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News Release

Prague

Czech Republic attractive to Banking, Finance, Insurance and Technology Companies

Shoring Markets Look Set to Help the Country through Tougher Economic Times


Prague, 7th April 2009- In a research paper covering shoring strategies “Onshore, Nearshore, Offshore: Unsure? A Czech Perspective” Jones Lang LaSalle provides an overview of the aspects of relocating a business to the Czech Republic. The report investigates three principle drivers - labour, business environment and real estate & infrastructure that ultimately influence location choice.

According to the report the Czech economy is slowing, though it remains in positive figures unlike other European countries. The weaker Czech crown eases labour costs, which remain much lower than in Western Europe. Additionally, the country offers a highly educated, skilled and multilingual labour pool and according to the Economist 2008 World figures the Czech Republic has the 22nd highest percentage of population in labour force in the world.

“According to figures from the Institute for Information on Education, the Czech Republic has 68 Universities, with a total of 344,180 students in 2007/2008. The highest volumes of students are studying either Economics and Finance or Technical Sciences. This fact is one more reason why the Czech Republic is so attractive to Banking, Finance, Insurance and Technology companies,” explains Alexandra Rudyšarová, acting CEO of CzechInvest.

The business environment in the Czech Republic can be classified as transparent with a high level of international compliance. According to the Jones Lang LaSalle Real Estate Transparency Index, the Czech Republic has significantly improved, particularly since 2004 and currently ranks 24th in the world with a classification of High Transparency, alongside Poland (25th) and Portugal (22nd).

In addition to this, incentives are available to foreign companies for a range of business activities. The main activities supported are the creation and development of information and communication solutions and applications, Shared Services Centres (SSC) and High-tech Repair Centres for Products and Technologies.

Mgr. Milan Novák, Country Manager, Grafton Recruitment, adds: “Prior to and since EU accession in 2004 numerous companies have entered the market to offer outsourcing services or, have done it themselves through offshoring or nearshoring various business processes. In the Czech Republic these companies include IBM, Accenture, Siemens, Red Hat, GE Money, Sun Microsystems, HSBC among others.”
The third principal driver influencing companies’ location choices is real estate and infrastructure. The Czech Republic offers modern, flexible and high- spec property. Furthermore, developers active on the market understand the constantly changing needs of today’s and tomorrow’s occupiers.

According to Kevin Turpin, Head of Research for Jones Lang LaSalle CEE, “Demand for office space in the Czech Republic has been led by the Banking, Finance and Insurance sector, plus the manufacturing and ICT sectors. Part of this demand has been from shoring activities, as well as new entrants to the Czech market or consolidations of existing companies in single modern office accommodation. Over the next couple of years we expect to see more demand coming from companies who are seeking cost savings through outsourcing or shoring various processes of their businesses.”

John Duckworth, Managing Director, Jones Lang LaSalle CEE, concluded: “Businesses are increasingly finding that shoring strategies are critical for improving their bottom lines. Our conclusion is that the CEE region has become a highly competitive location on a global scale for corporates, when making their strategic Business Product Outsourcing and Shared Service Centre decisions. With continued development in the region, combined with clear advantages around cost, labour and risk, we believe this trend is set to accelerate”.