POLAND, GROWTH IN THE IT SECTOR IS NOT NECESSARILY GOOD FOR BUSINESSES!
Updated: Jul 6, 2022
Labour Market Overview
By 2025, approximately 2 million IT and business services jobs can be expected to be created in CEE; Poland may receive 40-50% of these positions. In Poland, The registered unemployment rate at the end of May amounted to 5.1 percent, down by 0.1 percentage points from March, the Central Statistical Office (GUS) has said. In May 2021, the rate was 6.1 percent.
The shortage of IT specialists in Poland was estimated at around 50,000, and in Europe at about 300,000. Today these numbers are higher, which means new challenges for technology companies operating in the region.
Pre-pandemic estimates suggested that within six years or so, the shortage of specialists in the European IT market would reach about a million people. The pandemic caused a surge in digital services and the shift of many areas of life to the online world, which only exacerbated the shortage of workers with the right skills.
IT Market in Poland
This month we have heard about Taiwania Capital wanting to invest $200 million in Central and Eastern Europe, including Poland. The fund deals with financing startups in various areas of technology. Its president stresses that both parties have a lot to offer each other. He is also impressed by the Polish startup ecosystem. Also, we have learned about Nike officially opening its Technology Center in Gdansk, Poland. The Nike Technology Center will be responsible for providing essential technology services that will bring new growth opportunities for the company, develop innovations, and advance its direct-to-consumer strategy.
These are two stories of many we hear about new players entering the Polish market to pursue high-quality talents and for what is considered a good value for money. Despite news of an economic slowdown, demand for IT specialists is outstripping supply in the Polish market, rendering it less competitive compared to the neighboring markets in the CEE region as it is getting more complex and more expensive for businesses to hire talents locally.
Poland's competitiveness is at risk.
Poland will remain one of the leaders in the IT market in Central and Eastern Europe. According to a report published by Emerging Europe ("Future of IT 2022"), the ICT sector employs nearly 445,800 workers, accounting for 2.7 percent of the total employment pool. Between 2016 and 2022, salaries in the industry rose from just €1,600 to €2,250 today. On the other hand, Polish ICT exports rose from €4.8 billion to €8.2 billion during this period. One of the most vital segments of this industry is games. In recent years, companies such as CD Projekt and 11-bit studios have successfully promoted the Polish brand in foreign markets.
"Poland is the largest economy in Central and Eastern Europe, so the IT sector here by size is also the largest in the region. Unfortunately, the competitiveness of this sector is slowly starting to decline," Andrew Wrobel, founder and partner of the Emerging Europe think-tank said.
In his "Future of IT 2022" ranking, Poland dropped from the lead position to second place, falling behind Estonia. Romania and Bulgaria, which have a large talent pool, are growing competition for the local IT market. Poland has a chance to become a leader if it opens up to cadres from outside the CEE region.
Conclusion
There are a few ways for businesses to face the challenge of hiring specialized IT staff,
The first is the easiest yet the most expensive, which involves bidding money to retain and attract talents. However, taking that route means accepting the risk of attrition, higher cost to serve, and putting the business behind the curve as you'll need to follow what the market dictates in terms of a pay rate unless you'll be paying a premium on top of the market rate.
The second is the cheapest yet the most complex; it is about enhancing employee branding and ensuring a match between employees' purpose and the business' vision. It also requires investment in improving leadership skills and a better organizational communication strategy.
The third is an alternative that I believe is the most suited for IT businesses; it is about engaging a third-party HR agency that handles the end-2-end processes of identifying, hiring, and retaining the right talents. While few might argue that an in-house team would do the same, I believe they can't as they lack agility, the ability to scale, downsize resources and reach a badly needed global pool of talents that a third-party agency would have. I agree that an in-house HR team seems cheaper from a cash flow perspective. However, a third-party agency is more affordable in the long run as your business pay per candidate hired. I also agree that the downside to this route is the concern of losing the business identity and culture also the risk associated with working with remote teams.
The fourth scenario I call the optimum for any business where the business has a minimum HR headcount (20%-30% of the total HR resource needed) to maintain critical tasks for the company that has to do with the business identity and employees relationship. Anything related to hiring, nontechnical training, payroll, and facility management is a good candidate for outsourcing.
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What scenario would you choose for your business while facing a shortage in staff?
- 0%Money, money, money
- 0%Investing in skilling leadership and employee branding