The Czech ICT sector trends

In November, the Association for Applied Research in IT (AAVIT) released a comparative analysis of the ICT sector in the Czech Republic. The publication comprehensively explains the benefits of the ICT sector through examples of its added value or R&D investments. Furthermore, it clearly demonstrates why it is crucial for our region to systematically support the ICT sector. The analysis is part of the AAVIT cluster project to provide members with a document that they can use to better target their business activities and use to promote their economic and other interests.

“It’s not just about software development or the production of digital components, but the irreplaceable role that ICT plays across all economic sectors, from services to industry,” says Jaromír Hanzal, AAVIT director.

“The Czech economy needs to increase the efficiency of work, especially through the application of innovations, and many of them are in IT and digitalization. ICT produces products and provides services with high added value, it is a tool for research and development.” – excerpt from the analysis – quotes Martin Hriška, CEO 24 Vision

As an association representing the interests of Czech technology companies, we see that the Czech Republic lacks a targeted policy supporting innovation in the ICT sector. We have several subsidy instruments to support R&D, but they usually lack more specific sectoral targeting of ICT. We know from experience that if the state tries to support everything across the board, it does not support anything properly. However, it is not just about public support, but about the legislative setting, ensuring a sufficient number of skilled workers and the overall perception of the ICT business.

The Czech Republic must understand the importance of this segment of the economy and start developing it as much as possible. Not in the form of all sorts of strategies, but through practical steps. ICT is a cross-cutting sector across all sectors of the economy. Industry remains the foundation of our economy, but alongside it we would also like to create a robust services and progressive ICT sector. We believe that this study will be one of the impetuses for strengthening their support.

“We have a number of successful companies in the industry that export all over the world – mostly services, not products as we are still used to in the Czech Republic. Czech IT companies are looking to the future with optimism and have all the prerequisites to become the new engine of the Czech economy,” adds Jaromír Hanzal.

Key findings from the study:

• The direct, indirect or induced share of ICT in total GDP is 11.4% and growing. This is the highest of all countries in the Three Seas Region.

• According to the Ministry of Finance, GDP is projected to decline by 0.5% in 2023. In contrast, the ICT sector is expected to grow at a rate of 4-7%.

• R&D expenditure in the ICT sector now accounts for almost one third of total R&D expenditure. Relating the volume of R&D investment in ICT to the total Czech GDP, the Czech Republic ranks fifth in the European ranking with a current rate of 0.34%. Most of the expenditure comes from private sources.

• The ICT sector has long shown much higher growth than the economy as a whole. According to World Bank and OECD data, global real value added in the ICT sector has grown by 5.8% per year (measured at compound annual growth rate) in recent years, compared to 1.7% growth in the overall global economy, almost four times as much.

• The IT sector produces significantly higher value added than other sectors of the economy – especially compared to traditional industries.

• Currently, the average gross monthly salary is CZK 43,193. The average wage in the industrial segment was at the level of the national average, i.e. CZK 43,492. The average wage in the information technology segment amounted to CZK 75,522 and increased by CZK 5,270 year-on-year.

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