2020 Cyprus Country Report

Cyprus is
ready to boost
investment in the
sector to secure
its future as both
an established
international
business centre
and an emerging
tech hub.
Cyprus include Wargaming, a world-renowned
video game developer, international VoIP IPBX
software developer 3CX, and Viber, the popular
online communications platform. Viber’s success
in Cyprus is a good advertisement for the island
as it seeks to attract more tech entrepreneurs.
Viber was started in 2010 by a team of foreign
nationals who needed an EU base with favourable
taxation, so they set up their headquarters
in Limassol. Viber grew rapidly and in 2014
was bought by the Japanese e-commerce giant
Rakuten for US$900 million.
International heavyweights such as Microsoft,
SAP, Oracle and IBM have been present in
Cyprus for many years, and the island has long
been a prime location for the fintech industry as
it is home to hundreds of the world’s biggest forex
brokers and online-trading platforms. But there
is room for further development and growth in
the sector for smaller innovative enterprises, such
as Whipper, a ‘chat and play’ gamified digital
messaging platform which opened its headquarters
in Limassol in June 2017. Its founding team
includes executives, investors and advisors from
Netflix, Riot Games, Amazon, Swiftkey, Expedia,
and Viber. The number of fintech and regtech
firms, such as Spotware Systems and Point Nine,
is also growing and taking advantage of Cyprus
as a gateway into and out of the EU for various
corporate services.
DIVERSIFY OR DIE
With its new focus on long-term development
outcomes, Cyprus is determined to diversify
and harness growth with a technology-driven
economy. The biggest spender by far on IT in
Cyprus is the financial sector, followed by the telecoms
providers and the public service. Support
and training services form the largest primary
market in Cyprus, followed by project and outsourcing
services. There is currently big demand
for support services and skills training in ICT,
especially as communications are increasingly
moving to 3rd Platform technologies, such as
mobile, cloud and big data systems. Services and
software are expected to be the top-performing
segments of the Cypriot IT market in the coming
years, due to continuing demand for quality endto-end
solutions that focus on enhanced user
experience. Innovation and specialisation will be
key elements to succeed in the Cypriot market.
For Cyprus to remain competitive largely
depends on how it adapts to new realities like
virtual banking, e-governance, agritech, new
and renewable energies, as well as smart cities.
Business success will depend on how new technological
capabilities will be utilised, and education
and retraining will be absolutely crucial. In
the next five years, there is significant potential
in further developing medical and financial technology,
and Artificial Intelligence (AI) is also
set to significantly change the way companies
conduct their business.
NEW AI STRATEGY
Whether it sparks excitement or fear, there is no
denying that AI has already become an important
part of our world by enhancing key business
processes to help drive value. Today, companies
are racing to adjust their operations to be able
to capitalise on its transformational potential.
Cyprus has taken a firm stance in establishing
AI as a driving force for growth and increased
productivity, and an opportunity to transform its
economy.
Considerable progress has already been
achieved in Cyprus by developing blockchain
technology and a National Strategy for
Decentralised Technologies has already been
adopted. In January 2020, the Council of
Ministers approved a new National Artificial
Intelligence strategy with plans to establish applications
to support the technological development
of AI in domains such as universities, public and
private sectors. The aim is to create an ethical and
trustworthy foundation for AI development and
to build an international cooperation network
through Cyprus’ participation in EU initiatives.
The strategy also serves as a tool to better engage
with high-tech and start-up companies present
on the island and to attract more players to help
develop this segment.
Cyprus-based companies are already being
noticed internationally in the AI sphere. For
example, in its first outside investment fundraising,
machine-learning company Omilia secured
$20 million in funding from Grafton Capital to
continue expanding its conversational AI technology
built for customer care needs of global
enterprises. The Cypriot company has built a
virtual assistant and customer dialogue management
system, where customers can experience
human-level intelligence and machine-level efficiency
when contacting a company, whether
by phone, web chat, social media, SMS, email,
or mobile app. The AI consists of proprietary
speech-recognition software, voice biometrics,
dialogue technology and machine learning,
which the company claims has trained on billions
of interactions since its founding in 2002.
Now the service is fluent in 21 languages, serving
clients such as global banks, mobile operators
and insurance firms. The fresh capital will fuel
go-to-market efforts in Western Europe and
North America, where the company already has
a lucrative customer base.
Sector Profile
Country Report CYPRUS 2020 129