Within last 10 years, the industry saw a sharp increase in the number of newly formed companies, both local start‐ups and branches of foreign companies, reads the report by Enterprise Incubator Foundation (EIF). Nearly 90% of the foreign companies were established in 2000‐2009. The number of operating IT companies in 2009 reached 200, registering nearly 17% growth in 1998-2009 period. On average, 20 IT businesses set up each year in 2000‐2009. This sharply contrasts with 1990s when only 5 companies were founded each year.

At the peak in 2008, annual number of newly established firms reached around 30. These high rates, however, may be difficult to sustain due to a shortage of qualified developers, engineers, and project managers. So far, size of the workforce has been the primary factor limiting industry growth.

In 2009, the number of foreign companies in Armenia reached 74 entities or 38% from the industry total. Armenia’s expertise in software development has been gaining more and more recognition outside the country thus fostering foreign investments in the IT sector. Compared to 2006, percentage of firms with Russian/CIS ownership increased by 9% reflecting recent acquisitions in telecom and outsourcing areas. More companies with U.S. and European ownership were also established during the last 3‐4 years with the majority of foreign branches today being from the U.S.