Czech mate for IT offshoring

The Czech Republic is offering big subsidies to UK businesses to relocate their IT services to the country.

CzechInvest, the Czech government's foreign investment agency, will cover up to 50 per cent of investment costs for firms looking to relocate software development, call centres and IT outsourcing centres to the republic.

High-tech automotive, biotechnology and aerospace manufacturers are also being targeted, with the Czech government promising to foot the bill for up to 60 per cent of training and re-skilling costs for the first five years.

CzechInvest's UK and Ireland director, Rene Samek, said that although the Czech Republic is not as cheap as India it can still offer significant savings, with an IT workforce between 50 and 70 per cent cheaper than the UK's.

Samek said "near-shore" outsourcing to Prague and the country's second largest city, Brno, is being favoured by IT directors who want to maintain closer control of their operations.

"Sometimes you will want to check your IT operations in person or show them to a client," he said.

"It's easier to do this when there's a choice of 28 flights a day and it's only two hours away, compared to India that has only few flights and is more than an eight-hour journey."

Gianluca Tramacere, outsourcing analyst at Gartner, said many UK IT directors would willingly give up some of the cost advantages of outsourcing to India in favour of the Czech Republic's close proximity.

"Many firms will feel happier knowing that their infrastructure and applications are within close reach should there be a problem," he said.

"With the growth of the European Union, the Czech Republic will also be a good gateway for future expansion into Europe."

LogicaCMG is one UK IT services firm taking advantage of the grants. In May the company announced a £2.2m investment to create 200 new jobs in Prague, Brno and Plzen, and is now considering further investment.

Chris Garlick, finance director at LogicaCMG Central and Eastern Europe, explained: "We are now looking at further investment into the Czech Republic due to the grants on offer.

"Several companies we work with, like Shell, like to be able to reach their IT operations quickly in case there's ever a problem, making the Czech Republic a good location."

But the republic will need to "ramp up" and consolidate English language skills if it is to compete with India and UK call centre locations, advised Gartner.