Cyprus’ technology sector is now contributing almost one-sixth of the country’s GDP, supporting nearly 80,000 jobs and outperforming every other EU member state in ICT growth, according to a new report presented by Partner at KPMG Cyprus Christophoros Anayiotos said at the STEM For All event organised by TechIsland and Women In Tech Cyprus.
The study highlights the increasingly central role technology is playing in the country’s economic transformation, with the sector emerging as one of Cyprus’ strongest drivers of growth, employment, and foreign investment.
According to the report, the tech sector contributed €5.9 billion directly to Cyprus’ GDP in 2025, representing 16.2% of the national economy, up from 15.5% in 2024. When indirect and induced economic effects are included, the sector’s total economic impact rises to €11.9 billion.
The findings define the broader tech sector as a combination of information and communication technology (ICT), professional and scientific services, and parts of the financial services industry linked to technology activity.
The ICT sector alone generated €4.1 billion in gross value added (GVA) in 2025, with Cyprus ranking third in the European Union for ICT contribution to the economy. ICT now accounts for 12.5% of the country’s total GVA, significantly above the EU average of 5.6%.
Notably, Cyprus ranked first among all EU27 countries for ICT sector growth between 2016 and 2025. During that period, the country’s ICT gross value increased by 435%, compared with an EU average growth rate of 86%.
The report also highlighted the sector’s resilience during periods of crisis and uncertainty. During the Covid-19 pandemic in 2020, Cyprus’ overall economy contracted by 3%, while ICT sector growth rose by 21%, demonstrating what the report described as the industry’s “strong resilience and sustained growth.”
Employment figures also showed rapid expansion. The tech sector employed 48,200 people in Cyprus in 2025, including 31,700 Cypriots, 4,100 EU nationals, and 12,400 non-EU workers. Including indirect employment effects, the sector is estimated to support around 79,000 jobs across the wider economy.
Tech employment has grown at an annual rate of nearly 10% over the past decade, while the number of non-EU employees increased particularly sharply as companies sought international talent to meet growing demand.
Despite the growth, the report warned that Cyprus faces a widening skills gap and will need to invest heavily in education, digital skills, and workforce development to sustain momentum.
Among the report’s recommendations were promoting STEM education, upskilling teachers and students, improving digital government services, increasing airport connectivity, and joining the Schengen Area to improve mobility and talent attraction.
Foreign investment linked to ICT has also grown significantly. ICT now represents 17% of Cyprus’ inward foreign direct investment stock, making it the country’s third-largest FDI sector after financial services and real estate.
The report further noted that Cyprus ranks 25th globally in the Global Innovation Index 2025 and second among economies in its region, citing strengths including high-speed internet access, cloud computing adoption, and a highly skilled workforce.
However, weaknesses remain, particularly low business expenditure on research and development, limited access to R&D financing, and relatively low patent activity compared with other EU countries.
The findings reinforce Cyprus’ emergence as one of Europe’s fastest-growing technology ecosystems, with policymakers and industry leaders increasingly positioning the island as a regional hub for innovation and digital investment.
