Kazakhstan tries to play its own game. In the sense of digitalization of government services Kazakhstan and Russia lead the way. But the former is not under US and EU sanctions as Russia, so Astana also tries to take advantage from this status and actively develops connections with the West and the East as well.

This positioning allows to effectively bring not only capital from both sides but talents as well, so Kazakhstan seeks in this direction its competitive edge. Among the five nations comprising the Organization of Turkic States (OTS), Kazakhstan actively contributes to establishing a streamlined customs route. This innovative corridor will integrate the digital systems of Azerbaijan, Kazakhstan, Turkey, Kyrgyzstan, and Uzbekistan, fostering a seamless flow of trade data.

Presently, the bulk of foreign trade for Kazakhstan, Kyrgyzstan, and Uzbekistan relies heavily on two primary routes: one linking Russia to Europe, and the other traversing China. The accord to enhance this third corridor, the Trans-Caspian route, which sails through the Caspian Sea, Azerbaijan, and into Turkey, accelerates its development as an alternative. By endorsing this logistic innovation, Astana underscores its commitment to broadening its economic partnerships, thereby enhancing multi-faceted cooperation within the OTS bloc, encompassing areas such as the labor market.

Kazakhstan's diversified trade and economic connections mean the country is extensively engaged in economic dialogue with both the West and the East. It brings in not only goods and tech from key sides of the world but also actively brings in investments and people from the West and the East.

The Common Obstacles to Find Fintech Specialists in CIS Countries

Currently, all CIS countries face a challenge to take onboard all specialists local fintech needs. The main obstacle for local people to be onboarded is sometimes non-fluent command of English or, more often, Chinese.

Another obstacle is the so-called “spirit of a startup” that does not always fit the expectations of the people. Even young people sometimes seek a stable job rather than work in the vibrant but constantly changing and less predictable fintech environment.

The low wages in comparison with the compensation level in the EU and USA play also a role. For example, many fintech specialists in Russia leave the field because they find it does not bring them as much money as they had anticipated. The new industrial policy of Russia generously supported by the financial incentives from the government also created the environment in which some fintech specialists prefer leaving the sphere and going to the local industrial enterprises for better pay.

In other CIS countries there is also room to raise fintech specialists’ salaries. For example, in Armenia, the scope for well-compensated employment is notably narrow, with a concentration of higher-paying positions primarily in sectors like software technology, financial technology, and the banking industry. Salaries for roles outside these verticals tend to be modest, making earnings of $2,000 per month quite uncommon. To illustrate, even a skilled fintech professional, fluent in Armenian, Russian, and English, would typically command a salary in the range of $1,300 to $1,600, reflecting the local market's limitations.

CIS Countries Need Solid Industrial Base in the Background to Attract Fintech Talents

The CIS countries lack a sufficient industrial base to produce semiconductors, video cards, and data center equipment, relying heavily on imports from China and the West. However, modern fintech requires a solid industrial foundation to scale up. Without this, the heavy reliance on imports increases the cost of fintech products and limits the ability to raise wages to a competitive level with Western countries.

Considering the Cost of Living

Of course, the fintech wages level in the CIS countries calculated on the parity basis looks not so desperate as it could be. Considering the cost of living in these countries it looks rather lucrative. But this is a catch. There is still a long way to fully develop digital infrastructure.

Another setback is that, outside of the capitals, most CIS countries have a limited assortment of consumer goods. Imported goods, which are often more expensive, make up the omitted products. These countries must address this issue, as the day-to-day comfort living of Western expats depends on the availability of consumer choices similar to those in their home countries.

Each CIS country should identify its unique competitive advantage. Uzbekistan serves as a prime example. With an annual influx of more than 600,000 young individuals joining the workforce and forecasts suggesting a doubling of this figure within the next ten years, the nation's "Zoomer" generation emerges as a valuable resource. Being the most adept generation in terms of digital skills, they hold the capacity to spearhead innovation and fuel the country's advancement in the digital era.

The fintech sector, primarily in Tashkent, offers attractive salaries. The average monthly wage is 11 million Uzbek Soms (UZS), with a lower end starting at 6 million UZS. For context, Uzbekistan's national minimum monthly wage is 980,000 UZS ($77.18).

The positive salary trends in the fintech sector across CIS countries make it a promising field for both local citizens and expats.

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