Why Lithuania may be the next IT hotspot

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Recently we have seen reports of B2B companies moving into Lithuania’s borders and setting up shop. Google is also establishing a presence in the small Baltic state.

How did this country with a population of about 3 million become such a strong magnet for business and tech? 

Heavy investment in STEM, creating business-friendly environment

Skilled talent and investment in technology appears to be growing in Lithuania. The ZDNet report indicates the country ranks 16th in the world for ICT skills. The country is also heavily investing in STEM education and appears to be committed to ongoing increases in IT degree programs  (note: 93 percent of Lithuania’s population hold a secondary – or higher – degree).

Additionally, many Lithuanians speak several languages, with English being a rapidly growing second language (some say 80 percent of its youth speak English)..

Other appealing attributes found in Lithuania include:

  • A fast-growing and diversified economy
  • Attractive tax rates for businesses
  • Increased privatization of business
  • Financial incentives offered to bring business to the country

Lithuania appears to be trying to improve and create a more business-friendly environment by reducing some of the barriers. The U.S. State Department indicates the Lithuanian government now also provides “equal treatment” to both foreign and domestic investors, setting few limitations on activities.

“Foreign investment in the ICT sector has grown by 70 percent between 2008 and 2013. The number of businesses has grown by 10.5 percent over the same period,” Mantas Katinas, general manager at Invest Lithuania, told ZDNet.

Lithuania also entered the Eurozone earlier this year.

Lithuanian government role in helping attract businesses

The Lithuanian government is actively working to attract and help businesses transition across its borders. A dedicated government-sponsored agency, Invest Lithuania, appears to play a strong role in helping companies get established – and its services are free.

“We help global, export-oriented businesses that create highly-skilled jobs in Lithuania. Our experts are able to bring their wealth of experience to bear on a number of business sectors, with particular focus currently placed on shared services, manufacturing, technology and life sciences,” the agency’s website states.

Invest Lithuania says its services provided include sharing information related to startup costs, legal requirements and taxes. They help organize meetings and link companies with an “extensive partner network” and assist firms during a new launch, to name a few forms of support.

And government assistance is available after the launch for additional support and marketing too. The agency also helps attract local talent to companies setting down roots in the country.

Then there is the financial carrot too. According to Real Business, in Dec. 2014 the minister of economy in Lithuania approved a regulation allowing foreign investors to receive grants – up to €4.34m (US$ 4.82m/$Canadian 6.02m)

With government support, which also advocates business-friendly laws, these could be strong reasons why some companies are flocking to Lithuania instead of other countries.

What this mean for B2B companies

What might Lithuania’s increased business-friendly atmosphere translate for B2Bs? There are some pros and cons. The country can be a place to establish a presence or options can be explored to find local tech solutions. While tech appears to be central to its economic growth, a number of businesses that are not IT-centric are looking to utilize Lithuania’s talent pool to strengthen their own IT processes. With the technical criteria any business needs to conduct business, companies may just find their solution in the Baltic state.

However, it might be a good idea for B2B executives to keep an eye on the political developments too. In March both Reuters and Business Insider published a piece about fear of an invasion by Russia.

Other potential issues noted by the U.S. State Department includes a few obstacles business executives reported. These included difficulties in obtaining business/residence permits, low-level government corruption, some transportation barriers and high energy costs. But the latter is “projected to at least stabilize and possibly decline as the country implements diversification projects,” says the U.S. government agency. They also reported the World Bank’s “Doing Business” survey gave a positive rating, ranking Lithuania 17th of 189 countries in 2014.

Is Lithuania tech’s next hot spot? With its dedication and investment to both business and technology, it definitely appears Lithuania is a country to watch.

Photo of Vilnius, Lithuania, via Flickr, Creative Commons

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Leigh Goessl

Leigh Goessl

Leigh Goessl has been writing on the web since 2007. She currently is a freelance writer and enjoys writing about business and tech topics. Leigh's previous work includes ghost writing for a a legal website, a major online college and an education website. Her education includes an MBA with a concentration in information security.
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