Georgia’s SME Digitalization Lags Behind EU Despite IT Growth

Digital transformation is reshaping how businesses worldwide operate, yet SME digitalization in Georgia continues to lag despite strong IT sector growth. Many small and medium-sized firms struggle to adopt key digital tools like ERP, CRM, AI, and e-commerce. This raises questions about whether Georgia’s growing tech industry is truly driving digital progress across the wider economy. A new ISET Policy Institute study tracks SME digitalization from 2020 to 2024, comparing Georgia’s progress with EU benchmarks to reveal key gaps and opportunities for growth.

Why SME Digitalization in Georgia Matters

Across advanced economies, digital technologies fuel productivity and national growth. Investments in ICT, automation, and innovation enhance resilience and efficiency. Studies show that firms using e-commerce, digital payments, and remote work tools recover faster from disruptions and perform better overall. Yet, in both the EU and Georgia, smaller firms lag far behind large enterprises in adopting advanced technologies such as ERP, CRM, and AI. Bridging this divide is central to both the EU’s 2030 Digital Decade goals and Georgia’s economic modernization efforts.

How Georgia Compares to the EU

While EU SMEs steadily embrace digital tools, Georgia trails in both basic and advanced tech.

• Only 50% of Georgian SMEs have broadband speeds of at least 30 Mbps, compared to 89% in the EU.
• Just 7% of Georgian SMEs have websites with advanced features, versus 78% of EU firms.
• Adoption of ERP, CRM, and AI systems remains minimal among Georgian SMEs.

Key Findings from the ISET Study

• In 2024, only 6–7% of small firms used ERP and 3% used CRM, compared to 68% and 41% among large firms.
• AI use was just 2% for small firms versus 20% for large ones.
• Georgian SMEs lag EU peers in ERP (7% vs 42%), social media (30% vs 56%), and AI (2% vs 13%).
• Only 3% of Georgian SMEs sell online, compared with 20% in the EU.

Economic Implications for Georgia

The SME digitalization gap threatens long-term productivity and export potential. Still, progress is visible. Fast broadband access for small firms rose from 33% in 2020 to 49% in 2024. Local e-transactions jumped 135% from 2020 to 2023, signaling growing online demand. Targeted support for digital skills, financing ERP/AI adoption, and simple e-commerce onboarding programs could help Georgian SMEs catch up with EU counterparts.

Meet the Researchers

• Ana Burduli: ISET Policy Institute. 
• Zizi Galustashvili: ISET Policy Institute. 
• Giorgi Papava: ISET Policy Institute.

Read the Full Report

Read the full report on the ISET Policy Institute websiteto explore the complete findings. Explore more policy briefs on economic growth and development on the FREE Network website.