Information & CommunicationsTechnology Sectorin SLOVAKIA

ENGLISH EDITIONAUGUST 2019

SARIOSLOVAK INVESTMENT ANDTRADE DEVELOPMENT AGENCY

GOODIDEASLOVAKIA

Paris

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Athens

Zagreb

Ljubljana

Budapest

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Moscow

Copenhagen

Bern

Brussels

OsloStockholm

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Tallinn

Riga

VilniusKaliningradMinsk

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SarajevoBelgrade

Podgorica

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Luxembourg

Edinburgh

300 million clients in a radius

of 1,000 km

600 million clients in a radius

of 2,000 km

Information & Communications Technology (ICT) Sector in Slovakia

The purpose of this publication is to introduce Slovakia's dynamically expanding ICT sector — activities especially related to telecommunication, computer programming or internet services& present why Slovakia is an outstandingdestination for setting up ICT businesses and outsourcing.

total area 49,035 km2

population 5.4 millioncapital city Bratislavamember of European Union,Euro-zone, Schengen, OECD,WTO, NATOtime zone GMT +1 hour

1 www.sario.sk

ICT in Slovakiaat a Glance

Adaptable, educated and cost-effective workforce

Well-developed ICT institutional network

The highest labour productivityin the region

Strategic geographical location from the perspective of time zonation

Political & economic stability

High quality data & network coverage

Special tax regime for intellectual property revenues (patent box)

Additional tax deduction for R&D expenses up to 150% from 2019 (announced by

government)

Euro currency as one of the few in CEE

Attractive investment incentives for the ICT sector

1

3

2

5

6

4

8

9

7

10

Top Reasons to Establish an ICT Company in Slovakia

The ICT sector plays an important role in the Slovak economy and has significant potentialfor the growth. Due to a favorable combination of business advantages Slovakia has become an attractive destination for ICT investors.

ICT's contribution to Slovakia's GDPSignificant footprint in the Slovakeconomy

ICT share on the total employmentThe sector creates more than 67,000 job opportunities

Growing employment in the ICT sectorThe total number of employees in thesector grew by 53% between 2008and 2017

Value added per employeeThe value added per employee of top 100 IT companies ranked by revenue reaches over 70 ths. eur

ICT AdoptionBased on the Global CompetitivenessReport, Slovakia is the best in ICTadoption among Visegrad group countries(Poland, Czechia, Hungary, Slovakia)

4.03%

2.63%

53%

70 THS.EUR

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The Slovak labour force is perceived by foreign investors as educated, motivated, adaptable to culturally different management styles with great multilingual competences and very positive attitude to work habits.

The Most Common Foreign Languages Taught at Slovak Secondary Schools% of all students learning foreign languages

Source: Slovak Centre of Scientific & Technical Information, 2018, Eurostat, 2017

Source: Digital Economy and Society Index Report, 2018, Eurostat, 2018

93%

English

42%

German

13%

Russian

4%

French

QualifiedLabour Force

LANGUAGE COMPETENCES88% of Slovaks speak at least one other language besides their mother tongue.

Multilingualism is rising also among young generation. Students learn at least one foreign language already at primary school and continue these studies at higher levels.

ICT COMPETENCES OF SLOVAK LABOUR FORCEICT technologies became an integrated part of the daily life in Slovakia.

Their role continues to grow which is reflected by steadily raising adaptability of the Slovak population to ICT technologies.

4GCoverage

Individuals Using Internet

Households with Access to the Internet

% of populationactively using internet is

continuously increasing (+4% in comparison with the

previous year)

More than2/3 of all households

in Slovakia are connected to the internet

4G coverage of households increased to 82% (+11% in comparison with 2017),

furthemore 5G coverageis in preparation

82% 89% 81%

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DUAL EDUCATION*As a pioneer in this field, since the

academic year 2013/2014 T–Systems has implemented ICT dual education initiative

where students receive 70% of practical education.

INDIVIDUAL PROGRAMST–Systems Slovakia, in cooperation

with the Faculty of Business Economicsof the University of Economics in Bratislava,

launched the Honoris PM Program withthe focus on project management.

SKILLS FOR SUCCESS —FROM UNIVERSITY TO WORKPLACE

At the Faculty of Economics of theTechnical University in Košice, experts

from T-Systems are involved in teachingthe subject of SAP, used by most

of the centres.

students enrolled in ICT study fields

graduates of ICT study fields per year

10,387 2,855

7 ICT Faculties at 6 Slovak Universities Success Stories of T–Systems In Košice

ICT Related Education in Slovakia

Almost half of secondary school graduateskeep on studying at universities, thus creatingqualified and skilled labour force. Programs includingICT studies are becoming more and more popular& sought after by young generation.

Besides solely ICT programs there are new study trends focused on game

production, digital application design and painting, animation, sound production

and concept art of video and digital games provided by wide range of private and

public educational institutions producing more than 500 graduates yearly.

ACCADEMIC PARTNERSHIPS

*Note: Education and trainingadapted to the employer's requirements

at secondary grammar schools.Source: Slovak Centre of Scientific &

Technical Information, 2018,SARIO, T-Systems

Universities & Academies with Specific Study Fields Related to

Game Industry

10

Inside the SlovakICT Market

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23.9%

IT Service Market in Slovakia

ApplicationSupport

23.9% Other

Tailor-made Software Development

Outsourcing

17.9%

16%

New Application

Projects9%

IT Security

1.1%

Source: Trend, 2019

The majority of IT services in Slovakia arecomposed by application support and othertailor–made services (such as helpdesk, network administration, cloud storage, remote support, etc.) followed by tailor-made software developmentand outsourcing.

8.2%Hardware

Services

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Competitive Salaries in Slovak ICT Sector

Source: Grafton Recruitment Slovakia, 2019

POSITIONAREA

Tech

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tSW

Dev

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tIT

Con

sult

ing

Oth

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Technical Support Team Leader

1,5001,5001,900

MINMINMIN

1,9001,9002,700

MAXMAXMAX

1,4001,4001,600 1,9001,9002,200

2,1002,2002,500 2,9003,0003,200

2,5002,5002,800 3,5003,5004,000

2,0002,0002,200 2,7002,8003,500

1,4001,5001,700 1,9002,0002,200

8008001,200 1,0001,0001,500

1,7001,8002,000 2,8002,8003,500

1,3001,4001,600 2,3002,4003,000

2,1002,2002,500 2,7002,8003,500

1,200

1,200

1,400

1,200

1,500

1,600

2,400

1,800

2,500

1,900

3,000

2,500

Technical Support Level 1

SW Technical Lead

ERP Developer

Network Engineer (3—5 years experience)

Linux SystemAdiministrator

Window Administrator

SW Engineer (C++, .Net, Java, Javascript), 1—3 years experienceSW Engineer (C++, .Net, Java, Javascript),3 and more years experience

Business Analyst (more than 3 years of experience)

BI Consultant

ERP Consultant

AVERAGE GROSS MONTHLY SALARY IN EUR (SELECTED POSITIONS)

OTHER REGIONSKOŠICEBRATISLAVA

Although salaries in the ICT sector are above the Slovak average, in comparison with the Western EU countries remain significantly lower and still competitive in the CEE region.

Differencesin salaries occur

also on the regional levelin Slovakia allowing

the investors to explore regions outside the

main hubs.

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ICT Companies in Slovakia

The ICT Sector has a solid position in the Slovakeconomy, what is demonstrated by the presence of foreign–owned companies as well as strongly growing domestic companies.

TOP ICT EMPLOYERS — IT & Telecommunication Service (TS) Providers in Slovakia

COMPANY NAMECOUNTRY

ORIGINHQ EMPLOYEESFIELD

Germany Košice 3,853

Germany Bratislava 3,526

United States Bratislava 1,996

France Bratislava 1,161

Ireland Bratislava 1,055

Slovakia Bratislava 797

United States

Germany

Czechia

Austria

Israel

Slovakia

United States

Slovakia

France

Germany

Slovakia

Slovakia

Germany

Slovakia

Bratislava

Bratislava

Bratislava

Nitra

Košice

Bratislava

Košice

Bratislava

Bratislava

Bratislava

Bratislava

Bratislava

Bratislava

Bratislava

768

713

679

120

503

447

387

297

269

264

237

237

203

372

Slovak Telekom

T–Systems Slovakia

DXC Technology Slovakia

Accenture

IBM Slovensko

Orange Slovensko

Eset

Siemens

O2 Slovakia

Uniqa Group Service Center Slovakia

Ness KE

Asseco CentralEurope

GlobalLogic

Soitron

Tempest

Atos

PosAm

Slovanet

Datalan

SAP Slovensko

Source: Register of Financial Statements (2018—2019), Trend, 2019, SARIO

IT

TS

IT

TS

IT

IT

IT

IT

TS

IT

IT

IT

IT

IT

IT

IT

TS

IT

IT

IT

Diversification of Telecommunication

Segment

Traditional activities oftelecommunication operators aregradually expanding beyond mere

provision of telecommunication services. Building a diversified portfolio enriched by internet sales or IT services, data centers

or sofware houses, is becoming an integrated part of their

business.

Increaseof profitability

in telecommunicationsector in 2018

13.3%

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Notable Slovak Patents

Did you know that a Slovak companies stands behind numerous globally well-known products? Here are some examples of successful Slovak brands.

Source: SARIO

ESETProtects users in

180 countriesOne of the global leaders in security

software development including awardwinning NOD32® Antivirus

NG AVIATIONOne of a kind software

for safe & smooth aviationNG Aviation is an unique platform for

digitization of aeronautical data making Aviation digital for Airports, Air Navigation

Service Provider and Airlines

RESCOOne of the global leaders in developing

cross-platform mobile software solutionsResco Cloud solution is the ultimate

tool for offline access to data, interactivemaps for businesses & more

PHOTONEOA leading provider of

robotic vision & intelligenceDevelopment of the world's

highest resolution and highestaccuracy 3D camera

solutions

SOITRONSoitron developed

a system for intelligent police carsDeveloper of IT solutions from

integrated communication systems to mobile police units

INNOVATRICSWide range of application — from attendance system to

presidential electionsBiometric Software for identity

management based on fingerprint & face recognition technology

SYGICDeveloper of GPS

navigation software formobile devices and solutions

for businesses. The mostdownloaded offline

navigation in theworld.

Source: SARIO, Deloitte (2018)

9 www.sario.sk

Slovak Fastest Growing IT Companiesof 2018

Ranking positions in top 50 fastestgrowing companies in Central Europe based on the Deloitte Technology Fast 50 Central Europe 2018 programme.

SLI.DOFounded: 2013

An audience-interaction platformfor meetings and events allowing to crowd-source

top questions and engage participants with live polls,currently is used on average at 600

events in U.S. per week.

ITRINITYFounded: 2009

One of the world’s most popularkeyword–analysis tools providing bot

crawlers protection, reliable & affordable email verification and number one SEOtool package with more than 400,000

users worldwide.

ZELENÁ POŠTAFounded: 2012

A Slovak start-up andcurrently the only provider

of 'hybrid' postal transformationservices saving the customer

both cost and time.

INSTAREAFounded: 2008

Specialises in monetising data — processingbig data for mobile providers and banks thanks

to analyzes of people's behavior in the physical world,the main aim is integration of AI into the

automated operations.

PIXEL FEDERATIONFounded: 2007

Developer of browser–basedand mobile games, which are played

by 80 milion users all over theworld on the most popular

social media.

10 www.sario.sk

ITAS

Košice IT Valley

ZAICT

Source: ITAS, Košice IT Valley, ZAICT

ICT SupportingPlatforms

KOŠICE IT VALLEY• Headquartered in Košice• Established in 2007• Slovak association of 55 members and

sympathizers, including the private, public and academic sector

• Cluster Management Excellence Gold Label — in 2015 certificated as the 1st in Central Europe

Activities of Košice IT Valley are carried out in Eastern Slovakia:• Over the years focus on education stays

as one of the priorities, but scope of the cluster itself has gone beyond

• Innovations, research & development, support of collaboration within the cluster and support of investments become an integral part of the cluster

ITAS• Headquartered in Bratislava• Established in 1999• Slovak association of 100+ ICT

companies representing about 80% of the Slovak IT market

• Members employ more than 30,000 people

ITAS runs several projects including:• Digital transformation of private sector

interlinking the ICT sector with other Slovak industries

• Digital transformation of public sector via active cooperation on Digital Coalition project

• Support of educational iniciatives at all levels — from academic programs to requalification

• IT Testing — verification of IT skills among population in Slovakia among population in Slovakia

Bratislava

Trnava

Trenčín

Nitra

BanskáBystrica

Prešov

Košice

Žilina

ZAICT • Headquartered in Žilina• Established in 2008• Slovak association of 14 members,

including the private, public and academic sector

• In 2014 certificated as European Cluster Excellence Initiative Bronze Label

ZAICT activities that are mainly in the Žilina region at:• Interconnection of private sector and

R&D institutions• Supporting lectures of ICT companies

at secondary schools• Offering educational programs and

organizing school camps for raising IT skills

Clusters &

Associations

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Emerging Slovak GameIndustry

The game industry in Slovakia has been gainingpace by uniting a wide range of game developmentstudios. This rapidly growing market with nearlydoubled revenues in the past two years is a result ofthe world's top industry professionals presence and together with relevant educational programs areshaping new generations of game developers.

YEARLY REVENUE (IN MILLION OF EUR)

NUMBER OF PROFESSIONALS

Source: Slovak Game Developers Association, 2019, SkillValue, 2018

Slovakia as a countrywith the best developers in the

world based on the World Rankingof Countries by IT Skills

Number of gamedevelopment companies

& studios in Slovakia

2016 2017

20172016

2018

2018

2019(forecast)

2019(forecast)

Games released since 2001, 108 games in development

Number of employeesplanned to be hired in 2019

1ST

38

444

476436 580 682 158

Distribution ofGame Studios in

Slovakia

47%

21%32%

WEST

MIDDLE

EAST

24.1 36.142.7

56.6

Source: FinStat, Slovak Game Developers Association, 2019

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Top Game Studios in Slovakia — Based on Turnover

Game Development Platformin Slovakia

Game Events in Slovakia

STUDIO EMPLOYEES HQ TURNOVERYEAR OF

ESTABLISHMENT

206

50

45

<20

<20

30

<20

<20

<20

<20

2007

2007

2014

2016

2016

2001

2004

2010

2005

2010

Bratislava

Bratislava

Bratislava

Bratislava

Bratislava

Košice

Košice

Michalovce

Košice

Košice

28,131,334

2,320,058

1,750,123

1,223,043

1,073,318

871,228

315,901

241,789

220,210

186,518

Pixel Federation

PowerPlay Studio

Bohemia Interactive

Blue Brain Games

Cellense

Games Farm

Matsuko

Cypronia

3Division Entertainment

Eastworks

As a civic association supports digital game development as wellas game developers and start–ups in Slovakia. The association helps new talents to improve their artistic, technological and business skills, and promotes education of professionals and general publicin the field of digital games.

ART & TECH DAYSKOŠICE (ANNUALLY)An international platform explaining the impact ofDigitalization, AI and Industry 4.0 on our communicationand work through workshops, networking activities, exhibitions and interactive installations.

BRATISLAVA GAME JAMBRATISLAVA (ANNUALLY)A contest for individuals and teams of programmers, scriptwriters, graphics, philosophers and illustrators whose main aimis to make a video game prototype in just 40 hours and to experiment with bold game design.

GAME DAYSTRNAVA (ANNUALLY)The only international videogame festival in Slovakiaproviding opportunities for leading figures of the sector topresent their experience with progressive video game creation.The event combines digital games with artistic qualities.

SLOVAK GAME DEVELOPERS ASSOCIATIONBRATISLAVA, KOŠICE (MONTHLY)Community meetings of digital game developers topresent their work, to exchange know-how and to encourage networking among them, creating a compact and collaborative meetup platform.

BRATISLAVAGAME JAM

2018

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The primary role of the investment incentives is to motivate investors to placetheir new projects in regions with higher unemployment and to attract projects with higher added value. The positive impact of a new investment shall be proved by job creation, improved chances for the graduates to get a job, as well as by creation of new entrepreneurial opportunities for local companies.

Investment Incentives

ELIGIBLE PROJECTSThe Act on Investment Aid divides the projects which may be supported into four categories:• Industry• Technology Centers• Combined Projects of Industrial

Production and Technology Center• Shared Services Centers

ELIGIBLE COSTS• Costs of land acquisition• Costs of buildings acquisition & construction• Costs of new technological equipment

and machinery acquisition• Intangible long-term assets —

licences, patents, etc.• Rent of new land/buildingOR• Wage costs of new employees for the

period of 2 years

FORMS OF INVESTMENT INCENTIVES• Tax relief• Cash grant • Contributions for the newly created jobs• Rent/Sale of real estate for a discounted

price

TECHNOLOGY CENTERS• Minimum investment of 200 ths. EUR

on fixed assets in all regions• Minimum of 20 newly created jobs• Minimum 1,7 fold of average salary in

the district paid to new employees

SHARED SERVICES CENTERS• Minimum of 50 newly created jobs• Min 1,5 fold of average salary in the

district paid to new employees

SUPERDEDUCTION — SPECIAL R&D TAX REGIMECompanies with the R&D activitiescan benefit from the special tax regime. By the calculation of the income tax, the additional 100% of the R&D expenses can be deducted from the tax base. As a result, for every 100 EUR spent on the R&D activities, company can save 21 EUR (respecting the current income tax rate 21%). Moreover, the 'super–deduction' rate should be increased to 200% by 2021.

SUPERDEDUCTION RATE GROWTH

MAXIMUM REGIONAL INTENSITIES OF INVESTMENT AID IN SLOVAKIA

for SMEs additional 10 to 20 %

EXAMPLES OF DEDUCTIBLE COSTS• Wages and related contributions• Material and inventory• Power and utility supplies• Tax depreciation of long–term assets• Certification expenses• Specialised software licence, etc.

25%

35%

35%

Bratislava region excluded

*Conditions differ for projects from 'Priority areas'. Please contact us at invest@sario.sk for more information.

2015 2018 2019 2020

25% 100% 150% 200%

14 www.sario.sk

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number of SARIOinvestment projects from

2002 — 2016

number of SARIO investment projects in

ICT sector 2002 — 2018

500+

25

• Support activities for development and popularization of Slovak innovations and R&D environment

• Establishment of relations with domestic and foreign well–established innovative companies

• Interconnection of Slovak R&D capacities with industrial production and investors' needs in order to transfer leading innovative technology processes closer

to production praxis• Encouragement for foreign investors

to bring investments with substantial R&D components to the SR

• Ecosystem analysis of local investment opportunities as well as domestic and foreign investors in order to support acquisitions and joint ventures projects

• Specific information from the field, in order to obtain capital and foreign markets penetration

Slovak Investment and Trade Development Agency (SARIO) is a governmental investment and trade promotion agency of the Slovak Republic. The agency was established in 2001 and it operates under the Ministry of Economy of the SR.

CEE & TURKEY REGIONBest Investment Promotion

Agency in 2016

1

PUBLISHERSlovak Investment and Trade Development AgencyTrnavská cesta 100821 01 BratislavaT: +421 2 58 260 100F: +421 2 58 260 109marketing@sario.skwww.sario.sk

GRAPHIC DESIGNSlovak Investment and Trade Development AgencyTrnavská cesta 100821 01 BratislavaT: +421 2 58 260 100F: +421 2 58 260 109marketing@sario.skwww.sario.sk

AUTHORSlovak Investment and Trade Development AgencyTrnavská cesta 100821 01 BratislavaT: +421 2 58 260 100F: +421 2 58 260 109marketing@sario.skwww.sario.sk

SARIO I Slovak Investment and Trade Development AgencyTrnavská cesta 100 I 821 01 Bratislava I Slovakia

Copyright © 2019 SARIOThe information in this publication needs to be in every case double–checked to ensure that it is up to date.

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