The Czech Republic is capable of attracting the brains and is becoming a centre of innovation

The business services sector registered year-on-year growth in the double digits once again this year. This means that today this sector, which connects the Czech Republic to the world and brings qualified work to this country, is one of the fastest-growing sectors of the Czech economy. The Czech Republic is becoming a country of innovations, advanced services with high added value and professions least at risk from economic fluctuation.  This is what indicates the most recent survey by the ABSL, which compiles trends in the business services sector in the Czech Republic.

“Business services is among the fastest growing sectors in the Czech Republic. This sector grew from zero to 120,000 employees within just 15 years of its existence. It grew at a 12% rate in 2019 and we expect growth at a rate of at least 9% this year,”

See more in the ABSL Report 2020

says Jonathon Appleton, Director of ABSL, and he adds, “This year’s survey has established one very positive trend and this is the move from simple activities to more qualified activities. We can essentially say that we are truly no longer the assembly line of Europe, but we are becoming the brain of world business. The size of this sector and the benefits it brings makes it a new major pillar of the Czech economy, which is also resistant to crises. With a little exaggeration we can even say that the Czech Republic is becoming a country of business services, just like Switzerland is a country of clocks or Germany is a country of cars. And it is not just the number of qualified jobs offered by this sector that is important, but also its contribution to Czech GDP, which is now a full 6 %.”

Business services are also doing well in other Central European countries, but the Czech Republic holds several titles compared to other countries in the region:

  • Expert services on the upswing

Compared to other popular destinations for operating business services centres, such as Poland, Romania, Hungary or Slovakia, Czech centres offer the broadest range and highest degree of service expertise. This is perfectly illustrated by the range of services that registered the greatest increase during the elapsed year – this includes data analysis, digital transformation of sales processes, strategic purchasing and a whole range of IT activities, whether this concerns automation, robotisation or development and maintenance of computer systems. On the contrary, the percentage of transaction services, such as processing invoices, reporting or settlement of orders, is falling – this type of process is being largely automated using software robots, or is being moved to other countries.

  • The greatest density, salaries and ability to attract “brains

The Czech Republic also offers the highest salaries in the region, which is indicated by data from Grafton Recruitment. This fact contributes substantially to successful acquisition of foreign talents. On the other hand, it may also raise the question of whether our country may not be too expensive in the future and whether we will remain an attractive location for companies. “These concerns have not proven true. Growth of the sector is clear evidence that investors are not choosing the Czech Republic due to the low costs here, but because of the qualifications and know-how of the local labour force,” says Jonathon Appleton.

As stated above, Czech business services centres are doing very well in attracting experts from around the world, which is also proven by another title the Czech Republic holds among Central European Countries – Czech business services have the greatest percentage of foreign workers, a full 43%. The Czech Republic can also boast the highest density of business services employees. This exceeds 2% throughout the Czech Republic, and is even higher in the bigger cities, for instance nearly 9% in Brno.

When the boom ends business services will sustain the Czech economy

We are currently experiencing the longest boom phase of this century. It is therefore highly probable that we can soon expect at least a slow in growth. The key to successfully overcoming economic depression is to focus on sectors with a high added value, specialising in innovations, modern technologies and their implementation in practice. Business services centres have innovation in their DNA, they are a branch that is in a leading position with regard to implementing advanced technologies, such as artificial intelligence for example.

The business services sector provides one of the biggest opportunities for application of a knowledge-based economy – a trend that is least at risk from potential crises in the manufacturing sectors,“

says Jonathan Appleton, and he adds: “Development of business services centres means a substantial contribution to stabilisation of the economy in the future. Knowledge-based activities are increasingly replacing transaction services and their share rose by 17 % year-on-year.”

Robotisation and automation is the order of the day

The main motor driving development of business services is modern technologies, of which the most important is robotic automation. A full 82% of centres utilise some method of automation, this most frequently concerns RPA (robotic process automation) or OCR (optical character recognition) technologies, artificial intelligence technologies and chatbots. Software robots now do the work of 5,000 full-time employees. There are 1,500 experts involved in their development and this is one of the fastest increasing jobs in the sector. The primary reasons for investment into robotisation and automation are to support the growth of productivity for 27% of centres and the need to free talents for activities with higher added value for 24% of centres. Another 22% of centres are implementing automation and robotisation with the goal of reducing costs, 15% of centres wish to provide better services and 12% wish to increase their customers’ satisfaction. A full 45% of business services centres intend to use artificial intelligence elements this year – this is 15% more than last year.

”The positive news is that a full 69% of business services centres are developing their capacities in the field of robotisation and automation within the terms of their team,“ says Jonathan Appleton. ”This is evidence of the high level of qualification of local workers and their ability to keep up with the newest technological trends.”

Collaboration with universities is paying off

The speed of development of new technologies is now an extraordinary challenge to the education sector. The need for experts specialising in the most modern technologies significantly exceeds the ability of the education system to react to these needs. Collaboration between business services centres and universities is a great help in resolving this issue – 20% of centres have joint educational programmes with universities, which is 11 per cent more compared to last year. Investments into education also result in the fact that the number of centres suffering a shortage of qualified employees in the field of technologies and automation is falling, by 13 per cent year-on-year.

82% of centres complain that issuing visas delays the influx of foreign workers

Business services centres are important centres of diversity. 43% of all employees in this sector are foreigners, which is a total of over 48,000 people. 82% of centres employ at least 10% foreigners and 15% of centres have more than 70% foreigners among their employees. 84% of centres actively recruit their employees abroad. “Compared to last year the global reach of Czech business services centres has nearly doubled,” says Jonathon Appleton. “This naturally results in the need to recruit workers who are capable of offering the required expertise and also speak less frequent languages – for instance Swedish, Armenian or Lithuanian. Our workers now use 35 different languages”.

But it is also impossible to ignore the problems – a full 82% of business services centres consider the difficulties related to use of visas a significant obstacle to employment of foreign workers. Another 44% of survey respondents also state problems in relation to communication with the government administration.

“Despite some improvement in recent years, the administration related to employment of foreigners still represents considerable complications. If we want the Czech Republic to remain competitive and the Czech economy to not depend on manufacturing sectors alone, additional changes must be made and issue of work permits for highly-qualified workers from countries outside the EU must be accelerated considerably,“ Jonathan Appleton said in conclusion.

Figure: The business services sector in the Czech Republic is not just the domain of large cities, as it is in other Central European countries. On the contrary, this sector is also infiltrating the regions.

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