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2009-10-14 00:00:00
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The Czech Republic ranks 26th in the list of the most-developed IT countries worldwide, according to a new study released by the Economist Intelligence Unit (EIU) in cooperation with Business Software Alliance (BSA).
The Czech Republic’s position in this year’s study is three spots higher than last year, with a total score of 47 points out of 100. The first spot went to the United States, followed by Finland, Sweden and Canada. Some 66 countries were ranked in the survey.
The Czech Republic still ranked lower than Western Europe countries, but better than all post-communist countries in Eastern Europe except Estonia. For Central Europe, the Czech Republic was second to Estonia, while Slovakia ranked seventh, down two places from last year.
According to the study, the Czech Republic has a mostly healthy business climate and legal framework to support the IT sector. However, in the study’s assessment of the speed of development in the IT sector and the general state of IT infrastructure, the Czech Republic achieved only average marks and, despite an improvement of 17.4 percent compared to last year, research and development and IT human capital are two areas that according to the report require further improvement.
The IT sector is considered to be the sector with perhaps the greatest potential in the Czech Republic and many believe that IT will attract most investment in the future.
The IT sector is one of the most lucrative in Czech industry and will remain so in the future, according to Alexandra Alvarová, a private telecommunications and IT adviser and analyst. “If we count IT among services, it is one of the fastest developing. Its attractiveness lays in strong added value and creative human power. Traditional industry sectors are almost done, thanks to the rising quality of Chinese imports,” Alvarová told CBW.
Jan HlaváÄ, spokesman of the Business Software Alliance (BSA), said greater state investment and supervision is necessary for the sector to grow successfully. “I am not so bold as to make any predictions because it depends not only on companies, but also on state support. I don’t mean state financial support, but state support of development and research, education and building of high-speed internet connections, for example,” HlaváÄ told CBW. He also says the state needs to introduce stricter copyright legislation and implement copyright laws more stringently and says that France is leading the way in this respect. “Piracy steals hundreds of millions of crowns from the state treasury every year. The leader in this area is France, which strongly thought about the copyrights of software, films and music makers. These pro-growth stimulants could support the IT sector generally,” HlaváÄ said.
People as a key factor
The key factor to all IT development in the Czech Republic is people. However, the Czech Republic lost points in this category in recent years due to many leading Czech IT experts moving abroad to work, while the general level of IT education in the country is just average. “People, people, people. This is what pushes the sector this forward,” Alvarová said.
HlaváÄ said that the country lost points on IT skill numbers. “It is not only about the number of people in the sector generally, but also about general human capital—this includes the education level, number of university-educated specialists and so on,” he said. “However, Czech system integrators, for example, are on a very high level and many of them cooperate on international projects. Czech experts are parts of international teams, which share their know-how. This is the way Czech integrators are working,” HlaváÄ added. HlaváÄ cites S&T CZ, the Czech branch of a multinational system integrator, as an example of Czech expertise being offered on the international market.
The impact of the economic crisis on the IT sector is not accurately reflected in the study, which generally returned improved scores compared with last year’s study. “The crisis has had a painful impact upon the IT sector. … The biggest customers in this sector are banks and telecommunication companies, which annually bring billions of crowns to the sector,” Alvarová said. Spending by the banking sector on IT has fallen by around 50 percent, she pointed out. “Thanks to the relatively low impact of the crisis on Czech banks, we can assume and hope that this was only a preventive measure, not reactive,” Alvarová said, adding that she hopes for increased spending on IT by banks.
BSA’s HlaváÄ says that there have been significant layoffs of IT personnel due to the crisis but that large companies are denying it. “None of these companies will tell you openly, but this happened. It is a reaction to the lowering of budget finances for IT projects in banks,” HlaváÄ said, adding that the layoffs have mostly affected those employed in service and quality assurance.
“The majority of [those laid off] are educated not only in IT, so they are capable of working in other areas. This is most probably what they do now,” Alvarová said, adding that many have gone freelance, meaning that employment statistics don’t reflect the extent of the lay offs.
Although well-educated IT professionals are the key factor for the development of the sector, Alvarová said she believes that the framework and nature of collaboration between the state and private sector must change. “The reason the United States is in first place is because they can buy brains better than others. Demand there is pulled by state-financed space and weapon programs, sectors in which the U.S. is the world leader and which are a priority for the government,” she said. The level of state-financed IT projects in the U.S. is incomparable to even larger European countries, let alone smaller ones. Alvarová also singles out investment into IT education as one area where the Czech Republic is seriously lagging behind more developed economies.
Despite the negative factors, the Czech Republic appears to have a great potential to increase its competitiveness in the IT sector and become comparable to other West Europe countries. “Studies indicate that there are some chances for sure and they are not so bad. Analysis indicates that if governments effectively support IT development, results improve quickly and can be seen almost instantly,” HlaváÄ said, naming Finland as a prime example. This year Finland ranked second in the EIU – BSA study, up from 13th place last year. HlaváÄ said that if the Czech Republic could duplicate the level of state and private investment into the development of the IT sector, the country could soon be on the level of Switzerland in one year and outperform France in two.
HlaváÄ concluded that there are six factors to promote growth in the IT sector: sufficient numbers of well-educated and experienced workers; support of innovation; implementing high-end infrastructure; a reliable and legal environment with effective laws to protect copyright; a stable, open and competitive economy; and healthy state support that strikes a balance between promotion of technology and support of market powers. |
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