Cyprus is famous for its beautiful coastlines, rich historical background, and advantageous geographical position at the intersection of three major continents. But what is impressive about the country goes beyond its scenery: it is now undergoing an impressive transformation into a digitally-focused economy. Cyprus is keeping up with the global trend towards innovation powered by technology, aspiring to key roles on the stage of tech-driven capital.
Cyprus’s Digital Transformation and Economic Growth
Cyprus has made a striking path on the way to a digitalized economy. The country is now shifting away from traditional blue-collar industries moving towards a more innovation-led strategy. This shift is not just a fleeting trend but a component of a long-term plan to build a competitive digital ecosystem. Today, the ICT sector adds more than €3.3 billion to Cyprus GDP – a figure which is expected to rise to €5.6 billion, accounting for indirect investments. This rapid growth reflects the nation’s commitment to fostering a thriving tech sector. Key industries that drive this growth include artificial intelligence (AI), blockchain, cybersecurity, and fintech. Not only does Cyprus attract investment in these areas but it is also building the necessary infrastructure to sustain them.
Forward-looking initiatives combined with government actions to support them are helping shape a welcoming business environment that appeals to international financial stakeholders and tech startups.
Nurturing Talent: Addressing the Skills Gap
With the expansion of the high-tech economy, it is only natural that the demand for highly trained professionals is growing. It is quite remarkable that Cyprus’s ICT sector is now the source of workplaces for 5.4% of all labor force in the country – a figure surpassing the average across the EU. Although such quick growth in workforce demand is undoubtedly a positive sign, it brings a new challenge: the supply of qualified IT specialists (particularly in cybersecurity) exceeds the country’s increasing needs. To ensure the continued success of the nation’s technology ambitions this challenge needs urgent attention.
The government has recognized this issue and has taken significant steps to address it. Programs such as the €30 million THALIA initiative and the INNOVATIVE and DISRUPT funding schemes are designed to nurture talent and support the growth of small- and medium-sized tech enterprises (SMEs). With their focus on training and development, these programs and initiatives are designed to meet the skills deficit and secure a steady supply of qualified professionals in the local tech industry. This is crucial as more businesses across sectors are required to build robust cybersecurity defenses and develop the next generation of digital innovations.
Government Initiatives and EU Support for Digital Growth
The ongoing journey to a high-tech economy has been made possible through much strategic support provided by the local authorities and the European Union. The government has committed to significant infrastructure development, with a €1.55 billion investment focused on expanding the tech sector. This includes building gigabit internet connectivity and enhancing cloud computing capabilities – two critical components in supporting modern tech businesses.
The National Digital Decade Strategic Roadmap is a key part of this journey. It outlines plans to promote digital education, improve public sector services, and digitize businesses. By 2026, Cyprus’s government has set aside €24 million to teach 20,000 people digital skills, hoping it will ensure that the local workforce is ready to meet the needs of an increasingly digitalized world.
It is not only domestic efforts that support Cyprus’s technological expansion; the EU has also made a significant contribution. For instance, the Recovery and Resilience Facility (RRF) has allocated €350 million to the country for projects in AI, blockchain, and quantum computing. These investments are a good reinforcement for Cyprus to solidify its position as a tech hub in the region.
Investment Ecosystem: A Thriving Startup and VC Scene
If you are still looking for proof that Cyprus’s digital economy is boosting, the country’s vibrant startup ecosystem is one of them. The island is home to several well-established tech verticals, which include game development, fintech, B2C applications, digital media, and IT infrastructure. Major players in these sectors include Wargaming, Nexters, and Easybrain in game development, Exness and XM in fintech, and The Soul Publishing in digital media. These companies aid the economy by creating thousands of jobs and making Cyprus a welcoming place for tech talent.
Regarding the venture capital (VC) scene, the number of VC firms looking to invest in Cyprus’s local startups is also increasing. In 2024 alone, 23 Cyprus-based startups raised €67 million. Those numbers are clear evidence of the increasing interest from investors, further confirmed by the presence of venture capital firms such as GEM Capital, Embria, and Zubr Capital, all of which are actively contributing to the Cyprus tech industry.
The Reflect Festival is another important element of the startup scene in Cyprus, and without mentioning it our overview would not be complete. The Festival draws more than 10,000 visitors providing space for startups to connect with investors and form strategic partnerships. Such events are another essential element for the country to attract more investment into its growing digital ecosystem.
The Digital Horizon for Cyprus: Plans Through 2035
The future of Cyprus’s digital economy is bright promising even greater expansion. The government aims to make the country one of the main destinations for digital investment in the EU which is evident from the Vision 2035 strategy. Expanding Very High-Capacity Networks (VHCN) across the country and investments in quantum computing and AI are among the key initiatives included in the roadmap.
Cyprus is also integrating into European Digital Infrastructure Consortia (EDICs). It enables the country to collaborate on multi-national initiatives and pool funding and resources for transformative digital projects. Working alongside European partners on the latest advancements in AI, cybersecurity, and blockchain, Cyprus positions itself at the forefront of digital innovation, setting the stage for long-term economic growth driven by technology.
Conclusion: Capitalizing on Digital Opportunities
The shift to a digitally oriented economy in Cyprus is not just a future possibility – it is happening now. With government initiatives, EU support, and a thriving technology landscape, the country is well on its way to becoming a leading force in global digital innovation. For startups, investors, and global enterprises, Cyprus offers a great opportunity to tap into a fast-growing, highly competitive digital economy.
As the country continues to build on its successes and address its challenges, now is the perfect time to get involved and put capital into Cyprus’s digital progress. With the right infrastructure, a supportive government, and a skilled workforce, Cyprus is truly becoming a hub for the digital economy.