The Uzbek IT services market is experiencing rapid growth: in response to the increasing demand for technological products and services, new companies are emerging, and the overall volume of offerings is expanding. The share of gross value added generated by the ICT sector relative to GDP has increased from 1.5% in 2021 to 2.1% in 2023. In absolute terms, the volume of ICT services has grown from 11.76 trillion UZS to 23.77 trillion UZS during the same period.
Local companies whose technological products and services have found a customer base in Uzbekistan do not have to limit themselves to the domestic market. There are significant opportunities for expansion into international markets, where the ITes services market was valued at over $10.5 trillion and is projected by analysts to reach $26.9 trillion by 2032. However, entering foreign markets requires additional resources and entails certain risks. What challenges await exporters, and how can these be mitigated? This article explores these issues in detail.
Barriers to Global Market Entry
Let us examine the primary challenges and obstacles entrepreneurs may encounter when offering their products and services to foreign clients.
Selecting an Export Destination
The first step is to identify the target region for export. This involves studying the conditions in potential countries, analyzing the demand for the product in the chosen region, and evaluating the competitive landscape.
For instance, such an assessment can be conducted through SWOT analysis, market research, and pricing analysis. It is essential to examine market dynamics, including consumer and client preferences. By evaluating the market size and structure, exporters can develop a strategy for adapting their products and services to the new region and formulate a unique value proposition that sets them apart from competitors. This is a substantial undertaking that should be managed by specialists with expertise in regional specifics.
Legal Barriers
Beyond consumer demand, each country has its own legal requirements. For instance, software products may require licensing or certification, while in some countries, compliance with local security and privacy standards is mandatory.
The European Union, for example, has stringent requirements regarding personal data protection, whereas China mandates local data storage. The issue also extends to company registration: should a branch be established, or should a local partner be engaged?
Navigating these legal complexities necessitates consultation with experienced legal professionals who can recommend the most efficient solutions.
Financial Infrastructure
Financial gain from export operations is a primary objective for entrepreneurs. However, several critical questions arise: how to receive payments from international clients and users, in which currency to conduct transactions, what taxes must be paid, what benefits and exemptions may be available, and how to manage exchange rate fluctuations while mitigating currency risks.
These questions are inevitable for every exporter, and their thorough examination will necessitate the involvement of qualified specialists.
Product Promotion
Even if a product or service is well-aligned with market needs, this does not guarantee the presence of buyers. Entrepreneurs must allocate a budget for marketing and client acquisition. The cost of advertising may vary depending on the region, and brand promotion strategies can differ significantly. In some markets, digital marketing proves to be effective, while in others, word-of-mouth recommendations or partnership networks may yield better results.
Establishing Sales Channels
How will the product be distributed — through direct sales to customers or via distributors? It may be necessary to establish a local representative office to facilitate access to the customer base. In B2B channels, negotiations can be prolonged, and requirements for product customization may be stringent.
Acquiring initial clients in a new market present a significant challenge, even for entrepreneurs whose products are already in demand in Uzbekistan.
Customer Service and Cultural Considerations
For certain products, a user manual in the local language may suffice, whereas others may require 24/7 customer support in multiple languages. In some regions, clients expect prompt responses and assistance in their native language.
Furthermore, customer support must be available in the relevant time zones. It is also crucial to consider that different regions may utilize varying units of measurement. These factors must be carefully accounted for when expanding into international markets.
Are There Solutions?
Entering new markets becomes significantly easier when an entrepreneur has a well-structured action plan and data-driven analytical insights to support optimal decision-making. However, achieving this requires experienced specialists, who are often difficult to find in the labor market. Expanding the workforce, in turn, entails significant costs. Not all entrepreneurs can afford this, but the ambitious market expansion plans demand execution. How can this be achieved while minimizing risks?
Local2Global Program
The Government of Uzbekistan, represented by IT Park Uzbekistan, acknowledges the complexities and challenges entrepreneurs face in expanding the geographical reach of their goods and services. To support potential exporters, the Local2Global program has been launched, offering 50% reimbursement for the following categories of expenses:
Furthermore, participants of the Local2Global program receive complimentary access to a selection of educational courses on the Coursera platform, enabling employees of export-oriented companies to acquire valuable knowledge and skills.
Export Accelerator
The Local2Global program also provides a comprehensive framework to facilitate the transformation of local businesses into global enterprises, recognizing that strategies effective in the domestic market may not necessarily yield the same results in international markets. The Export Accelerator, hosted on the Local2Global platform, enables entrepreneurs to identify their strengths and weaknesses, which are critical for export success.
Through this initiative, Uzbek companies receive technical and methodological support, while executives gain strategic management competencies. In October 2024, the first cohort of the Export Accelerator was successfully completed. During this phase, business leaders acquired key skills and were granted access to renowned international experts. The program’s workshops and seminars were conducted by South Korean professionals, including specialists with extensive outsourcing experience for Blizzard Entertainment and Microsoft. Additionally, the program featured mentors from leading global firms, including Ginza Soft, ITCOMMS, LaunchLab, and PROXYPLANET.
The Local2Global platform has also served as the starting point for collaboration between Realsoft AI and Modrean AI. Furthermore, the Uzbek gaming studio EVEGOPLAYON, through its participation in the program, successfully established a partnership with the South Korean company PROXYPLANET.
Evgeny Ponomarev, CEO and Co-Founder of EVEGOPLAYON, shared:
"We are currently focused on expanding our operations, particularly towards Eastern markets. The South Korean market is of particular interest to us, as it is one of the largest gaming industries in the world. Our partnership with Proxy Planet serves as a strategic gateway to establishing new connections with South Korean studios.
I would like to express my sincere appreciation to the IT Park team, particularly the Local2Global department, for their invaluable support in assisting member companies with international market expansion and facilitating engagements, including our meetings with South Korean firms. I am confident that after completing several projects within the Korean market, we will build a strong reputation and establish a solid foothold in the market".
How to Join the Local2Global Program?
To be eligible for the Local2Global program, companies must meet the following criteria:
All IT Park Uzbekistan members are automatically enrolled in the program and are required only to submit a request for expense reimbursement.
To become part of the Local2Global community, eligible companies may contact us. Submit an application through the website.
With Local2Global, the global market is within reach!
