The popularity of the Czech Republic as a destination for digital industries is growing, the main argument is security

International companies mention security as the strongest argument for locating their offices specialising in IT or digital business services in the Czech Republic. From their perspective, the Czech Republic’s popularity is also growing thanks to its high quality of life, which can attract foreign experts and its political and economic stability. This is according to a survey conducted by ABSL among 100 international companies.

“The attractiveness of the Czech Republic as a location for the establishment and operation of a digital business services centre has always been determined mainly by its accessibility and proximity to key markets, the quality of its infrastructure, as well as the optimal time zone for providing services at a global level. Now it appears that new reasons are prevailing, in particular the security and stability of the country and the quality of life here,” says Jonathan Appleton, Managing Director of ABSL, adding: “We are actively working with investors who have targeted the Czech Republic and together with our partners we are helping them to enter the Czech market. We estimate that the industry’s contribution to the Czech economy is already approaching €20 billion per year.“

The country’s safety was also an important argument for instance for Vendavo, which operates its development centre in the Czech Republic:

“The emphasis on the safety of all our customers and employees was key for us when looking for a destination,” says Jacob Ringler, head of development and director of Vendavo’s Czech office, adding: “There is also a great network of cyber security experts on the Czech market, which is why we recently moved the position of information security manager from the US to the Czech Republic, and he has built an amazing team around him. As I always say, any company that invests in information security sends a signal to all customers that they take all issues around data security and privacy seriously. The Czech Republic is helping us keep that promise.”

The Czech Republic is the country with the largest share of employees in digital enterprise services

The Czech Republic’s strong position in IT and digital business services is also demonstrated by a recent Grafton Recruitment survey. According to the survey, the Czech Republic is even the country with the highest share of employees in business services in the total population and holds its position as a leader despite higher labour taxation compared to neighbouring countries.

“The survey, which involved 15 countries, shows that while in nearby Poland, for example, the share of employees in the industry in the total population of the country is 1% and in Romania even less, in the Czech Republic we are already approaching 2%, even though we no longer pay for cheap location,”

explains Martin Malo, director of Graftom Recruitment, adding that the higher costs here are compensated by investors for the high quality they have found in the Czech Republic.

Quality of life attracts employers and employees

The quality of life and the market’s ability to attract experts from abroad is another important argument in favour of the Czech Republic. And it is not only employers who think so but also employees of 90 nationalities who work for the industry. The quality of life in the Czech Republic was mentioned in the ABSL survey by 54% of respondents from among foreign workers, while 46% also praised the good financial remuneration. It is the level of wages that is another top priority for the Czech Republic as a destination for digital business services companies. Data from Grafton Recruitment shows that, compared to the 14 countries where this industry operates, the Czech Republic has the largest difference between the average salary in the country and the average salary for non-managerial positions in the industry. This difference amounts to a full 895 euros and shows how attractive employment the industry offers 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.

“The average length of time that employees in the sector stay with a single employer is also steadily increasing. It has risen by 4 months year-on-year and is now almost 4 years,” adds Jonathan Appleton.

The Czech Republic can be competitive with the world even in the area of premium office space

The IT and digital business services sector is an office sector, thus the level of the local office market, including pricing, is also important for investors.

“The working environment this industry offers is truly one of premium. Despite the high proportion of flexibility and the possibility to work from home, we see a growing interest of companies in cultivating the working environment according to the latest trends and standards,” says Jana Vlková, Head of Workplace Advisory and Office Agency at Colliers, adding: “Although rents are rising slightly, unlike in many neighbouring countries, this is only a moderate growth and the market is showing considerable stability as a result. For investors looking for a suitable destination for their offices, corporate or IT service centres or business units, Prague and the Czech Republic as a whole remains a very attractive location that can compete with countries in Central and Eastern Europe, as well as Spain and Portugal, for example, markets where office sectors such as corporate services are currently growing. “

The highest achievable rents, the so-called prime, on the Prague market in Q1 in premium buildings in the city centre were around €28.00 / m2 / month, in the best locations in the wider city centre €19.00 / m2 / month and the best locations in the rest of the city up to €16.00 / m2 / month. By comparison, for example, in Lisbon, the price level is currently between €21 and €28 /m2 /month, in Madrid between €24 and €37 and in Warsaw between €21 and €27 for premium locations.

ABSL (Association of Business Service Leaders in the Czech Republic) is an association of companies operating in the shared business services sector, which represents a strong generator of employment in the Czech Republic. ABSL was established in 2013 to foster companies in the business services sector, share best practices and help to develop the activities of its members and other entities operating in this segment. At the same time, ABSL provides support to foreign investors who want to establish their business services centres in the Czech Republic. Currently, there are nearly 400 centres in the Czech Republic employing 160,000 people. For more information, please visit www.absl.cz.