Startups

Gdansk: a tech hub for Scandinavian companies

Gdansk is a tech hub for Scandinavian companies

Anton Koval - Business Growth Director at Develocraft - and Dorota Morka representing the Norwegian - Polish Chamber of Commerce enjoy a freewheeling discussion around why Gdansk is such an exciting destination for Scandinavian businesses.

Contents:

    Dorota Morka

    We can officially start right now. So my name is Dorota Morka and I'm a representative for the Norwegian - Polish Chamber of Commerce. And my guest today is Anton Koval, Anton will you quickly please introduce yourself?

    Anton Koval

    Hello, my name is Anton and I am responsible for sales in a small local software consulting company. But I've been also connected to tech for some seven to eight years already and worked in various roles as a founder and even, worked with the government to attract more tech businesses to this area. So, , really connected to this area personally.

    Dorota Morka

    Okay. Maybe it's a good moment, actually. I'm going to say that we are talking about Poland, but you're not Polish.

    Anton Koval

    No, I'm not Polish. I'm actually Ukrainian. Ukraine is also a large market but, I moved here some 13 years ago and then some 10 years ago I moved to Gdansk and have loved the city ever since, and I'm planning to stay here.

    Dorota

    Okay! That's the best recommendation. Someone who actually immigrated here and decided to stay for let's hope forever.

    Anton

    That's the plan.

    Dorota

    Okay, I think we can start talking about our subject. Of course, I have some questions prepared for you - you are my expert here today. Okay, we are having very strange times in 2020 and 2021. It's a really strange year. Of course, it's a challenging time for everybody. How is it for the tech market? Also challenging?

    Anton

    I wouldn't say so. I think one of the largest beneficiaries of the whole crisis has been the tech market because everyone has had to move online. People that never use mobile phones have had to start using mobile phones. At the beginning of the year, when there was a lot of confusion, there was a little bit of a delay in the market. A lot of projects stopped, but currently the market is moving very fast. The demand is very high. So yes, it's a very good time for tech currently.

    Dorota

    If it's possible for you to say, you said it's very demanding, which branches [areas of tech] are the most in demand at the moment? Has it changed between, let's say 2019 and 2020?

    Anton

    Basically, remote work. Every tool that allows people to work remotely and new services that, for instance, allow you to order food when you would usually eat at your office or home. There are also new services like security services that, for instance, an app that checks how many people are in a [Zoom or Skype] room, so that you cannot surpass the given capacity of people. So there is safety [security] and remote work. And e-commerce is also growing hugely. Just to give one example, before COVID the penetration of e-commerce in the retail market was around 10%. Very low still. Now it's jumped by some 10%, so it's doubled. Double growth. So yes, these are the three major areas.

    Dorota

    Okay, interesting.

    Anton

    Everyone started being online more, so businesses are spending more on their websites rather than traffic.

    Dorota

    In one way it is a little sad because we're taking a step back from our social lives. But on the other hand, we are happy about it because if more people go online, like seniors, it will be safer for them, right.

    Anton

    Yes, and more connected to younger people, too. Because before they had issues connecting, but now they are more likely to connect with the younger people in their lives.

    Dorota

    Yeah. That's true. It's not the same, but it's as good as it could be.

    Anton

    Yeah.

    Dorota

    Right. Today we are focused today on two areas, mainly in Europe first. We will be talking a little bit more about Gdansl and we will also tell you what the Tricity is. And the most important part for us of Europe today is mainly focused on Norway.

    Anton

    Yeah.

    Dorota

    So, how has this COVID situation influenced Norway? as we discussed before? Or is it a little bit different?

    Anton

    I would say similarly to other markets. There was a sudden stop during the spring of 2020, but then new projects and new ideas started emerging. But the, the underlying issue in Norway and the other Scandinavian countries is the lack of developers at present, because the countries there are relatively small. However, there are a lot of ideas and a lot of capital, which is very good for building new stuff, and the resource capacity allows those countries to dominate and to grow their economies.

    Dorota

    Okay. So you said they're lacking developers in Norway. How bad actually is it? Are there any numbers?

    Anton

    Yes. I've prepared some data points. It's hard to estimate this. But for instance, there was one study that in the area of security, which is a fraction of the whole programming landscape, Norway has around 4,000 people. It's also estimated that in Sweden up to 2022, Sweden will lack workers to fill around 70,000 digital jobs. Not only programmers, but all the other supporting areas. Denmark, for instance, will also lack about 19,000 developers until around 2035. So it's big numbers. Thousands. And I think demand is currently growing with COVID, so these gaps in the labor market will grow larger.

    Dorota

    So they're growing.

    Anton

    Yeah.

    Dorota

    So we foresee that the future of IT is big. I think that at the start of COVID, as you also said before, there was some kind of blockage in demand for IT professionals because everyone was confused with what was going on around us. And then we all very quickly realized that, 'Oh, we have to go online.'

    Anton

    Yeah.

    Dorota

    And once we started, we saw that we couldn't stop this development path. Actually. I really like the word development, which is connected to developers. Uh, okay. I was always really wondering what developers spend their time doing. I think...

    Anton

    Developing!

    Dorota

    Haha! Building!

    Anton

    Well, they are very similar. The whole business is actually very similar to physical [real estate] developers who build buildings. But with software, websites, apps, and so on.

    Dorota

    That's quite a good explanation for someone who is not connected to the market. You just mentioned that just looking at Scandinavia there are thousands of developers missing from that market, but I think that if we look globally, it could be as much as a million, right?

    Anton

    Yes, it's millions.

    Dorota

    That's how it is. Could the Polish labor market be some kind of answer to this demand? With the wide availability and quality of tech talent there?

    Anton

    Well, definitely Poland is one of the answers. It's not the only answer because we have countries that support this whole industry. We have East Asia, or India or other Asian countries. We also have Central / Eastern Europe. We have South Africa. So there are various locations and each has both plusses and minuses. But for Scandinavia, Poland seems to offer the most advantages.

    Dorota

    Due to membrship of the [European] Union, right?

    Anton

    Yes. We are in the European Union, so the data transfer laws and and comparable areas are better for security and compliance, as the data stays in Europe. Although you still have to check every company you work with when you set up, in terms of regulations, it's much easier and more effective.

    Dorota

    Yeah.

    Anton

    Norway, obviously it's not the part of the Union, but a lot of regulations are very similar there.

    Dorota

    Yeah. The regulations are similar for bank transfers and in various other areas, they are aligned.

    Yeah. So it simplifies cooperation. So in comparison to the countries and regions you named earlier, like Asia, it could be much easier compared to those places. So is it just more convenient to cooperate with European companies?

    Anton

    Well, yes, because on the one hand there is a time difference with much of the rest of the world. But between Norway and Poland there's no time difference because we are in the same time zone. But there's also better [regulatory] alignment and even understanding of cultural and workplace norms. Not identical, of course, but much closer than between Norway and Asia. So yeah, there are a range of strong benefits that help, and we can see this in numbers because a lot of Scandinavianadian companies locate their businesses or look for partners in Poland. So this is backed up by real world trends

    Dorota

    Do we have many talented people in Poland? Because we should focus on this relationship between Poland and Norway and Poland and Scandinavia, mainly. So how could you describe that? Is Poland a tech talent hub or...?

    Anton

    So there was a study conducted by Stack Overflow, which is the largest Q&A website in the world for developers, together with a [Gdansk] local tech conference called Infoshare. And what they found is that in Central / Eastern Europe, there are up to around one million developers and actually one fourth of those developers are located in Poland. So it's where a pretty big chunk of the available talent in Central Europe is located.

    Dorota

    Okay. And in Poland, we also have some talent hubs located in various cities, I believe. How are they distributed?

    Anton

    So, the largest one is obviously the capital of Poland, Warsaw. They have roughly 70,000 developers and then we have the Krakow and Wroclaw. They're also very large. And then there's Gdansk, which is sometimes referred to here in Poland as the Tricity area. Gdansk is in the northern part of Poland is the fourth largest tech hub in Poland. And the specifics of the Poland are that, although, yes, Warsaw is the largest market, there are a lot of other cities that are also strong. So you could compare it more easily to Germany than to France, because in France most things are located are in Paris, whereas in Germany industries are more evenly distributed. Poland's more like Germany, with a range of local hubs that are strong.

    Dorota

    Yeah, and I believe that these talent hubs do not consist only of developers.

    Anton

    Exactly.

    Dorota

    Which other occupations can you name among those types of specialists?

    Anton

    Yeah. Tech isn't just about developers. In Gdansk we do have around 25 thousand of them, as of around 2018-19.

    Dorota

    Yes, let's look at the second slide.

    Anton

    At least they can see the actual numbers. However, there's a lot of talent around supporting with the developers because you need to have project managers, you need to have architects, you need to have designers, scrum masters, testers, and so on. There's also an encompassing area of expertise that exists to support this talent. So yeah, if we talk about digital jobs, I would say it's it's much larger than the raw number of developers.

    Dorota

    Okay, so digital jobs and digital occupations. I myself have this history of working in engineering companies for many years. There are some people actually watching us here today from my previous business. So as I said, one part of the digital jobs we can support from Gdansk is the IT industry. Another part is the engineering sector, construction, the offshore market, and the energy market. And this market is very close to my heart. Can we name some sectors where Scandinavian businesses are looking for support from Poland?

    Anton

    Yes, absolutely. As you mentioned, there's the maritime market in which we have some large companies like DGL who have their R and D center here... Holstein, the big ship building company. So yeah, I would say shipbuilding is one of the verticals. Another vertical is airlines and the airline business because Boeing have their R and D center here with Hausa systems and smaller companies. We don't build planes here, but in terms of navigation, because it also comes from the maritime industry, that talent is available because there was a lot of talent in terms of navigation and navigation at sea is a little bit similar to navigation in the air. So, so this is one area. The other one is actually the business services industry, which includes accounting, customer service, IT support. So this is actually a vast market. It rivals the size of IT, I would say in terms of talent pool, around 25,000 people.

    Dorota

    Yeah. But let's take a small step back. Let's explain what the Tricity actually is. It's a name used to describe three connected cities on the Baltic coast; Gdansk, Sopot, and Gdynia. If you are traveling to one of those cities most of the time the first city you encounter will be Gdansk because we have an airport. If you want to go to have some fun, then you will most likely go to Sopot, which is a famous resort town. I'd definitely recommend it.

    Anton

    Yeah. And Gdynia is smaller but it's also more modern with some nice restaurants. They also have some nice port stuff there. So yeah, these three cities with time have connected together. So when you drive through the city, you might not notice any difference. They have a single transport system, they have a single labor market. But Gdansk, is actually a much larger city compared to the others. Just to give you some numbers, Gdansk itself, has around 450,000 people. For context, the Detroit city area has 750,000, which is similar to Oslo. So it's a little bit like 13% larger than Oslo. So it's it's a big difference. That's why we...

    Dorota

    And Oslo is the capital!

    Anton

    Yes, and the Tricity is far from being the capital in terms of distance and the number of people!

    Dorota

    Some people from Poland would say that Gdansk should be the capital of Poland, because it's so vibrant. It's so lively. So many businesses are here and so much going on around culture. Of course, that's not to downplay Warsaw, which is our capital, where I was born. Okay. Now, Anton has prepared some slides for you that you can see on your screens, including the beautiful airport in Gdansk, which is also growing now, which is quite an interesting story.

    Anton

    Yes! Before COVID, it was the third largest airport in Poland, with 4 million passengers every year. It had at least five connections to Scandinavia, to Sweden, Norway, and Denmark. For instance, to Oslo. From Gdansk Lech Walesa Airport it will take you just one and a half hours. A flight to Copenhagen is 45 minutes. So it's basically, you could call it a commute rather than travel because it's so close and sometimes planes would fly twice a day. So in the morning, you could fly in to do some business and then come back at the end of the day.

    Dorota

    Yeah, it's very convenient. Also the distance from airport to the city center is a plus because it's very close to the city.

    Anton

    Then there are some offices actually across from the airport. So if you want to minimze travel time, you can have your office just across from the airport!

    Dorota

    Yeah. One of the offices, as you said, across from the airport, is BCB. That's the place where I've worked from for many years at our office engineering office. And also BCB is a member of Polish Norwegian chamber of commerce. The airport and the city is growing before our very eyes. And although COVID may have slowed this a little bit, the building itself,is still in progress and was not stopped. So once you fly down to Gdansk, first of all, you can see that the airport buildings themselves are growing, plus the infrastructure around the airport as well.

    Anton

    Yes.

    Dorota

    So there will be extra new offices and there will also be new build hotels, fitness areas, and everything is there. So once you fly down to Gdansk you will find everything you need. So that's very convenient. Of course, business meeting placesare located here as well. So it will be the perfect spot to be or to stay. Also, Gdansk itself is a very beautiful city. Historically I think that's a part of the reasons why people coming here don't want to leave. And, this small distance by plane between Scandinavia and Poland as well as the small mental distance, I think, between the Scandinavian people and Polish people. But I'm always careful saying that because psychologically people from Gdansk are probably closer to people from Scandinavia when compared to Polish people in general, which might be down to the location and historical ties, as well as the cosmopolitan history of the city.

    Anton

    And this reflects the IT market here, actually, because there's a specific pool of people, developers, who want to work for Scandinavian companies. Why? Because they find this flat corporate structure where they can talk to the CEO without having to traverse a distance five kilometers of reporting line managers and executives in between! So it's very hands-on. Very. And everything's built on trust. So there's actually a specific pool of people looking to work for a Scandinavian company rather than others. So theyget this free benefit, I would say. Yeah.

    Dorota

    Yeah. So that's definitely an advantage of Gdansk as we are very close to Scandinavia and psychologically close as well. And I would say getting closer all the time as we are learning from Scandinavian people, we enjoy their attitude, and their way of living with a great work-life balance. And in IT, although people in that sector are sometimes considered a little bit stiff, Gdansk, they actually have some in-person events.

    Anton

    Yeah. For example, before COVID they would organize a Scandinavian IT night, which was like an annual event with around like 500 to 600 people where these companies would present how they work. They actually brought some well-known speakers from Scandinavia to talk. So there's a small community and these managers are close. They know each other. And actually, I remember one case when we were discussing with one of the Norwegian companies that was considering locating its office [in Gdansk]. And when we had a discussion, I mentioned there's another company, I think called 'Banksoft'. And the CEO said, 'Oh, are they here?' 'Yes.' 'Oh, let me check. He called his friends from Banksoft and said, are you relocating?' 'Yes.' 'Okay.' And then he stopped the meeting and said, 'Okay. I made my decision. They are here, they are doing something.' 'Right.' So this is on the spot half of the presentation wasted, but at least we got to have some lunch! So yeah, this is the level of trust that they built. Not only in terms of the business, but also community building, they're very engaged.

    Dorota

    Banksoft is actually located or has their offices close to the airport. So they're one of the smart ones with that location [for access]!

    Anton

    Yeah!

    Dorota

    That's good. Why do we have so many businesses with jobs or vacancies connected to IT here in the Tricity? Why are we the hub?

    Anton

    So, apart from it being beautiful here and close to the sea, there are two main important things. These are demand and supply. So there's always demand when there is supply where there's supply there's demand. So let's start with supply. Supply, meaning the town, because mainly companies come here for talent. So having around 25,000 people [developers], it's a, it's a big market. Why do we have so many? We have a pretty large university who are, let's say every year contributing with new graduates that are entering the market. We also, because of the popularity of the area, a lot of neighboring areas in Poland, provinces, from which people from those areas are migrating to Gdansk / Tricity. And the universities in those neighboring provinces are also contributing their talent.

    Dorota

    It's potentially bad for them, but it's good for the Gdansk labor market. So we have the supply. We also have demand because of the companies that have already entered the market. And at the beginning it was hard, because they were hiring a lot people which drove up salaries, which drew in more people who started applying. So, generally, it's the whole [IT] industry that is very popular in Poland itself. The other thing that is a contributor here is the number of coding schools. While universities take some time to deliver the graduates - three to five years - coding schools are a shortcut, where people go there purely to learn how to code. And actually in Gdansk we have one of the largest coding schools in Poland, which is the Infoshare Academy, and one other major one.

    Anton

    So two?

    Dorota

    Yes, and they have their schools around the whole of Poland. Even outside of Poland, but they started here. And it started because there was local government support. The specific agency of the government, they call it Invest Pomerania, is focused on developing the area and helping investors. So that any investor who would like to invest here directly, meaning to set up an office here, for example, or indirectly by looking for a partner or company from the Tricity area to work with can do so as easily as possible. These companies need a proper environment. And the job of these guys is to build trust and confidence. At the beginning, when it all started it was very small and only a few where companies were entering the area. But then larger and larger companies kept arriving. And we even have some global IT tech monsters here, like Intel. Again, they're located close to the airport with around 3000 engineers.

    Anton

    Gdansk is a big location for Intel, isn't it?

    Anton

    It's their largest R and D site outside the US. And Gdansk also hosts offices for Amazon, which is obviously such a big deal now, especially after COVID. It's not a fulfillment center, which is mostly what they're known for, but their tech focused on Alexa, which is their text to speech technology. Actually there's a funny story behind that. Amazon came to the Tricity because there was a local startup called Bona here. So originally, Alexa was called Bona. It was renamed to Alexa to make more modern. And besides Alexa, there are also Amazon engineers here focused on AWS, which is this underlying infrastructure for a huge number of businesses across the world. So yes, with the math of supply and demand, Gdansk is favorable to these foreign companies relative to Scandinavia itself because in Scandinavia, however much you are willing to pay, but there's a limit to the number of people with these skills. The costs are lower and the talent is more widely available.

    Dorota

    Yeah, the numbers definitely add up.

    Anton

    Yes, and the infrastructure is there, too. We already mentioned the airport, but it's not only airport. There's a large amount of office space and this office space is actually relatively cheap. In Oslo you would spend perhaps five to 600 Norwegian krone for the one square meter of office space. I mean, in Gdansk you would spend 115. So it's three times more affordable. Plus in Gdansk you can get top of the line office space for that. In Oslo, it might be different. And actually, with respect to the people working in those offices, salaries are around 30% lower. Because of the location, not the quality of the work. So the operating costs here may not be cheaper than India, but there is no plan to be cheaper than India. But there's a balance of affordability with quality and much better transparency as well as access for investors and businesses.

    Dorota

    Although office space nowadays, at least during COVID, may not be the priority? Working remotely seems to be the trend, right?

    Anton

    Yes, arguably the IT market benefits from remote work the most. So while office space as a business may be fading a little bit, I would say that's not necessarily a long term trend. It's a choice businesses can make, and I think after COVID it's possible that there will be a strong appetite for in-person interaction, including in the world of work.

    Dorota

    On your screens, you can see the name of some major investors in Gdansk. Some of them Anton has already mentioned. The list includes the biggest international global investors, like Intel or Amazon. Some of them are based in Norway, Sweden, Finland, and Denmark. Sometime ago Microsoft also invested in a school in the Tricity actually. We were talking earlier about Gdynia, and one of the strengths of that part of the Tricity area is the Microsoft flagship high school. That's unique in Poland.

    Anton

    They have been there for many years. In terms of the number companies, Norway is like the largest Scandinavian investor in the area, I would say. Also, I think in terms of the number of people and in terms of individual investors. This is the data that we have, although we don't currently have data on-hand about indirect investments. However, I'm absolutely sure there's a very large number of Polish companies or companies of Polish that work with Scandinavian partners.

    Dorota

    Okay guys, I see a chat is very lively with discussion so we can leave it with that. We've definitely talked through the most important points. For example, why is it worth it to locate your company in Gdansk or in the Tricity area? We talked about offices, airports, and skilled people in this area, which is a really fun place which also includes a number of quality universities. A strong educational infrastructure. We talked about cultural similarities. I think that's everything. Did we miss anything?

    Anton

    I have an ace here, hidden! So it's not specifically business, but it's very closely aligned with business, which is the Tricity's leisure and golf courses. Because people like golf and we have around like three golf clubs. So yes, after a successful meeting, you can go play golf! So this area is well prepared not only for business, but also to handle the post-business activities. There's also the largest amount of Scandinavian speaking talent here.

    Dorota

    Thanks to everyone! We are both on LinkedIn, so you can find us there - Anton Koval and Dorota Morka.

    2021-03-2120 mins

    Anton Koval

    Anton leads customer development at Develocraft, providing strategic guidance internally and externally. While other members of the DC team can be found playing table football, you're more likely to find him in a corner reading detailed analysis about the economic environment and how tech startups can make the most if it. He's fun like that.


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