Inside Poland’s Quietly Booming Tech Sector
Silicon Valley comes to Poland
Last year, Google invested 2.7 billion PLN (upwards of 600 million euros) in Polish tech. The company now owns the Warsaw tech hub, a space they had previously rented, using it as a center for developing Google Cloud technologies. Google has also expanded its Warsaw offices to include space for up to 2,500 employees, with the possibility of further development in the future. As of right now, it is the largest center for the development of Cloud technology in Europe.
As of 2022, Google employed over 1,000 Poles, over 600 of whom are programming engineers.
Aside from supporting Poland’s tech sector, senior officials at Google had a geopolitical message. “Our activities in Poland go beyond supporting the development of the digital economy. We will use our resources and spaces to support those who have been impacted by the ongoing war in Ukraine ,” said Ruth Porat, the Senior Vice President and Financial Director of Google and Alphabet. Earlier that year, the company announced financial support to NGOs working for refugees from Ukraine coming to Poland.
This solution is very cost-competitive.
The company claims that over 270,000 Poles have taken part in initiatives developing their digital skills, and that, in the last two years, Google has trained over 24,000 cloud computing specialists, according to CRN .
On June 16, tech giant Intel announced their own investments in the Polish tech sector. The U.S. company plans to build a Semiconductor Integration and Testing Plant near Wrocław, according to Gazeta Wyborcza . “This investment will create the first of its kind, comprehensive and modern value chain in Europe in the field of semiconductor production,” Prime Minister Mateusz Morawiecki said after the deal was announced.
The plant, which is projected to open in 2027, has received $4.6 billion of investment from Intel. Aside from temporary construction and related supplier jobs, the center will employ 2,000 individuals in total.
For Intel, this isn’t the beginning of a relationship with Poland, but a continuation. Intel has held various operations in Poland for over 30 years and currently employs a total of 4,000 Poles.
“Poland has already been the place for Intel’s operations,” said Intel CEO Pat Gelsinger. “The geographical location of the country will allow for effective cooperation with the company's production plants in Germany and Ireland.”
Gelsinger also cited lower costs in comparison to other countries, saying, “This solution is very cost-competitive compared to other manufacturing locations globally while offering great potential for a talent base that we will be helping to develop.”
Investing in green energy
Recent investments by Intel and Google have sparked a new wave of interest in the Polish tech sector. In 2020, Microsoft launched a landmark $1 billion IT investment in Poland, the largest ever at that point in time.
Intel’s arrival in Poland, as well as the growth of the tech sector in the country as a whole, have not been without their own added costs. According to unofficial estimates by Bloomberg, Germany was set to pay 11 billion euros in subsidies to Intel in exchange for the production plant. Whether Poland paid for the plant, and how much it may have promised Intel in subsidies for its investment, are unknown. Polish Prime Minister Morawiecki declined to answer Gazeta Wyborcza’s request for comment.
And, despite keeping their eyes on Poland, large firms have made it clear that their investment in the country is not unconditional. In February, a list of multinational companies — including tech giants Amazon and Google, but also Mercedes-Benz and Ikea —signed a letter addressed to the Polish Prime Minister and the Polish Parliament , urging Poland to invest in green energy in order to continue attracting their investments.
The verdict is a positive light at the end of the tunnel.
Poland is currently the most coal-dependent country in the EU , with 71% of its energy being coal-generated as of 2021.
Polish tech taxation
Polish law has also sprung to the defense of the country’s burgeoning sector of tech entrepreneurs , who may end up paying less in taxes than they did before. After the Polish Treasury tried to implement higher taxes for workers in the sector, the Administrative Court of the Gdansk Voivodeship struck them down.
Workers in Poland’s tech industry are now taxed between 8.5 and 12%, but the recent judgment has increased IT technicians' chances of being taxed at a lower rate.
The judgment, which applies differential rates depending on whether technicians on undefined concepts of "software" or activities "related to software”, remain unclear. But workers in the sector are optimistic that the lower tax rates will soon apply to them.
“The verdict is a positive light at the end of the tunnel,” Piotr Sekulski, a tax advisor at the law firm Outsourced.pl, told Gazeta Wyborcza .
More modern than the West
In recent years, growth has been so significant that Poland has been experiencing what some have referred to as “reverse brain drain.” The presence of tech and software companies such as Google, Microsoft, and Nvidia, as well as the lower costs of living compared to countries like the US or UK, have prompted members of the Polish diaspora to return home.
This, combined with Poland’s own recent achievements in the IT and AI fields, has created a vocal group of Poles advocating for its tech industry over others.
"Poland is sitting on a gold mine of tech talent, ranking four overall in STEM graduates and number one in female STEM graduates," Polish-American venture capitalist Dominik Andrzejczuk told Euronews . "It’s this high concentration of tech talent that sets Poland up to be a real contender in the next 5-10 years.”
Other industries, even those completely unrelated to technology and IT, are taking note of Poland’s success in the area.
“In many ways that are very important to us, Poland is more modern than the West,” Valery Gaucherand, chief of L’Oréal’s division for Poland and the Baltic states, told Gazeta Wyborcza . "Digitization is Poland's great strength and it will be the source of its growth."
