The business, customer and IT services sector has the potential to transform the Czech Republic from a traditional manufacturing economy with cheap labor to a country of modern and innovative services with high added value, and through it significantly contribute to the transformation and growth of the Czech economy. By 2025, according to the predictions of the ABSL industry association and the consulting company McKinsey & Company, it should represent the dominant sector of the Czech economy and employ 180,000 people. During the pandemic, the industry demonstrated its exceptional resilience, growing despite all the constraints, and supporting the digital transformation and innovation projects of hundreds of international and local companies. In order to maintain its dynamic development and growth, it is necessary for the next government to pay attention to its needs. Therefore, ABSL, in cooperation with industry leaders, has defined 10 medium-term priorities for the next government for the sustainable growth of this modern sector.
“This year, despite the pandemic, our industry is growing the most in the last four years. It employs 130,000 people and contributes 5% to the Czech GDP. If we want the Czech economy to be able to rely on a stable pillar that has shown exceptional resilience to crises in the last year, is at the forefront of digital transformation and brings highly skilled work with added value to the Czech Republic, then the incoming government needs to begin to perceive needs of our sector, especially in the field of education, digitalization of state administration, flexible and remote work and simplification of immigration processes for foreign workers, “said Jonathan Appleton, director of the ABSL association, which brings together business, customer and IT services centers in the Czech Republic.
Representatives of the industry also consider that the sector is currently ignored by the government, is not included in the nomenclature of the Czech Statistical Office, has not yet been mentioned in government reports and future strategies and is not included in discussions on the use of European recovery funds.
Because business, customer and IT services centers serve customers from all over the world, foreign-speaking employees are essential for them. That is why the sector is dependent on the employment of qualified experts from abroad. Another reason is the lack of people in the Czech labor market, which breaks records in low unemployment, and the low availability of experts with appropriate qualifications, mainly from IT, HR and Finance space. Currently, foreigners make up 45% of employees in the sector, while their share has increased by ten percentage points in the last two years. Three quarters of foreigners are from EU countries.
“At present, our centers in the Czech Republic employ almost a tenth of all local foreign workers, the Ministry of the Interior of the Czech Republic registers around 660,000 of foreigners in total, so our industry pays for the largest employer of foreigners in the Czech Republic. Foreign workers in the sector contribute 2% to the Czech GDP, generate about $ 4 billion a year, most of which is invested back in the Czech Republic. And it is this benefit, along with the development of the industry, that is threatened by very complex immigration processes and complicated tax conditions, “comments Jonathan Appleton, adding that the digitization of the state administration also seems necessary, as confirmed by the covid pandemic when the time needed to process all visas and work permits for foreigners from outside the EU has doubled.
In order to maintain the smooth development of business, customer and IT services sector and strengthen this important pillar of the Czech economy, ABSL, in cooperation with industry leaders, has prepared a list of 10 priorities that the next government should address. ABSL also presented these priorities at a meeting with the Chamber of Commerce of the Czech Republic.
10 medium-term priorities for the next government for sustainable growth in business, customer and IT services:
- Continue to digitize the state and state administration and enable companies and entrepreneurs to share all information with the state administration electronically
- Actively support the digital economy and digital transformation of companies, including support for the start-up ecosystem
- Create and implement a strategy for new and existing foreign investors in the field of digital business services and IT
- To be an active, visible, and constructive member state as well as the presidency of the EU
- Proactively promote the Czech Republic abroad as a digital, innovative country in the center of Europe
- Include the business services sector in the official classification of economic activities CZ-NACE and officially reflect its size and importance for the Czech economy
- Reassess the tax burden on job creation and reduce levies to a level comparable to other Central and Eastern European countries
- To increase the readiness of pupils at all levels of schools for the digital future and new technologies, to insert the basics of programming and computer science into the curricula already in primary schools
- Simplify and substantially speed up the process of hiring qualified foreign workers
- Support flexible forms of work (eg work outside the workplace, including from abroad), including flexible working hours
ABSL (Association of Business Service Leaders in the Czech Republic) is an organization of companies operating in the segment of shared business services, which represents a strong source of employment in the Czech Republic. ABSL was established in 2013 with the aim of supporting companies in the field of business services, sharing best practices and helping 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 set up their business service centers in the Czech Republic. At present, there are more than 330 centers in the Czech Republic employing 130,000 people. More information can be found at www.absl.cz and in the study The Future Now: A Leader’s Vision for Business Services in the New Digital Era.