Download Czech Republic IT Profile and Business Opportunities

Czech Republic
IT Profile and Business
Opportunities
Team Members
Chris Kowalski
Ed Terrana
Rajani Sinha
Gyan Prasad
Chris Czar
Agenda
Characteristics of Czech Republic
Geography
History
Demographics
Politics
Culture
Characteristics of the IT Industry in the Czech Republic
Economic characteristics as related to IT in the Czech Republic
Economic and IT comparison between Czech Republic & Slovakia
IT opportunities and Recommendation
Characteristics – Geography
Characteristics – Geography
Characteristics – Geography
Area: 78,866 sq km, roughly the size of South Carolina
Landlocked – no ports
Located astride some of oldest and most significant land routes in
Europe
Neighbors economically sound nations Germany and Austria, as well
as emerging nations Poland and Slovakia
Railways: 9,435 km; Roadways: 127,693 km (100% paved, 498
Highway); 114 Airports
South Carolina has 103,072 km Roadways and 68 Airports
What Does this mean?
Czech Republic is highly accessible!
Characteristics - History
Communist Nation from 1948 until after the fall of the Berlin
Wall
Non-violent anti-communist coalition negotiated the
governments resignation in 1989
1993 the “Velvet Divorce” separated Czech Republic and
Slovakia into two nations
In 2004 became a member of the European Union
Czech Republic financial experts do not believe the nation is
emerging, but already “emerged”
Czech Republic has undergone recent and drastic changes!
Characteristic - Demographics
Population is 10,241,138
Labor Force 5.25 Million
Growth rate is -.05%
The median age:
males is 37.2 years old
females is 40.82 years old
90.4% of populous are of Czech ethnicity
59% claim no religious affiliation
Catholic - 26.8%
Literacy rate is very high at 99%
90.45% of populous has a secondary education (US – 88.35%)
What does this mean?
Czech Republic is educated but old!
Characteristics - Politics
Parliamentary Government
Legal modifications have occurred to:
bring Czech Republic in line with the obligations of
the Organization on Security and Cooperation in
Europe (OSCE)
expunge Marxist-Leninist legal theory influences
from former government regime
The Czech Republic is working toward a stable, legitimate government
Characteristics - Culture
Culture is heavily influence by
neighbors
Prague 1-2 hours from Germany
Also influenced by Western Europe
Rapidly changing from Communist culture
to Western culture.
Characteristics - Culture
Culture Model based on Hofstede:
Environment – Constraint
Time – Multi-focus, fixed, future and past
Action – Doing and being
Communication – High context, direct and
indirect, instrumental, and formal
Space – Private and public
Power – Tend to be hierarchical
Characteristics - Culture
Culture Model based on Hofstede:
Individualism – Collective and
particularistic
Competitiveness – Cooperative
Structure – Mix of order and flexible
Thinking – Tend to be inductive and
deductive.
Characteristics - Economic
Unemployment Rate
Real GDP Growth Rate
5
10
4
8
EU (15 countries)
1
Czech Republic
%
2
6
EU (15 countries)
4
Czech Republic
0
2
-1
0
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
1998 1999 2000 2001 2002 2003 2004
-2
Year
Year
Inflation Comparision
12
10
Percent
%
3
Czech
8
Finland
6
Germany
4
Netherlands
2
0
1998
1999
2000
2001
Year
2002
2003
2004
IT Industry in the Czech Republic
Electricity Data
71.75 bill kWh produced, 55.33 bill kWh consumed
Telephones
3.6 Million land lines
Cellular Phones
9.7 Million cellular units
Privatized industry (Eurotel, RadioMobil and Cesky
Mobil)
• All provide wireless internet access and improved SMS
IT Industry in the Czech Republic, Cont.
86% Business Exchanges now digital
Copper subscriber systems now being enhanced with
Asymmetrical Digital Subscriber Line (ADSL)
equipment
295,677 Internet Hosts
2.7 Million Internet Users
Approximately 35% of population use internet
Dial-up, ISDN, Lease Line, Wireless, Cable all used
as access methods
IT Industry in the Czech Republic, Cont.
Personal Computers in Czech Republic
500,000 PCs in use
600,000 Networked PCs
PCs in the home have the highest growth
rates
IT Industry in the Czech Republic, Cont.
Government Initiatives
Ministry of Information Technology was
established in 2003
Program to connect all Czech schools to
the Internet initiated in 2001
2003 – Launched National Computer
Literacy Program targeting middle-age and
older people outside large cities
IT Industry in the Czech Republic, Cont.
Prague establishing itself as a center for financial and
IT services
New Investors are attracted to Czech Republic due
to:
quality of the city's infrastructure
the availability of modern office space
good telecommunications
improved services
SAP, Intel, DHL, ExxonMobil and Siemens all have
Czech Republic Operations
Top Tier Czech Tech Firms include Auto-Cont on Line,
ICZ, LogicaCMG, PVT
Economic Characteristics as related to IT
GDP $107 Billion
Unemployment rate is 8.5%
Work week mandated at a minimum of
40 hours a week
Double Digit growth in IT Industry
IT market value is $760 Million
$26 Million in IT services in 2003
Economic Characteristics as related to IT
4 Modes of Software Development in CR
Localization – software imported from other
countries and translated in Czech
Customized – software created from scratch for
Czech users
Offshoring – developing software domestically to be
sold to other countries
Development – developing software for domestic
market as well as translating to other languages for
foreign market
Economic Characteristics as related to IT
Czech Software Engineers
Lower salaried that Western European Counter parts (60%
of salary)
• $18,000/year for programmer in Prague with 2-3 years
experience
• Smaller cities, salary is 15-20% lower
Tend to be very skilled
Targeted for software development by foreign companies
50,000 Czech university students are enrolled in software
engineering course
• 33% of degrees are technical in nature (US – 18%)
• Czech Technical Institute compares favorably to MIT
Slovak Republic
Member of European Union
Czech Republic is also a member of EU
Population is 5.4 Million
10.2 Million in the Czech Republic
Originally behind economic growth of other
Eastern European nations
Has since caught up economically
Very High Unemployment rate 15%
Czech Republic is 8.5%
Slovak Republic
GDP is $41.1 Billion with 5.5% growth
rate
GDP $107 Billion in Czech Republic
Services make up 53.6% of GDP
58.8% in Czech Republic
Hi Tech Exports Made up 3.7% of
exports in 2004
Down from 4.1% in 2003
Slovak Republic
Hi level of phone usage
Fixed Line/Mobile Phones combined at .925
phones per person
• Czech Republic is over 1 per person
Internet usage is 53%
35% of Czech Republic
89,592 Internet Hosts
295,677 in Czech Republic
PC’s owned is 15%
Czech Republic is 27% (2001 est.)
IT Opportunities/Recommendations
Call Center servicing Europe and/or USA
and Canada
Call center for Germany is likely the best
possibility due to labor cost differences
35% of Czech Republic speak German,
higher proficiency than English
Advanced telecommunications
SAP European Call Center serves as model
IT Opportunities/Recommendations
Tourist IT Services
Tourism is increasing in Prague
http://www.mikesbiketours.com/index_munich.html
“Mike’s Bike Tours” has leveraged IT to market itself
Relocation Assistance for Americans
Prague becoming biggest European Relocation destination
for Americans
Assistance would include Czech language instruction, social
and business cultural instruction as well as helping emigrés
to set-up their basic needs
IT Opportunities/Recommendations
Outsource engineering and/or computer
science projects
Leverage IT in order to have a satellite center that
tackles engineering and computer science projects
for a company
High number of graduates with technical degree
8.5% unemployment approximates to 1,400
unemployed high tech graduates each year
Opportunity for Czech’s to work in their own
country and not be forced to emigrate
IT Opportunities/Recommendations
Advantages to establishing in Czech Republic
No foreign investment restrictions
High “Knowledge Pipeline”
Skilled and disciplined workforce
Expansive telecommunications network
IT is a national priority
Various domestic tools to facilitate investment
Stable, democratically elected government
IT Opportunities/Recommendations
Advantages, continued
Lower labor costs when compared to other European
nations
Czech
Czech
Czech
Opportunities/Recommendations
Disadvantages
Labor costs are rising with admittance into the EU
• Real wage growth is 4% (US 1.2%)
Unemployed work force is primarily unskilled
Only 4.38% of 530,297 unemployed workers have a
university degree
Czech Republic government’s weak enforcement of
Intellectual Property Laws
Czech Republic added to U.S. government’s Special 301
priority watch list that identifies nations that have failed to
establish fair and effective legal protections outlined under
international obligations for intellectual property rights
Summary
While labor costs are still low, and IT skills are
high, the Czech Republic represents an
excellent opportunity for IT investors. Call
centers, software development, and IT
services are a few possible investment areas.
However, as the Czech Republic continues to
thrive economically and remains an attractive
destination for other investors and immigrants,
the odds of a successful venture will continue
to decrease in the near future.