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REV 202103C

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Content

IntroductIon 5

About KrAKow   6

KrAKow, A mAjor tech hub In europe   7

<![if !supportLists]>1. <![endif]>tech ecosystem 8

LaRgE CoRpoRations   10

staRt-ups LandsCapE   14

Most CoMMon tEChnoLogiEs 20

EduCation 22

CoMMunitiEs 26

<![if !supportLists]>2. <![endif]>hIrIng   30

taLEnt pooL   31

saLaRiEs 33

EMpLoyMEnt and bEnEfits   38

it RECRuitMEnt   46

LaboR Law   49

<![if !supportLists]>3. <![endif]>cost of doIng busIness 50

KEy figuREs 51

offiCE spaCE in KRaKow 52

pRofEssionaL sERViCEs   56

taxation in poLand 58

staying in KRaKow   60

<![if !supportLists]>4. <![endif]>2020 In revIew   64

nEw it pLayERs in KRaKow in 2020 65

CoVid-19 and thE KRaKow it MaRKEt 70

About motIfe   83

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4 Krakow it Market Report 2021 | MotifE

Introduction

with over 500 technology companies and close to 50 000 it specialists, Krakow is a well-known brand, and it continues to attract both large corporations and small ventures, who seek options to establish their presence here.

what makes Krakow unique is the ecosystem. the ecosystem that consists of a large talent pool, local and international businesses, educational institutions, and local communities.

after 20 years of growth and expansion, Krakow has become a robust and mature location that not only serves hundreds of companies from all over the world and across multiple industries but is also prepared to expand further.

it is a great pleasure to present a new version of our report about Krakow’s it Market.

the goal of this report is to be a single source of crucial information about how to setup or expand a presence in Krakow. it includes an overview of the ecosystem, information about hiring in Krakow, as well as information regarding the cost of doing business.

2020 has a been a difficult year, but it has also triggered and accelerated some changes. The global trends, including home office work, hiring from anywhere and remote recruitment are influencing Krakow’s market, but also create an opportunity for further growth and maturity. in this report we have covered some of these trends as well.

Enjoy reading.

>>Michał Piątkowski

founder & CEo at MotifE michal@motife.com

Krakow it Market Report 2021 | MotifE   5

About Krakow

>780K

population of Krakow

>7%

businesses in Krakow

are information and

communication firms

>14M

tourists visiting

Krakow annually (pre-CoVid)

>18%

average passenger annual

growth at Krakow airport between 2015 and 2019

>3.1%

unemployment rate

in Krakow

Krakow, the medieval capital of poland, is the country’s second largest city with approximately 780 000 inhabitants.

Krakow’s metropolitan area has

a population of approximately 1.4 M people.

Krakow is a visible sign of the success of a polish transformation. over the last 25 years the city has become the top outsourcing destination in the European union. global players such as abb, Motorola, ibM, ubs, shell, Cisco, Capgemini and Motorola have established their business service hubs here.

Krakow is also a vibrant city with over 150 000 students at local universities and over 14M tourists visiting every year. the city has been named one of the top tourist destinations by many reviewers including Cnn and the telegraph.

Krakow is located in the southern part of the country. the city is well connected with

Europe with its airport featuring direct flights to major European cities and international business hubs such as new-york, Chicago and dubai.

since 2012, computer science has been the most popular field of study among Polish students. Krakow, as a university town, not only turns out over 2200 new iCt graduates every year, but, as a business hub, attracts talent from other cities and countries.

Sources: krakow.stat.gov.pl, krakow.pl, krakowairport.pl. December 2020

6 Krakow it Market Report 2021 | MotifE

>Krakow, a major tech hub in Europe

Krakow skillfully combines tradition with the challenges of the future. 2020 showed that thanks to strong it & bss ecosystems, it can also be a pandemic resilient city. the large number of Research and Development facilities catering specifically for the needs of modern industry and a highly qualified workforce make the city the right setting for the pursuit of business endeavors, especially from the high-tech sector.

the Krakow development strategy 2030 underlines that we want to build the city’s economy on knowledge and innovation, which naturally includes supporting the it tech ecosystem. to develop the city, we need to implement smart and friendly solutions for our citizens. the process demands much from the city – and this is Krakow’s perspective for the next 5 years – being open to new technologies and cooperative to their creators.

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>>Katarzyna Wysocka

director of department

for Entrepreneurship & innovation at Municipality of Krakow

>1.

Ecosystem

In this chapter we provide an overview of companies, communities, and higher education schools in Krakow.

over the last 20 years Krakow has become one of the most important technology centers in Central and Eastern Europe. there are hundreds of it companies, from small ones that operate only in the polish market to large subsidiaries of foreign corporations employing more than 1 000 people.

the Krakow it scene is heterogenous. from big, international players with abb, Luxoft or Motorola being among the largest, through mid-sized firms like Relativity or OANDA to small ones that employ less than 100 people globally. the small ones include also start-ups, both international and polish. some already achieved international success such as brainly, Callpage or basE (now Zendesk sell), some are smaller ventures that are only beginning their growth. this ecosystem of businesses is complemented with higher education schools and active local communities.

.

>20 000

Estimated number of engineers employed

by large it companies in 300+ ftEs development centers in Krakow

>45 000

Estimated number of engineers and it

professionals working in Krakow region

>2 250

number of Computer science students

graduating yearly from Krakow universities

Sources: stats.gov.pl, MOTIFE Insights

Krakow it Market Report 2021 | MotifE   9

Large corporations

The largest IT Companies in Krakow

the Krakow it market has a fair portion of big players. at least 80% of these large companies are software engineering centers focusing on software development and service delivery.

List of the largest IT companies in Krakow (400+ engineers/IT professionals)

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Comarch* 3 480 2 450   poland   1993

Java, .nEt, scala, Javascript

>Aptiv 1 920 1 320   united states   2000   C, C++

>>Sabre Corporation*

1 400 1 240   united states   2000   Java, .nEt

hcL

>Technologies*

<![if !supportLists]>1 <![endif]>400 1 200   india 2007 systems

engineers

Cisco*   2 000 1 000   united states   2012

python, go, node.js, Javascript, angular

>>Motorola Solutions

1 600 1 000   united states   1996 Java, Linux,

networking

Abb   2 000 850   switzerland 1997   .nEt

10   Krakow it Market Report 2021 | MotifE

Capgemini   2 800 680   france 2003 systems

>engineers

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Nokia Networks

760

600

finland

2010

C, Linux, networking

EPAM System

750

600

belarus / united states

2010

Java, .nEt

Luxoft

700

500

Russia

2010

Java, .nEt

Ericsson

580

450

sweden

2003

Java, C++

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Akamai Technologies

670 420   united states 2011 Java, Linux,

networking

>

Sources: * based on data provided by companies mentioned.

Other data based on LinkedIn searches (March 2021), likely understated by 20-40%

E  x  p  E r T   V I E w

Ramon Tancinco

Krakow site Leader at Cisco

Currently in its 9th year of operation and with 2 000 people on board, Krakow is the biggest Cisco site in EMEAR, continuing to expand with new strategic functions. Software, Customer Experience and Security are among Cisco’s top priorities globally. They also are and will continue to be our strategic growth areas in Krakow. A good example is AppDynamics, a company acquired by Cisco in 2017, which recently opened its EMEAR customer support hub on our Krakow campus, with Software Engineering as the main role of this dynamically growing team. But as we continue to grow, our focus will always be on our employees’ wellbeing and satisfaction as we strive to remain the #1 Great Place to Work in Poland.

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Non-IT companies hiring engineers in Krakow

approximately 90 000 people work for corporate business centers in Krakow and 40% of them are it specialists. Other functions located here include various financial roles, customer service, procurement, hR, or marketing. Many companies started by employing non-it personnel and then expanded to hire technology specialists. With that, there are also non-IT companies in Krakow that employ significant numbers of engineers. These are primarily financial institutions, such as UBS (Switzerland) or HSBC (united Kingdom).

List of the largest non-IT companies hiring engineers in Krakow (300+ engineers/IT professionals)

>

hsbc

(financial services)

<![if !supportLists]>2 <![endif]>600 980   united Kingdom

2010

Java, Javascript, python, data integration

>Java,

ubs

(financial services)

>Philip Morris International

(tobacco)

>Brown Brothers Harriman

>(financial services)

Shell

<![if !supportLists]>3 <![endif]>600 950   switzerland 2008

1 810 480   united states   2005

1 180 380   united states   2012

netherlands /

Javascript, python, data integration

sap, data integration, python

Java, Javascript, data integration

sap, data

(oil & gas) 4 100 320

united Kingdom

2005

integration

>State Street

(financial services)

3 200 300   united states   2007 data

integration

Source: LinkedIn searches (December 2020), likely understated by 20-40%

12   Krakow it Market Report 2021 | MotifE

>

f o C u s

ASPIRE - Association of IT

and Business Services Companies

Established in 2008, aspiRE brings together key players in developing the Krakow tech and business services sector under one umbrella. aspiRE is acknowledged as being a key player in Krakow’s rise to the position of the top ranked location for global services in Europe.

aspiRE currently has 160 members, comprising leading multinational companies operating delivery and development centers in Krakow and companies providing support services to the industry.

the association takes a city-centric approach to the development of the industry, through the organization of conferences or events, the publication of reports and surveys such as the aspiRE headcount tracker, and the facilitation of networking and information sharing between members.

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Start-ups landscape

Krakow, dynamic start-up city

it would be a platitude to say that everything has changed in the start-up scene in Krakow over the last 20 years. from being a deserted land with only a handful of businesses that could be called start-ups, Krakow now has a growing ecosystem of new ventures that operate internationally. there are incubators, business angels, advisers, and access to funding at both private and public levels.

start-ups in Krakow attract investors and receive the highest funding in poland. according to the latest report ”polish start-ups” from the start-up poland foundation, as many as 40% of companies that have acquired over 10M pLn ($2.6M) from investors, come from Krakow, Krakow being number one before wroclaw, warsaw, tricity region and the rest of poland.

Krakow’s leading position in investments comes from the existence of a truly connected start-up ecosystem, including incubators, mentors, investors and organizations collaborating with start-ups, such as the foundation supporting #oMgKRK or the Krakow technology park.

>$148.5M

total funding received by the most

successful Krakow start-up brainly since its creation in 2009

start-up associations, accelerators and incubators for young entrepreneurs have helped start-ups to flourish in Krakow. Below you will find the five most active organizations that help develop start-up businesses in Krakow:

Krakow Technology Park and its technology incubator

Foundation Supporting #OMGKRK - Krakow start-up Community

hubraum, deutsche telekom’s tech incubator

#Start-up Małopolska, the regional accelerator of the Lesser poland Voivodeship

Foundation ‘’Krakow City of Start-ups’’

there are at least 150 companies in Krakow that meet the criteria of a start-up.

14   Krakow it Market Report 2021 | MotifE

There are three very specific areas where Krakow start-ups specialize.

The first group of start-ups are IoT ventures which includes silvair, EMbEtECh, airly, sEEdia, husarion, findair, Estimote, Elmodis or Kontakt.io

the second group focuses on Sales & Marketing tools/services. the list here includes Zendesk sell (formerly basE), Callpage, Codewise, synerise, salesManago, freshMail, Edward or edrone.

and the third group, Game Studios. Over 20% of Polish game studios are based or have offices in Krakow, including Infinity Ward/Activision (Call of Duty), CD Projekt RED (The Witcher, Cyberpunk 2077) and gamesture (Questland).

Start-ups bornin Krakow

the following list includes 15 of the most successful start-ups born in Krakow, selected according to their respective Crunchbase Ranking. together, these 15 companies have raised over $460M in total funding since their creation. although originally from Krakow, some start-ups such as Estimote, Kontakt.io or silvair now have their headquarters located in the united states while continuing to run and grow they R&d centers in Krakow.

The most successful start-ups from Krakow according to Crunchbase

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Airly

(iot)

Beit

(software)

Brainly

(Edtech)

Zendesk Sell (formerly BASE)

(software, sales)

2016

$3.1M

2016

$1.4M

2009

$148.5M

2009

$91.2M

airly specializes in providing hyper-local data about air pollution. it empowers individuals and communities with knowledge about the air they breathe.

>airly.eu

beit designs and implements algorithms for solving a relevant np-complete class of problems using Quantum Computers effectively.

>beit.tech

brainly is the place to learn, for students, by students.

the world’s largest social learning network with 200 million unique users monthly.

brainly.com

>Zendesk Sell (formerly BASE) is a service-first CRM company that builds software designed to improve customer relationships.

zendesk.com/sell

Krakow it Market Report 2021 | MotifE   15

CallPage

(software, sales)

Codewise

(software, sales)

edrone

(CRM, Marketing & sales automation)

Elmodis

(iot)

2011

>$6.7M 2010

>$1M 2014

>$5.9M 2015

$5.2M

Convert web visitors into inbound sales calls.

callpage.io

Codewise is a venture building company that focuses on the tech performance marketing sector.

codewise.com

Edrone is an autonomous e-commerce CRM platform that provides advanced marketing automation solutions. edrone.me

Elmodis offers an end-to-end iot solution that monitors performance and improves operating efficiency of industrial machines.

elmodis.com

>

Estimote

(iot)

Kontakt.io

(iot)

Mobiltek

(software)

SALESmanago (software, sales, Marketing)

2012

>$27M 2013

$8.3M

>2002

>$112M 2011

$7.7M

Estimote is a technology start-up, building a sensor-based context and micro-location platform for mobile developers. estimote.com

Kontakt.io builds secure and configurable beacon hardware and software to power competitive proximity-based solutions.

kontakt.io

Mobile services including payments.

mobiltek.pl

saLEsmanago operates a cloud-based online marketing automation platform used by over 10 000 companies in over 40 countries.

salesmanago.com

>

Silvair

(iot)

Sinterit

(3d printing)

Synerise

(software, sales.

Marketing)

2013

>$23.3M 2014

>$3.7M 2013

$19.2M

silvair is a turnkey smart lighting platform enabling manufacturers to provide an enhanced lighting experience. silvair.com

sinterit specializes in development of sLs 3d printers.

sinterit.com

state-of-the-art marketing cloud.

synerise.com

16   Krakow it Market Report 2021 | MotifE

Foreign start-ups with offices in Krakow

the Krakow start-up ecosystem does not only consist of polish start-ups, but also includes foreign businesses that have decided to set up offices in Krakow. Here are examples of foreign start-ups that opened a subsidiary in Krakow.

Selected foreign start-ups with offices in Krakow

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bidroom

(hospitality)

Karhoo

(Mobility)

the netherlands 2014

uK 2016

bidroom is a membership-based travel club and online booking platform that offers hotels and apartments at discounted room rates across the globe. bidroom.com

>Karhoo is one of the Mobility-as-a-service (Maas) leaders, successfully operating with a unique b2b platform model for people transportation, building a digital marketplace that connects supply (e.g. taxi and private hire vehicle fleets) with demand

(e.g. travel & hospitality brands).

karhoo.com

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>E  x  p  E r T   V I E w

Sylwia Liszka

finance and hR Manager at Esatto

Esatto Poland is a branch of the Swedish digital agency. We have been operating on the Krakow market for three years and we are developing at a fast pace.

We chose Krakow as a location for many reasons. The presence of high-quality technical universities ensures an influx of well-educated, ambitious young people. Krakow is a Polish IT hub and as such attracts specialists from other cities in Poland. It is also a beautiful city and is a close fit with our Stockholm office. Our customers love its charm and always enjoy visiting. Our office is situated in the very heart of the historic city of Krakow, which gives great opportunities to build a strong organization through integration events (training, conferences) or meetings with clients. Finally, We cannot ignore the economic aspect either. The cost of our operations in Krakow is still competitive with other European cities.

Esatto

(digital agency)

sweden 2013

Esatto is a digital agency offering an extensive expertise in digital communication, from strategic consulting, concept development, design, system development and management of the solutions tailor-made for their customers.

esatto.se

>

Revolut

(fintech)

MojoRank

(ai/Recruitment)

DataFeedWatch

(Marketing/sales)

uK 2015

usa 2017

usa 2012

Revolut is a world-renowned fintech company offering digital banking services to its users via online and mobile applications, offering customers a digital alternative to traditional banks. revolut.com

>>MojoRank is a silicon Valley start-up focusing on building the next generation of ai technology for the talent acquisition industry, allowing recruitment teams to increase their productivity by speeding up the decision and hiring process. mojorank.com

datafeedwatch offers data feed optimization and management software that integrates with the most popular eCommerce platforms, providing marketers with detailed cost and revenue data on product level.

datafeedwatch.com

18   Krakow it Market Report 2021 | MotifE

neXtA

(ai/Media)

FaceMetrics

(software/Edtech)

Kitopi

(food tech)

Stonly

(b2b saas)

denmark 2017

belarus 2018

united arab Emirates 2018

france

– poland & usa 2018

Nexta.io created the first AI-driven Sales and Media Activation platform tailor-made for digital media and commerce companies, enabling them to increase value for their customers by unlocking new advertising demand with intelligent automation.

>nexta.io

faceMetrics develops computer vision applications relying on technologies such as emotion recognition or eye tracking, enhancing mobile experiences in the areas of education, lifestyle, and entertainment.

facemetrics.io

>Kitopi is a Kitchen as a service (Kaas) platform that enables restaurants to open delivery-only locations by providing the necessary managed infrastructure and software with minimal capital expenditure and time.

>kitopi.com

stonly is a platform to create and distribute interactive guides without code. from interactive knowledge bases to in-app product tours and contextual help, stonly provides an all-in-one solution for onboarding, product adoption, support and internal training. stonly.com

>

E  x  p  E r T V I E w

Alexis Fogel

founder at stonly

Being that one of Stonly’s co-founders is Polish, it is only natural for the company to want to promote the start-up ecosystem in Poland. Our team in Krakow is in charge of building our product and technology. In less than two years they have created a powerful tool that is now used by hundreds of companies including banks, retailers, SaaS businesses, governments, telcos and more. The team there has been able to innovate while supporting current customers’ needs thanks to a strong application of the agile methodologies. They have full autonomy on the technical decisions and they also bring a ton of value to the business by providing ideas and feedback on the business side of the company.

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Most common technologies

The ever-changing technology landscape of Krakow is quite diverse. It is hard to find a technology or a programming language that would not be used here. Most of the trends seen here reflect trends around the globe. when analyzing surveys of engineers’ familiarity with different languages we can identify some leading ones.

Share of developers in Poland having experience with a specific programming language

>Javascript

sQL python Java typescipt

C# C++

php

C

go

0   5 10

15   20

25   30

35   40

45   50   55

60 %

Source: Stack Overflow’s 2020 Developer Survey of 995 Polish developers

Javascript, loved by some, disliked by many, is a language that majority of developers worked with before. however, with the proliferation of front-end frameworks, the familiarity with front-end libraries is what matters. here clearly React.js is a leader with angular being a bit behind.

another language continuously getting popularity is python that is gaining a lot with the growth of various data science related applications. still, the strongest on the backend though, are the traditional Java and C#.

Poland has also traditionally had a significant group of Linux enthusiasts who choose languages such as C, C++. in addition, there is also a large group of php developers, including those who specialize in frameworks like Laravel or symfony. among the rising stars are Kotlin, go and scala, although not as common as the others.

20   Krakow it Market Report 2021 | MotifE

>poland is considered one of the best countries for programming skills. polish developers are regularly mentioned in global rankings, such as hackerRank’s that gave 1st place to poland for Java and 3rd place overall.

>3rd

global rank of polish programmers

according to hackerRank

>1st

Rank of polish Java programmers

according to hackerRank

Krakow it Market Report 2021 | MotifE   21

Education

Higher education schools

one of the key strengths of Krakow is its continuous stream of new graduates. in fact, the city is dominated by students: more than one in ten people who live in Krakow are students. there are over 15 computer science courses at b. sc. level run by various universities. they turn out over 2250 graduates every year. the majority of Cs students usually start working in their third year of school, and by the time they graduate already have professional experience.

>23

higher education schools in Krakow

>8

higher education schools with it courses

>152 000

students in Krakow

>36 800

Engineering faculty students

>2 250

Computer science students graduating yearly

>free

higher education in poland

Sources: krakow.stat.gov.pl, agh.edu.pl

22   Krakow it Market Report 2021 | MotifE

>>Jagiellonian University, founded in 1364, is the oldest university in poland. it offers 3 different computer science courses. 43 000 students attend this university.

>www.uj.edu.pl

Courses offered at the Faculty of Mathematics and Computer Science:

Computer Science (including software engineering, modeling, artificial intelligence and machine

learning)

analytical Computer science (including algorithms, software engineering, programming, operating systems and web)

Computer Mathematics (including mathematics analysis, combinatorics and probability theory, programming languages, algorithms and software engineering)

Highlights:

100% of graduates from these computer science courses find a job right after graduation

the university boasts a rich bachelor degrees offer for students straight out of high school. it has also prepared individual care, programs such as the Jagiellonian olympic workshops and various types of scholarships for research and for foreign students choosing to study in Krakow

Jagiellonian university has developed cooperation with it companies and gives opportunities to its students to participate in concrete it projects

Krakow it Market Report 2021 | MotifE   23

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>>AGH University of Science and Technology is the largest polish technical university with 15 different faculties offering 10 computer science courses. 35 000 students attend this university.

www.agh.edu.pl

Computer science courses offered at diverse faculties:

Electronics and telecommunications

software development methods

data science

Modern technologies in forensics

it technologies and business processes

ERp systems on the example of sap ERp

database systems

Cybersecurity in practice

it - design, programming and operation of systems

automatics and Robotics

Highlights:

agh university of science and technology was ranked second of EngiRank - best universities of technology in the ”new Europe” countries. EngiRank, short for European Ranking of Engineering programs, covers higher education institutions and engineering programs in 13 countries of the so-called new Europe, countries that joined the European union on or after 2004

The Faculty of Computer Science also conducts certified courses for everyone who wants to expand their it knowledge in areas such as ux web application design, Vpn networks, bgp Routing, C ++ and scala programming, cryptography and safety, or introduction to agile / scrum

65% of students find employment during their studies

55% of graduates receive more than 1 job offer when finishing studies

nearly 80% of agh students decide to work in Krakow and its region

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>>Krakow University of Technology (Politechnika) is the second largest technical university in Krakow offering 3 computer science courses.  16 000 students attend this university.

www.pk.edu.pl

Courses offered at the Faculty of Computer Science and Telecommunications:

Computer science

data science

Cybersecurity

Highlights:

Krakow university of technology has an extensive role in the cooperation between education and industry via the technology transfer Center within the campus

the university also had a major role in the creation of the Krakow technology park in 1997

Communities

Krakow, as a university city, is home to many young people interested in different facets of technology. these are students and young graduates who want to explore domains they are passionate about. Several years ago, they started creating community groups around specific technologies. Enthusiasts, technology geeks and programmers initiated regular meet-ups to exchange information and educate others. Examples here include frameworks and programming languages such as angular or Java.

><![if !vml]>

<![endif]>Estimated number of community events organized annually

(pre-CoVid)

although the ecosystem originally started with technology groups, later, new communities appeared, some of which focused more on business and entrepreneurship. during these meet-ups they would talk about start-up pitching, financing, validating product ideas, legal aspects and more, with a heavy focus on networking. there are also communities that explore the software engineering methodologies, including lean, agile, scrum, or Kanban.

some of the communities in Krakow were formed more than 15 years ago, while others, such as Crypto@Cracow or french tech Cracovie, are relatively new. Most of the communities are very active. they organize regular meetings, presentations, and workshops. they use social sites such as meetup.com to organize the events. Communities may also be helpful in recruiting new employees.

f o C u s

Women in Technology

women in technology is the largest organization of women in it in poland. this community has been operating for over 10 years and counts 15 000 members at national-level. women in technology brings together leaders and it professionals. it is a platform for exchanging and expanding knowledge, and a source of benefits for the IT companies that become community partners. the community organized 650 industry events since its creation.

The flagship project of Women in Technology is called Tech Leaders, a 4-month mentoring program enabling participants to expand skills around it and new technologies, and allowing it companies to offer development opportunities for their employees engaging in the program as mentors.

womenintechnology.pl

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Selected Krakow technology communities

Name

Website/social

Focus area

#OMGKRK

omgkrk.com

start-ups

Krakow Technology Park

kpt.krakow.pl

start-ups

OpenCoffeeKRK

linkedin.com/company/open-coffee-krakow

start-ups

Startup Stage

startupstagepeople.splashthat.com

start-ups

French Tech Cracovie

lafrenchtech.com/en/community/cracovie/

start-ups

Wzmaczniacz.Org

wzmacniacz.org

start-ups

AleKrakow

alekrakow.com

Methodology

Crypto@Cracow

facebook.com/groups/153326791858075

blockchain / Cryptocurrencies

KrAQA

facebook.com/kraqakrakow

Quality assurance

technology

Angular Krakow

facebook.com/angularKrakow

/ software

development

technology

WTMKrakow

womentechmakers.com

/ software

development

Women

in Technology

technology

womenintechnology.pl / software development

>

Hackerspace hackerspace-krk.pl

technology

/ software development

>

DjangoGirls   djangogirls.org/krakow

technology

/ software development

>

Polish Java Users Group

technology

java.pl   / software

development

Krakow it Market Report 2021 | MotifE   27

>

>   >   > >

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E  x  p  E r T   V I E w

Paul Kulon

Vice president (international operations) at foundation supporting #oMgKRK

For the last five years, the Foundation Supporting #OMGKRK has been animating the Krakow Start-up Community. The Foundation is a full-stack ecosystem developer delivering value at scale to individuals and technology businesses in the Krakow innovation ecosystem, by executing initiatives around ecosystem branding, matchmaking, recruitment and acceleration.

What makes the strength of the Krakow start-up ecosystem? There are many local scaleups building their own products and services, we have a great IT talent pool, top universities and an international- friendly environment with plenty of support and mentorship initiatives. Perspectives are looking bright too, with increasing funding opportunities for pre-seed and seed teams, lots of room for growth and visibility, and access to public financing.

Welcome to Krakow and feel at home!

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<![if !supportLists]>2. <![endif]>>Hiring

In this chapter we provide an overview of the employment market in Krakow. Find here information about talent pool, salaries, employee benefits, local practices you should be aware of, and finally some key elements of the Polish labor law.

Talent pool

Krakow attracts a considerable number of domestic and foreign technology companies. they come to the city attracted by the large it talent pool. with more than 45 000 it professionals, Krakow is the second largest pool in poland, after warsaw and before wroclaw.

the key characteristics of the Krakow talent pool are:

big share of engineers with strong international experience, as foreign companies employ more than 80% of the engineers in Krakow

a rapid growth supported by the local universities as well as migrations from other polish cities and from ukraine

software development is the primary area of the expertise before it infrastructure or applications support

IT Talent pool in Krakow and Poland

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<![endif]>professional developers in poland

Sources: Atomico, The State of European Tech 2019, stats.gov.pl, 2018

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in 2018, 2 250 computer science students graduated from Krakow universities. Many of these graduates will find work in Krakow, contributing to the growing local talent pool. Krakow also attracts a number of computer science graduates from other regions in poland. an average of 36 000 iCt students in poland graduate each year.

Number of ICT graduates per main city in Poland, 2018

>3 000

2 500

2 000

1 500

1 000

500

warsaw   Krakow   wroclaw   poznan Katowice   tri-City Lodz

Source: stats.gov.pl

the it job market in Krakow is dynamic and offers a number of job opportunities yet it is not as large as the capital city, warsaw.

Number of IT job ads per main city in Poland, Q4 2019-Q3 2020

>3 500

3 000

2 500

2 000

1 500

1 000

500

warsaw   Krakow   wroclaw   poznan Katowice   tri-City Lodz

Q4 2019

Source: inhire.io, IT Market Snapshot 2019, 2020

Q1 2020

Q2 2020

Q3 2020

32   Krakow it Market Report 2021 | MotifE

>Salaries

>the it job market in Krakow grows every year as the city continues to be an attractive location for it and software businesses.

there are numerous compensation reports available that display salaries in poland and in Krakow. also, websites like glassdoor or payscale feature information about typical pay in the city. to a large extent information available in these sources can be misleading as it represents current average salaries of the employees, but not the expectations of the potential new hires. the differences between the two can be significant. This is driven by candidates who tend to seek higher compensation when changing jobs.

This trend is also amplified by companies who offer salaries above the market when hiring new

employees, usually for one or more of the following reasons:

Companies want to attract senior engineers by offering a higher compensation than their current one

Foreign companies entering the market want to hire a significant number of engineers quickly. According to Sedlak & Sedlak’s Salary Report these firms can propose salaries 10 to 15% above market

start-ups can offer higher salaries to cover the “risk-factor” for joining a potentially less stable organization

Hiring in Q4 is usually more difficult, which may influence salary level. Candidates are least likely

to change jobs before year end partially due to an expected bonus payout the above practices impact the salary ranges, for all roles and seniority levels.

Newhires salaries

in this section, we offer an overview of the gross monthly salary ranges for software developers and it professionals in Krakow on employment contracts, taking into consideration the most popular programming languages and profiles as well as seniority. This is how much a new hire will expect to be paid.

14 500 pLN

(~3 200 EUr)

Median salary for hiring a Regular Engineer

(3-5 years experience)

in Krakow (gross, monthly)

Gross salary range for new hires in Krakow, per seniority (monthly, in EUR)

>Developers

Junior (no prior experience)

Regular (3-5 years

experience)

senior (5+ years experience)

Lead

special (niche sector,

i.e. data scientists or Quant developers)

€1 000 €2 000 €3 000   €4 000 €5 000 €6 000 €7 000

Sources: inhire.io IT Market Snapshot 2020, nofluffjobs.com, MOTIFE Recruitment insights

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E  x  p  E r T   V I E w

Piotr Sedlak, Ph.D.

project Manager at sedlak & sedlak

The COVID-19 pandemic has not significantly affected salaries in Poland. According to GUS data (Central Statistical Office), the average wage in the enterprise sector is in fact growing, although a little slower than in previous years. Naturally, some companies have had to reduce working hours or suspend bonus systems in response to the crisis, with some companies also limiting or modifying their compensation systems.

In one of the Sedlak & Sedlak surveys about the impact of COVID-19 on the functioning of the organization, 46% of the surveyed companies suspended some benefits. An interesting phenomenon was the introduction by 14% of companies of a new benefit - psychological support for employees.

An important area that needs attention is the perception of remote work which until recently was treated as a popular benefit, especially in the IT industry. When asked, 55% of the surveyed companies said that the greatest challenge in the time of COVID-19 was to maintain the integration of teams that so far were only used to work side by side in the office space. Remote work is beginning to be treated as one of the possible forms of work on a par with working in an office.

Gross salary range for new hires in Krakow, per most popular technologies (monthly, in EUR)

>php C++

python*

C#

Javascript

Java

Mobile

Qa

devops

€1 000 €2 000 €3 000 €4 000 €5 000 €6 000

Regular (3-5years) senior (5+ years)

Sources: inhire.io IT Market Snapshot 2020, nofluffjobs.com, Hays Poland Salary Report 2021, MOTIFE Recruitment insights

*For regular Python development, not Data Science

Gross salary range for new hires in Krakow, non-programming profiles (monthly, in EUR)

>ux

it admin

business analyst / product owner

project Manager scrum Master

€1 000 €2 000 €3 000 €4 000 €5 000 €6 000

Regular (3-5years) senior (5+ years)

Sources: nofluffjobs.com, Hays Poland Salary Report 2021, MOTIFE Recruitment insights

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f o C u s

IT market average salaries vs new hires expectations from a candidate point of view

the it job market in Krakow is no different from other industries and changing jobs is commonly regarded by candidates as the right moment to reach for higher levels of compensation. new hires salary expectations will likely be 10-15% higher compared to their current level of pay. sometimes the expectations can also be higher compared with the current salaries of employees in similar roles in prospective companies, thus creating salary gaps. this is even more true for candidates with newest and rarest technologies such as go, React.js or Kotlin, for which the demand is driving salaries upwards.

This trend causes significant differences between compensation of junior specialists and regular/senior specialists. the most talented individuals can double their compensation in 5 years by continuously working on their skills and… changing jobs.

in a dynamic job market with the salary gaps mentioned above, replacing departing employees with candidates from the talent pool can sometimes result in an increase in costs of salaries. the impact can be even more hard felt for smaller organizations and start-ups.

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Employment and benefits

polish labor code is very detailed and outlines precisely the rules of employee - employer relation. in addition there are number of practices and customs that are not implied from law, but became  a norm and need to be observed.

Forms of employment

the most popular form of employment in poland is the permanent contract, referred to officially as contract for an  indefinite  period  of time (in polish umowa o pracę na czas nieokreślony). hiring on a permanent employment basis usually starts with a 3 months’ probation contract, followed by a contract for an indefinite period of time. For most employees, this type of contract is synonymous of stability and job security.

the polish Labor Law also offers employment contracts to respond to shorter or unique needs to hire. first of all, the fixed-term employment contract (umowa o pracę na czas określony) for a maximum period of 33 months and maximum 3 consecutive fixed-term contracts. This contract is common for temporary replacements such as maternity/parental leaves. there is also the order contract (umowa zlecenie) for performance of a specified activity on a given period (for example SEO analyst support for a 3-month campaign), and employment contract for specific task (umowa o dzieło) for the achievement of a specific result (for example a freelance graphic designer creating a set of web banners).

in addition to the regular employment contracts, we observe a trend on the it market of applying alternative forms of engagement, the most popular one being the B2B contract. Rather than an employment contract between an employer and an employee, the b2b contract is a service agreement between a company seeking services and a contracting party that can offer these services. typically, this is a registered, one-person company. this type of engagement is attractive particularly for more experienced engineers for its financial benefits and self-entrepreneurial freedom.

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Contract for an indefinite period of time

fixed-term employment contract

order contract & employment contract for specific task

b2b contract

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B2B contracts

There are two main reasons to explain the popularity of B2B contracts in the IT industry. The first reason is that b2b contracts usually allow the contractor to be independent and allow them to deliver services to more than one company. secondly, the contractor is able to increase his net income without increasing the total cost for an employer due to taxation and social insurance regulations. b2b contracts allow an employee to take home approximately 20% extra income. Also, during the first two years of self-employment a b2b contractor pays a preferred social insurance rate.

from the hiring company perspective, the following tables illustrate the main differences between hiring an employee on a permanent contract and hiring services from a b2b contractor.

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Personal Income Tax

17% income tax rate under 85.5K pLn annually, and 32% income tax rate over that threshold

19% flat rate

>

Social Security

approx. 18% of gross salary at the charge of the employee and similarly 18% at the charge

of the employer

Entirely at the charge of the contractor. flat contribution is approx. 1 400 pLn/ month, no matter the revenue of contractor. Reduced contribution during the first 2 years of self-employment, between 300 and 600 pLn/month

>

Cost Deduction

it is possible for the employer to implement a tax-deduction Costs scheme for creative work

the contractor can deduct the costs incurred to the one-person company (hardware, leasing etc.)

Krakow it Market Report 2021 | MotifE   39

>

Rate Monthly   daily or hourly

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Duration

usually starts with 3-month probation period, followed by indefinite contract

none or custom

>

Notice

depending on employment length, notice period can either be 2 weeks, 1 month or 3 months

1 month

>

Annual leave   20-26 days   none or custom

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Sick leave   unlimited   none or custom

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Maternity/ paternity leave

yes   none

>

Benefits package

yes none or custom

in terms of company and team integration, we observe that most companies do not create any significant differences between regular employees and contractors. For instance, contractors are invited to company events, and benefit from all office perks on offer.

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<![endif]>>B2B contracts leave a certain level of flexibility in terms of contractual details and benefits. These are

the trends observed for custom agreements in the Krakow it market.

>Probation period: none. first month is usually regarded as a trial period, but can be ended at any time as per notice period.

>Notice period: 1 month, however this can be 2 or 3 months for key individuals in senior positions.

>Holidays: there are no paid annual leave and public holidays on b2b status. it is up to the contractor to take unpaid days off, in agreement with the company hiring his services. Companies can ask a b2b contractor to align his number of days off with the permanent employees’ limit, i.e. 26 days of annual leave.

>Sick leave: there is no paid sick leave on b2b status. the contractor needs to take unpaid absence if he is unable to perform his work duties. we observed that some companies allow flexibility in the form of remote and flexible work, or days fully paid up to 5-10 days/year.

>Benefits package: B2B contractors are not guaranteed to receive the same benefits package offered to regular employees such as medical coverage, a gym pass or life insurance. in order to keep attracting talent, we observed that some companies would offer access to these benefits package to B2B contractors with costs recharged to contractor.

>Non-exclusivity: Contractors are allowed to offer services to other companies unless this is would violate competitive clauses of their contracts.

Opting for a B2B contract can be beneficial for both the employer and contractor. However, this requires legal advice and must be done with greatest care to comply with polish law. improperly written b2b contracts can be questioned and considered to be an employment contract.

Tax-Deductible Costs (TDC) for IT professionals, aka ”Creative Tax”

the polish personal income tax act allows for special tax-deductible rates for authors of copyrighted works. if they receive a remuneration for the transfer of the copyright, they may apply tax-deductible costs in the amount of 50% of a portion of earned income.

The scheme has gained popularity throughout the IT industry. Both smaller IT firms and large international software companies with 1000+ employees utilize its benefits.

In terms of benefits, the TDC scheme allows employees to reduce their personal income tax and therefore increase their net income. without increasing employer costs, the employee’s net income can increase by as much as 17% per year. as an alternative, some employers use the tdC scheme to reduce the cost of salaries, by offering lower gross compensation but still an attractive net compensation.

implementing the tdC scheme in an organization requires a thorough process that can take up to 6 months and require the support of a local partner and legal verification. The cost of necessary legal services has to be taken into account when planning.

Benefits

Employers attract developers with rich benefits packages. The most popular ones are paid gym/fitness cards, professional trainings, and private healthcare (these are often considered as three at minima components of a benefits package).

><![if !vml]>

<![endif]>Monthly estimate of per-employee

cost of benefits package

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Most popular benefits offered by companies in the IT industry in Poland

private healthcare sport and recreation vouchers professional trainings

Life insurance Language lessons

partial cover of study costs Vouchers/prepaid cards additional paid days off occasional lunch vouchers

Employee shares program

64%

57%

40%

30%

12%

99%

99%

99%

94%

94%

Source: Sedlak & Sedlak Salary Report for the IT Industry – 2020 (Spring)

Benefits popularity differs per seniority. Employees in leadership positions might be expecting a company car and fuel costs reimbursement (respectively 35% popularity for department director role and 29% for a senior manager role). Junior employees will be rather demanding the partial cover of study costs (75% popularity for specialist/junior role).

Other types of benefits, more seldomly encountered in Krakow companies include:

Reserved parking space, especially when offices are in the hyper-center

Mobility or car bonus integrated in compensation

Premium office well-being, in-house gyms, massages, nutrition coach

Permanent indefinite contract from Day 1, without trial period

Company loans and additional retirement plan

Krakow it Market Report 2021 | MotifE   43

Home office and Flexible working time

Similarly to other European cities, Krakow struggles with heavy traffic during rush hour. Despite continuous investments, the road infrastructure is not able to handle the ever-growing number of cars. students, tourists and visitors alike all contribute to the issue of congestion seen in the city.

although Krakow is well-known for its well-organized public transport links and cycling routes, the time spent commuting is increasing year by year.

Due to this, flexible working hours and home office opportunities have become important and attractive benefits offered by IT industry employers in Krakow. Nearly all employees (99%) are offered an opportunity to work from home on a part time. before CoVid-19 crisis, job descriptions would often mention ‘’1 or 2 days of home office per week’’.

Regarding flexible working hours, 82% of IT industry employees are offered this work arrangement

from 68% for specialist/junior roles to 86% for high level manager positions.

practices from abroad not common in poland

The idea of social welfare and benefits can differ from one country to another. Unlike some Western European countries with a richer heritage of social welfare and generous branch/company agreements (i.e. France, Germany), some benefits would not form part of the expectations from employees in poland. here are some examples that are rarely found in poland:

Restaurant vouchers co-sponsored by employer for every working day

Company cafeteria on-site (even for large-size corporations)

public transport abonnement paid/co-sponsored by employer

Company Committees offering employees the access to discounted/co-sponsored holidays, leisure activities, green camps for employees’ children, etc.

allocation of free company products/services to employees or overly generous discounts to purchase these products/services

Company shares or incentive stock options

Companies setting up their teams in Poland are not expected to offer these benefits, unless an employer wants to attract specific talent with out-of-the-box benefits/perks, or import a strong company culture from the home country.

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IT recruitment

Recruitment projects for IT specialists in Krakow usually take between 4 and 8 weeks. After accepting an offer, candidates have a 1-month, or in some cases 3-month, notice period.

><![if !vml]>

<![endif]>time to recruit an experienced it specialist

Companies adopt three main approaches to sourcing talent in Krakow: utilizing in-house recruitment function, hiring external recruitment services or contracting staff augmentation services.

In-houserecruitmentfunction

when entering a new market, an obvious choice for many companies is to hire candidates using their own recruitment team. to be successful with this option, a company needs to build a recruitment function in the chosen location, as hiring with a remote recruitment team rarely works.

building one’s own team however, is an investment which requires time and can slow down initial growth. hiring with just an internal team is in most cases slower compared with hiring external agencies. Recruiting for senior IT roles can be particularly difficult with only an internal team due to a limited database, relations with candidates, and a need for in depth knowledge of the market.

an in-house recruitment scenario is often chosen when the demand for recruitment is high in the longer perspective, but a slow start is acceptable and when there is no budget for external recruitment agency fees.

to decrease the hiring cost, but to keep a fast pace, companies often choose a hybrid mode when they start with an agency and then continue with a mix of internal, agency and potentially Rpo consultants.

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>External recruitment services

there are numerous local and global it recruitment agencies operating in Krakow. the scope of involvement of the agencies differs from one project to another, but usually consists of advertising the roles and searching for candidates, screening interviews, coordination of the process with hiring managers and other interviewers, and finally issuing an offer.

with experienced technical recruiters, agencies use their in-depth knowledge of the local it job market and professional recruiting tools to accelerate the hiring process. the agency fee is anywhere between 15% and 20% of the new hire’s yearly gross salary.

in addition, some agencies propose Recruitment process outsourcing (Rpo). in Rpo a team of recruiters is plugged-in into the in-house function of the hiring company and often uses the company’s branding for a seamless experience for the candidate. Rpo usually comes with a management fee which is in addition to the recruitment fee.

E  x  p  E r T V I E w

Agnieszka Widacka

Recruitment Manager at MotifE

podcaster at hR-up!

Nowadays we have a competitive, candidate-driven job market. Finding and hiring the right talent requires skills and knowledge. This is why many companies turn to recruitment agencies to get help finding the right people for their open positions. I know from my experience that the most effective cooperation with a recruitment agency is when you take into account some good practices such as:

letting the agencies know you: teaching them about the company, the business as well as the culture;

giving recruiters direct access to hiring managers to make the processes more effective;

not involving more than two agencies so not to flood the market with your job postings;

using an agency that is known for focusing on long-term relations with clients.

In short, choosing the right recruitment agency and taking into consideration the points above can help you recruit the right people much faster and quite often cheaper.

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>Staff augmentation services

staff augmentation, also known as team augmentation is a solution when a local outsourcing partner hires candidates and outsources them to a company. this option is different from a practice of outsourcing a whole project to a third-party provider. with staff augmentation, the candidates are onboarded as members of the company’s team and the project ownership remains in-house.

staff augmentation is used when a company cannot or does not want to hire candidates on a traditional employment contract. typical scenarios are:

a project that has a budget for limited time;

company doesn’t accept b2b agreements with candidates;

company has a limit on the permanent employees headcount

there are several models of staff augmentation: a rapid staff augmentation which involves the outsourcing of engineers already on the outsourcing partner’s payroll or dedicated staff augmentation when candidates are hired from the market to match a precise set of skills.

the costs structure of staff augmentation  can vary from one outsourcing partner to another.  It usually consists of a mark-up on monthly gross salary, and is inclusive of social security, benefits, payroll and hR support.

E  x  p  E r T V I E w

Karolina Zimoch

hR Manager

at gain Capital poland

Over the last two years, GAIN Capital has entered the Krakow market and launched its modernization center. We continue to attract the best IT specialists, who are constantly working on making the FOREX/CITYINDEX experience more fun and user friendly for users around the world.

Back then, we started with a small team of 5 people, and we are now more than 200. The speed of growth is impressive, we continue to get stronger every day, consistently adding new roles to our teams.

What would be my recommendations to new companies planning to hire IT experts in Krakow? If they are entering the Krakow market now, it’s important to note that we are experiencing a high level shift into the home-working model. I believe that focusing on a variety of tools for making the home office easy and more digestible is simply a must. I also believe that investing in various areas of employer branding activities will be highly beneficial.

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Labor law

In many aspects the Polish Labor law is aligned to the other European countries’ Labor regulations with comparable working time, paid holidays allocations and contractual principles. Polish regulations are considered as business-friendly, while caring for employee status and ensuring a family-friendly environment boasting one of the most generous maternity leave schemes in Europe.

<![if !vml]>

<![endif]>8 hours per day, 40 hours per week working time

251workingdays on average

20or26days of vacation

1or3months’notice

50-100%

overtime pay

80%paid sickleave

100%paid maternityleave (upto6months)

13 days of public holidays annually

Vacation entitlement depending on experience

the termination period depends on the length of employment with a given employer:

2 weeks’ notice for < 6 months, 1 month notice for > 6 months, 3 months’ notice for > 3 years

50% regular overtime pay, 100% overtime pay for working

nights, sundays and public holidays

From first day of sick leave with medical certificate

that can be extended by a 6-month parental leave (60% paid). paternity leave lasts 2 weeks (100% paid).

Maternity and parental leave can be split between mother and father

Krakow it Market Report 2021 | MotifE   49

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<![endif]>>Cost of doing business

In this chapter we provide an overview of the costs of running a business in Krakow, including the cost of the office and professional services as well as an overview of taxation in Poland. Also, we include a summary of the cost of travel and living in Krakow.

Key figures

despite being a top tourist destination, Krakow continues to be an affordable location. unlike many large European cities, Krakow manages to keep the cost of doing business here competitive. Office space leasing, professional business services, accommodation and dining provide amazing value with a great price-to-quality ratio.

Krakow offers excellent offices, hotels and restaurants, all whilst managing not to become as crowded,

rushed and pricey as the capital, warsaw.

The last 15 years has seen a significant growth in office building construction, new modern hotels and restaurants. More recently there has been an incredible effort to develop city infrastructure, with event venues such as the iCE Congress Center or large tauron Krakow arena. Krakow airport has also undergone a complete make-over, and the ongoing development of a Regional fast Railway network brings office centers closer to peripheral areas.

>16 800 EUr

average gross annual salary in the business sector in Krakow

>pLNpolishzloty

Currency of poland

>1 pLN = 0.26 USD = 0.22 EUr

stable exchange rate

>6th

Largest economy in the European union

>4.5%

gdp growth in 2019. Eu countries average: 1.6%. Eurostat

>43.3%

Combined gdp growth rate between 2008 and 2019

Eu countries average: 12.3%. Eurostat

Sources: gov.pl, krakow.stats.gov.pl, Eurostat

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Office space in Krakow

Office market

Krakow offers a variety of office options. Some of them are large buildings with a capacity of 2 000+ people such as Kapelanka 42, Fabryczna Office Park, High5ive or Quattro Business Park. There are also smaller buildings offering a unique vibe and a more private, low-key experience. in this section we present an overview of the office market in Krakow with different options for office space leasing and the associated costs.

>1 550 000 m2

Office space surface in Krakow

>140 700 m2

Office space completed in 2020

In 2017, Krakow became the first regional market in Poland with modern office space exceeding

1 million square meters. in just 3 years, this number has increased to 1.5 million square meters.

In addition to the modern, A-class office space that is available, there is also a supply of office space in old, often historic, buildings. Some firms look for space with unique character and choose office space in the old City or in the post-industrial areas of town.

Office stock evolution in Krakow (in m2)

200 000

180 000

160 000

140 000

120 000

100 000

80 000

60 000

40 000

20 000

0

2011 2012 2013 2014 2015 2016 2017

2018

2019

2020

2021p 2022p

1 800 000

>1 600 000

1 400 000

1 200 000

1 000 000

800 000

600 000

400 000

200 000

0

Source: Cushman & Wakefield, 2021

new supply

Total office surface

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Leasecosts

Lease costs for a-class and b-class spaces have remained stable over the last 3 years. the usual lease

period for an A-class office space is 5 years, and 3-5 years for a B-class office space.

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13.5-15 EUr

Lease per 1 m² of office space/month

in an a-class building

10-13 EUr

Lease per 1 m² of office space/month

in a b-class building

Flexibleoffice space

a growing number of start-ups and high-tech companies in Krakow accelerated the development of co-working spaces, serviced offices and hybrid spaces. Flexible office spaces provide fully equipped office space shared among multiple companies, with administrative and maintenance services. The undisputed advantage of such an office solution is that it can provide a flexible rental period, while providing privacy and separation from other companies.

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40 500 m2

Flexible office space in Krakow

650-1 600 EUr

Monthly rental cost of a serviced

office for 6 persons

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>Sublease

the standard rental period for a-class spaces is 5 years and 3-5 years for b-class spaces, but it is possible to find shorter offers, e.g. office sublease. Subleasing continues to gain popularity in 2021. The office space available for sublease in Krakow is now estimated at approximately 38 000 m2.

>38 000 m2

Office space available for sublease

With a subleasing agreement, the tenant can sublease a part of their office space, cutting down its fixed operational costs, while the sublessee can rent a space for a shorter period which can sometimes work out cheaper than a standard lease agreement. it is worth noting that subleasing is not always a perfect alternative to standard leasing. for instance, subleasing agreements can limit the customization and branding of office spaces, or may not be suitable for companies working with sensitive data.

E  x  p  E r T   V I E w

Dariusz Madej

senior negotiator

at Cushman & Wakefield – Krakow

For many years now subleases have accounted for a portion of leases offered in the marketplace and have grown linearly along with an increasing volume of office space. From 2016 onwards, with increased demand coming from the BSS sector, property developers sped up office space construction and were able to supply, on average, more than 150 thousand m2 of office space year on year. A historical peak of total demand for office space, amounting to 266 thousand m2, occurred in 2019.

The Spring 2020 lockdown brought a significant change and gave rise to a vigorous growth in sublease offers in the office market. Throughout 2020, many businesses decided to put their office space on the market; some of them looked to save money on the rent while others decided to shift to a fully remote working format. Following this market turbulence, the total amount of square meters available rose by ca. 315% YoY, to 38 000 m2 in December 2020.

During 2021 this figure could continue to rise, but at a certain point in time the market should start absorbing this supply of space both due to the expansion of businesses that have experienced growth in recent months and demand coming from new investors. It should be remembered, however, that a portion of that space could formally come back to the market and be offered directly by the property owners, if, as a result of contract renegotiations, organizations will adapt the demand to the new work model they are embracing, i.e. a hybrid model.

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professional services

When operating in Poland, companies need to comply with local regulations. Most of foreign firms choose to outsource most of the work associated with bookkeeping, payroll or legal. Krakow offers competitive pricing for these types of services, which minimizes the overhead costs of running a business here. business services providers are often familiar with elements of foreign legal and tax laws as well.

>

accounting and bookkeeping

<![if !vml]>

<![endif]>

payroll calculation

>   >

Legal   health

& safety

<![if !vml]>

<![endif]>

it Equipment

>250 EUr

Monthly cost of accounting services

for a small limited liability company

>100 EUr

Monthly cost of payroll services

for up to 10 employees

>50 EUr

hourly fee for legal services

56   Krakow it Market Report 2021 | MotifE

>

Krakow it Market Report 2021 | MotifE   57

Taxation in poland

there are 3 primary taxes that a company pays in poland: the personal income tax paid by companies for their employees by deducting it from their salaries, the Value-added tax and the Corporate income tax.

pIT

Personal Income Tax 17% under 85.5K pLn (19K EuR) annually,

and 32% over that threshold

VAT

CIT

Value-Added Tax 23% standard Vat rate

Corporate Income Tax   9% for companies with <2M EuR annual revenue

and 19% over that threshold

Tax incentive for new investment in poland

polish investment Zone program offers options of Cit tax break for companies who set up their operations in poland. this income tax incentive is available for investments in the Krakow and Malopolska region, and is granted by a regional entity (Krakow technology park) on behalf of the polish Minister of Economic development.

the amount of tax break is calculated by multiplying investment costs by 35%, 45% or 55% depending on the size of the company (e.g. a ‘large’ company that plans to hire 50 developers and incur 10M pLn as 2-year-employment cost will be granted 3.5M pLn income tax break).

>Income tax break

from 35% to 55% depending on the size of the company

>Forservice sectorcompanies

and certain production companies

>Investment allowed

in the location of your choice

the Krakow technology park issues decision of support

in Krakow and Małopolska Region

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<![if !vml]>

<![endif]>>Companies of all sizes can apply and receive tax breaks if they incur minimum investment costs and declare to meet quality factors related to sustainable economic and social development. the tax break can be granted to services sector companies, including: it services, research and development in natural and technical sciences, bookkeeping and book control, accounting services (with the exception of tax statements), research and technical analysis services, call center services, architectural and engineering services.

Companies that used this tax incentive in Krakow:

<![if !vml]>

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Justyna Czyszek

investor services Manager at Krakow technology park

Since 2018, when the Polish Investment Zone was introduced, Krakow Technology Park granted income tax breaks to more than 90 companies. Among service sector companies, we welcomed well-established brands such as UBS or new-technology-driven entities such as Relativity. We walk investors through the process of applying for this investment incentive and introduce them to the network of our clients. Every company that wants to join our growing business environment in Krakow should definitely consider this tax break and can learn more at kpt.krakow.pl

>Staying in Krakow

Travel

as one of the top tourist destinations in Central Europe, Krakow attracts approximately 14 million domestic and foreign tourists each year. thanks to its cultural wealth, Krakow’s historic Center has been listed as one of 12 first sites to be entered on the UNESCO World Heritage List in 1978. Krakow is also a thriving business center, playing a leading role based on the total number of meetings and events held here. it is one of the most important economic hubs in the country, focusing on professional services for business, new technologies, finance, IT and telecommunications.

156

hotels with

3* or higher rating

being the most visited polish city, Krakow offers connections and facilities that make travel easy and enjoyable. There are direct flights to over 50 cities across Europe as well as direct connections to the usa, israel and the united arab Emirates. Krakow is also conveniently connected with major European air hubs, including multiple daily flights to Munich, Frankfurt, Vienna, Zurich, Oslo, and London.

Krakow hotels offer amazing value for the money. with locations both in the old town and near business centers, there is always a nearby facility ready to accommodate business needs. the majority of hotels are brand new or were built within the last 10 years. they are clean and modern, offering a high-quality environment for doing business.

Long forgotten are times when Krakow’s cuisine was limited to traditional polish food. with 500+ restaurants, Krakow has much to offer, and dining can be part of a great experience during a stay in the city. from Michelin or gault&Millau recommended restaurants to new affordable eateries offering international and fusion tastes from Japanese ramen and Middle East specials to vegan burgers and argentinian steaks, there’s something to suit everyone’s taste

60   Krakow it Market Report 2021 | MotifE

Costoftravel

airfares from European capitals start at 100 EuR and from the us start at 500 EuR. a 4-star hotel starts at 200 EuR for a four-day stay.

you will not need to spend more than 30 EuR per day on food (this amount will get you an excellent lunch and dinner) and 50 EuR for a 5-day stay for local transport by taxi.

>700 EUr

Estimated total cost of a 5-day trip to Krakow

from a European capital including airfare, a stay in a 4* hotel, food and local transport

>1 100 EUr

Estimated total cost of a 5-day trip to Krakow

from a European capital with coach class airfare, a stay in a 5* hotel and fine dining and drinks every evening

Origin

Flight time

Airfare range*

northern, southern, western Europe

1.5–2.5 hours

100–200 EuR

Middle East

3.5 hours

200–400 EuR

united states – East Coast

11 hours

from 500 EuR

united states - west Coast

14 hours

from 650 EuR

*For tickets purchased at least 2 weeks before the planned travel date

Krakow it Market Report 2021 | MotifE   61

Cost of 4 nights in a hotel (in EUR)

>

450-1 000

5* rate for 4 nights

>50+

<![if !vml]>

<![endif]>

200-450

4* rate for 4 nights

<![if !vml]>

<![endif]>

150-250

3* rate for 4 nights

>direct connections to European cities from Krakow

>18%

average passenger annual growth at

Krakow airport between 2015 and 2019

>150 EUr

Average airfare for a return flight

from a European city to Krakow

>20 min.

taxi ride from the city center

to the airport

>Localexpenses

>3 EUr

Cappuccino in the old town

>7 EUr

basic lunchtime menu

<![if !supportLists]>5 <![endif]>>EUr

taxi ride on a business day, 5 km

<![if !supportLists]>6 <![endif]>>EUr

a cocktail in an old town club

>15 EUr

dinner with drinks at a good restaurant

in the center

>50 EUr

dinner for two in a city center restaurant,

including appetizers, main course, wine and dessert

>4. 2020

in review

In this chapter we provide an overview of the key highlights of 2020, presenting the new IT companies that came to Krakow and exploring the effects of COVID-19 on the Krakow IT Market.

New IT players in Krakow in 2020

Every year we see more and more new companies who decide to establish their subsidiaries and build it teams in Krakow. also, every year at least 3 000 new it jobs are added in Krakow as a result of arrival of new companies as well as expansion of the existing organizations.

2020, despite the pandemic, was not different. at least 10 companies decided to set up their software development teams, joining a list of firms that had already have offices in Krakow. Number of these organizations were fintech companies. With addition of OANDA and Backbase, the fintech industry becomes one of the strongest in the city it market.

another trend that is continued, is that the primary it roles companies decide to establish in the city are software development roles while it infrastructure positions are less common.

>

Fintech / Canada oanda.com

Number of engineering / IT roles in Krakow: 50

oanda is a leader in currency data, offering forex trading, corporate fx payments, and exchange rates services to corporates and consumers alike.

The roles at OANDA Krakow office cover the following areas:

software, it infrastructure, Marketing, hR and finance.

>

>

FIT Software / USA mohawkgp.com

Number of engineering / IT roles in Krakow: 15

Mohawk is an e-commerce technology provider for online sales and marketing. Their flagship product is AIMEE® (ai Mohawk E-commerce Engine), a next generation e-commerce platform that enables growth of Mohawk’s owned and operated consumer product brands.

Krakow it Market Report 2021 | MotifE   65

>

Eoin McCoy

Chief transformation

Officer at OANDA

What have you been able to achieve with OANDA in 2020?

Our initial decision to open an office in Krakow dates back to November 2019. Our plan for 2020 was to establish and set up a new legal entity, start the recruitment process and onboard 100 employees, all of which we achieved within the year.

The roles we filled here in Krakow reflect the organizational structure of OANDA as a whole, featuring a balance between technology, finance and business service careers. With regards to technology roles, the spectrum ranges from product ownership and design through to software engineering and testing, infrastructure and systems. Meanwhile, our finance and business operations roles include everything from sales and marketing, customer support and KYC client onboarding all the way through to internal finance services and human resources.

Has the COVID-19 crisis impacted the growth of OANDA in Krakow?

Given the nature of our business, OANDA has fared relatively well over the last 12 months, despite how the world has changed. As such, the pandemic did not have a significant impact on the overall success of the business. However, we did experience some disruption and delays in terms of recruitment and onboarding as well as moving to a remote-work model. As a result, we had to adjust our working practices to navigate these challenges, much like many companies around the world. For instance, we chose to place greater emphasis on strengthening our company culture, improving engagement and building relationships inside our new team. Despite this, COVID-19 situation had no impact on our commitment to establishing the Krakow center.

Why is Krakow an attractive location for foreign companies?

From the perspective of a foreign company looking for a destination, Krakow ranks high on any global listing. Not only does it boast a smart, young and highly educated workforce, it also houses a multicultural, multi-ethnic and multilingual working population that makes it attractive to companies from all over the world. Krakow is no longer an invisible back-office location. It is now seen as a front-office value-add and a key hub location for global firms.

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Why is Krakow particularly attractive for fintech companies?

Krakow has established itself as a location of excellence in various financial institutional areas such as retail or investment banking. From a fintech point of view, some of our key competitors have been developing skills and product knowledge in Krakow for more than five years now. That was a very attractive differentiator for us. We knew we could benefit from that market experience here in Krakow. Not only did we have access to highly-skilled engineers, but also experienced product owners or customer service executives who would already understand our industry, our product and our clients.

What would be your recommendations for the companies that want to come to Krakow?

At the very top level, my recommendation is always to truly understand what you’re actually looking for, which is critical to your success.

Going into specifics, your first step when considering any location is to ensure the local talent pool matches the technology skill sets you want. You also need to be realistic about labor and operational costs from the start. Krakow can still provide considerable cost savings versus Western locations but is no longer as low cost as some companies might believe.

And finally, have a plan. If that sounds obvious, think of it more as a three-to-five-year vision. Over the years, I’ve seen many organizations eager to get started, but without a clear view of where they want to end up. A long-term plan will provide clarity on whether Krakow is the best place for you, as well as the type of core team you need to grow your center. The core team that gets you to 100 people might not be the exact same type of team that gets you to 500 people, for instance.

Could you please name some key factors that contributed to the success of OANDA in the last 12 months?

One success factor I believe is necessary for all companies – and certainly was for OANDA – is understanding your market. There’s a difference between being able to get up to full speed quickly versus spending 6, 9 or even 12 months trying to learn the dynamics of the market. Knowing the market is also down to knowing key partners – recruitment agencies, finance agencies, accounting and HR firms. Being able to step into the market and pick the right providers and partners is very important.

I think the second factor that played to our success was our ability to build an employer brand within the local market. Compensation and salary may be important, but career development and corporate culture are what really matters. That’s what excites potential hires and encourages them to make the move.

<![if !vml]>

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>

E-commerce / USA searchspring.com Number of engineering / IT roles in Krakow: 5

searchspring is a global provider of e-commerce services focused on search and merchandising functions. the searchspring team in Krakow is mainly responsible for data acquisition systems, including faster data streams and inventory updates.

>

>

IoT / Poland haptology.com

Number of engineering / IT roles in Krakow: ongoing

haptology is a tech start-up developing haptic solutions, with the aim

to ”redefine the way people understand digital content as something that can be touched and felt”, with practical implementation in the electronics, iot or gaming industry.

>

>Mobile platform / Switzerland beekeeper.io

Number of engineering / IT roles in Krakow: 20

Beekeeper is a mobile-first communication platform that allows companies to reach their frontline workers through real-time messaging and targeted streams. the platform counts users in over 137 countries, in industries such as hospitality, Manufacturing/ Construction and Retail.

>

>

IT Services / Poland billennium.com

Number of engineering / IT roles in Krakow: ongoing

bilennium is a  global  technology  company  with  headquarters in warsaw. founded in 2003, bilennium creates innovative it solutions using its expertise in outsourcing, software maintenance and development, and Cloud computing. the company manages software of clients from around the world, including global brands such as RoChE and abb.

>

>

IT Consulting / India mindtree.com

Number of engineering / IT roles in Krakow: 10

Mindtree is a global technology consulting and services company, delivering digital transformation and technology services from ideation to execution, with expertise in infrastructure and applications management.

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>

Fintech / Germany gft.com

Number of engineering / IT roles in Krakow: 25

gft group helps companies optimize their business processes by providing intelligent it and digital transformation solutions. the company is one of the world’s largest suppliers of it solutions for the banking sector. gft group designs, creates, implements and maintains custom IT solutions and enables financial institutions to quickly and safely use modern technologies.

>

>

Fintech / The Netherlands backbase.com

Number of engineering / IT roles in Krakow: 30

Backbase is a fintech software provider offering digital banking solutions to financial institutions all over the world.

More than 120 financial institutions have already used their flagship product, the backbase omni-Channel banking platform, including barclays, Credit suisse, fidelity, postfinance, Royal bank of Canada, Royal bank of scotland and société générale.

>

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Robert Liziniewicz

delivery Manager

& site Leader at backbase

The Backbase Development Center (BDC) was established in the summer of 2020. We started small, concentrating on 2 main areas – professional services group implementing projects for customers and new Backbase as a Service offering – our approach to SaaS model. Over the second half of the year we managed to build a team of about 30 engineers. As well as this, we have also started to build our R&D team in Krakow.

In regards to COVID-19 impacts on Backbase, our operations in Krakow had already started during the implementation of restrictions, so the risk was known and taken into account. Fortunately, we operate in an industry not affected by COVID-19, quite the opposite even - many of our customers started to put more attention into their online operations. From the local perspective the only difficulty was sometimes the hesitation of experienced engineers to change jobs during the pandemic for something completely new on the local market.

<![if !vml]>

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COVID-19 and the Krakow IT Market

the impact of the 2020 epidemic on the Krakow it market can be compared to the impact on the global

economy. Companies in some industries benefited from the situation while some were hit hard.

Specifically, Krakow technology companies (e.g. Motorola, Akamai, Cisco), financial institutions (e.g. hsbC, ubs, bbh), or consulting companies (e.g. Capgemini, hCL, ibM) did well or relatively well.   the majority of them continued to grow or only temporarily suspended hiring. however, there were some companies, particularly it ventures in the hospitality and travel industry, which decided to freeze hiring, reduce working hours and in some cases to introduce redundancies.

all companies, however, had to change and adapt how they work and how they hire.

in this section, we focus on four key angles of the CoVid-19 impact: the new normal of work, hiring in

the times of pandemic, office market impact, as well as the impact on the Krakow start-ups ecosystem.

New Normal of work

Rapid switch to remote work

before March 2020, 87% of the companies allowed remote work at least 1 day a week. then, instantly, almost all of them switched to full remote working practices. Most of the employees who still came to the office, did so, because they were not able to work from home. 90% of Krakow corporations’ employees started working remotely before the end of Q1 2020 and the introduction of official government guidelines.

the remote work trend continued for the following months, with a limited number of team members being allowed back to the office between the first and second waves, with precautionary measures in place such as split teams and desk reservations.

>88%

of Krakow it specialists worked fully remotely in 2020

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Percentage of employees working from the office (May 2020 - Feb 2021)

10%

>9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

May

June

July

august

september

>

october

november

december

January

>

february

>><![if !vml]>

<![endif]>first Lockdown

over

Source: ASPIRE HOME 2 OFFICE Tracker #8, 8-26 February 2021

1M CoVid-19 cases in poland

1.5M CoVid-19

>>cases in poland

>

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Andrew Hallam

general secretary at aspiRE

ASPIRE is a network of the 160+ multinational corporations located in Krakow and which collectively make the city Europe’s No. 1 hub for global technology and business services. As ASPIRE we focus on accelerating the evolution of the ecosystem that supports the growth and development of our sector.

The past 12 months of COVID-19 have demonstrated how resilient and robust the Krakow ecosystem is. Within hours of the first lockdown the industry moved seamlessly to home working and over 12 months we have seen consistent gains in productivity and performance as an acceleration of existing trends, new innovations and raw ambition.

During COVID-19, Krakow centers have experienced higher visibility within their businesses. Post-COVID, we expect an acceleration of new and higher value work coming to Krakow. Much more than a safe port in a storm we anticipate that Krakow’s reputation will be secured as a creative hub to drive change.

There is a huge appetite within the industry to move things forward, embracing radical new thinking on what an office is, the ability to hire from anywhere, and what makes for effective and rewarding work.

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New types of practical benefits

With remote work becoming the norm and no precise date set for a return to the office, companies have been exploring what kind of benefits they could provide to people working from home. These include either a lump sum or a monthly payment for internet or mobile phone costs, equipment or home office furniture. More generally, companies also provided employees with the possibility of borrowing and taking home necessary company equipment (e.g. screens, office chairs).

Towards a codification of remote work

up until now, remote work in large companies has been treated as an exception. in the majority of cases, it was accepted to work remotely one or two days a week, but few companies made this an official arrangement and formalized the process. There weren’t any dedicated infrastructure or equipment or rules defining what you could or couldn’t do. It is expected that COVID-19 will trigger and accelerate changes in this area. Remote work will be packaged into something that will be a part of how corporations work (for instance with processes around remote onboarding).

similarly, corporations had to start looking into letting employees work from alternate locations different from the office region, for instance from their home cities in Poland, home countries or any other locations in the world. this in turn has opened a new spectrum of the hR and legal challenges, as well implications on the clients’ contracts

Hiring

Jobs Market

despite the global economic slowdown generated by the pandemic, the overall impact of the crisis on Krakow’s it labor market was relatively low. in Q2 of 2020, companies decided to freeze recruitment, before getting back to regular hiring levels in Q3 2020.

1 600

IT jobs ads in Krakow Q4 2019-Q4 2020

>1 500

1 400

1 300

1 200

1 100

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

Source: inhire.io, IT Market Snapshot 2019, 2020

72   Krakow it Market Report 2021 | MotifE

the uncertainty, however, caused the companies to be more careful with spending. this was clearly visible in survey results, with 55% of it specialists reporting freeze on their salary increases or promotions, 33% had their bonuses put on hold and, 22% had their salaries temporarily decreased. Surprisingly, these decisions did not trigger any significant attrition among staff members. At the same time 6% of survey respondents reported that they lost their jobs or contracts due to CoVid-19.

Record low attrition rates

before the pandemic, there had been a typical, organic attrition among companies hiring it engineers. by the end of 2020, most of large companies in Krakow reported unusually low levels of attrition. Employees are not willing to change their jobs in what they perceive as uncertain times.

Candidates tend to be more careful when seeking new job opportunities looking closer at a stability of an employer as well as safety of a specific role. With that, even though over 80% of employees declare they are open to new, interesting employment opportunities, much less would decide to change the employer.

This trend is temporary, and it can be expected that once the confidence returns to the earlier levels,

more people, who are now delaying their decision to change their job, will decide to make a move.

Increased demand for senior engineers

Many companies found remote work easier than remote hiring or onboarding. two elements were particularly difficult. First, making sure new team members become well integrated into the team. second, getting the more junior employees up to speed.

With that, at the peak of the COVID-19 first wave, IT companies had a preference to hire experienced it specialists and job offers for Junior specialists dropped by half in Q2 2020. it companies need more experienced staff to be able to onboard them faster. the more senior ones are more independent and require less training or support from other team members.

Demand for IT specialists in H1 2020 in Poland (% of jobs ads for juniors, mids, seniors)

>60

50

40

30

20

10

January february March   april May   June

Junior

Source: No Fluff Jobs’ IT job market in Poland 2020

Mid

senior

Krakow it Market Report 2021 | MotifE   73

Office market

Despite the pandemic, the office market in Krakow remained stable throughout 2020. The average monthly rental rate hovered in the range of 13.5 to 15.0 EuR/m2, and 13 new office investments with a total area of 140 700 m2 were delivered for use. in addition, the supply of new spaces in Krakow reacted with only a delay due to the outbreak of the pandemic, thanks to which the implementation of projects under construction has not been suspended. the vast majority of projects planned for delivery in 2021/2022 will be completed on schedule. nevertheless, we expect a delayed response from the supply side of the market in the next two years by reducing the number of new investments entering the market in 2023/2024.

Demand for office space

In 2020, it was possible to observe a decrease in demand for office space in Krakow, which amounted to 154 400 m2 and was lower by nearly 40% compared to 2019. the decline in tenant activity was primarily due to the economic uncertainty caused by the outbreak of the coronavirus pandemic and the implementation by tenants of ”wait and see” or ”time buying” strategies, which was reflected in short-term contract extensions, negotiations with landlords and office subleasing. We expect that the demand for office space in Krakow in 2021 will be similar in volume to that of last year’s level. At the same time, it will be a year of rebound in the market and a re-start of processes postponed from 2020.

Demand for office space in Krakow broken down by transaction type (in m2)

>300 000

250 000

200 000

150 000

100 000

50 000

0

2011 2012   2013 2014 2015 2016   2017   2018   2019 2020

owner occupier

Source: Cushman & Wakefield, 2021

Expansion

Renewal

new

prelet - total

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Availability of office space

the decline in tenant activity and the relatively high supply of new projects completed in 2020 led to an increase in the availability of office space and thus an increase in the vacancy rate to 14.0% (3.3 pp. year on year). the availability of space and the vacancy rate in 2021 is likely to continue on an upward trend, which will be due to lower transaction activity of tenants than in previous years and the increasing availability of space in older buildings.

Vacancy (in %), absorption and annual supply (in m2) in Krakow office market

200 000

180 000

160 000

140 000

120 000

100 000

80 000

60 000

40 000

20 000

0

2011 2012 2013 2014 2015   2016 2017 2018 2019 2020

16%

>14%

12%

10%

8%

6%

4%

2%

0%

new supply

Source: Cushman & Wakefield, 2021

Stable lease rates in 2020

absorption

Vacancy rate

base rates for the best space remained stable and ranged from 13.5 EuR to 15.0 EuR / m2 / month, depending on the location. despite the negative impact of the pandemic on the activity of tenants and the increase in the availability of office space, rent rates have not changed due to the limited number of projects available in the very center of Krakow and the relatively low availability of office space in the most attractive locations. in the coming quarters, we expect headline rents to stabilize further. nevertheless, projects located outside the city center may offer a higher level of incentives, in the form of an increased period of rent exemption or increased subsidies for office finishing, which will reduce the effective cost of renting an office.

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The new reality of home office

the experiment of transferring the majority of employees to remote work during the pandemic has proved to many managers that this model of work allows them to perform most office tasks from home, and that technological solutions supporting remote work do in fact function.

>30%

of Krakow offices were closed in the first half

of 2020 due to the pandemic. 10% of offices

remained closed in the second half of 2020

Source: ASPIRE, HOME 2 OFFICE Tracker

however, as the months of forced remote work pass by, most workers and employers begin to see that this is not a ”real solution” that will be effective in the long term. According to Cushman & Wakefield, limits of the current situation center around 3 main concerns:

>deterioration of work-life balance and sense of wellbeing, with an increasing percentage of employees working more hours in remote work mode

>struggle with connection with company culture, impacting on organization’s cohesion, innovation and creativity

>Decrease of satisfaction with working from home when others return to the office and FOMO

(fear of missing out) among employees working remotely

Towards a hybrid work ecosystem

As Cushman & Wakefield research shows, the future of the work environment will be based on a hybrid model, where organizations will offer their employees the opportunity to work together at  a physical office space and also work remotely. 100% remote work will in fact be implemented in a very small number of organizations. In turn, hybrid work is in line with the trend of flexibility that both organizations and employees will be looking for.

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>

>E  x  p  E r T   V I E w

Dominika Kowalska

associate director, workplace strategy & Change

Management at Cushman & Wakefield

For at least a decade, the number of companies that work in a hybrid model has been constantly increasing, and for many of them, remote work is an integral part of the work environment ecosystem. The pandemic has only cemented and advanced these changes. Throughout Europe, we predict that in the so-called new normality, office workers will split their time on a 50/50 basis between the office and home during the working week. This solution will enable you to get the best out of your work from the office space provided and all the benefits of remote work mixed into one. In addition, in all regional cities in Poland a coworking base is developing which will support those employees who want to save on commuting to offices in city centers and at the same time do not want or do not have the conditions to work from home.

Start-upsecosystem

Considering the global economic slowdown, Krakow start-ups did relatively well in 2020.

start-ups cooperating with the tourism and transport industries were impacted and had to temporarily cut salaries and freeze hires. no start-up bankruptcies in Krakow have been reported so far due to CoVid-19.

the following are the highlights of the survey conducted by the think-tank startup poland, published in their 2020 polish startups Covid Edition Report.

Revenues

>38%

of polish start-ups generated more

revenue than a year ago.

as mentioned in the introduction, and despite the global economic context, 2020 has also been a positive year for polish start-ups. overall, 38% of polish start-ups generated more revenue in 2020 than a year ago.

Functioning

Pandemic impact on Polish start-ups

39% of start-ups noted a negative impact on their business

34% of start-ups noted a positive impact on their business

Key indicators of negative impact: Key indicators of positive impact:

  53% no new customers   56% new customers

<![if !vml]>

<![endif]>  35% sales drop   48% sales increase

<![if !vml]>

<![endif]>no new markets entered

Key employees retention

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Many start-ups reported difficulty acquiring new clients and most of them did not manage to grow their revenue in comparison to 2019, however only 6% of surveyed ventures decided to reduce teams in response to pandemic.

Headcount changes in Polish start-ups in 2020 due to the COVID-19 pandemic.

no change

hiring Layoffs uncertain

17%

6%

14%

63%

>

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Bartosz Józefowski

industry 4.0 director

at Krakow technology park

2020 was surprisingly a year like any other. There were fears of major disruption, but was it really a disruption for start-ups? Yes, start-ups that secured VC funding before COVID-19 had to go through additional cost reviews, but honestly such deeper reflection can only be useful to early stage start- ups. Apart from that, it was almost business as usual for Krakow start-ups - business has always been tough, acquiring early clients with online activities is natural for these companies, and as ever they have to pivot or change approach often to overcome obstacles. In my opinion, industrial and hardware start-ups had the most difficult time, respectively because of temporarily limited access to customers infrastructure and broken supply channels leading to difficulties with delivery logistics.

From my observation, the biggest opportunity is that the adoption of digital solutions has gained momentum. As for the challenges foreseen, three of our predictions did not happen. There were no difficulties with securing new investment as VCs were very quick to move the investment process to a remote mode. Secondly we thought that layoffs in large corporations would increase the talent pool accessible for start-ups but in the end they emerged fairly intact from the crisis, and finally Krakow IT experts have not been massively recruited by tech companies abroad for remote positions.

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Financing

Value of VC investments in Poland by quarter (in M EUR)

>160

140

120

100

80

60

40

20

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Source: PFR Ventures, The Polish VC market in Q3 2020: transactions

VC investments in the polish market slowed down in Q2 2020 before growing back dynamically in Q3 2020. this shows that investors have been more cautious in Q2 2020 when perspectives were the most uncertain. from start-ups’ point of view, 49% of those surveyed think the pandemic affected the fundraising process, of which 66% declared that the funds had suspended ongoing discussions, and 19% that the funds insisted on a lower valuation.

80% of Polish start-ups declared using their own funds to finance their activities, and 1/3 of them have used the stimulus package set up by polish authorities, consisting of loan schemes and exemptions to social security contributions.

f o C u s

Krakow start-ups – big steps in 2020

Airly – is working on a new version of their product - an air quality mapping system using mobile sensory networks. in 2020 the family of Richard branson (Virgin) invested $2M in airly, and the Krakow start-up obtained additional funds of almost 4M pLn from the national Center of Research and development.

Brainly – raised $80M in funding from Learn Capital, to reach a total $148.5M funding since its creation in 2009 in total, a record among Krakow start-ups. since april 2020, the brainly user base has grown by over 75%. in 2020, brainly reached 350 million users.

Codewise – Centralnic is to acquire the Krakow-born company Codewise for $36M. the acquisition will grow Centralnic’s headcount for which it plans to add 140 people from Codewise.

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Katarzyna wysocka (Municipality of Krakow), Eoin McCoy (oanda), Ramon Tancinco and Łukasz Dąbrowski (Cisco), Andrew Hallam (aspiRE), bill wilkins (Karhoo), sylwia Liszka (Esatto), alexis fogel (stonly), paul Kulon (foundation supporting #oMgKRK), piotr sedlak, ph.d. and szymon adamczyk (sedlak & sedlak), Karolina Zimoch (gain Capital), dominika Kowalska, dariusz Madej and Jan szulborski (Cushman & Wakefield), Justyna Czyszek and Bartosz Józefowski (Krakow technology park), Robert Liziniewicz (backbase), Marek Wiśniewski (Comarch), Michał Gąszczyk (inhire.io), Maria Ożóg, Monika wojkowska, Magdalena gauger, James blackhouse.

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