Growth Perspectives for Polish Ict Sector by 2025

GROWTH PERSPECTIVES FOR POLISH ICT SECTOR BY 2025

OF ECONOMIC GROWTH PERSPECTIVES FOR POLISH ICT SECTOR BY 2025 Prepared by INVESTIN, commissioned by the Ministry of Economic Development. Under the patronage of the Polish Chamber of Information Technology and Telecommunications (PIIT) Published by the Polish Agency for Enterprise Development ul. Pańska 81/83, 00-834 Warsaw, Poland www.parp.gov.pl © Polish Agency for Enterprise Development 2017 The views expressed in this publication are those of the authors and do not neccessarily coincide with activities of the Polish Agency for Enterprise Development. All product names, logos and brands mentioned in this publication are property of their respective owners. ISBN 978-83-7633-330-4 Free copy I edition Circulation: 1000 copies Printing of this publication has been co-financed from the European Regional Development Fund in the framework of the Smart Growth Operational Programme.

Pre-press, printing, binding: Agencja Reklamy Eureka Plus, www.eurekaplus.pl Government investments and creation of innovation friendly environment shall be an important driver for stimulating growth of the ICT sector. The increased effectiveness of key sectors through implementation of IT solutions may become a driving force of overall economic growth. The huge growth potential of the ICT sector is also confirmed by a large number of newly created start-ups. More than 50% of start-ups are established in the ICT sector. The number of Polish enterprises in the sector increases in the average annual rate of 10.1%. Polish ICT sector is in good condition, recording the average annual increase of turnover amounting to over 8.6%. This is the highest growth in Europe. However, relatively lower productivity of Polish ICT sector is manifested through the size of turnover per employee, which is lower by almost half than in German economy. This situation points to the need of further stimulation of the sector, as well as investment, both in infrastructure and education. Investments from the government and enterprises in innovation should be the drivers of further increase of productivity. One of the conditions to stimulate investment activity of Polish enterprises is development of a transparent and stable legal system regulating activities in individual areas of the ICT sector and ensuring better safety of investment. Polish ICT sector is characterised by significantly higher innovativeness than other sectors of Polish economy. This strengthens its perception as a good field for investment. This is one of the reasons the Polish Development Fund (PFR) has been established. It is Mr Tadeusz Kościński, a group of financial and advisory institutions for entrepreneurs, local governments and the Undersecretary of State at the Ministry of Economic Development private individuals, investing in sustainable social and economic growth of the coun- The development of information technologies is a foundation of growth, not only for try. Together we develop practical solutions for common success and safe future. PFR the ICT sector, but for the entire economy and society. Competitiveness of Polish indus- offer includes packages of financial and non-financial services, designed to suit spe- tries is to a large extent based on availability and quality of ICT sector solutions. In the cific needs. Our objective is to create a complete market for acquisition of capital and era of global changes this is one of the key sectors for future growth. growth instruments at all stages of development of a given undertaking. We are active in the area of banking, insurance, investment, advisory in international expansion and The significance of the ICT sector in global and Polish economies continues to dynam- development of entrepreneurship and innovation. ically increase. Key trends in the ICT sector shall include cloud technologies, Big Data, the Internet of Things and cybersecurity. Poland faces the challenge of replacing present growth drivers, such as low cost of labour, EU subsidies and increase rate of productivity, and of balancing future disadvantageous regulations and socio-economic factors. Polish companies must seek sources OF ECONOMIC of competitive advantage in original, proprietary solutions and exploitation of market niches.

1 Shared service centres of software laboratories are not all. Poland is also a country, where companies making first steps on the path to become global companies are created. Groups such as Asseco or Comarch are recognised not only in the European market, but also globally. It is worth to remember about companies such as CD Projekt, the makers of “The Wither” – a global leader in the gaming market, one of many Polish companies taking global markets by storm. They include 3D printers manufacturers, which will play a significant role in industrial revolution 4.0 happening right now. The content of the report shows that despite all this success the ICT sector in Poland is characterised by a relatively low level of investment. This has a negative and unsat- isfying impact on the size of the market. Hence the huge stimulating role to be played by the new development strategy designed by the Polish government. All this with the participation of commercial companies active in the information and telecommunications market. With the dynamics of the entire Polish economy in mind, the continued growth of its competitiveness and effectiveness and resistance to turbulence in global markets (Po- land is the only European country, which avoided post-2008 recession), it seems that doubling the size of Polish ICT market in 2025 perspective is entirely realistic. On behalf of the Polish Chamber of Information Technology and Telecommunications I invite you not only to read the report, but also to be courageous and determined in betting on new technologies. By investing in ICT technologies you give your companies the velocity and dynamics necessary to step into the world of the fourth industrial revolution. The revolution, which according to many leading authorities will dramatically Mr Ireneusz Piecuch, change the world we know. the President of the Polish Chamber of Information Technology and Telecommu- nications (PIIT) In 2018 we shall celebrate the 70th anniversary of Polish computer science. Last year we celebrated the 20th anniversary of GSM telephony in Poland. The time between the jubilees will surely be filled with hard work for the development of the information technology and telecommunications sector in our country. It is thus good that it is thanks to the Ministry of Economic Development that we get a document discussing the presence of the sector in Poland and its future potential. The ICT sector is the most pro-innovative one for the modern economy and will surely be one of the foundations for its further growth. As the report shows, Poland ranks 6th in Europe in terms of the level of employment in the sector and – what is important, is the country recording one the strongest dynamics of employment growth. It is Poland where more than 850 shared service centres have been created, employing more than 193 thousand workers, of whom 37% are IT specialists. Companies such as IBM, HP, Intel, Nokia or Samsung have located their centres in Poland.

2 The Polish Chamber of Information Tech- a number of acts - the telecommunica- patronage to the largest Polish ICT events. nology and Telecommunications (PIIT) is a tions law, on protection of personal data, We were established in 1993, now asso- partner both in the legislative processes on electronic signature, public procure- ciating more than 120 largest companies and in issuing opinions on day to day de- ment law, on copyright and related rights from the information and telecommuni- cisions of government administration and and many others. The Chamber has won cations sector. regulatory bodies. an opinion of a reliable and constructive partner in discussions and negotiations The Polish Chamber of Information Tech- The authorities of the Chamber attain and an expert in explaining new technology and Telecommunications is a their objectives through cooperation with nological solutions. Representatives of member of the international organisation legislative bodies, state and local admin- the Chamber actively participated in the DIGITALEUROPE, which gives us an op- istration, providing them with relevant Council for Information Technology De- portunity to have an impact on the shape information, comprehensive analysis and velopment, Telecommunications Council of the European legislation in the area of constructive assessments of phenomena and many others. information and communication technol- and activities important for the ICT mar- ogy. ket. Promotion of Polish telecommunications market and companies operating PIIT has had a fundamental and signif- in it is very important to us. Our activi- icant influence over the shape of legal ties include co-organisation of Polish In- More on PIIT: www.piit.org.pl acts and tax, customs, certification and formation Technology Congresses and copyright provisions, as well as on public providing support to Polish companies in procurement procedures. PIIT’s experts organisation of their presentation at Ce- participated in drafting and amending of BIT in Germany. The Chamber provides

3 The Polish Agency for Enterprise Develop- If you are interested in information on Polish ICT Promotion Program ment (PARP) is a government agency es- support programmes offered by PARP, In the years 2016-2019 the Polish Agency tablished in 2000 to support micro, small addressed to entrepreneurs and business for Enterprise Development is responsi- and medium-sized enterprises. Over environment institutions, you can contact ble for implementation of the Polish ICT more than 15 years of its existence the the helpline operated by the PARP Infor- Promotion Program. Agency has developed numerous forms mation Centre: of support, including: financing for enter- The aim of the program is to present Pol- prises, development services, education ish ICT products and services to a wide and information activities as well as ac- +48 22 432 89 91 audience of investors, distributors, busi- tions aimed at enhancing entrepreneur- ness and technology partners, and poten- +48 22 432 89 92 ship culture and innovation in Poland. tial end-users. The areas of PARP activity evolve along +48 22 432 89 93 with economic development and with We will organise 14 promotion stands at emerging new trends in business and ICT trade fairs and conferences in Brasil, innovation. Thus, over the years, PARP Japan, South Korea, USA, Spain, Germa- Polish Agency for Enterprise Development has become a forerunner in creating new ny, Austria and Portugal, including events support areas and developing various Pańska 81/83; 00-834 Warsaw dedicated to startups. ways of assistance (Financing, education, phone: +48 22 432 80 80 The program is financed from the Euro- promotion). The new instruments under pean funds in the framework of the Smart the EU Financial Perspective 2014-2020 fax: +48 22 86 20 Growth Operational Programme, sub- serve to stimulate entrepreneurship, in- measure 3.3.2. novation and competitiveness of Polish www.parp.gov.pl Learn more about the Polish ICT Promo- businesses. PARP is engaged in the imple- [email protected] mentation of three new operational pro- tion Program: grammes co-funded from the EU finds, [email protected] https://ict.trade.gov.pl/en namely: Smart Growth, Eastern Poland, Knowledge Education Development. Find us on Facebook: www.facebook.com/ICT.BPP

5 Table of contents

Polish economy in the face of transformation 8 • Poland as a magnet to foreign investors 9 • Strengths and weaknesses of Polish economy 10 • Strengths and weaknesses: A chance for a new 12 opening

ICT across the world 14

ICT in the face of digital transformation 18 • ICT in Poland 19 • Digitalisation of economy 21 • E-commerce 24 • Polish start-ups 24

6 The analysis of Polish ICT sector: state of play and 26 international standing • Size and importance for the economy 28 • The share in and the significance for international 30 trade • Productivity of the ICT sector 33 • Employment in the ICT sector 35 • Investment and innovation in the ICT sector 38

7 POLISH ECONOMY IN THE FACE OF TRANSFORMATION

8 Good condition of Polish econo- POLAND AS A MAGNET TO FOR- The position in the WEF ranking does not Poland has been enjoying huge interest my, dynamic development, as well EIGN INVESTORS change the fact that Poland is one of the on the part of foreign investors for many as economic stability are a strong most dynamically growing economies. In years. According to the Polish Information magnet for foreign investment Poland ranked 26th in the Global Compe the past 25 years Poland’s real GDP dou- and Foreign Investment Agency (PAIiIZ), in Poland. Retaining the present titiveness Report 2016-2017 elaborated bled. The growth was not halted in 2008- high share of foreign companies, which growth rate and high economic by the World Economic Forum. It is an ad- 2009, at the times of the global financial had invested in Poland, do it again. 98% predictability will have a positive vancement by 5 places in comparison to crisis. Entire Europe, save for Poland, sank of companies are satisfied with their de- impact on the position of Polish 2015 and at the same time the best place into recession. This was because Polish cision to locate part of their business in ICT sector in the international are- for Poland in the history of the ranking. 14 economy had been growing sustainably Poland. In the rankings of investment at- na. 000 companies from 138 countries across already before the crisis. Both public and tractiveness, Poland has continuously tak- the world, including 214 from Poland, par- private sectors had been less indebted en leading places for several years, ahead ticipated in the study. Our economy has than in other countries of our region. Also of countries such as the Czech Republic, been classified in the transitional group – the external debt had been lower in com- Hungary, Ukraine or Turkey. In recent aspiring to the group of countries, which parison to other countries. This stability years Polish cities have become one of are most competitive thanks to innova- and balance have been retained until to- the most attractive locations for the BPO/ tion. Economies of Switzerland, Singapore day. Since the beginning of 2014 the GDP SSC sector, while Cracow has been re POLISH and the United States have been deemed has been growing at the rate of at least cognised as one of the 10 best places for most competitive in the report. 3.1% annually. The share of the ICT sector outsourcing in the world. in the GDP amounts to around 8%. GDP PER CAPITA BASED ON PURCHASING POWER PARITY (PPP) UE-15=1 ECONOMY 1,0 UE-15 0,9

0,8

0,7

0,6 Czech Rep.

0,5 Poland

0,4 Hungary

0,3 Bulgaria

0,2 Romania

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Source: Eurostat 9 Poland holds a number of advan- STRENGTHS AND WEAKNESSES impact on economy also plays an important Poland has effectively been using the EU tages for foreign investors over OF POLISH ECONOMY role. For our smaller neighbours, such as funds granted. In 2014-2020 Poland shall the rest of the EU countries. It is the Czech Republic or Slovakia, export receive more than EUR 82 billion for the characterised by strong internal Since 1990 Poland has been open to for- is of key importance for the economies, development of the economy. The funds demand, low costs, high human re- eign investment, irrespective of a polit- which makes them more sensitive to tur- shall be distributed by both central and sources potential, stable financial ical party in power. Relatively low remu- bulences in global markets. The financial regional institutions. There shall be a lot sector, as well as an independent neration, high educational attainment sector in Poland is stable and in good of focus on R&D processes. Moreover, currency. However, it is viewed of workers, flexible labour market and condition, which is demonstrated by the already today there are 14 special eco- negatively in the context of inno- geographical location have been the pri- results of Polish banks, when compared nomic zones operating in Poland, offering vativeness. It stems i.a. from low mary magnets attracting foreign com- to foreign institutions. In recent years special conditions for investors. level of investment in R&D activi- panies to Poland. Having own currency road infrastructure has been significantly At the same time international rankings ties. helps to keep the entire economy at the improved. In 2007-2013 1500 kilometres assess Poland poorly in terms of innova- competitive level. Thanks to systematic of motorways and express roads were tiveness, energy efficiency, as well as pov- weakening of Polish zloty against euro or commissioned. As a result the total length erty and social exclusion. dollar, it has been possible to retain price of this type of roads increased by around competitiveness of exports. Large and ab- 150%. It is the improvement of infrastruc- According to the Innovation Union Score- sorbent internal market with a stabilising ture that investors point to as the biggest board 2015 Poland ranked 24th among positive change in recent years. It is the the European Union Member States, international companies, which had an ahead of Romania, Bulgaria, Latvia and impact on initiating qualitative changes Lithuania. In 2014 the expenditure for STRUCTURE OF R&D EXPENDITURE in Polish economy. The industry has un- R&D in Poland amounted to slightly over by source of financing (2014) dergone significant modernisation. The PLN 16 billion, i.e. only 0.94% of GDP. level of technological advancement has Leading EU countries allocate around 3% increased, which has translated into in- of their GDPs to R&D. According to the creased effectiveness of enterprises. Strategy for Innovativeness and Effective- ness of the Economy, this indicator is to Various forms of tax allowances and sub- 56% amount to 1.7% in Poland in 2020. The 64% 56% sidies for investors increase investment 64% share of remuneration in added value 68% 67% 68% attractiveness of Poland. Since the time in Poland amounts to 45%, which places of joining the European Union in 2004 Poland among countries competing on costs. At the same time, the positive as- 25% pect of the changes lies in the fact that 25% companies have an increasing share in 23% financing of research and development 33% 17% 23% 29% State work. The primary source of financing of 18% innovation are own funds of enterpris- 15% 18% 12% 9% 4% 2% Academia es. The supporting sources include bank loans, EU funds or funds from the state Business budget. EU (average) Finland Sweden Denmark Germany Czech Rep. Poland

Source: World Economic Forum 10 POLISH LABOUR MARKET IS CHARACTERISED BY QUALIFIED LABOUR FORCE AND LOW COSTS OF LABOUR The share of university graduates 2014 Costs of labour, 2014 (EUR/hour) (in percentage of persons in 25-64 age group)

Sweden Romania

Denmark Hungary

Spain Poland

Netherlands Czech Rep.

France Slovakia

Austria Portugal

Germany Spain

Poland Italy

Hungary Germany

Portugal Austria

Czech Rep. Netherlands

Slovakia France

Italy Sweden

Romania Denmark

AVERAGE 27 AVERAGE 22

Source: World Economic Forum 11 Human capital in Poland is as- The transparency of the tax law, labour of business operations. Numerous minor It is also worth noting that since 2014 sessed very favourably. Poland market regulations and instability of the legislative amendments are perceived as the migration processes to Poland have has large resources of qualified economic policy were rated most poor- actions targeted against entrepreneur- gained momentum. The influx of people personnel, while still keeping the ly in WEF questionnaires. Legal regula- ship. These factors pose barriers to smal from the eastern border is felt particu- cost of labour at a low level. How- tions, despite some symptoms of positive ler investments undertaken by foreign larly strongly. Political and economic de- ever, both legal regulations and changes, continue to be primary factors companies from the SME sector. Also fi- stabilisation in Ukraine was an important the difficulty in acquiring funds hindering the economic growth. Present- nancing of high risk investment has been contributing factor. Official data mention for high risk investments are ra ly, the law is perceived as too complex rated poorly in the WEF ranking. In this several dozens of thousands of people ted poorly. and incomprehensible. It often imposes category Poland ranked 96th. annually granted work permits in Poland. a great number of obligations on entre- A realistic assessment of the scale of this Polish labour market is viewed as relative- preneurs, thus generating excessive costs phenomenon shall be possible in two or ly flexible. Entrepreneurs have a possibil- three years. ity to adapt remuneration and the costs of dismissals are low. The problem is to Progressing restructuring of Polish eco THE SHARE OF LARGEST COMPANIES CONTROLLED effectively use the resources in the labour nomy contributes to changes in the struc- BY THE STATE IS market. In 2014 the share of working pop- ture of demand for workers. It calls for higher than in developed countries, but lower than in developing ones ulation aged 20-64 in the total population adaptation of workers’ qualifications and amounted to 66.5%. It is one of the poor- an increase of their mobility. It is easier The share of public and private companies in the “Forbes” Global 2000 ranking (in %) The number of com- est results in the EU. According to the Eu- for young people with higher education to panies in the “Forbes” Global 2000 ranking rope 2020 strategy by 2020 this indicator adapt to the changing labour market. At is to amount to 71%. The employment the same time upskilling in not common Japan rate among young people is also low- in Poland. The younger and better edu- USA er than the EU average and amounts to cated a person, the bigger the chance that 43.8%. It should be noted though that the it will take action to gain more education Great Britain employment rate among young persons and adapt to the labour market. France is unsatisfactory in most of the EU coun- STRENGTHS AND WEAKNESSES: Turkey tries. The overall unemployment rate in July 2016 amounted to 8.6%, which is the A CHANCE FOR A NEW OPENING Switzerland lowest result in more than 25 years. On Primary drivers of the growth so far are Brasil one hand it is the result of growing Polish slowing down - the value of foreign in- Norway economy, on the other of the economic vestment and the increase rate of pro- migration of Poles, which is the strongest Russia ductivity based on low labour cost are in the EU. According to the statistics, since decreasing. After 2020 the EU funds shall India Poland’s accession to the EU more than probably shrink and we shall feel a strong China 2 million people migrated for economic negative impact of demographic changes. reasons. Initially these were persons with Poland Furthermore, with time the expectations low educational attainment, who emi- of reduction of carbon dioxide emissions Private companies Public companies grated. With time, more and more edu- in the context of climate change shall cated and well qualified persons started 1. The share of private and public companies in Poland has been calculated for 50 largest companies according to prevail, which is particularly disadvanta- to leave. Primary directions of migration “The list of 500” ranking by “Rzeczpospolita”. geous for Poland because of rich carbon 2. Companies with more than 50% of shares held by the State Treasury include Germany, the United Kingdom, deposits. Polish companies must start to Source: „Forbes” Global 2000 ranking, 2011; OECD report „State-Owned Enterprises”, 2012; McKinsey’s analysis Ireland, the Netherlands and Norway. 12 Poland faces the challenge of re- look for advantages other than costs. In Among the assets, which will help Poland cil shall be important throughout the pro- placing present growth drivers, the long run it shall be impossible to re- to catch up with Western Europe, the fol- cess. Among external factors influencing such as low cost of labour, EU tain competitiveness through low prices. lowing are mentioned: educated and cost volatility of prices in Poland, the Council subsidies and the increase rate of It will be of key importance that compa- competitive labour force, strategic geo- pointed to the uncertainty of econo productivity, and of balancing fu- nies develop their own, original solutions graphical location, large internal market, mic growth in the world, as well as very ture disadvantageous regulations and enter new market niches. More and large area of agricultural land (4th place aggressive monetary policies of largest and socio-economic factors. Polish more often Polish entrepreneurs decide in the EU). central banks (FED, EBC). Among internal companies must seek sources of to invest abroad. Many companies have factors, overall economic situation, situa- In the “Poland 2025” report McKinsey has competitive advantage in origi- earned a strong position in the home tion in the labour market, fiscal policy and also clearly defined, what activities should nal, proprietary solutions and ex- market. Further growth calls for imple- situation in the lending market are listed. be undertaken in the next few years: ploitation of market niches. mentation of bold strategies allowing to In the assumptions for 2016 the inflation gain market share outside of the country QQ Creation of high-tech clusters facilita target of 2.5% has been retained. At the Government investments and cre- borders. Investment activities cover also ting better cooperation in large technolo- same time, according to forecasts, infla- ation of innovation friendly en- regions from outside of the EU, such as gy projects and exchange of knowledge. tion at the end of 2016 shall amount to vironment shall be an important Asia, North and South America or Africa. around -0.5%. driver for stimulating growth of QQ Strengthening of ties between busi- the ICT sector. The increased ef- In its report “5 opportunities for Poland” ness and academic community in order According to a PwC report, in the long- fectiveness of key sectors through McKinsey identified five areas, which to adapt curricula to the need of the term perspective, by 2050, Poland shall implementation of IT solutions should be improved in order for the Pol- high-technology sector and to better use achieve the highest average growth rate may become a driving force of ish economy to equal to the European the results of research in business, e.g. among all large EU economies. Forecasts overall economic growth. leaders: through introduction of the requirement indicate that average growth of Polish of equal share of private and public funds GDP by 2050 shall amount to 2.7% annu- 1: Increasing productivity in all sectors in research and development. ally (2.9% per capita). By 2020 the fore- of the economy, and particularly in four casted growth rate amounts to 3.4%, up sectors with the highest potential for im- Q Q Allocation of more funds spent under to 2.8% annually in 2012-2040 and 2% an- provement in relation to Western Europe public procurement for research and de- nually in 2041-2050. The key factors slow- (mining, energy, agriculture, manufactu velopment projects. ing the growth shall include demographic ring) and improvement of the position of factors and hindered growth accompa- Polish companies in the value generation QQ Provision of support from the state nying transformation of Polish economy chain. in order to limit the risk related to large capital projects (for example through loan into a developed one. 2: Preparation of additional investment guarantees). projects and securing the capital in the amount of up to PLN 2 billion for their fi- QQ Increase of targeted expenditure for nancing over the next decade. research and development through re- moval of tax barriers and facilitating of Investments in innovativeness of the 3: access to sources of venture capital fi- economy as the new stage after the “low nancing. cost” phase. QQ Possible allocation of direct public Counteracting negative demographic 4: expenditure to national research pro- trends in the labour market. grammes. 5: Stronger support for business and improvement of the level of public services. The support of the Monetary Policy Coun- 13 ICT ACROSS THE WORLD

14 The development of information The flow of information and development computers and software, not connected flow of coherent information on mo technologies is a foundation of of information technologies are now however to communication technologies netary flows makes it possible for tax growth, not only for the ICT sector, foundations for the development of com- and those related to networks. The deve authorities to shorten or simplify proce- but for the entire economy and petitiveness and impulses for economic lopment of these technologies results in dures or minimise errors in tax collection society. Competitiveness of Po or social development of any developed a situation, where both of these concepts systems. Making use of relevant data lish industries is to a large extent or developing country. Availability and become increasingly coherent, while be- helps limit the risk of fraud in the public based on availability and quality quality of information are key elements ing a driver for civilisation, social and eco- sector, while analysis of trends and social of ICT sector solutions. In the era for growth and competitiveness. nomic development.” attitudes with the support of Big Data of global changes this is one of the could facilitate more effective communi- This is how the Central Statistical Office Practically any aspect of modern life - in key sectors for future growth. cation between the state and citizens and defines ICT: business, culture or even at home, de- business environment. pends on the flow of information and use “Information and communication tech- of information technologies. The global Good cooperation of the state with en- nologies mean a family of technologies communication network is the largest and trepreneurs, characterised by the ade- processing, collecting and transmitting most broadly implemented undertaking quate level of information flow, facilitates data in an electronic form. Information in the history of modern world. According identification of common development technologies (IT) are a narrower concept to the UN data there are now more than goals. The consequence of such situation and they refer to technologies related to 7 billion telephone subscribers, 1.4 billion is growth of employment, in this case FORECAST: households are connected to TV network in the sector of new technologies. If the and each year there are several dozens of market adequately reacts to the changes the number of smart-phone users in 2014-2020 millions of new Internet users. Together in the economic situation, employment is

3,5 with the development of GPS and similar moved to sectors with higher productivi- networks, several hundreds of millions ty. In the long term, such situation results 2,87 of people also started using satellite net- in the growth of GDP per capita and im- 3 2,71 2,53 work, and almost every cell phone user proved living standards of citizens. 2,32 has a possibility to send data via Blue- 2,5 It is hard to find a better example of the 2,1 tooth. Increased importance of ICT, and use of information and information tech- 1,86 thus the increased level of availability 2 nologies, than activities of all types of en- of information, led to the development 1,57 terprises. In large companies each com- of the so-called information society - a ponent, structure or process is digitalised 1,5 trend in societies forced by a significant and analysed with a view to optimisation increase of the importance of informa- of processes, costs or organisation of 1 tion and electronic services in public ad- work stations. Access to specialised data ministration and everyday life. Therefore, bases and relevant tools to establish de- 0,5 the capacity of citizens of a given country pendencies between individual pieces of to acquire and use information through information on potential candidates for a 0 information and communication techno specific job provides a possibility to select 2014 2015 2016* 2017* 2018* 2019* 2020* logies is an important driver of economic best suited options, thus limiting costs, growth. * forecasts recruitment period and ensuring high ef- Adequate use of information by citizens fectiveness of the recruitment and selec- brings a lot of positive results. Efficient tion process. Persistent and accelerating

15 The significance of the ICT sector growth of ICT continues to provide new must continue to invest in digital techno Key trends in the ICT sector in the next in global and Polish economies business opportunities. logies, adapt to the market and increase few years shall include cloud technolo- continues to dynamically increase. competitive advantage of a company or a gies, Big Data, the Internet of Things and The analysis of connections in such exten- Key trends in the ICT sector shall country. cybersecurity. sive data sets would not be possible with include cloud technologies, Big the use of only analogue technologies, or According to the indicators of ITU (Inter- Cloud computing is a model of data pro- Data, the Internet of Things and would be too labour consuming, costly national Telecommunication Union) - the cessing based on the use of services pro- cybersecurity. and ineffective to meet the basic require- organisation acting on behalf of the UN vided by a service provider via Internet. ment of profitability. and measuring i.a. the level of digitalisa- It eliminates the need to buy software tion of societies, saturation of all aspects servers or bear the cost of equipment From a point of view of a citizen, who is of economic activities with ICT technolo- administration. In this model consumers just a consumer, broader flow of informa- gies is a foundation for growth, building pay for using the service. Cloud compu tion also means a broader choice, savings key competences and valuable resources, ting facilitates functioning of IT resources and better matching products with needs. thus supporting development of subse- in the so-called “cloud”. Access to dis- In this case structured flow of information quent generations of more technolo persed disk space or computing memory means more competition - consumer has gically advanced products and services. brings a significant change to a consumer. a possibility to compare prices and quality According to the most recent report, the They can use and pay only for resources of products and services offered by com- list of countries with a high level of social they use, easily adapting services use to panies and to verify fairness of individual digitalisation is topped by South Korea, current need, avoiding costly investment sellers in data bases collecting opinions of Denmark, Iceland, the United Kingdom, in IT infrastructure. Furthermore, storage clients on their purchases. Transparency Sweden, Luxembourg, Switzerland, Nor- and processing of data in a cloud facilitate of the market also facilitates better com- way and Japan. These countries have access to information shared by many us- munication and easier matching of con- based their national competitiveness on ers. A study commissioned by the Euro- sumers and products. ICT of products and services. pean Commission has shown that savings It is also worth to mention another aspect related to increased competition, i.e. SPECIALISTS EMPLOYED IN ICT (EU-28) focus on specialisation. It is time consu 8000 ming, but in the long run it helps to op-

timise prices, thus increasing availability 7500 of products and services to consumers, at

the same time not reducing profits of en- 7000 terprises thanks to minimisation of waste

of resources used. 6500 A country with a high level of digitalisation shall be ready to compete in new markets 6000 based on technological development. 5500 Also in the light of increasing competitiveness of European, Asian and Ameri- 5000 can companies, digitalisation is no longer

a choice, but a necessity. In order to be 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ready, business and government leaders Source: Eurostat. Data given in thousands. 16 Segments covered by key trends in resulting from implementation of cloud WIKIBON BIG DATA SOFTWARE the sector develop at the rate be- solutions amount to 10-20% of the cost of Hardware & Professional Services Projection 2014-2026 ($B) tween around a dozen and several entire IT. It is estimated than over the next tens of percent annually. This is few years the model of work in a cloud $ 100,0 CARG Total Big Data Revenue 20142006= 14,4% because they provide significant will be used more and more frequently by competitive advantages and bring individual and corporate users. The entire $ 90,0 savings. For example, implemen- market is developing at the rate of around tation of cloud solutions brings 10- a dozen percent annually. The primary $ 80,0 20% savings on IT costs. Issues re- factor slowing the market so far was us- $ 70,0 lated to safety of information and ers’ concern about data safety. However, legal regulation hinder the growth according to experts, it is the insufficient $ 60,0 of the most innovative segments. number of qualified employees that may slow down the growth of cloud services $ 50,0 market. $ 40,0 Big Data is a concept applied to data sets, $ 30,0 which at the same time are characterised

by large volume, diversity and complexi- Annual Big Data Revenue ($ Bilion) $ 20,0 ty, and require application of innovative information technologies, tools and me $ 10,0 thod to extract new and useful knowledge $ 0,0 from them. Progressing digitalisation of 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 economy and technological development have opened access to large volumes Big Data Software Big Data Hardware Professional Services of data. This brings a number of conse- Source: Wikibon Big Data Project, 2016 quences. Part of these data are publicly available, which increases transparency The Internet of Things (IoT) is a concept, At the same time the increasing number in a number of fields. Organisations may whereby each device is connected to of network connected devices gives rise collect data or use external data sets to the Internet, which will facilitate collec- to concerns about data and user safety. increase effectiveness and make better tion and processing of data from such a According to Deloitte, with the scale and decisions. Bid Data helps companies to device. According to Gartner, a compa- rate of development of cyber threats, better segment their clients, thus facilita ny specialising in technology related re- one can assume that every organisation ting better adaptation of their offer. Use search, in 2015 the number of connected has either already been digitally attacked of available data facilitates also better devices amounted to 4.9 billion. Gartner or shall be attacked in future. Primary design of subsequent generations of pro estimates that by 2020 this number shall sectors in the area of network safety are ducts and services. Analytics is the key increase to 25 billion, i.e. around twice as cloud data security, security of mobile de- area of Big Data as it makes it possible many as there are smartphones, tablets vices and security analytics. The growth to interpret data and identify competitive and computers combined. It is the IoT rate of the market is estimated at around advantages. It is estimated that markets data that will result in an even greater 10% annually over the next few years. related to data analysis will grow at the influx of information facilitating optimi rate of 20-40% annually in the next few sation of processes inside organisations. years. 17 ICT IN THE FACE OF DIGITAL TRANSFORMATION

18 On average, digitally advanced Presently, all markets see the process of HOW IS THE DIGITAL TRANS- The number of ICT companies increased sectors grow 2.8 times faster than digital transformation. Use of digital tech- FORMATION UNDERSTOOD by 24.5% in 2011-2014. The number of other sectors. Polish specialisa- nologies is possible in many areas of each persons working in the sector increases tion include IT services consisting company’s activities. At the same time Pertains to all activities related to at the rate of around 6% annually. More in software development, out- 100% of application of digital opportuni- innovation than three quarters of persons employed sourcing services (shared services ties call for the total change of the way Polska in the sector work in ICT services, of which PolandPolska World centres in particular) and devel- of thinking about company’s operations. most are persons employed in IT services. opment of games. However, tele- Thanks to the use of digital technologies The largest revenues in the sector are communications remain the lead- the transformation cover the entire pro- generated by services, telecommunica- ing sector in terms of generated cess, from product design to customer tions in particular. IT companies are re- revenue. service. Digitalisation involves the use of sponsible for two thirds of the revenues technologies such as social media, mo- in the sector. bile, data analysis, and cloud computing. In manufacturing companies “smart” It is a concept equivalent to IT manufacturing systems emerge, which IN THE PAST 5 YEARS IN POLAND PolandPolska World apply data analysis and ensure communi- Polska digitally advanced sectors were growing almost cation between individual components of 3 times faster than less advanced ones a line. Large flexibility and reduced manu- The increase of total sales - average values by sectors facturing costs are an advantage of these (CARG 2010-2015, in %) types of systems. Digitally advanced sectors 4,8 In order to fully use advantages embed- Source: PwC, Digital IQ report ded in digitalisation, it is necessary to fully 2,8x understand new technologies and their Digitally less with existing ones and effective use of the 1,7 benefits. According to PwC CEO Survey, advanced sectors huge volumes of data available. The pri- 86% of presidents of management boards mary reason for the latter is shortage of believe that the use of digital technologies qualified employees. Apart from compe- Service companies with operations based is of key importance. 31% of respondents tences in data analytics, the respondents on the work of Polish programmers have claim that over 15% of company revenues pointed to skills related to UX/UI (user the largest share in IT exports. ITO (Infor- are invested in technologies covering op- experience), system architecture and mation Technology Outsourcing) centres erations of entire companies. At the same strategic planning as the most important have been opened in Poland by com- time for slightly more than one third of ones. At the same time, more than three panies such as Luxoft, Tieto, BLStream, respondents, the concept of digitalisation quarters of interviewees confirmed that Sii, and C&F. According to forecasts, up equals IT. It means that this very group of companies were aware of the increasing to 240 thousand persons could work in interviewees perceives digitalisation pro- threat of cyber attacks and undertook Polish BPO, ITO, R&D and call centres in cesses too narrowly to fully understand prevention measures. 2018. the scale and potential of digital revolution. ICT IN POLAND Every year ICT sectors companies spend more and more money on research and According to the respondents the big- In Poland 430 000 people find employ- development. Companies providing ICT gest challenges related to digitalisation ment in the ICT sector and the share of ICT services are responsible for 90% of the included integration of new technologies industry in GDP amounts to around 8%. increase. At the same time the ICT sector 19 demonstrates more innovativeness than One of the key challenges faced by Value of the market (in USD million) Share in IT services market employers and investors in the ICT other sectors of the economy. Segment carg (20132018) sector is finding qualified employ- 2013 2018 2013 2018 Alongside the development of software ees. In this area Poland holds one on request and outsourcing services, Application Management 6,6% 7,26 102,18 2,4% 2,6% of the leading positions in the EU, development of computer games is a however further activities stim- Polish speciality. Popularity of titles re- Information System Outsourcing 0,0% 193,92 194,34 6,2% 4,9% ulating supply of qualified IT spe- leased by studios such as CD Projekt Red cialist continue to be necessary. („The Witcher” series), CI Games („Snip- Network and Desktop Outsourcing 0,5% 122,95 119,73 3,9% 3,0% er” series), Techland („Dead Island”, „Dy-

ing Light”) or 11bit Studios („This war of Hosted Application Management 17,6% 26,53 59,58 0,8% 1,5% mine”) significantly influenced popularity

of this sector in Poland. The market for Hosting Infrastructure Services 17,5% 173,40 388,86 5,5% 9,9% computer games is strongly globalised and the origin of the publisher is less sig- Total 591,06 864,69 18,8% 21,9%

nificant than in other ICT branches. At the Source: ABSL own elaboration based on IDC data same time the revenues of Polish game developers are relatively small in com- opment of the ICT sector, and IT in par- one programming language to another is parison to other ICT branches. The reve- ticular, is the shortage of qualified em- definitely simpler and cheaper that train- nues of CD Projekt RED, Techland and CI ployees. At the same time, as statistics ing a new one. It does not alter the fact Games, definitely the largest game devel- indicate, there is a shortage of several that in the next few years the situation opers in Poland, amounted to less than dozens of thousands of programmers in in the IT labour market will continue to PLN 1.5 billion in 2015. the territory of the European Union, and deteriorate from the point of view of em- these values continue to grow every year. ployers. Demographic trends have a neg- STRUCTURE OF NET REVENUE Also in Poland CEOs of companies point to ative impact on the number of students FROM SALES this factor as one of the most significant and graduates of universities. Employers problems. Programmers experienced in are looking for new, flexible forms of em- in the ICT sector Java, .NET, C++, Objective C, HTML, CSS, ployment, which will facilitate better use Javascript, Python are most sought after. of freelancers. The hope lies also in pop- ICT production Re-qualification of a programmer from ularisation of robotisation and machine Telecommunications ICT wholesale WHAT IS THE POLISH ICT IT services SPECIALISATION? Software development on request

11% of people aged 20-29 have recently Development of games graduated from universities. 2.2% are BPO/ITO services graduates of scientific faculties. Poland ranks 4th in the EU in this respect. The Internet technologies

cost of labour in ICT is 45-70% lower than Research and development in the area of software in the Western Europe countries. One of the primary factors hindering the devel- Research and development in the area of hardware 20 The financial sector is the most In 2008-2016 GDP per capita increased digitalised in Poland. Despite sub- by 31%, and the Economy Digitalisation stantial changes in recent years, Indicator by 70%. Poland ranks 4th in the remaining sectors still lag the EU in terms of the increase of the behind the EU average. Govern- digitalisation indicator. At the same time ment spending on digitalisation, Poland ranks 6th in Europe in terms of including e-administration, is a improvement of digital competences and very important driver of ICT sector 10th in terms of improvement of business development. Public procurement environment. At the same time it should supported by EU funds represents be noted that Poland is relatively poorly around 25% of the demand for ICT developed in terms of digitalisation in services. comparison to the most developed economies in Europe. Digitalisation should improve effectiveness also in sectors, which are least connected with digitalisation, such as mining or industrial production. Meanwhile, the only sector with digitalisation better than EU average is the financial sector. Inclinable approach of the Financial Supervision Authority to technological novelties, openness of customers and high competitiveness of the sector, resulted in a situation, in which THE BIGGEST PROBLEM PRESENTLY FACED BY YOUR COMPANY* Poland possesses a user friendly banking system. Remaining sectors are weaker Availability of qualified staff Cost of labour than EU average in terms of digitalisation. Level of taxes and fees provided by the law Complexity of legal provisions It may result from the fact that small and medium-sizes enterprises in Poland are Low turnover Limited access to public procurements usually smaller than their counterparts in Competition from other entrepreneurs Corruption Western Europe. Bureaucracy In 2008-2014 huge effort was made im- *share of answers pointing to this factor as the most important one proving the quality of e-administration. This work shall continue under the new EU learning, which in some areas will take According to Deloitte’s forecast this value perspective. The use of ICT technologies the burden off human resources and will will increase to 5% in 2016 and as much as in the public sector continues to call for make it possible for programmers to get 9.5% in 2020. Thanks to progressing digital- improvements. The Ministry of Econom- involved in other tasks. isation, the cost of running companies shall ic Development has made it its objective be decreasing over the next few years. Also, for 50% of the society to handle 80% of DIGITALISATION OF ECONOMY exchange of information within companies official matters electronically within 2-3 shall improve and customer service shall years. Furthermore, one of the priorities is Polish e-economy represents 4.1% of GDP. become easier. to increase non-cash turnover. The Digital 21 Main areas of government expen- POLISH SECTORS COMPARED TO THE EUROPEAN AVERAGE IN THE son to 2014. Most of these persons are diture supported with EU funds ECONOMY DIGITALISATION INDICATOR (PTS) young people, with higher education and shall include access to fast Inter- self-employed persons. 01 02 03 04 05 06 0 net, e-administration, digital com- Under the axis “E-government and open petences and technical assistance, Insurance and finance government” public institutions shall implemented via the Digital Po- Information and communications be granted aid to broaden the scope of land Operational Programme. Other services e-services, integration of services at the Trade ePUAP platform (Electronic Platform for Industrial processing Public Administration Services), stream- Specialised services lining of services within administration, Administrative services digitalisation of processes and proce- Energy dures and provision of more data within

Transport and storage the public sector. Real property The axis “Digital competences of the so- Hotels and catering ciety” shall support persons willing to im- Construction prove their digital competences and people at risk of digital exclusion. Moreover, support shall be offered to programmers, Poland average which will facilitate better use of the po- Source: Polityka Insight tential of this resource. Poland programme envisages introduction The axis “Common access to high-speed In- The axis “Technical assistance” focuses of widespread ICT services, broadening of ternet” focuses on provision of broadband on provision of tools and human capital online administrative procedures and other Internet, with a minimum capacity of 30 necessary for implementation and day actions supporting digitalisation of Poland. Mbit/s, in areas where necessary infrastruc- to day management of the Digital Poland ture could not be provided without support Public procurement supported by EU funds programme. from the state. The objective is to provide represents around one quarter of the de- the access to broadband Internet in the „Polityka Insight” centre issued a number mand for ICT services in recent years. The entire territory of Poland by 2020. In 2015 of recommendations, which are to accel- Digital Poland Operational Programme slightly more than 70% of households had erate the digitalisation process in Poland: shall be the primary programme continuing a broadband access to the Internet. At the this trend in 2014-2020. The total amount QQ To guarantee shaping of digital compe- same time almost one quarter of house- of funds allocated to the programme shall tences at each stage of education. holds still do not have Internet, of which excess PLN 10 billion, of which 80% are EU households without children are a decisive QQ To encourage public institutions to funds. The programme has been divided majority. The reason given for the absence make data and services available online. into the following priority axes: of Internet in these household is the lack of QQ To create a single government service QQ Common access to high-speed Internet, need to use the network. to handle official matters. Q Q E-government and open government, 13.7% of Internet users aged 16-74 QQ To support and develop educational QQ Digital competences of the society, used disk space in a cloud. This is a 5.7 programmes on personal data. QQ Technical assistance. percentage points increase in compari- QQ To regulate access to personal data

22 There is still a large disproportion COMPANIES USING ERP SYSTEM IN EUROPEAN UNION MEMBER taking into account all groups. in diffusion of ICT solutions in the STATES IN 2014 QQ To invest public funds only in selected, economy. Smaller companies of- prospective sectors. ten do not have a possibility to QQ To design a system of tax allowances implement modern solutions or to Belgium for purchases of innovative technological employ qualified specialists. Tax Austria solutions. allowances and financial supports Sweden may be the answer. QQ To support investment in broad- Denmark band infrastructure to ensure universal, Portugal high-quality access to the Internet. Netherlands QQ To facilitate business activities. Greece QQ To coordinate the process of execution Finland of IT procurement by administration. Luxembourg Italy COMPANIES EMPLOYING PERSONS Cyprus WITH SPECIALIST skills in ICT by size and types of activity in 2015 Spain France 73,6 Germany Malta EU-28 Slovenia Lithuania Slovakia Czech Rep. Bulgaria 30,3 Ireland Poland Romania Croatia 12,0 Estonia Hungary 6,6 Great Britain Latvia

01 02 03 04 05 0% Source: Eurostat database Large Medium Small Total 23 The e-commerce sector develops HOUSEHOLDS WITH INTENET E-COMMERCE conditions. Therefore competitiveness in at the rate of 20% annually. Its ACCESS AND BROADBAND this sector is governed by different rules value amounted to PLN 32 billion. ACCESS TO THE NETWORK The value of the e-commerce sector in than those of the traditional trade. E-com- Despite the fact that presently it 2015 amounted to PLN 32 billion and was merce is characterised by rapid changes represents a relatively small per- higher by around 20% in comparison to in consumers’ habits. Companies, which centage of trade exchange, its 2014. The revenues of the sector are ex- shall quickly and effectively adapt new share shall systematically grow. pected to double in the next 5 years. How- technologies and react to changes in It is expected that the revenue of ever, the sector continues to represent a customer preferences stand the biggest the sector shall double in the com- small share of trade exchange. chance of remaining in the market. One ing 5 years. of the key factors will be effective use of In 2015 11 million persons aged 16-74 big data. made at least one purchase via the Inter- net. Two thirds of these persons have a POLISH START-UPS degree. Men buy online more often than women. Nowadays consumers are very As the study of Deloitte shows, half of well informed. Thanks to the Internet they start-ups in Poland carry out activities can quickly find products they want, at the related to the ICT sector. The most fre- best possible price. They are used to have quently mentioned areas of start-ups’ their need fulfilled immediately, on good activities include mobile technologies, e-commerce, business software, education, Internet of Things and Big Data. The SECTORS, IN WHICH START-UPS OPERATE structure of financing of young companies is changing. Most companies start their ICT and digital transformation solutions activities using own funds, avoiding costly 50,86% investments until they generate enough Creative industry and multimedia technologies revenue. In substantial majority from the start of operations start-ups intend to sell 30,86% their services and products outside of Technologies for optimisation of energy consumption and renewable energy sources Poland. At the same time, as in the entire 12,57% sector, shortage of qualified employees is a problem. Already one in every four Biotechnologies and medical technologies start-ups employs foreigners as ICT spe- 9,14% cialists. The progressing computerisation Nanotechnologies and material technologies of the society is an opportunity for start-

6,86% ups from the ICT sector and companies already established in the industry. With Robotics and other industrial technologies every year more and more households 5,71% are connected to the Internet (75.8%) including broadband. This trend leads to Others the increase of the target group for many 9,14% ICT solutions, endogenously stimulating Source: mBank the demand for products of Polish com- 24 The huge growth potential of the panies from the sector. The change of November 2014. These data clearly justi- include provision of financing for high risk ICT sector is also confirmed by a consumer behaviours, including transfer- fy the statistics indicating that more than projects, introduction of allowances (e.g. large number of newly created ring of a large part of day to day activities 50% of start-ups are established in the ICT tax allowances) for enterprises investing start-ups. More than 50% of start- to the Internet, is a significant stimulant sector. A very dynamic development of in R&D and computerisation and retain- ups are established in the ICT sec- of the sector. Computerisation continues the sector can be expected in the coming ing of the level of public expenditure sup- tor. to affect more and more aspects of lives years, as well as its continuously growing ported by EU funds. Without an active of citizens and companies. One of the significance to the economy. At the same approach of companies and the state, the strongest trends is the increased use of time one should remember that in order retention of positive results of the sector mobile devices. This is very well exempli- to keep the sector in a good condition may prove very difficult at the time of fied by more customers logging in from substantial efforts are required, especial- growing competition and decreasing cost mobile devices than from traditional ones ly in the form of investment and allow- advantage of Poland. to one of the leading banks in Poland in ances from the government. The needs

MAP OF START-UPS

Source: The map has been elaborated by Startup Poland ambassadors 25 THE ANALYSIS OF POLISH ICT SECTOR STATE OF PLAY AND INTERNATIONAL STANDING

26 The ICT sector includes all services For the needs of this report, the ICT sec- Table 1: DEFINITION OF THE ICT SECTOR and products performing a func- tor has been defined in line with the NACE KodRev. 2 NACE code / Polish Description according Description according to Polish tion of processing and transmit- framework presented by the Organisa- Classification Opis wg.to NACE NACE Rev. Rev. 2 2 ClassificationOps wg. of ActivitiesPKD (PKD) ting information electronically. tion for the Economic Cooperation and ofRev. Activities 2/Kod (PKD) PKD code Development, which had been presented in document DSTI/ICCP/IIS(2006)2/ FINAL „Working Party on Indicators for the Information Society” of 5 March 2007. The guidelines identify the sectors of the economy, which should be included in the ICT sector. The segmentation is in THE ANALYSIS line with the framework of the Statisti- cal classification of economic activities in the European Community - NACE Rev. 2, which ensures its compatibility with an overwhelming majority of commonly used classifications. In general, the ICT OF POLISH sector comprises services and production of goods fulfilling the functions of information processing and its communication by electronic means, including transmission and display, or using electronic processing to detect, measure and ICT SECTOR record physical phenomena or to control physical processes. It must be noted that statistical definitions are not perfect and some values may differ depending on the adopted classification of the ICT sector. The complete analysis of the situation of the Polish ICT sector is possible thanks to combining the qualitative and quantita- tive analysis tools. The qualitative analysis focuses on examining the key, quantifi- able parameters monitoring the situation and trends in the sector. Such data include those describing i.a. turnover, employment, profitability, significance of the sector for the economy or innovation. The results of the analysis of the main indicators describing the sector, as well as Po- Source: Own study based on NACE Rev. 2 and the Polish Classification of Activities (2007). 27 In terms of the number of entities, land’s place on the international forum, Table 2: NUMBER OF ENTERPRISES the ICT sector means growth of the sec- the Polish ICT sector accounts for are presented below. The data include IN THE ICT SECTOR tor’s capacity to generate innovative solu- 7.6% of the EU market. The num- aggregated results of individual groups of tions of international significance. ber of Polish enterprises in the the Polish Classification of Activity com- COUNTRY/YEAR 2008 2009 2010 2011 2012 2013 2014 In terms of gross revenues from sales of sector increases at the average prising the ICT sector. Great Britain 132943 ... 128957 ...... 163325 goods and services supplied by the ICT annual rate of 10.1%. France ... 69900 95204 94627 108515 126702 131835 SIZE AND SIGNIFICANCE FOR Italy 108507 10S331 104614 103239 103075 101893 102330 sector, Poland ranks seventh among the THE ECONOMY Germany 70134 71252 74973 80767 82554 86378 97972 analysed European countries. This posi- POLAND 42833 48517 52566 57887 63462 69169 76302 tion, when compared to the size of the The analysed factors include: turnover in Netherlands 30898 33998 47953 51135 55825 70914 73131 sector expresses by the number of en- the sector, value of the sector’s produc- Spain ...... 44222 45095 48986 49863 52204 terprises, points to a lower effectiveness tion, added value, employment, turnover Sweden 39215 40041 41876 43925 44186 43903 44913- of Polish enterprises compared to the per employed person, employment dy- Romania 19519 19190 17157 16127 17318 18188 19485 European market leaders. The conclu- namics, dynamics of gross operating sur- Austria 13617 13466 14420 14798 15088 15388 15795 sions from the analysis of the changes plus, value of investment per employed Slovakia 2906 1512 9847 11719 11838 13022 14324 of the said indicator are optimistic. In the person, investment rate, remuneration, Denmark 10624 10797 11650 12396 12733 13074 13619 years 2009-2014, Poland recorded an av- profitability rate, value of investment Portugal 12408 12052 11747 12004 12035 12680 12975 erage annual turnover growth rate at the expenditure, share of the ICT sector in Norway 12113 11345 11237 11215 11546 11B17 11939 level exceeding 8.64% (CAGR). The over- the GDP, share of the ICT sector in total Greece ...... 9054 8939 8975 9455 all growth rate in the years 2010-2014, employment, share of the ICT sector in Bulgaria 5752 7126 7279 7685 8228 9024” 9452 i.e. the period not including the financial export, share of the ICT sector in import, Finland 7402 7344 7517 7679 7825 B130 8185 crisis, amounted to 16.72%. In terms of innovation expenditure, share of reve- Slovenia 4162 4703 5170 5422 5676 6091 6614 the first indicator, the Polish ICT sector nues from sale of improved products in Croatia 4432 4879 5111 5134 5187 5438 5630 recorded the highest growth rate among revenues from sales. Latvia 2559 2780 3151 3406 4391 5063 5432 all analysed countries. As regards the sec- Lithuania 2415 2270 2532 2779 3435 3B1B 5127 ond indicator, Poland was classified as Poland is at the high, fifth position among Estonia 1849 1934 2266 2731 2917 3364 3527 second. the European countries in terms of the Luxembourg 1554 1618 1694 1755 1838 1960 2054 number of registered enterprises in the Macedonia ...... 947 1065 1143 1170 The above data reveal a positive global ICT sector. The above data demonstrate Source: Own study based on Eurostat; Legend: “e” – own trend in the Polish ICT sector. Turnover the large potential of the sector for both estimation, “…” – no data available; Values expressed in generated by the ICT grows dynamical- the economic growth and directly for em- the number of enterprises ly and places Poland at a high position ployment. The large number of enterpris- of Poland at the international arena will among the European countries. Howev- es constitutes a potential which provides be further strengthened. The average an- er, the efficiency of Polish enterprises foundations for further international suc- nual growth rate of the analysed variable should be further improved. The turnover cess of Polish enterprises. Polish compa- in the years 2009-2014 exceeded 10.1% dynamics of the sector is still lower than nies account for approximately 7.6% of (CAGR). This places Poland at the seventh the growth rate of the total number of enterprises operating in the sector in the position in terms of average growth rate enterprises. The instruments employed European Union. This points to the im- among all analysed European countries. It to improve the situation should include portance of these companies both from is also worth noting that among 10 coun- mainly the government and the EU sup- the Polish and the European perspective. tries with the largest number of enterpris- port programmes aimed at increasing the The growth rate of the number of enter- es Poland was classified at the third place. efficiency of enterprises. The areas that prises allows to forecast that the position The increasing number of enterprises in should receive support include innova- 28 The Polish ICT sector is in a good Table 3: TURNOVER OF THE ICT SECTOR Table 4: VALUE OF PRODUCTION OF THE ICT SECTOR condition, observing an average annual increase in turnover COUNTRY/YEAR COUNTRY/YEAR of over 8.6%. This is the highest Germany Great Britain growth rate in Europe. Great Britain Germany

France France

Italy Italy Spain Spain Finland POLAND POLAND Finland Austria Norway Norway Austria Denmark Denmark Portugal

Portugal Romania

Slovakia Slovakia

Greece Greece

Bulgaria Bulgaria

Slovenia Slovenia

Source: Own study based on Eurostat; Legend: “e” – own estimation, Source: Own study based on Eurostat; Legend: “e” – own estimation, “…” – no data available; “…” – no data available; Values expressed in EUR million Values expressed in EUR million

the group of leaders, i.e. Italy. As regards tion, internationalisation or cost-reducing metic mean of average annual growth the groups of leaders, the United King- solutions. rates, Poland ranks first among the Eu- dom and Germany stand out, since apart ropean countries. However, it should be Poland is classified as sixth in Europe in from being at the leading position, they noted that the average is overstated due terms of production volume in the ICT also record a constant high growth dy- to a very high growth rate in 2011 which sector. The indicator informs about the namics, thus strengthening their position amounted to 24.8%. Taking into account value of products and services produced at the first two places. They recorded high the total growth of production in the by enterprises from individual groups of growth rates in average annual terms and years 2010-2014, Poland developed at PKD/NACE Rev. 2 comprising the ICT sec- in absolute terms in the years 2010-2014. the above-average rate, but considerably tor. The leaders in terms of production (in They stood at 4.4%-5% and 19.98% for the slower than the United Kingdom and Ger- the course of the entire analysed period) United Kingdom and 1%-8% and 17% for many. The situation suggests that despite include the United Kingdom, Germany, Germany. Poland recorded an average the extraordinarily good results, the Pol- France and Italy. Another country is Spain, annual growth rate at 0.46%-24.8%, while ish ICT sector still has a large unused po- but it produces almost a half less goods the growth rate in the entire period 2010- tential. If Poland wants to become one of and services than the last country from 2014 amounted to 6.7%. In terms of arith- the leaders in the sector, it must intensify

29 The United Kingdom, Germany activities stimulating the production by production will still be far ahead. The sit- accounts for 4% of total employment. and France are the leaders in pro- Polish enterprises from the sector. uation is well illustrated by a significant The value is relatively low compared to duction in the ICT sector. With the gap between the production volume of other countries. In Germany it amounts Poland is characterised by a relatively average annual growth rate of Poland and France, which will decrease to 5.2%, in Denmark to 9.2% and in Fin- high growth rate, higher than in the ma- 6.7%, Poland efficiently catches only slightly, if the growth rate of the Pol- land to 7.19%. It is important that Poland jority of European countries, including up with the leading countries, but ish sector does not change until 2026. records a significant upward trend in the also the sector leaders (on average 6.3% stills records a significantly lower The above figure presents the growth share of employment in the ICT sector in CAGR). However, it is worth noting that value of production. forecasts of the leading (United Kingdom, total employment. It amounted to 0.168 the sector leaders, although their growth Germany, France) and the aspiring coun- pp annually on average. The share of the dynamics is lower, achieve higher growth tries (Poland, Spain, Italy). The forecasts ICT sector in employment is expected to rates in absolute terms. Since the dispro- present three possible variants of chang- increase over the next years. It should portion of absolute value of the sectors is es: optimistic, i.e. maintaining the average be noted that the trend is strongly influ- high among the countries, Poland must growth rate from the years 2008-2014, enced by two factors, namely, the talent develop much faster if it wants to catch neutral, i.e. reduction of the growth rate drain by other economies and by a de- up with the leading countries. If the cur- by 1 pp, and conservative, i.e. reduction creasing cost advantage of Poland. In rent growth rate trend in Poland is main- of the growth rate by 2 pp. All variants are the long term, those factors will have an tained, the countries with the largest ICT based on an assumption that during the adverse impact on employment in the forecast period no actions will be taken sector and thus may cause a drop in the FORECAST OF THE VALUE OF PRODUCTION OF THE ICT SECTOR that could have a significant impact on share of employment in the ICT sector in the condition of the Polish sector (apart total employment. from maintenance). THE SHARE IN AND THE SIGNIF- Great Britain In Poland, the share of the ICT sector in ICANCE OF THE SECTOR FOR the GDP amounted to 6.1% in 2014. The INTERNATIONAL TRADE result places Poland at a relatively dis- Germany (optimistic) tant position compared to other Europe- The share of the ICT sector in total ex- an countries. For example, the figure for port and import in 2014 amounted to Hungary is 11.46%, for Bulgaria 9.76% 7.47% and 7.28%, respectively. In abso- France (optimistic) and for Germany 8.38%. In most coun- lute terms, the total export in the years tries, the share of the ICT sector in GDP 2011-2014 increased by PLN 134.8 billion, has declined in the analysed years. How- which marks a growth by 24%. The export Italy (optimistic) ever, the decline in Poland was relatively of the ICT sector increased by PLN 17.3 low. The further decrease in the share of billion, i.e. by 50%. This demonstrates the ICT sector in GDP is likely to be halt- the growing significance of the ICT sector Poland (optimistic) ed or reversed due to dynamic develop- for the Polish export and its potential for ment of the sector and the GDP growth further development at a rate exceeding rate. If the situation does not change, the the average for other sectors. The data Great Britain (neutral) trend from previous years may lead to a demonstrate that Polish enterprises have decrease in the share of the ICT sector in a great opportunity for expansion on for- GDP to 6.06%. eign markets and that they are in fact using it. Source: Own study (forecast) based on Eurostat. Values expressed in EUR million. Employment in the ICT sector in Poland

30 Table 5: SHARE OF THE ICT SECTOR IN THE GDP Table 6: SHARE OF THE ICT SECTOR IN EMPLOYMENT

COUNTRY/YEAR COUNTRY/YEAR

Sweden Sweden

Great Britain Switzerland

Hungary Denmark

Bulgaria Estonia

Estonia Finland

Denmark Hungary

Czech Republic Great Britain

Germany Latvia

Slovakia France

Croatia Netherlands

France Norway

Belgium Czech Republic

Latvia Slovakia Slovenia Belgium Italy Germany Portugal Slovenia Spain Austria Austria Italy Norway Lithuania Romania Spain POLAND Bulgaria Finland Croatia Lithuania POLAND Greece Romania Source: Own study based on Eurostat; Legend: “e” – own estimation, “p” – projection, “…” – no data available; Values expressed in %. Portugal

Greece

Source: Own study based on Eurostat; Legend: “e” – own estimation, “p” – projection, “…” – no data available; Values expressed in %.

31 The dynamic development of the Table 7: SHARE OF THE ICT SECTOR STRUCTURE OF THE ICT SECTOR’S EXPORTS IN 2011 AND 2014 ICT sector is also visible in the for- IN EXPORT AND IMPORT eign trade balance. The share of the sector in export and import amounts to 7.47% and 7.28%, re- PLN billion spectively. Export of which ICT Computers and peripheral devices

Percentage share Consumer electronics Import Telecommunication equipment of which ICT Other ICT products Percentage share

Source: Own study based on the publication of the Cen- tral Statistical Office: “Information society in Poland. Results of statistical surveys in the years 2011–2015.” Source: Information society in Poland. Results of statistical surveys in the years 2011-2015, Central Statistical Office.

The value of import also increased in the analysed period of 2011-2014. Total STRUCTURE OF THE ICT SECTOR’S IMPORTS IN 2011 AND 2014 import grew by PLN 81.2 billion, which accounts for 13% compared to the beginning of the period. The import of the ICT sector increased by PLN 8.4 billion, i.e. by 19.6%. Similarly to export, the import of the ICT sector also grew faster, by 6 pp. Computers and peripheral devices However, the two indicators did not grew evenly in individual segments of the ICT Consumer electronics sector. Differences are recorded in the Telecommunication equipment changes of export and import structure which took place between 2011 and 2014. Other ICT products The changes in the export structure show that in the analysed years, the highest growth rate was recorded in case of ex- Source: Information society in Poland. Results of statistical surveys in the years 2011–2015, Central Statistical Office. ports of telecommunication equipment. The share of this product category in total In the years 2011–2014, telecommunica- on exports. Other product categories exports increased by 23 pp. The expan- tion equipment recorded the highest in- grew only slightly (by 1.4-1.6 pp). All posi- sion of this category reduced the share crease in its percentage share in imports. tive changes in the import structure hap- of computers and peripheral devices and The data confirm that the segment is very pened at the expense of the reduction in consumer electronics by 5.3 pp and 18.3 strong, which is reflected also in the data the share of other ICT products (–7.7 pp). pp, respectively.

32 Telecommunications remain the EXPORTS AND IMPORTS OF INDIVIDUAL SEGMENTS OF THE ICT segment owes its leading position primar- main segment of the ICT sector, SECTOR IN 2014 ily to high import value amounting to PLN generating the highest turnover in 17.9 billion. The segment is the main im- foreign trade. 15,8 porter in the ICT sector. Other products 12,8 PRODUCTIVITY OF THE ICT SECTOR 3 The indicator of value added of production describes the growth of the value of 27,2 goods and services as a result of a specif- Consumer electronics 8,2 ic production process or service creation.

19,6 The indicator is related to innovation, technological advancement, place in the value supply chain, brand strength and

28,2 competitiveness of manufactured goods and services. At the time of increasing Telecommunication 12,4 equipment competition, those aspects are particu- 15,8 larly important for the Polish ICT sector. Competition based on low costs (e.g. relatively lower personnel costs) may prove 31,3 insufficient in the coming years. The value Computers and 17,9 added of production of Polish enterprises peripheral devices 13.4 from the ICT sector increased by 9.97% in the years 2010-2014, growing on average by 5.46% annually. It should be noted 05 10 15 20 25 30 35 that the average of annual increases is strongly overstated due to above-average Total Import Export growth in 2010 which amounted to 17.4%. Source: Information society in Poland. Results of statistical surveys in the years 2011-2015, Central Statistical Office. Data in PLN billion. A strong growth rate of the indicator in The above changes give but a fragment of lion respectively. It should be noted that the years 2009-2010 was due to low val- the full picture of the foreign trade of the in recent years the enterprises selling ues recorded in 2009 as a result of the ICT sector. It needs to be complemented- telecommunication equipment abroad financial crisis. with the presentation of absolute values recorded the highest export growth com- Compared to the countries which set describing individual segments of the sec- pared to other segments. Computers and forth the highest standard on the Euro- tor. peripheral devices remain the segment pean market, i.e. the United Kingdom and with the highest turnover in goods. How- The segments with a positive foreign Germany, the growth of productivity of ever, it should be noted that the segment trade balance include those offering the Polish ICT sector in the years 2010- is subject to intensive competition from consumer electronics and telecommu- 2014 was significantly lower. In the ana- producers manufacturing the products in nication equipment. Their turnover bal- lysed period, the surplus of value added the areas characterised by significant cost ance is PLN 11.4 billion and PLN 3.4 bil- growth rate over the production growth advantages, e.g. Asian producers. The rate amounted to 8.83 pp for the United 33 Despite lower personnel costs, Table 8: VALUE ADDED OF THE ICT SECTOR Table 9: SHARE OF THE VALUE ADDED IN TURNOVER Polish enterprises are character-

ised by a lower productivity than COUNTRY/YEAR COUNTRY/YEAR the leaders from the sector. This means that investments in inno- Great Britain Great Britain vative solutions and R&D must be increased. Germany Norway France Denmark

Italy Bulgaria

Spain Italy

Norway France

POLAND Portugal

Denmark Spain

Austria Germany

Portugal Slovenia

Slovakia Austria

Greece Greece

Bulgaria POLAND

Slovenia Slovakia

Finland Finland

Source: Own study based on Eurostat; Legend: “e” – own estimation, “…” – no data Source: Own study based on Eurostat; Legend: “e” – own estimation, “p” – projection, available; Values expressed in EUR million. Value added at factor cost. “…” – no data available; Values expressed in %, denoting the share of added value at factor cost in the turnover of the ICT sector. Kingdom, 4.62 pp for Germany and 3.27 an organic rate recorded by the majority or promotion. Support in the area of edu- pp for Poland. of the European economies. Productivity cation should cover human resources de- must be further stimulated and Polish en- velopment or cooperation with science. During the analysed period, Poland re- terprises must be educated on key factors corded a satisfactory growth of the value Polish enterprises from the ICT sector are stimulating the productivity. The support added generated in the ICT sector. The characterised by moderate productivity. actions carried out by the government value added and its dynamics do not al- Dynamic development in the highly com- and the EU institutions should be target- low to forecast that Poland will fully use petitive international environment is pos- ed at education and support specific ac- its potential and will generate a growth sible thanks to implementation of signifi- tivities which increase competitiveness. rate enabling it to become a leader in the cantly improved or innovative solutions. They include the aforementioned innova- international arena, but will develop at The situation is reflected in the data on tion, cost reduction, internationalisation 34 The relatively lower productivity Table 10: TURNOVER PER PERSON EMPLOYED IN THE ICT SECTOR Poland is the 6th country in Europe in of the Polish ICT sector is mani- IN THE SELECTED COUNTRIES terms of employment in the ICT sector. fested through the size of turnover In 2014, it amounted to 315,094 FTE. The per employee, which is lower by figure accounts for approximately 5% of total employment in the sector for 28 almost a half than in the German COUNTRY/YEAR economy. This situation points to countries of the European Union. At the the need of further stimulation of same time, Poland records one of the the sector. Germany highest employment growth rates. The parameter points to both a significant Investments from the government Italy pro-development activity of Polish enter- and enterprises in innovation prises and the high interest of foreign en- should be the drivers of further in- Slovakia tities in locating their processes in Poland. crease of productivity. This is due largely to low personnel costs POLAND in Poland, combined with a relatively high availability of qualified labour force. The Source: Own study based on Eurostat; Legend: “e” – own estimation, “…” – no data available; Values expressed in employment growth rate in the analysed EUR thousands per person (FTE) period amounted to 4.76% on average. In the years 2010-2014, it totalled 20.13%. The figure gives Poland the second and the share of the value added in turnover. similar characteristics, such as Slovakia. the third place, respectively, among the More complex products that are signifi- However, a positive development is an analysed countries. The countries that cantly better than the existing competi- above-average growth rate of this indica- compete with Poland in terms of growth tive solutions usually have a higher added tor for the Polish ICT sector. In the years rate include mainly Latvia and Romania value. In terms of value added in turn- 2008-2014, it grew annually at an average where the employment growth rate in over, Poland ranks 13th among the ana- rate of 10.48%. the years 2010-2014 amounted to 53.18% lysed markets, behind such countries as According to the data of the Central Sta- and 26.58% respectively. Germany and Bulgaria, Portugal or Greece. Within the tistical Office, the profitability of the ICT Bulgaria also recorded a high growth rate analysed period, the share of value add- sector’s sales is higher than the profit- amounting to 19.99% and 16.59%, respec- ed in turnover varied from 34% to 29%, ability of enterprises from production tively. showing a downward trend. This situation and service sector in total. In 2014, the has a negative impact on competitiveness profitability of the ICT sector amounted The Polish economy is characterised by of Polish enterprises and Poland’s situa- to approximately 6.4%, while the profit- a high growth rate of employment in the tion in the international arena. ability of services and production in total ICT sector. Foreign investment, creation of services centres (SSC and BPO), and Turnover per person presents the sales amounted to approximately 4.7%. The cost advantage contribute strongly to fur- per one person employed. The indicator profitability is the highest in the telecom- ther growth of employment in the Polish is thus independent of the size of the sec- munications segment and the lowest in ICT sector. It allows to predict that em- tor in a given country and illustrates the production and wholesale of the ICT sec- ployment in the Polish ICT sector will ex- productivity of persons employed. The tor. ceed that in Italy and Spain, if the growth said indicator is very low in the Polish ICT rate is maintained or increased. sector, in comparison to both the sector EMPLOYMENT IN THE ICT SECTOR leader, Germany, and to countries with Expenditure on salaries are a particularly

35 Poland accounts for approximate- Table 11: NUMBER OF PERSONS EMPLOYED Table 12: GROWTH RATE OF EMPLOYMENT ly 5% of total employment generated by the ICT sector in the Eu- ropean Union. Employment in the COUNTRY/YEAR COUNTRY/YEAR

Polish sector grows dynamically as Germany Germany a result of investment by foreign entities and development of do- Italy Italy mestic companies. However, it is Spain Spain accompanied by talent drain. POLAND POLAND

Romania Romania

Austria Austria

Portugal Portugal

Norway Norway

Bulgaria Bulgaria

Slovakia Slovakia

Greece Greece

Latvia Latvia

Slovenia Slovenia

Source: Own study based on Eurostat; Legend: “e” – own estimation, “…” – Source: Own study based on Eurostat; Legend: “…” – no data available; Values expressed in %. no data available; Values expressed in full time equivalents

important and direct instrument of im- and Germany (29%). There is a consider- group of the analysed countries the lower pact of the ICT sector on the economic able disproportion between the leaders value was recorded only in Bulgaria. The situation and the labour market. Sala- and Poland in terms of total salaries paid average salary in Germany amounted to ries are the sum of funds transferred by by the sector. The salaries in Poland ac- EUR 4,048 and in Norway to EUR 6,048. the sector directly to persons employed, count for 7.24% of total salaries in the The analysis of salaries and expenditure and thus indirectly to the economy in the German ICT sector, 8.06% of the British on salaries in the ICT sector reveals that form of private consumption. The salaries sector or 11.1% of the French one. the level of salaries in Poland is signifi- in Polish enterprises from the ICT sector Apart from providing important informa- cantly lower than in other countries. On are low compared to other European tion about the amount of money flowing the one hand, this situation gives an im- countries. In 2014, Polish companies paid from the sector to the economy via per- portant competitive advantage to Poland, EUR 1,043 million to their employees. The sons employed, the total salaries in the since it leads to reduction of the costs of figure marks an increase by 27.9% com- sector also constitute a basis for estimat- enterprises from the ICT sector. But on pared to 2010. The countries which re- ing the average level of salaries in the sec- the other hand, it means that the amount corded a higher growth rate of salaries in- tor. In Poland, it amounted to EUR 1.043 of money transferred by the sector to the cluded Bulgaria (51.7%), Slovakia (39.6%) in 2014. It is a very low figure, and in the economy in the form of salaries is consid- 36 Poland still attracts foreign in- FORECAST OF EMPLOYMENT IN THE ICT SECTOR Table 13: SALARIES IN THE ICT SECTOR vestors with access to qualified personnel and lower salaries than COUNTRY/YEAR in the Western countries. Howev- Germany (neutral) er, the difference is gradually re- Germany duced and will result in a decrease Italy (neutral) Great Britain of Poland’s competitiveness in this Spain (neutral) area. France Romania (neutral) Italy

Germany (optimistic) Spain

Denmark Italy (optimistic) Norway Spain (optimistic) Austria

Poland (optimistic) Finland

Romania (optimistic) POLAND

Portugal Germany (conservative) Greece Italy (conservative) Slovakia

Spain (conservative) Bulgaria

Slovenia

Source: Own study (forecast) based on Eurostat. Values expressed in full time equivalents. Source: Own study based on Eurostat; Legend: “e” – own estimation, “…” – no data available; Values expressed in EUR million.

Table 14: REMUNERATION TO COUNTRY/YEAR EMPLOYMENT RATIO IN THE ICT Norway SECTOR Germany

Austria

Spain

Italy

Slovenia

Portugal

Greece

Slovakia

Source: Own study based on Eurostat; Legend: “e” – own POLAND estimation, “…” – no data available; Values expressed in Bulgaria EUR.

37 In the long term, the ongoing erably smaller. Poland has obtained sig- Table 15: VALUE OF INVESTMENT changes should be balanced with nificant benefits from its cost advantage an increase in investment in the thanks to attracting foreign investment. sector. Investments, in particular It should be noted, however, that at the COUNTRY/YEAR in innovative technology, are nec- time of increasing competition, also as essary to stimulate the develop- a result of globalisation, cost competi- Germany ment of the Polish ICT sector. tion may prove insufficient to keep or to strengthen the position of Poland in the Italy international arena. POLAND The level of employment in the Polish ICT sector results also from a relatively high Norway labour productivity. The indicator of value added per person employed in Poland is Slovakia one of the higher in the European Union. It constitutes a strong incentive for the Source: Own study based on Eurostat; Legend: “e” – own estimation, “…” – no data available; Values expressed in companies to increase employment. EUR thousand. INVESTMENT AND INNOVATION Table 16: INVESTMENT PER PERSON EMPLOYED OF THE ICT SECTOR

Investments determine the transforma- COUNTRY/YEAR tions and development of the sectors. The inflow of capital in the form of invest- Norway ment is often a necessary condition for improving the manufacturing processes Germany and, in consequence, creating new innovative products and developing domestic Italy companies. A growth of investment on the part of both the enterprises and the POLAND state is extremely important for the international position of the Polish ICT sector. Slovakia In 2014, Polish enterprises invested EUR 1,490,571,000. The figure represents only Source: Own study based on Eurostat; Legend: “e” – own estimation, “…” – no data available; Values expressed in 13.45% of total investment made by Ger- EUR thousands per person (FTE). man companies in the same period. Tak- ing into account the number of persons employed in the ICT sector, the situation of Poland looks even more optimistic. The value of investment per person amounted to EUR 46,500, which constitutes 43% of the figure on the German market.

38 One of the conditions to stimu- Table 17: INVESTMENT RATE IN THE ICT SECTOR corded an increase in the share in total late investment activity of Polish R&D expenditure of the production and enterprises is development of a services sector by 1.2 pp. The share grew at a stable rate in the analysed period, ex- transparent and stable legal sys- COUNTRY/YEARkraj/rok 2008 2009 2010 2011 2012 2013 2014 tem regulating activities in indi- cept for 2012 when a slight decline by 0.1 vidual areas of the ICT sector and pp was recorded. It should be noted that POLAND 137,5 109,5 135,1 110,7 103,2 166,3 ensuring better safety of invest- … the share of the production segment of the ICT sector in total expenditure of the ment. Germany 118,0 106,7 107,6 142,1 135,7 110,7 88,60 production sector was gradually falling Italy 105,5 101,6 88,10 100,7 92,40 80,60 77,80 (-1.6 pp). The services sector increased its share by 4.1 pp from 16.5% to 20.6%. Norway e e …… 103,9 89,93 75,97 62,00 58,80 The purpose of investment in R&D is to generate specific benefits for Polish en- Slovakia 460,6 268,4 218,3 167,2 109,2 76,85e terprises in the form of their increased innovation. The notion of innovation is not Source: Own study based on Eurostat; Legend: “e” – own estimation, “…” – no data available; Values expressed in homogenous and several types of innova- EUR thousands per person (FTE). tion may be identified. They concern var- According to the data of the Central Sta- vative sectors. Obtaining a competitive ious areas of activity of enterprises. They tistical Office, investment expenditure in advantage requires offering innovative include product, process, organisational the ICT sector are not evenly distributed solutions. In order to explore the issue, and marketing innovation. Below you will between its constituent segments. Invest- R&D expenditure of the ICT sector is pre- find the statistics on individual innovation ment in the segment of services prevail, sented below. groups in the Polish enterprises from the since they account for 94.77% of all in- According to the data of the Central Sta- ICT sector. vestment expenditure of the sector. tistical Office, investment in R&D expendi- PRODUCT INNOVATION is the market The reason for reluctance of Polish enter- ture in 2014 amounted to PLN 1.5 billion. introduction of products or services that prises to invest are numerous and vary The figure marks a growth of PLN 553 are substantially redesigned compared to in regions, segments and enterprises. In million compared to the beginning of the the currently available solutions. The im- general, one important factor stemming analysed period, i.e. 2011. It represents provement may concern both the charac- from the analysis of macroeconomic data an increase by 56.8%. The lion’s share of teristics and the applications of products/ may be identified. The Polish ICT sector the growth is attributed to the services services. is characterised by low effectiveness of segment, which in 2014 accounted for investment. From among the selected 93.13% of investment in R&D. The ser- PROCESS INNOVATION is innovation im- countries presented above, Poland has vices segment is not only the dominant plemented directly to the process and not the worst investment to value added rate. part of the ICT sector, but also recorded the product itself. It may be e.g. produc- The rate show how investments indirectly a higher investment growth rate. In the tion process or distribution process inno- influence the generation of value added years 2011-2014, the growth rate of in- vation. vestment in R&D in the services segment in the sector. The lower the rate, the high- In all segments of the ICT sector, enter- amount to 59.07%, while in the produc- er the effectiveness of the sector in trans- prises with product innovations have a tion segment to 31.62%. lating investment into value added. higher share than those implementing R&D investment plays a key role in inno- In the years 2011-2014, the ICT sector re- process innovations. It should be noted, 39 R&D EXPENDITURE OF THE ICT SECTOR R&D EXPENDITURE OF THE ICT SECTOR AS A SHARE OF TOTAL R&D EXPENDITURE

1421,6 ICT services ICT services in total ser- 20,6% 1173,9 vices sector 13,3% 1100,9 13,3% 893,7 16,5%

104,9 ICT production 3,1% 87,5 ICT production in total production sector 3,2% 85,9 3,4% 79,7 4,7%

1526,5 14,9% ICT services and production (total) 1261,4 13,8% ICT sector in total services 1186,8 and production sector 13,6%

973,5 13,7%

0 200 400 600 800 1000 1200 1400 1600 1800 0,0% 5,0% 10,0% 15,0% 20,0% 25,0%

2011 2012 2013 2014 2011 2012 2013 2014

Source: Information society in Poland. Results of statistical surveys in the years 2011–2015, Central Source: Information society in Poland. Results of statistical surveys in the years 2011-2015, Central Sta- Statistical Office. Data in PLN million. tistical Office. Data in %.

40 The Polish ICT sector is character- Table 18: PRODUCT AND PRO- Table 19: ORGANISATIONAL Table 20: REVENUES FROM ised by significantly higher inno- CESS INNOVATION IN THE ICT AND MARKETING INNOVA- SALES OF NEW OR SIGNIFICANT- vativeness than other sectors of SECTOR TION IN THE ICT SECTOR LY IMPROVED PRODUCTS Polish economy. This strengthens its perception as a good field for investment. Organisational Marketing Total Products new Products new SEGMENT SEGMENT innovation innovation SEGMENT to a market to an enterprise

Total Total Total ICT services ICT services ICT services and production and production (total) and production (total) (total)

ICT production ICT production ICT production

Services Services Services

Source: Information society in Poland. Results of statistical Source: Information society in Poland. Results of Source: Information society in Poland. Results of statis- surveys in the years 2011-2015, Central Statistical Office. statistical surveys in the years 2011–2015, Central tical surveys in the years 2011-2015, Central Statistical Data in %. Statistical Office. Data in %. Office. Data in % (compared to sales total). Data for 2014. Refers to products placed on the market in the years 2012-2014.

that in general the Polish ICT sector is used in an enterprise. Marketing innova- turnover than enterprises in the economy characterised by significantly higher in- tion may concern the methods of product in total. Therefore, the ICT sector should novativeness than other sectors. From promotion, price policy, design, etc. be deemed innovative. This conclusion is of particular importance, since numerous among all enterprises in the economy, The group of innovative enterprises is experts believe that innovation will be 14.8% have process and product innova- dominated by enterprises implementing one of key sources of competitive advan- tions, while the figure for the ICT sector organisational innovation, though the tage in the coming years. Due to its inno- stands at 24.9%. difference is not significant. It amounts vative nature, the ICT sector can thus be- to 3.1 pp in the ICT sector, while in the ORGANISATIONAL INNOVATION is the come one of the dynamically developing economy in total it is 1.2 pp. Contrary to implementation of a new method of en- drivers of the economy. terprise organisation. The method should product and process innovation, the ICT generate additional benefits to the or- services sector has a leading position in In terms of the entire economy, enterpris- ganisation. It may include such areas organisational and marketing innovation. es on average generate 6.4% sales from as knowledge management, human re- This concerns in particular marketing in- new or significantly improved products. In sources management, relations with the novation. the ICT sector, the share of such products amounts to 8.5%. It is particularly high environment, workplace organisation or The share of new or significantly improved in the services segment, where it totals procedures. products in total sales is a very important 8.9%. MARKETING INNOVATION concerns the measure of innovation. It demonstrates area of marketing concept and strategy. the rate of creation and implementation It consists in implementing a new version of innovation at the company. The ICT of such strategy that has not been earlier sector is again characterised by a significantly higher share of such products in 41

notes OF ECONOMIC

ISBN 978-83-7633-330-4