According to Reuters, SMEs can play a big part in Central Europe’s economic recovery:
Imploding demand and tighter credit have held back eastern Europe’s small and medium firms in the economic crisis, and how they cope could significantly determine which countries in the region recover quicker.
Small businesses provide 60-70% of all jobs across Central Europe, and pay at least half the taxes. That makes SMEs critical to the region’s economic recovery. (Other important factors are governments’ fiscal discipline, demand from Western Europe and the pace of foreign direct investment.)
A major issue for SMEs is limited access to credit. Lending rates in Central Europe have traditionally been less than in Western Europe. With the financial crisis, small business credit across the region has virtually frozen.
Vienna’s position as CEE’s ICT capital has suffered quite a blow by IBM’s announcement to move its CEE headquarters to Prague. Beware: I love Prague, I live there, but the decision’s wording “to move growth market activities to growth markets” sounds rather shallow if applied to the Czech Republic. Sure the country has growth potentials that the EU15 have lost long ago, but then why not move IBM CEE to Ukraine or Russia right away?
Continue reading ‘IBM CEE: Na shledanou to Vienna’
I read with interest that Indian outsourcers Satyam Computer Services are setting up a facility in Hungary. It’s also worth noting the company’s stock rose 4%, based largely on this news.
Hungary is good business for Satyam largely because local wages are still lower than in Western Europe. According to the Satyam piece a programmer’s average salary in Hungary is $10,500 compared to $24,500 in Ireland.
However, the piece goes on to say the comparable wages in India are $7,500, so I can’t help but ask what are the advantages for an Indian outsourcer setting up in Hungary?
Is India running out of programmers?
Is there a tax advantage I’m not aware of?
Does geography make such a difference?
The cost advantages are clear for multinationals that set up programming here (this includes Ericsson, Siemons, Nokia, Motorola, EDS …) but I can’t see the argument for an Indian company. Any suggestions out there?