How will the pandemic shape the future of the foreign workforce in the Czech Republic?

Business service leaders from ICON, Anheuser-Busch InBev, and Deutsche Telekom CZ discuss Covid impact, expat salaries, and the future of the industry.

Dinah Richter Spritzer

Written by Dinah Richter Spritzer Published on 21.06.2021 10:54:00 (updated on 21.06.2021) Reading time: 10 minutes

The international services sector in the Czech Republic employs 130,000 people, half of whom are expatriates, according to ABSL (The Association of Business Service Leaders in the Czech Republic), an umbrella organization including more than 300 companies with specialties such as shared services, business process outsourcing, information technology outsourcing, and research and development. sat down with several members of ABSL to discuss the impact of the pandemic, expat salaries, what they've learned about management, and whether the industry is fated to move East sooner than later. (Don't miss the leaders’ job tips at the end of the interview.)

Joe Appleton is managing director of ABSL.
Helen Hickin is CEO of ICON Communication Centres.
Sergei Holmeckis is managing director of Deutsche Telekom Services Europe CZ.
Jaromír Staroba is Prague Capability Center director for Anheuser-Busch InBev.

This interview has been edited for length and clarity.

What is the most important lesson you learned from the pandemic?

HH: Prior to the pandemic, we'd been speaking to clients about making work more flexible. And this was going to be 18 months of conversations. Then overnight we went 100 percent remote and our clients did not see any difference in terms of service delivery. A hybrid approach moving forward is very much part of our business planning process. And the good news is we haven't got to take clients through this massive transformation. 

The type of work that is now moving into global business services is switching completely. it's really knowledge-based work. We absolutely have to offer people more flexibility and autonomy, fewer hierarchies, and to work together with teams. This awareness is probably the biggest change that came out of remote work, which is more a blessing than a curse. Sergei Holmeckis, managing director of Brno-based Deutsche Telekom Services Europe CZ

How has your management style changed in response to remote work?

HH: We are helping managers not just have a conversation about performance, but making sure they have a conversation about the whole element of working from home. Like, “I can see she's a bit grumpy today or she's super happy.” It's making sure that you've got that genuine interest when it comes to colleague care and the associated processes for effective remote working. ICON also has an anonymous Mental Health First Aid program as an additional support layer.

JA: There's less role-playing that we have built up over the years in our offices. I've always thought work is like a stage. It's like you're playing a role in a theater. You tend to get stuck in those roles. Well, this just threw it all out the window. There is some role-playing on technology like this, but it's far less.

So there is a pandemic benefit?

JS: There was a drawback for the newcomers, it's very difficult in the virtual environment to get into the company culture. Also, you have a tendency to speak to your bubble. But what I'm really missing big time is talking to the others where I had a really informal chat about this or that and really being able to sense the work and the mood. This is where really the virtual limit comes. And that's why I think we all believe that the hybrid model in the future is probably going to be the right one.

Let’s talk more about your employees. Are they mostly from the East or West? 

SH: We are about 50 percent expatriates, mostly from Central and Eastern Europe, as well as the Middle East and North Africa.

More than two-thirds of our workforce is not Czech. They’re mainly from Western Europe. So I think the number one country would probably be Spain, then France, probably followed by Ukraine. Jaromír Staroba Prague Capability Center director, Anheuser-Busch InBev

HH: We have 70 different nationalities working in 29 different languages. Our most called for languages are English, French, and German.

And did you have to let people go because of the pandemic?

SH: We didn't have to let go of anybody, because of the pandemic, we were even growing in certain areas. But the overall attrition has been significantly lower.

JS: So we had below 10 percent attrition, which is significantly below the overall market. At our center in Prague, we actually grew during the pandemic. 

JA: The whole service center sector is still growing. Ten percent, it looks like at least some centers even grew more. 

HH: We had to make 39 people redundant. However, I am really pleased to say that 10 of those we've employed again and we are continuing to scale up as new clients select ICON as an outsourcing partner.

So speaking of challenges employees face, there have been many articles in the international media about how working mothers suffered more during the pandemic than any other group. How did you deal with that?

SH: Fifty percent to 60 percent of our employees are women, and we have a similar range of women in leadership positions. Everyone was under pressure and I think it was communicated to our teams that family comes first. So people were able to take more flexible hours. It's OK, you know, to take care of the family and work a bit longer in the evening or early in the morning.

That is exhausting. 

SH: I witnessed fathers and mothers with kids sitting on their lap in front of the camera say, I'm sorry, you need to take care of my kid, would you excuse me for five seconds? And we all go for an unforeseen coffee break. AWe just become more effective and efficient with the time that is given.

JS: We don't talk about working mothers, we talk about primary caregivers, because it's not only mothers who are providing care. We have fathers on paternity leave and not only mothers. About 10 percent of our workforce are mothers and fathers on parental leave. We try to support them with flexible hours. So sometimes that means working after business hours to stay connected with us. 

I'm not saying that women had to keep the family secret, but before the pandemic, it was like I've got my family and that's not going to impact my work. But now we had client meetings where kids and dogs have been in the background. There is a greater appreciation of what's going on in people's lives. Helen Hickin, CEO of ICON Communication Centres

JA: We're also on more calls with people and they'll just start crying. You'll be trying to get on to why things haven't quite worked out and you'll find out that their mom and dad have Covid and that they are really worried about hospitals or that a divorce is coming. It's all right there on the surface. So we've had to be much more compassionate, much more flexible in our approach.

We keep talking about calls. I know a Czech business journalist who refers to your sector as “monitored call center slaves.” How do you feel about that perception?

HH: I've not heard the word call center mentioned for ages. I think that perception is probably focused on the lower cost base locations, India or the Philippines for example, where a lot of lower skill set functions are outsourced for high transactional types of activity.

JS: The type of jobs that people are now doing is much more value-added activities like IT, marketing, human resources, logistics. 

I just read that Prague has one of the highest GDP per capita of all of Europe. That is as high as Luxembourg, as high as London. Do you think that came from selling cars or hot dogs? It came from the services sector and industry that has grown and has brought international companies to invest and helped to internationalize the country. That success wouldn't have happened if we were talking about slave trades. Joe Appleton, managing director of ABSL Czech Republic

JA: I think in this country, we're obsessed with looking at everything that's going wrong rather than what's going right. I came here in 1993 and this country has radically transformed. And that is not because of the politicians, although they love to take credit for it. It is because of the people and it's because of business. But it seems to be part of the cultural narrative. 

But initially there were businesses that like to be here because the labor was cheap. And isn't it true that as wages rise, service centers will look for very educated people further east?

HH: One of the key drivers was about the proximity of location and access to a skilled multilingual workforce.

Well, what about Romania and Bulgaria? And what about Ukraine, even though it is not part of the EU, they have highly educated, multilingual populations. 

We were looking at the availability of infrastructure, the political system, and education when we located here. We did not consider going to Kiev; I was surprised by how many companies took that challenge. But also, people are not moving West anymore. Not many want to go to Germany when you can have such a nice life in the Czech Republic. I myself moved also, and I'm happy here. Sergei Holmeckis, managing director of Deutsche Telekom Services Europe CZ

JA: Central and Eastern Europe has for the last ten years been the fastest growing location in the world for business services. That includes Poland, Hungary, and Romania. And of course, some of them are still cheap. But we're not losing work to them. We can all grow at the same time. And yes cheaper work might go outside of the EU. But a lot of the decision making, the strategic stuff, comes here. The Czech Republic has become a brain of operations in the region. 

Prague skyline via iStock / Kateryna Kolesnyk
Central and Eastern Europe are the fastest growing regions for business services, but a lot of the decision making comes to the Czech Republic; it has become the sector's "brain". (Prague skyline via iStock / Kateryna Kolesnyk).

Now you're talking about attracting employees. Pay here is much much lower than it is in Germany or Austria or Switzerland. Housing is expensive and salaries have not kept pace. Sixty thousand crowns a month doesn’t go that far anymore. So what's the advantage? 

JS: We have more people from countries like Spain, France, Belgium, Netherlands, the UK than people from Romania or Bulgaria. Romanians quite often come to this region simply for a better salary and for that they will probably go to Germany or somewhere else. But what attracts people from Western Europe is the lifestyle and the growth opportunity.

We're finding that British people come here for the lifestyle. Prague is the sum of its parts; it's a safe and beautiful city that is convenient to live in with a great public transport system. It's just a great place to live. Helen Hickin CEO of ICON Communication Centres

SH: I mean, yes, maybe nominally you will earn a higher number of euros in Germany, the Netherlands, but you will also pay probably double for everything else. Maybe housing is the only issue. I think the government is trying to solve that.

JS: What's expensive now is to buy a flat and buy a house. But expatriates are coming here quite often to rent. And now the prices with Covid have gone down with the likes of Airbnb and all that. So I don't agree with the costs of living going significantly up for this type of expats that we attract into the Czech Republic.

Fast facts: Business services in the Czech Republic

  • Total number of employees in 2021: 130,000
  • Expected number of employees in 2025: 180,000
  • Average share of employed foreigners: 45%
  • Employment growth in the year 2020: 5%
  • Number of business services centers: 330

Can you give me an example of the monthly wage in your sector?

JA: You can easily look at starting salaries from CZK 40,000. If you're in the IT sector significantly higher, and you can be in management positions approaching CZK 100,000 and CZK 200,000 for senior management positions. That's good pay, even compared to the UK, where I'm from. But that's not why people come. They come for the lifestyle. They come for the adventure. 

You receive thousands of CVs. What would be the number one piece of advice for people who want to get their foot in the door at your organization?

HH: Show your passion, show what it is that you want to do.

JS: I look at tech-savviness and the tech curiosity, as well as people wanting to explore new things.

JA: I never read a written CV. I don't even read them online. I will go and check out the person's digital presence. What have they got on LinkedIn?

SH: I am also looking for positive energy. So someone is looking positively at the world and is able to change things and is not even hesitating, regardless of any position or hierarchies, to challenge the status quo and move things ahead.

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