The contribution of business and IT services to the Czech Republic is approaching EUR 20 billion per year
Grafton Recruitment’s international salary survey has shown that despite declining cost efficiency, the Czech Republic remains a leader in corporate and IT services. By the end of the year, 175,000 employees will be working in this sector, making the Czech Republic the country with the largest share of business services workers in the total population. The industry is moving from simple shared services to skilled global digital services. According to estimates by the industry association ABSL, its contribution to the Czech economy is already approaching €20 billion per year.
In recent years, the business services sector has become a cornerstone of global economic growth and an important source of employment opportunities in many countries around the world, including the Czech Republic. While Central and Eastern Europe has become the preferred destination for in-house business service centres (SSCs) and research and development (R&D) centres due to its well-educated workforce, competitive costs and strategic location within the European Union, India and the Philippines have become the preferred destination, as have countries in Latin America, particularly Brazil, Mexico and Colombia, are important global destinations for business process outsourcing (BPO) and information technology outsourcing (ITO), made possible in particular by a large, skilled and cost-effective workforce with good English language skills. North America, on the other hand, has emerged as a centre of high technology and R&D, driven by the presence of leading technology companies, access to top talent and strong government support for innovation.
Czech Republic as a first-timer
“The survey, which involved 15 countries, shows that the Czech Republic can boast more than one first place among the countries surveyed. For example, the highest density of employees in business services. While in neighbouring Poland, for example, the share of employees in the sector in the total population of the country is 1% and in Romania even less, in the Czech Republic we are already approaching 2%, despite the fact that we have one of the highest labour taxes and we are far from being a cheap location,”
explains Martin Malo, Director of Grafton Recruitment, adding that the higher costs are compensated by the high quality that investors have found in the Czech Republic.
The Czech Republic is another leader in wage levels. Compared to the average wage in individual countries, the Czech Republic has the largest difference between the average wage in the Czech Republic as a whole and the average wage for non-managerial positions in the business services sector. This difference is a full EUR 895 and shows how attractive the sector offers jobs to qualified Czechs and expats. By comparison, the difference is €712 in Poland, €701 in Portugal, €657 in the UK, €466 in Romania and even just €144 in Spain. This is also due to the level of pay, which in the Czech Republic for non-managerial positions is on average EUR 2 648, higher than in most of the countries surveyed. Higher wages were recorded only in the UK and China.
Digital transformation and ESG
In all countries surveyed, the industry expects further growth. Probably the strongest growth is currently taking place in Spain, Portugal and India, but the Czech Republic is competing with them. According to the industry association ABSL, 59% of centres in the Czech Republic are planning to expand and grow, and the industry is expected to employ a full 200,000 people by 2025.
“In order to continue to be among the top performers, the Czech Republic needs more flexible economic migration programmes, similar to those introduced in Poland, for example, as well as more support for the sector from the state. Either as in Hungary, for example, in the form of incentives for new investors or by listening to the needs of the sector, which is changing the Czech Republic from a country of cheap labour to a country of services with high added value,”
comments Martina Malo. According to Malo, important trends in the industry include digital transformation enabling a focus on more skilled digital services on a global scale, hybrid working, which makes it possible to employ talent outside company headquarters and thus access a much wider pool of job seekers, and the growing emphasis on ESG and related obligations and regulatory requirements.
