Czech Republic: The touchpaper has been lit

25 January 2016

Czech Republic: The touchpaper has been lit

czech

Do not be surprised at the Czech Republic’s take-off in the outsourcing space, says Tomas Turkovic at Soitron UK.

Economists use a nation’s M&A attractiveness rating as a useful rule for working out the sustainability of its business status.

You may be surprised – or not – to find that one of Europe’s smallest nations is recording a high mark. That country is the Czech Republic, whose ranking is higher than it has ever been, according to London’s Cass Business School, which publishes the global M&A Attractiveness Index. The Czech Republic currently (2016) places 21st – out of a total of 147 countries, most of which are much bigger.

calculator-paperclip-pen-office-66862Anyone familiar with the quiet dynamism of the Czech Republic will not be surprised. The McKinsey Global Institute has gone on record to state that, along with its outsourcing rivals and neighbours Poland, Slovakia, Hungary, Romania, Bulgaria, Slovenia, and Croatia, the Czechs saw some of the best GDP average annual growth rates in the world in the years from the start of the century to the financial crisis in 2008.

Obviously, that has not been the case more recently. But what may really surprise you is that it hasn’t been disastrously bad, either, and it now seems to be getting better. Yes, the economy failed to grow in 2012/13, but the consensus among economists is that Prague weathered the financial crisis better than most European capitals – and that its recovery since then has been significant.

startupReturning to the M&A theme, business advisor JD Supra has stated that Czechs enjoy a “positive reputation” for launching successful technology ventures and start-ups; the M&A targets of tomorrow, of course.

 

Major service players

A key driver of that tech venture culture is the rise to prominence in the local economy of  nearshoring – the use of geographically convenient but cost-effective resources to aid a firm’s IT outsourcing and service delivery.

That is down to a combination of technical competence, language capability, political stability and the ease of access of Czech programmers to employers in major western economies such as Germany, the Low Countries, and the UK.

AT Kearney said in its 2014 Global Services Location Index that the country stands out as a prime nearshoring option for Europe down to its “large software engineering talent pools”. The management consultancy also rates Prague as one of the top 10 emerging cities for nearshoring work.

156,000 – NUMBER OF IT PROFESSIONALS AS OF 2014 (source: Czech Statistical Office)

In parallel, IT analyst group Gartner, also a close observer of these trends, has even made the state one of its highest designated EMEA service locations, up there with Poland and Turkey.

There is some legacy to back all this up: the country has long had an enviable manufacturing and engineering reputation, dating back to the far-off days of the Austro-Hungarian Empire, not to mention the communist era, where it consistently was rated one of the more promising – albeit trapped – economies.

Want to know more about IT outsourcing in CEE- (4)Czech universities, especially the two world-renowned technology-focused ones: Brno University of Technology and the Czech Technical University in Prague, produce a steady stream of accomplished graduates in engineering and computing. And prudent Czech school leavers prefer practical and vocational degrees, which helps cement the national reputation for a strong work ethic – which translates to a wide variety of IT services skills. These are reported by impressed external employers as spanning an impressive range of business process outsourcing (BPO) competencies, a wide variety of application services, plus useful IT infrastructure management expertise. Open source and Linux are closely studied at school and in higher education, too.

Looking ahead

That all adds up to a growing number of shared service centres opening up in Prague and other major cities, led by the likes of Accenture, Atos, CSC, Fujitsu, HP, IBM, Infosys, Tieto and T-Systems. By any measure, the Czech Republic stands out as a mature nearshoring market, given the presence of all these market-leading players.

10% – Year-on-year growth in IT outsourcing in 2014

It has always been a necessity for Czechs to be multilingual, given their position at the heart of a past Europe of empires. Business languages such as English, German, and Russian are commonly spoken, and to a very high standard. That means competent professionals are easy to hire and do business with.

€336M – Annual investment in R&D, as of 2013
(source: Czech Statistical Office)

But Czechs’ political stability, which is firmly wedded to commitment to a strong and transparent business culture, is what helps them compete so convincingly. The country’s political leaders stress the importance of good copyright, prague2IP and EU data practices to encourage that, which reassures many western firms. But, to be clear, that does not mean Czechs are simply obsessed with structure; people who have had exposure to the country consistently cite local willingness to try new things and an eagerness to strive for excellence as very common features.

The final bit of good news concerns local salary and benefits expectations. These are rated by those familiar with the job market here to be a little higher than in nearby Slovakia, but much less than in the UK, for example.

Putting it all together, given the workforce’s technical strengths and language fluency, the country’s unbeatable great location at the heart of Europe, and competitive salary levels: expect Czech Republic nearshoring to grow significantly this year – and probably even more so in the next five years.

Author: Tomas Turkovic, head of outsourcing at Soitron UK

Originally published in Channelnomics.

How nearshoring can help you tap into Europe’s talent base

The outsourcing of a core business process is complex and in some peoples’ minds, something of a risk. Best practice dictates that you should engineer the best contract you can, along with a tight set of highly-defined SLAs in order to guarantee the best possible outcome and mitigate the risks. But really, at the end of the day, it comes down to this simple question: do you believe your new partner has the right calibre of staff on-board to do the job?

This core question is made that much more nuanced when it comes to off- or nearshoring. It’s one thing to contract with a service giant based in your own country. But what if the new team is based half a world away – or, as is increasingly the case, Central and Eastern Europe (CEE)?

The good news is, customers working with quality CEE nearshoring partners have very little to worry about, and actually quite a lot to be reassured by. That’s because the vast and growing pool of human talent service firms have three highly-favourable characteristics: youth, a dedicated approach to education and a strong culture of quality training.

The Gen Y…

young_boyYoung people often get a bit of disparagement, especially in the UK, with some loose ideas about ‘Gen Y’ this or that. The reality is that so-called Generation Y – workplace entrants bring a valuable set of attributes into their new jobs. They are completely digitally aware for a start, so there’s less of a learning curve. They also like a challenge, look for interesting and rewarding careers from the start, and are very good at self-management, report satisfied employers.

The Gen Y cohort already in or about to join the CEE tech human capital resource are just like this. They also share another characteristic of young modern Europeans; they are multi-lingual, happy to move between countries to gain experience and advance themselves, and have often already done a stint living or studying in, say, London, before they come on-stream for you in Prague or Bratislava.

Meanwhile, they have been taught at college to work in teams and be skeptical of hierarchies, which can also be great for bottom-up innovation. And because they want to enjoy their work, not just climb the greasy pole the way you or I might have resigned ourselves to, these guys can be incredibly loyal – but only if they feel valued and stimulated.

Want to know more about IT outsourcing in CEE- (2)And good CEE-based service companies know this – which is why they are shaping their recruitment and retention policies to capitalise on just these very strong distinguishing marks of Europe’s Gen Y graduate workforce. In terms of recruitment, the market is very competitive and there is a lot of talent available in the CEE. Experienced, senior people are rich picking in the Czech Republic and Slovakia, whereas Bulgaria and Romania is stronger for more junior staff.

The reason that the Czech Republic and Slovakia are better for senior people is because they receive hands on education and training in the workplace after finishing university, and because the big US tech companies such as HP and IBM set up shop there more than 10 years ago. This has resulted in producing people with very strong communications, customer relations and management skills – meaning they are very experienced, highly trained and extremely well rounded.

Western Europe may have little choice in looking to CEE nearshoring – as 51 million ‘millennials’ are moving into the workforce, while 48 million Baby Boomers will retire over the next 10 years, according to a Forrester Research study published in 2006.

That study also provides one last basis for optimism, by the way: “Talented, mobile individuals who are so used to connective technology that they embrace it at work without a second thought.” Don’t you want that kind of enthusiasm on your outsourced business process?

Originally published in http://www.pcr-online.biz.

Turkey Remains A Serious Outsourcing Destination

Recent world news has put the name of Turkey back into the headlines, and some commentators have raised doubts about the near-future stability of this dynamic economy.

The consensus, though, is that this regional power-broker and founding G20 member of 75 million citizens enjoys so many structural advantages as a modern state. Let’s look at the country’s fiscal profile first. Turkey was the seventeenth largest economy in the world in 2014 with a very respectable GDP of $1.5 trillion, states the CEEMA Business group’s latest data on the nation, which also says that per capita income has risen 300 per cent in the last ten years alone.

dollar-currency-money-us-dollar-47344-minThe same source suggest that 23 per cent of Turkish companies across all sectors forecast double-digit sales growth this year and next. The consensus is that the country remains on the growth path, despite current pressures – a judgement backed by its latest (Q2) GDP figures that show a rise of 3.8 per cent year-on-year, higher than expectations.

Those pressures will, over the long term, be assuaged by basic facts about Turkish business life, perhaps. There are many young, educated and multi-lingual Turkish professionals seeking careers in service industries, which has given the country a sound track record already in fields like IT infrastructure, web development and hosting, software and application development, support and many other fields. IT spending on hardware, software, IT services and telecommunication services in Turkey is expected to increase to $25 billion as early as next year, for instance.

Near to Europe – but other markets too

There is also a growing, and strong, domestic market to tap into. More than half of all households in Turkey have computers with internet access, a proportion expected to rise to 66 per cent over the next five years, while the percentage of Internet users will approach one in two by as soon as 2017. Those young Turkish knowledge workers are also heavily invested in communications tech, with the total number of mobile phone subscribers is expected to reach 75 million by 2017, for example.

IT outsourcing in CEE SoitronFinally, Turkey is in a very interesting position simply by dint of where it is located. Some businesses worry about saturation of the growing CEE ICT markets of Poland, Hungary and Slovakia, and like the idea of another local option. The proximity of Turkey to not just these nearshoring destinations but also to Western Europe itself is a positive factor for many global businesses. At the same time, Turkey is a neighbour of Russia, an unpredictable player in global politics; many experts recommend keeping a close eye on both of these highly-promising emerging markets.

The verdict has to be, then, that while there are challenges for Turkey, they are in many ways not as great as other offshoring locations (think North Africa) – and that there remains vast potential in this modern, well-connected, European neighbour of ours.

Turkey As An IT Power – The Facts

* Analyst Ovum has reported that there is ample opportunity to recruit customer contact centre staff (mainly in Istanbul) fluent in not just English but also German and Dutch.

* Turkey has already been chosen as a regional hub by many market leaders including Microsoft, Intel and Hewlett-Packard.

* Finally, Ankara’s ambitious ‘2023’ growth plan calls for investment to Increase ICT’s contribution to GDP from 2.9% to 8%, creating a local ICT market of $160b, fuelled by increasing national R&D spend from today’s less than 1% to more like 3%.

Originally published in Sourcing Focus.

Soitron UK Shortlisted for NOA Awards 2015

SOITRON UK SHORTLISTED FOR NOA AWARDS 2015Soitron UK’s work recognised by the National Outsourcing Association in the Outsourcing Works – Award for Delivering Business Value category Soitron UK has been recognised in the 2015 National Outsourcing Association (NOA) Awards for its IT SMART project for HP Enterprise Services, a project which helped HP to save $18.3 million.

Daniel Olsson, COO, Soitron UK, commented, “We are honoured to be recognised for such a prestigious awards. Being shortlisted is a great achievement and validation for what we are doing in the UK and in Central Europe.”

Spotlight on Romania as an outsourcing destination

Is it time for Romania to get into the CEE outsourcing fast lane? Many observers say yes, it seems.

Is Romania set for a big leap forward – driven by a number of positive economic drivers, of which technology could be a major component?

Want to know more about IT outsourcing in CEE- (2)

For example, the EU currently rates the country as officially 28th out of all 28 of its member states when it comes to its internal digital economy.

Read the full article at: Sourcing Focus.

Bulgaria: The Next CEE Nearshoring Contender?

Where’s the best kept secret in European outsourcing potential?

That’s a question that in some people’s eyes is increasingly being answered by fast-emerging CEE (Central and Eastern European) nearshoring contender Bulgaria.

Though acknowledged as having a smaller IT workforce than some of its neighbours, the country’s tech scene is in buoyant mood. The Global Entrepreneurship Index (May 2015) placed at 44 out of 100 in terms of its attitude to business and starts up, putting it just ahead of local CEE IT services rivals Hungary and only just behind Slovakia.

accountingThat positive attitude towards development starts from the top down – with the country consistently setting the lowest corporate income tax in Europe, of only 10 per cent. No wonder, perhaps, that many big firms have made their way to Sofia, attracted by the nation’s competitive labour costs and access to a high-skills workforce, with SAP, VMware, Johnson Controls, Cisco and HP all having strong presences here.

It’s not all one-way traffic; a number of home-grown technology firms have even made it all the way over to Silicon Valley. Talk to local entrepreneurs, though, and a few gripes soon come through; the government is often criticised for not doing more to encourage tech development – and some commentators say that, while growing strongly, as we’ll see, the local tech community is still relatively small compared to other CEE economies.

Still, there is a real sense that Bulgaria is finally building to really take-off. The official inward investment agency, InvestBulgaria, says the country offers expertise in outsourced HR, working on world-level projects and at competitive salaries, while for Business Process Outsourcing, it notes that it’s among the leaders in the world in outsourcing.

Bulgarian outsourcing now (2015) accounts for almost 4 per cent of GDP.

Consultancy AT Kearney has put Bulgaria at number nine in its global list of outsourcing destinations for 2014, meanwhile, while the Bulgarian Outsourcing Association says outsourcing now (2015) accounts for almost 4 per cent of GDP.

money_coinsThat seems set to rise, given Bulgarians’ facility with foreign languages (especially English and German), that growing interest in start-ups as a way of life – and the fact that Sofia office space will cost you about half of what you’d pay in Warsaw or Berlin.

 

Is there something to that idea of Bulgaria as the next big outsourcing thing? Seems there could well be.

Bulgaria As An Outsourcing Option – The Facts

Want to know more about IT outsourcing in CEE- (2)BASSCOM is the official trade body for Bulgaria’s local software industry, regularly publishing data on the country’s progress.

Some recent findings support the idea that it’s quickly approaching maturity:

* Bulgarian software firms earned €702m in 2014, compared to only €132m in 2005 – a 500% jump, 60% of which was earned in the export market

* IT is one of the fastest growing of all Bulgaria’s industries, now accounting for 1.75% of total GDP

* 12,000 jobs were directly created in the local tech sector between 2005-14, with a 10% jump from 2013 to last year alone

* That means there are now 17,000 IT professionals in the country compared to less than 5,000 ten years ago

* These IT professionals earn more than most of their local peers in the services or other engineering fields – but their average wage is still highly competitive by EU standards, at just under €22,000 per annum

This article was originally published in Sourcing Focusthe Portal for Sourcing Industry.

Soitron Recognized with Award at Cisco Partner Summit 2015

12 April 2015

Soitron Recognized with Award at Cisco Partner Summit 2015

By admin

Soitron Recognized with Award at Cisco Partner Summit 2015

May 12, 2015 – Soitron has just received the Cisco Architectural Excellence Collaboration Partner of the Year award for the EMEAR (Europe Middle East Africa Region) and SEE (South East Europe) at this year’s Cisco Partner Summit 2015, held in Montreal, Canada.

Peter Hajdu, Cisco’s Director and General Manager, South East Europe, commented, “It’s my honour to recognise that this Award is presented to Soitron for the expertise, professionalism and passion in helping customers to build a competitive advantage thanks to smart use of Cisco solutions. This award highlights Soitron’s outstanding achievement in delivering video and collaboration solutions to solve customers’ business challenges.”

Cisco Partner Summit awards reflect the top-performing partners within specific technology markets across all geographical regions. All award recipients are selected by a group from Cisco’s Worldwide Partner Organisations and regional executives.

Soitron recognized as Architectural Excellence Collaboration Partner of the Year

10 April 2015

Soitron recognized as Architectural Excellence Collaboration Partner of the Year

By admin
Soitron UK Shortlisted for NOA Professional Awards 2015

May 12, 2015 – Soitron has just received the Cisco Architectural Excellence Collaboration Partner of the Year award for the EMEAR (Europe Middle East Africa Region) and SEE (South East Europe) at this year’s Cisco Partner Summit 2015, held in Montreal, Canada.

Peter Hajdu, Cisco’s Director and General Manager, South East Europe, commented, “It’s my honour to recognise that this Award is presented to Soitron for the expertise, professionalism and passion in helping customers to build a competitive advantage thanks to smart use of Cisco solutions. This award highlights Soitron’s outstanding achievement in delivering video and collaboration solutions to solve customers’ business challenges.”

Cisco Partner Summit awards reflect the top-performing partners within specific technology markets across all geographical regions. All award recipients are selected by a group from Cisco’s Worldwide Partner Organisations and regional executives.