American companies active in Poland for the last 30 years, have been investing heavily in the country through strategic partnerships and CSR, while capitalizing on its growing workforce.
Microsoft’s plan to invest USD 1 billion dollars to provide cloud services in Poland underlines the country’s importance to tech companies in the United States as well as worldwide. In 2018, the main trading partners of Polish IT enterprises in the international exchange of services were companies based in the United States. The post-pandemic world will be increasingly digital and Poland’s partnerships with American companies are critical to making this happen.
Poland’s Strategic Partners
Poland has attracted investments from the largest IT giants in the world, due to its beneficial conditions for foreign investment. Many multinational companies established their high-tech business operations in Poland years ago and have been expanding their Polish branches over time, taking advantage of favorable business conditions.
National Cloud is Poland’s public cloud provider, and Poland’s most recent and noteworthy development in cloud technology has National Cloud’s strategic partnerships with American corporations including Microsoft and Google. Microsoft has announced a USD 1 billion digital transformation plan for Poland with a key initiative of establishing a datacenter region in the country. The U.S. Corporation will set up several server rooms and conduct cloud data processing training for IT professionals, teachers, and students within two years. Microsoft’s presence in this strategic IT area is not new, however. The company has been operating in the “Polish Digital Valley” since late 1992, having opened one of the first three subsidiaries in this part of Europe. Microsoft has over 6,000 partner companies in Poland, and Technology Director Michał Jaworski states, “This partnership system seems to be our greatest asset and contribution to the Polish economy.”
Google opened its first office in Poland in 2005 and was the first strategic partner of National Cloud. Thomas Kurian, Google Cloud CEO, writes that the rapidly growing country is “accelerating its digital transformation and has become an international software engineering hub.” Google is now planning to open a Cloud region in Warsaw, one of seven European locations, that helps customers in Central and Eastern Europe benefit from its cloud services. The company's engineering center in Warsaw has been working on cloud technologies since 2011 and currently employs over 300 engineers at its Warsaw headquarters, making it Google's largest cloud engineering center in the EMEA region (Europe, the Middle East and Africa).
Another IT giant that has been operating in Poland for many years is Cisco, whose Polish branch was established in 1995. Since then, Cisco has been actively supporting the construction of a knowledge-based economy in Poland and developing a network of over 800 partner companies throughout the country. Cisco has been operating its Global Services Center in the city of Krakow since 2012. The Lesser Poland Voivodeship (Małopolskie) including Krakow has 212,000 students, and the region has emerged as a top IT hub in Poland. The Cisco center is a modern technology campus employing a staff of almost 2,000, making Cisco Krakow the largest Cisco service center in the EMEAR region. Przemysław Kania, General Manager of Cisco in Poland, emphasizes that the company highly values its staff in Krakow and adds, “We see Krakow not only as a talent center for Poland, but also as a global talent center to which we can attract employees from around the world.”
Motorola (MSI) is another example of a company that has gradually developed its presence in Krakow. Over 2,200 employees currently work in the Krakow center, which runs departments including R&D, FOC, SCC, Documentation and Learning, Customer Support, Training Center, Procurement, Purchasing, Logistics, HR, and an IT help desk. Krakow was chosen as a location for knowledge-intensive processes due to its highly qualified labor pool, including easy access to young people just entering the labor market as well as a wide range of experienced workforce. Motorola Country Manager Jacek Drabik also emphasizes the value of Poland’s wide variety of sub-suppliers. These suppliers are able to offer all required components and services directly and, on the spot, without needing to bring in volumes and services from outside of Poland.
IBM has been present in the cities of Krakow, Warsaw, Katowice, Poznan, and Wroclaw since 1991. IBM Polska provides a full range of consulting services and products that enterprises, state administration and the science sector need in order to develop innovatively. The company provides the latest knowledge and technologies, such as blockchain to over 250 Polish information and communication technology (ICT) partner companies. The company has grown from 40 employees to over 9,000 since its establishment in the country, and also works to help central local governments improve the safety and quality of services for their citizens.
Yet another recent and noteworthy investment project in the IT sector has been a project by the American WP Engine providing managed WordPress hosting for mission-critical sites around the world. The Polish WordPress subsidiary will be a center focused on R&D activities and providing support, optimization, and other research and development activities to clients. The Małopolska headquarters facility is the third of its kind in Europe. WP Engine has opened locations in London, Limerick, and Brisbane, and its new team in Krakow will support the organization as part of its global innovation center.
The north of the country is not lagging behind either. Intel’s lab in Gdansk is one of the company’s biggest research and development centers in Europe and has become an important Tele-Information service center for other European Intel subsidiaries. Intel Technology Poland employs over 1,000 employees and is still developing, hiring most of its staff from local universities.
Hardware producers are represented in Poland by Dell, a regional leader in the corporate group for Eastern and Central Europe. The importance of this region has been highlighted by Dell’s decision to build a manufacturing plant in Lodz in 2006, Dell’s second factory in Europe and fifth in the world. The American computer manufacturing giant sees Poland as an important partner, and Dell CEE Communications Manager Ewa Jarzemska says a factor that sets Poland apart is its “highly qualified engineering staff, which is an invaluable foundation for all activities.”
Roche and 3M
IT corporations operating in Poland are not the only companies benefiting from the country’s STEM workers. IT solutions are key to efficient business functions and guarantee the maintenance of long-term market advantages for companies in other industries as well, including pharmaceuticals and electronics. Roche Poland, the second-largest pharmaceutical company worldwide and owner of Genentech, has chosen to locate its 500-employee Global IT Solution Center in Poland. 3M has also been developing in Poland – the 3M Innovation Center in Wroclaw is the largest corporate R&D center in Europe and third largest worldwide. In addition to employing 80 engineers and 120 support staff, the center also employs 4,000 specialists in the field of IT solutions. The center is constantly innovating and developing new product lines; 50% of 3M’s new products in 2015 were developed in Poland.
Availability and Skills of Labor
While many countries struggle with a lack of STEM workers, human capital is one of the greatest resources the Polish market has to offer, and one quarter of all programmers from Central Europe are Polish. In 2019, Poland was ranked 6th on the European Commission’s list of countries with the highest employment in information and communications technology. There are over 408,000 specialists in the ICT sector in Poland, a number most likely underestimated due to many self-employed IT experts who work on projects on a case-by-case basis.
Pic. 1. Top 20 European Countries in Number of Persons Employed in ICT, 2019
Source: European Commission
Poland’s growth is guaranteed by the available labor force that Poland offers in response to the rising demand for highly skilled labor in the STEM (science, technical, engineering and math) fields. Today’s Polish teenagers show promising staff potential – according to the Organization for Economic Co-operation and Development (OECD), students’ high scores in science, mathematics and reading comprehension place them among the best-performing countries in Europe and the world.
There is a growing demand for IT professionals in Poland; the country observed an annual growth rate of 5.7% in the IT sector from 2015-2019, one of the highest after Ireland, Bulgaria, and Latvia. However, this demand is not reflected in the cost of labor, particularly in software development – Polish developers earn about one fourth of the salary of U.S. software developers at both junior and senior level positions.
Pic. 2. Annual Average Software Developer Salary, 2020, in USD
Source: Payscale.com (https://www.payscale.com/research/PL/Job=Software_Developer/Salary), Daxx.com (https://www.daxx.com/blog/development-trends/it-salaries-software-developer-trends-2019); accessed 19.05.2020
As the global demand for STEM workers continues to grow, Poland is internationally regarded as an attractive place for developing ICT solutions. The turnover value generated by IT companies operating in Poland reached PLN 69 billion in 2017, a 14.2% increase from the year before. According to the Statistics Poland (GUS), IT companies operating in Poland exported services worth a total of PLN 24.1 billion (a 14.3% increase from the previous year). On the other hand, companies in Poland imported services worth only PLN 4.8 billion (a 14.2% increase). Skilled workforce and low labor costs result in high competitiveness of services offered by Poland-located providers in foreign markets.
Corporate Social Responsibility in IT
American IT companies are not limiting themselves to focusing on software development and its dissemination to foreign and domestic buyers. These companies are also promoting the digital transformation of Poland through corporate social responsibility (CSR) activities that support education, provide specialized trainings, and promote startup activity.
Polish schools have been using Microsoft technologies for over 20 years, and Microsoft estimates that half of all schools in Poland worked on Microsoft Teams during the COVID-19 pandemic. Microsoft has also developed partnerships with Polish universities; the Microsoft Innovation Center (MIC) is an example of a successful joint project between Microsoft, Poznan Supercomputing & Networking Center, and the Poznan University of Technology. The main purpose of this center is to support innovative solutions and technologies in the field of IT security and outsourcing services.
Not to be left behind, Cisco Poland recently joined forces with IBM to support Polish schools, encouraging them to participate in the Webex4Teachers initiative. Over 500 volunteers from both companies have trained teachers in designing effective online classes using Cisco’s WebEx platform.
Google has launched PFR Designers of Innovation, a program providing Design Thinking workshops, in cooperation with the Polish Development Fund. Nearly 7,000 participants have attended the workshops to date, and these workshops are currently supporting Poles in creating innovations that respond to the challenges associated with COVID-19.
Cisco’s most recent initiative in the field of corporate social responsibility has been the Cisco Networking Academy, an educational program operating in Poland since 2000. The program was created to head off a shortage of IT professionals by developing the IT talent necessary to support Poland’s digital development. The primary objective of this curriculum is to build networking concepts and skills. Courses in new fields such as the Internet of things and cyber security have also been added over time in response to industry trends and labor market demand. Over 400 schools and universities across the country are using this curriculum today. This year alone more than 40,000 students attended the Cisco Academy, and over 200,000 students have participated in courses offered by the Cisco Networking Academy since the program’s launch in 2000.
IBM Polska also supports students, users of new technologies, industry organizations, and educational institutions in Poland. IBM Polska cooperates with several dozen academic centers in Poland as part of the IBM Academic Initiative, a program providing access to the knowledge of global academic networks and state-of-the-art software and training.
The startup environment in Poland has not been ignored by IT companies, either. The Google for Startups Campus was opened in Warsaw in 2015 as the first such space in Central and Eastern Europe, and second in all of Europe. This campus is dedicated to startup founders and the larger entrepreneurial community. The campus provides support ranging from office, coworking, and event space to training, mentoring, and acceleration programs. Startups active in this community have created over 3,500 jobs to date.
A “New Normal” Brings Future Potential
A significant decrease in worldwide industrial production has been observed over the last few weeks. The Purchasing Managers’ Index (PMI) is a measure of the prevailing direction of economic trends in manufacturing and recently recorded its lowest historical levels in the Eurozone. Oxford Economics experts also estimate that the sectoral value-added output will decline by approximately 11% from Q4 2019 to Q2 2020.
On the other hand, the crisis caused by the COVID-19 pandemic has raised awareness to the importance of computer technology in our daily lives. The Internet and IT solutions have become essential tools for working, learning, and keeping in touch with others. The Polish Economic Institute indicates that the country’s largest technology companies have recorded significant growth and development in spite of COVID-19. Social distancing recommendations due to the coronavirus pandemic have strong-armed companies into allowing employees to work from home, and the spread of cloud-based tools for remote work (direct access to databases, joint work on documents, etc.) will facilitate this task. Working remotely will most likely continue to gain popularity even after the pandemic, especially as research shows that employees are more and more willing to accept this way of working. Companies will also be able to save money, as the development of cloud services makes it easier to employ workers with lower wage requirements, such as those living outside of big cities.
Looking Ahead to E-Poland
The acceleration of Poland’s digital transformation is undoubtedly creating new trends in the workplace, and not only because more employees are working remotely. These changes have touched a variety of Polish sectors, from public administration to fintech.
Poland is streamlining its public administration, with one example being the creation of the Electronic Platform of Public Administration Services. ePUAP is a nationwide platform for Polish citizens to communicate with public administration in a uniform and standardized way. Thanks to solutions such as “trusted profiles” and “qualified digital signatures,” public administration institutions can now perform their functions without requiring the presence of the interested party.
The digital transformation of Poland is also taking place in the country’s judiciary. For the last two years, the Ministry of Justice has been working on introducing e-applications for entry in the National Court Register. This electronic access includes uploading financial statements as well as the electronic delivery of pleadings. The Ministry of Finance also plans to create an e-tax office where taxpayers will be able to remotely settle PIT, CIT, and VAT taxes, and make payments for fines. In just a few years, Poland’s Social Insurance Institution (ZUS) has also made breakthroughs in terms of online information and services, announcing the launch of electronic payments via a web browser and mobile application.
Doctors in Poland currently issue around 2 million e-prescriptions a day, and the Ministry of Health informs that e-prescriptions constituted over 80% of all prescriptions in mid-February. In the near future, the Ministry of Health plans to use artificial intelligence and data collected from patient internet accounts to introduce pharmaceutical care that will review drugs, record unwanted drug interactions, and monitor medical recommendations. It is also worth noting that during the first weeks of quarantine during the COVID-19 pandemic, the only possibility of obtaining a medical consultation was by phone or chat box. The spread of such communication tools may reduce the extended waiting time for an appointment in the future, which is one of the main problems plaguing the public health care sector.
Experts predict that the opening of Microsoft's server rooms and the company's cooperation with National Cloud will lead to an increase in their sales of cloud services to financial institutions, including the banking sector. The digital transformation of the financial sphere will help banks reduce their IT spending by between 20 and 50 percent. The large number of fintech projects implemented by Polish startups and mature enterprises have made the Polish market one of the most important centers of IT innovations for the financial sector in Europe.
The Polish government will have the chance to obtain EU funds from the 2021-2027 Horizon Europe program with a proposed budget of EUR 100 billion. However, to make the next steps in development possible, Poland will need more investment from both private as well as public sources. The IT industry has become one of the most dynamically rising sectors of the Polish economy in recent years, developing thanks to its highly skilled workforce and the long-established presence of multinational IT giants operating in the country. Poland’s technological resources, strategic partnerships and CSR activities with American companies are making Poland a leader in the world of digital transformation and a country in which more foreign companies will want to invest.