IT in the Czech Republic is Comparable to the Developed World
In recent years, the economy of the Czech Republic has profited from the positive trends of past years. Yet, at the end of 2008 and especially during 2009, it could not avoid the problems caused by the uncertainty of the world system of finance and the subsequent global economic recession from which the Czech economy has not been spared.
Position of the ICT Sector
There were 31 000 economic entities operating in the ICT sector in the Czech Republic in 2008, 80% (25 000) of which were active in fields falling within the IT services. However, the majority of them (over three quarters – 19 000) were individual businessmen – self-employed people.
150 000 people were employed in the ICT sector in the Czech Republic in 2008 and their contribution to the overall employment in the Czech Republic reached 2.8%. Almost half of all people working in the ICT sector in 2008 were employed in IT services.
In recent years, the Czech market of the Information and Communication Technologies (ICT) has copied the economic development of the Czech Republic by recording a tumultuous growth. While it is difficult to estimate the overall impact of the global economic crisis in the field of the ICT in the Czech Republic at this time, it is evident, on the basis of preliminary data from the international analytical company, IDC, that the whole ICT market recorded a year-on-year decline of 4.9% to CZK 91.4 billion (approx. EUR 3.66 billion).
The share of costs expended for software and services, related to hardware maintenance from the overall IT expenditures, is generally considered a reliable indicator of the maturity of a given IT market. According to IDC reports, the market for IT services in the CR grew by 5.4% in 2008, in comparison to the year before, despite the beginning recession. According to preliminary estimates, the growth in 2009 slowed down to 1.3% but, in view of the overall economic decline, we can still consider these numbers a success. According to the same source, the main source of investments in IT services is, and will remain, the state administration with its many e-government projects. A further decline in expenditures for IT services is not predicted for 2010. Rather, they will be directed at different types of projects than before the crisis.
The performance of the domestic Information Technologies industry should be boosted by direct foreign investments that have been flowing into this field in recent years. Sun Microsystems became the Investor of the Year 2005 with the greatest economic contribution to the sector of strategic services because of an investment in its Prague development centre. The following year, IBM was given this award in the area of strategic services, after opening its centre for the outsourcing of Information Technologies in Brno in April 2006.
In June 2006, Hewlett-Packard opened its regional headquarters for Europe, Middle-East, and Africa for the management of production and distribution of personal computers and printing and image processing products. Honeywell founded a global centre for the same area, for the support of its aviation production in Prague, which made it two development centres for the company in Prague. At the end of 2006, Google, one of the largest companies doing business on the Internet, also opened its branch in Prague.
Mobile Technologies Support Center, built by the software giant, Microsoft, became operational in January 2007. Microsoft, in co-operation with the South Moravian Innovation Centre (JIC), then opened the Microsoft Innovation Center in Brno the following year, to support start-up companies, especially from the area of IT. Microsoft opened another such centre in Hradec Králové at the beginning of 2010. A new service centre was opened by the Computer Sciences Corporation in 2007, providing a broad range of services in the area of Informatics Technologies.
Another American company – Red Hat – one of the world‘s leading suppliers of software based on open source code, opened a new development centre in Brno in 2007. With 207 professionals, this centre ranks among the company‘s most important branches.
ICT investments are not limited to foreign companies, which is clearly illustrated by the fact that a genuinely Czech company (Logos) was named the most important Investor of the Year 2007 in the area of strategic services for an expansion of its Prague IT development centre. The list is concluded by Novell, which opened a global Suse Linux support centre in Prague in 2008, and eBay, which established a marketing and analytical centre in Prague to support its business activities in Europe and Asia. Other investment projects have been realised by the HSBC bank, which opened a software and application development centre within its existing centre of shared services in Ostrava, and Solarwinds Software Europe Limited with its software development centre in Brno.
The aforementioned information makes it clear that the Czech Republic has become an important centre for the provision of high-value added services in recent years. A Gartner Group study on the countries ideal for offshore IT services names the Czech Republic in the regions of Europe, the Middle East, and Africa as being in first place ahead of Hungary, Ireland, and Israel.
Success of Czech ICT Companies Abroad
There are many Czech ICT companies that have made a breakthrough abroad. Many successful companies, such as LANGMaster International, CN Resources International, 2N telecommunication, and many others abroad have proved the quality of Czech IT professionals.
The success of Czech companies from the field of Information Technologies was spearheaded by Software 602 at the beginning of the ‘90s. The fame of the “ageless” T602 text editor is now emulated by other Czech companies.
AVG Technologies CZ (formerly Grisoft) from Brno has seen a great amount of international success. It is one of the largest exporters of anti-virus software (65% of the company was acquired by Intel Capital and Enterprise for EUR 43.23 million in 2005).
Prague‘s OKsystem expands the not-so-numerous ranks of successful Czech solution providers for European research projects. The company has been developing a solution for EU identification cards during the three-year Onom@topic+ project (European Smart Card Platform for Citizenship and Mobile Multimedia Applications). A consortium of 17 organisations from 7 countries co-operated on this project. The result is a draft of a chip card operating system and a draft and an implementation of middleware. OKsystem should also be participating in the subsequent BioP@ss project that will mainly make use of biometric methods.
The example of Bohemia Interactive Studio shows there is still room for innovative solutions. Based on the world-famous game, Operation Flashpoint, and its newer engine, the Australian branch of the company, Bohemia Interactive Australia, has created the Virtual Battlespace Systems 1, a tactical simulator for the military in the USA, the United Kingdom, Australia, and other countries. It is a three-dimensional training system for teaching tactics to small units. A new generation of this military training game, developed according to NATO requirements for the preparation of soldiers for Afghanistan and Iraq missions, is already being realised in Prague. Czech companies have also seen much success in the field of games for mobile phones, as evidenced by the multi-player logical game, Multiplayer Reversi, developed by the Czech company Geewa. In June 2008, it became the most popular application for the iPhone smartphone by Apple, Inc.
e-Government in the Czech Republic
The Government of the Czech Republic pays a lot of attention to making the public administration services provided to companies and citizens more effective, by modifying processes with the help of available Information and Communication Technologies. In 2008, the Government approved a document called “Strategy for the Development of Services for the Information Society in the Czech Republic for 2008–2012”. Its main purpose was to allow citizens and the business public to conveniently, securely, and reliably communicate with the public administration at all levels and regarding as many life situations as possible.
This strategy is being implemented through a series of mutually interconnected projects; the projects are divided into five programme areas. Businessmen will find Area 2 useful because it includes, among other things, the introduction of universal contact points (Czech POINT), allowing citizens to perform a number of actions in one place, including the acquisition of statements from: the Drivers‘ Point Register, the Criminal Records, the Real Estate Register, and the Trade Register. It is also possible to submit a form to the Trades Licensing Office.
Low Rate of Software Piracy
According to the results of BSA (Business Software Alliance) statistics, the rate of software piracy in the Czech Republic was 37% in 2009, which was two percentage points less than the year before. The Czech Republic has managed to lower the rate of piracy from the original 66% in 1994 by 29 percentage points. These numbers put the Czech Republic in the 13th place worldwide when measuring the percentage of illegal software.
IT in the Czech Republic is comparable to the Developed World
In conclusion, it can be said that the Czech Republic represents a highly competitive market in the area of ICT, with discriminating customers and competent local business entities, whose business culture is comparable to similar entities in the EU or OECD countries.
CIO, Ministry of Industry and Trade
Czech Business and Trade 3/2010