Mark Zuckerberg suddenly appeared in Warsaw on Wednesday on what the Facebook founder and CEO said was a spontaneous one-day holiday. But the meaning of the word "spontaneous" would need to be stretched to explain his late afternoon meeting with the Polish minister for administrative affairs and digitisation, Michal Boni.

Officially, Zuckerberg and Boni talked about the significance of the IT industry in Poland and the position of Polish programmers in the world market. According to the social media mogul, Poland is the second-most important recruiting grounds for programmers, "ahead of China although still behind India". Boni added that the growing Polish IT market was now worth approximately €7bn annually — 2.2 percent of the country's GDP.

The two are also likely to have discussed one subject likely to be on both their minds for different reasons: the EC's proposed reforms of Europe's privacy rules.

The issue of privacy did crop up in conversation between the minister and Facebook founder. Boni said that privacy remained important for Poles, and working out how to create conditions that allowed businesses to successfully combine innovation with privacy would remain an issue in the years ahead.

And, while Zuckerberg told journalists that data protection was a key issue and people should always know how their data was being used, the company has found itself on the wrong end of Europe's privacy watchdogs on several occasions.

As a result, Wednesday's meeting stirred some criticism among local industry watchers, and not just for its small-scale and hasty nature.

On the same day as Zuckerberg's visit, experts attended a conference on web security and the limits of advertising in the online age in the same city. "We are getting two separate worlds. Experts can talk all they want, while businessmen and politicians meet elsewhere," Polish technology blog Dziennik Internautow lamented.

Late last month, Microsoft trumpeted that its Windows Phone platform had outsold the iPhone in seven markets in the last quarter of last year, including Poland.  What Microsoft didn't say, however, is that Poland is the biggest Windows Phone market anywhere in the world – consumers and developers alike can't get enough of the Microsoft platform, which is second only to the Android juggernaut in smartphone market share.

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The success of Windows Phone has also had side effects on the Polish development scene, Microsoft claims. Windows Phone sales have spurred the Polish app development industry to focus on the Microsoft platform, a Polish spokesman of the Redmond giant told daily Gazeta Wyborcza in February. Of the approximately 130,000 apps in the Microsoft store, 6,000 are built by Polish developers, Microsoft says. That makes Poland the third placed country for Windows Phone development, behind the USA and India.

So what makes Poland so different to so many of the world's other mobile markets, where Windows Phone's share of the smartphone market is one-tenth that of iOS'?

First, a bit of perspective: the largest smartphone OS in Poland, as in most mature markets, is still Android. Overall, it accounted for 72 percent of smartphones sold in Poland last year, according to figures from analyst firm IDC.

However, Windows Phone has been making huge strides in the country: IDC reckons in 2012, it took 12 percent of the smartphone market, while Microsoft estimates it took 16.3 percent, compared to eight percent in the whole central and eastern European region and three percent worldwide.

The iPhone, a very strong second place in the smartphone market in most other parts of the globe, is struggling in Poland: iOS' share of the smartphone market in the country is around four percent, according to IDC's numbers, compared to 19 percent worldwide. (Although it's worth noting that iPhone is more popular in the informal market, such as auction websites, because of the lower prices that can be found there.) However, in terms of new sales, Poland is one of the few countries where Windows Phone devices outsell iPhones by a significant margin.

Mobile operators' support

According to analyst Marek Kujda of IDC, mobile operators have been pushing mobile contracts with Windows Phones partly out of fear of Samsung coming to dominate the market. "They don’t want to be too dependent on one supplier," he says. "That supplier would otherwise have the edge in future sales contract negotiations."

While Kudja believes Samsung is continuing to extend its lead, others believe the operators' balancing act is paying off for Nokia. In Poland, the smartphone battle is a now two-horse race: in 2012, 32 percent of smartphones sold were Samsungs, while 29 percent were Nokias, says broadsheet Rzeczpospolita citing data from MEC Analytics and Insight. Worldwide, Nokia has just five percent of the smartphone market to Samsung's 30 percent, by IDC's numbers.

Nokia doesn't seemed to have suffered the same wobbles in Poland as it has in other markets. In 2011, Nokia sold more smartphones (admittedly which were mostly Symbian-based) than Samsung, IDC found last year. Worldwide, it shipped 18 percent fewer smartphones than its rival.

So why is Nokia holding up better in Poland than elsewhere?

According to one Polish technology industry watcher, Przemyslaw Pajak, Nokia and Samsung both spend around the same amounts on marketing in the country. However, Nokia holds the edge when it comes to reputation: "Polish consumers consider Nokia to be a trustworthy brand, which produces resilient phones," Pajak says. "Samsung still has a reputation of lesser quality. Apple is perceived as a high-end luxury."

A question of images

So why is Nokia holding up better in Poland than elsewhere? According to Pajak, while Samsung has been active on the Polish market far longer than Nokia, that history may be in a sense a handicap for the company: Poles were introduced to Samsung during the 1980s and beginning of the 1990s, an era when product quality in Poland wasn't seen as especially good. When Poland opened up economically, Samsung was one of the companies whose consumer products came onto the market. Consumers still seem to remember those times, when Samsung was one of the budget choices they had, Pajak explains.

In the meantime, Nokia managed to create an image of Nordic durability and that image has stuck, Pajak adds. The choice for Windows Phone as the operating system for the Lumia line of smartphones has not tarnished that image at all.

And, while Apple may have been able to lay the groundwork for the iPhone through a halo effect from its Mac desktop line, Poland has remained resistant to the company's charm there too. "Compared to Western Europe, Microsoft has an even stronger position here in the PC market," Pajak says. "I think 98 percent of PC sales are Windows. Mac and Linux have not been able to establish themselves yet." Worldwide, Apple's share of the desktop market is thought to be five times that.

And iPhone's lack of Polish success? IDC's Kujda believes the reason the OS is not doing well in Poland and other poorer countries is simple economics. "The average salary in Poland is about €800 before taxes. The median salary is even lower," he says. In order to buy an iPhone, the average Pole would have to fork out an entire month's wages.

"Windows Phone sales have not been driven by the most expensive models, but by the cheaper Lumia 610, which costs about €150 without a contract," Kujda notes. The average monthly mobile tariff in Poland is about 60 to 70 zlotys  (€15 to €18) per month. "You cannot offer an iPhone for one zloty with those bundles," Kujda says.

Parts of Poland are preparing to establish themselves as technology and R&D hubs in an effort to attract more funding from Europe.

Under a European initiative to rejuvenate recession-hit parts of the continent, regions are being encouraged to "find their own industrial and technological niche in the global marketplace" by focusing on a so-called "smart specialisation". From next year, should all go according to plan, European regions that pick a smart specialisation will be able to access extra funds.

The European Parliament's commission for regional policy is currently reviewing new laws that would entice European regions to choose their smart specialisations – typically focusing on R&D and technology strands – by offering them 10 percent on top of any regional funding they get from EC grant pools including the Structural Funds.

Should the law pass parliament, it would open the door for areas of Europe in need of development to access a 10 percent bonus on top of any regional funds they're awarded  from the grants pool of around €322bn for 2014-2020, proponents of the plan say. Interestingly, that bonus will have to be invested outside the region that wins it: in practice, that could mean students get a scholarship to participate in exchanges with other regions, or that one region would buy production capacity in another.

Competition

According to Dutch European People's Party MEP Lambert van Nistelrooij, rapporteur and negotiator for the European Structural Funds and the European Investment Fund, the plan is intended to aid competition.

"Europe has to make sure that it does not miss out on converting the available knowledge into products and services, which would result in such applications going to countries like India and China," he says. "The idea behind smart specialisations is to connect the parties that can make that conversion."

The smart specialisation bonus comes as part of Europe's 2020 growth strategy. While in the past, the strategy has come under criticism for moving too slowly, individual regions see any new possibility to invest in more economically durable projects as a bonus.

Polish regions are particularly eager, according to van Nistelrooij, with many of them have already defined their specialisation for 2014 onward. Lesser Poland, and its capital Krakow, already decided to choose becoming an IT hub  as its smart specialisation last year. During the last EC budget period, 2007 to 2013, Lesser Poland was already one of the big spenders of regional funds, getting through a total of €1.5bn, of which €1.3bn came directly from Brussels.

And smart specialisations aren't likely to be confined to Less Poland. "In keeping with the objectives of the Europe 2020 strategy, we anticipate a considerable increase in expenditure on scientific research, technological development, innovation and enterprise," the country's minister of regional development, Elbieta Biekowska, said recently.

Focusing on 2014 and beyond

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While the idea of holding individual regions to certain specialisations (including R&D and IT) isn't entirely new, the proposed bonus on regional funding should entice some to focus more on their strengths. The hope is it will entice individual regions to cooperate with other regions that carry the same expertise, ranging from exchanges to collaboration in R&D.

With the additional money, IT companies will experience less of a financial barrier to opening additional R&D centres in other regions - for example, because a nearby university produces more graduates with the specialities it needs.

Last year, an IBM representative told Central European Processing that Poland is particularly strong in technical areas like network security, but could do better on the management side of things. The new program would, again in theory, mean that Poland's universities are under less pressure to have to excel in that area as well, and just focus on what they are good at already, partnering with other regions to fill in the gaps.

Poland has been particularly active in defining regional specialisations and moving to get additional funds, van Nistelrooij says. "Mentally they are already fully focused on the 2014-2020 timeframe", he says. While is still some friction between the capital region of Warsaw and the rest of the country, "most technical universities and regions have already at least given a sign of the direction they want to go in".

That eagerness stems from the fact that while Poland prides itself on the technological prowess of its universities, they remain low in European rankings. Van Nistelrooij hints this has partly to do with a lack of money.

"They want to avoid the situation from the previous period, 2007-2013, in which 90 percent of European research funds went to the older member states," he says. "So far, they have spent their money on building roads. Now the Poles show a willingness to invest in knowledge and bring it in from other parts of Europe."

The European Parliament's commission for regional policy is due to vote on the proposed funding laws on 11 June, with a full European Parliament vote schedule for the October. If the law gets a parliamentary majority – and it already has the backing of the largest group within the European Parliament, the conservative European People's Party - the program is slated to take effect from 1 January next year.

The idea behind IP Core is that a company licenses a design of a processor core to a third party. In practice, it means a technology company would put in an order at a company such as DCD, which then designs a core. The tailor-made specifications are then given to the client, who can then use it in its own technology – anything from USB drives to mobile phone SIM cards, as well as dedicated applications for medical and military use. In that sense, the business model for DCD (which has only a staff of ten) has similarities with that of UK chip designer ARM.

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Specifically, DCD specialises in producing chips according to Intel's 8051 specifications, which was first developed in 1980. Even though the 8051 model has been discontinued by Intel about five years ago, the demand for such chips is still immense, says Jacek Hanke, DCD's CEO.

"The death of 8051 has been announced for 10 to 20 years now," he says. "But still, there still appears to be a need everywhere. It is one of the most popular microcontrollers in the history of electronics." According to Hanke, this has to do with the fact the 8051 has been a staple in lectures, which means everyone with a degree in electronics has worked with them. "Most of them continue to work with it during their careers, because they are so familiar with it. There are a large number of tools available and it is quite user-friendly."

While true CPUs and GPUs tend to take all the credit, Hanke says much of the actual work within IT equipment and electronics is done by 8051 style chips. "They are basically the workhorses, where the CPU is the shiny new car," he illustrates. The engineers do need some preparation though, internal work takes up to two years during which they can act as an assistant to a main designer.

In its most recent announcement (which was timed specifically for the CeBIT trade show earlier this month), the company claims it had developed the 'fastest 8051 chip in the world'. The company says it has redesigned the 8051 principle with its DQ80251. "We only took the instruction set, to keep it compatible with the original," says Hanke. "The architecture has been redone."

The result is that it can execute 66 times more operations when working at the same clock frequencies as the original 8051, while the frequency itself can be cranked up by a factor of 30 compared to its forefather. While that might not seem so impressive given that it was a design from the 1980s, the technology for this kind of chip is not subject to Moore's Law: the speed gain is wholly due to changing the architecture, instead of just adding transistors. "During benchmark tests, any operations that would take our solution one second, the original would take over half an hour," Hanke says.

Of course, that's not to say that that's where the bottleneck is when storing large amounts of data on a USB drive. While Hanke can't quantify the time gain in actual use, he says there will be a marked improvement in performance when, for example, storing data. "Also, when using a standard controller, the software freely available and can be downloaded by a third party. With ours, this is not the case. Any solution can be hidden in the software, making reverse engineering the technology of our customers a lot harder."

Under the revised budget, passed by the EU earlier this month, spending on broadband and digital services was cut from a proposed €8.2bn to €1.2bn. Perhaps unsurprisingly, Europe's digital commissioner Neelie Kroes has voiced her disappointment about the cuts, while others have queried if the cuts will mean emerging economies' tech industries — particularly those in Central and Eastern Europe — will be left behind.

However, while the EU is taking with one hand, it may be giving with the other. Poland for example saw an increase of the money it receives from Brussels: €106bn for the budget period 2014-2020 — an increase of €4bn on the previous budget.

Part of that money is received in the form of support from the European Regional Development Fund. And it's a portion of that funding (combined with some from the Polish government itself) that is being to develop broadband in the country, especially in the poorer eastern regions.

Local roll-outs

According to a spokesman for Poland's Office of Electronic Communications (known as the UKE) the proposed cuts in the EU broadband fund will therefore not affect any broadband ambitions in Poland.

"The money that was meant for boosting broadband within the Connecting Europe Facility is rather meant for broadband connections between countries," he says. "But the broadband projects in Poland are regional and therefore funded using regional funds."

Currently, the OKE estimates there are about 150 regional projects ongoing, with a combined worth of 3bn zlotys (around €725 million), with companies like Orange, Hawe, BT Poland, Biatel Telekomunikacja and Inea winning local contracts.

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Also, in contrast to the cuts in European broadband schemes, the Polish minister for administration and Digitisation Michal Boni last month promised 10bn zlotys (around €2.5bn) to boost 30Mbps broadband in Poland until 2020.

Poland's services industry

After the EC budget was announced in February, the Polish government almost immediately signalled that it intends to spend a larger part of the funds on 'sustainable' economic development, meaning that job creation will become more important in the allocation of the funds. The Polish business services sector has been a creator of jobs in recent years, boding well for the sector.

Jacek Levernes, VP at HP Europe and the chairman of the Polish Association of Business Service Leaders (ABSL), expects the Polish business services or technology sectors to continue developing apace, despite cuts to EC broadband cash and other changes in funding. 

"The business services sector has grown with almost 50 percent since the crisis started in 2009, creating more than 40,000 new jobs since then. As long as there are issues globally, we think we will keep on growing 15 to 20 percent over the next few years."

According to ABSL estimates, the number of people working in the business services industry hit 100,000 for the first time late last year, and that number is forecast to increase by another 15,000 to 20,000 in the coming year – making the segment the fastest growing in terms of jobs within the Polish economy.

According to a report by Krakow-based labour market analysis firm Sedlak&Sedlak published earlier this month, the average wage (that is, the median) for workers getting their first job in Polish IT sector is 3300 zlotys (€790) per month. That's the highest of any industry in Poland, surpassing wages for sectors like heavy industry and banking – second and third placed industries respectively ­– with wages of around 3000 zlotys (€722).

IT has topped the list for the last four or five years, Krzysztof Plens, an analyst at Sedlak&Sedlak, said. However, there some caveats to the ranking, he added.

"The categories are quite broad," he says. "For example, in banking the wages in areas like investment banking and corporate banking are about as high as in IT. What is happening is that the wages in consumer banking is dragging the rest down."

He adds that similar differences exist within IT. "Software developers earn around 6,500 zlotys (€1,565), and consultants even start around 7,500 zlotys (€1,805). But people in IT services will earn around 4,000 (€963), so we do see a lot of variation."

A programmer proficient in C++ (or any other high-level language) will get more than a web developer. "Web developers and graphic designers are rather at the lower ends of the scales," he added. Those with WAN-LAN administration skills would also edge towards the higher end of the pay scale.

The high ranking of IT is also due to a constant growth in wages in the sector, going against the general trend in the country. (While Poland is generally seen as a country that is faring comparatively well in the worldwide economic crisis, wage growth in other industries has not kept pace with that in IT). "In IT, we have noted steady increases, ranging from two to nine percent," year on year, Plens said.

"Last year, 50 percent of respondents working in IT confirmed getting a raise, whereas the average over all industries is about 33 percent. So that's a marked difference." The level of the raise was also is also steeper in IT than in other areas.

While Poland is low cost compared to other countries particularly those in Western Europe, Plens has so far not seen a large exodus of Polish IT specialists abroad. That doesn't mean that enough IT-skilled new starters are coming through the education system, however. "Even though 20 percent of Polish employees completed higher education, the number of people with an IT related degree is not enough to fulfil demand," Plens said. Ironically, Polish students appear to be pursuing economic subjects over IT ones -  because of a perception that's where the money is.

While the country has been lagging when it comes to fixed broadband and the country's mobile broadband uptake is also one of the lowest in Europe, it is surging ahead on 4G: back in 2010, the country became the fourth in the world to get LTE.

A virtual monopoly

Since then, LTE services in Poland have been offered by the Zygmund Solorz-Zak Group, through its telco Polkomtel.

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Its LTE network covers around 35 percent of the Polish population, with coverage concentrated in the larger cities — up from 22 percent at the start of 2011. At the end of 2012, according to Grzegorz Bernatek, an analyst at Audytel, there were about 100,000 LTE dongles active on LTE.

The company offers LTE through two different avenues: Plus, its mobile brand and the largest operator in the country; and Cyfrowy Polsat, the group's TV and internet arm. Three other companies in the Solorz-Zak group also resell LTE data access, giving the company a virtual monopoly on LTE services.

When it comes to pricing, LTE is so far comparable to 3G offerings. The current LTE options range from 30 zloty (about €7.50) for a data cap of 2GB or 3GB, or up to 160 zloty (€40) for 35GB. Speeds are at around 100Mbps, which is not quite the maximum attainable on LTE, but is still markedly faster than the 42Mbps HSPA+ services deliver. Also, the Solorz-Zak companies offer a special night pack free of charge: 50GB between 12am and 8am.

The future alternatives

The growth of LTE coverage in Poland is one of the highest in Europe, notes telecoms analyst Michal Wlasenko of IDC. Growth of coverage by populaion "is expected to grow to around 60 percent at year-end 2013," he says. "Except for the Baltic states, other countries in the Central European region have been slower to implement the LTE networks."

Other Polish mobile networks are looking into providing LTE, but are not yet offering it for a variety of reasons. For example, operator Play has previously said that it will forego normal LTE in favour of LTE Advanced. Orange has stated it will roll out LTE across all its European operations, but that could take until 2015. T-Mobile has not announced plans yet but, like the other operators, it's bidding in Poland's current auctions for 1800MHz spectrum bands.

The auction for the 1800MHz band is ongoing, with the results expected by the middle of the year. Once closed, the winning operators will get rights to use tranches of spectrum until the end of 2027. Besides the usual suspects of telcos, one fixed-line internet provider Sferia has also tabled bids. For those operators that lose out in the auction however, there will be a second chance, with further sell-offs of 4G-appropriate spectrum.

Growing coverage

"The 1800MHz spectrum auction, aimed at extending 3G/LTE coverage to more rural areas and increasing competition, is currently underway," says IDC's Wlasenko of IDC. "More spectrum auctions, including bands of 800MHz and 2600MHz, are expected to happen in 2013-14, which will allow other carriers to catch up with their 4G offerings."

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In terms of coverage, the current auction is important, according to Wlasenko. "The 1800MHz spectrum auction rules require that the winners build out their networks within 24 months from the date of reservation delivery," he says. Coupled with the stipulation by regulators that operators must have 1,800 base stations ready within two years of getting the licence, it looks like Poland is set for a significant LTE coverage boost before too long.

However, LTE coverage is still limited in rural areas, meaning that blanket 4G in Poland is still far from being a reality right now. But with LTE coverage expanding steadily at around one percentage point each month, Wlasenko thinks it might pick up that role in the near future. "Especially with fixed broadband lagging in Poland, there may be an opportunity for mobile carriers to use LTE as a basis for challenging the fixed-line players in terms of broadband access and multiplay bundles.

"In fact, bringing 4G access to Poles presents a significant opportunity to the carriers as Poland is so far behind the EU averages in all of the broadband access modes (DSL, FTTP, WiMax, cable etc) — with the sole exception of 4G LTE."

HP has started its legal offensive a couple of months ago, in a move that mirrors legal actions taken by the company in Spain last year. "The development and taking to market of innovating products is the core business of HP," the company said in a statement. "We have to take legal steps to defend our original technology." HP claims alternative replacement cartridges made by the companies violate one of its patents covering loading cartridges into printers.

The actions taken by the OEM has already seen some results. Action, from Krakow, and AB, which operates from the Polish cities of Warsaw and Wroclaw, have both agreed to stop selling the products which HP says infringe on its patents. Besides ceasing sales of the offending cartridges, Action has agreed to cover part of the legal costs HP has incurred, while AB has agreed to discard any of the offending cartridges it holds in storage. Only one week ago, AB was named 'distributor of the year' 2012 by HP.

A third company, Black Point, has refused to settle with HP and will now be taken to court. The CEO of Black Point, Piotr Kolbusz, denies his company has done anything illegal. "Our company neither distributes nor holds in storage products that violate patent law held by printer manufacturers,” he says in a statement on the Black Point website. "This has been confirmed by the local bailiff who was accompanied by an HP representative in June 2012. We will reject the accusations of HP during the ongoing process."

Alternative replacement cartridges have been a pain for printer manufacturers for years now, with many generating their profit from ink sales rather than printer sales. An original HP cartridge is sold in Polish online stories at around 80 zloties (€20), while an alternative goes for half that. Per unit, manual cartridge refilling is even cheaper.

It remains to be seen if the consumer will suffer as a result of the HP lawsuit, Pawel Polcyn, one of the owners of online store Drukuj24.pl, told Polish newspaper Gazeta Wyborcza. "The prices for printers are so low [in many cases a printer costs even less than new cartridges], that it isn't a problem to replace it for one that does offer alternative cartridges.

"People who want to print cheap will look for systems that offer good quality cartridges, and there is no shortage of those the market."

More than one-fifth of the world's top 100 outsourcing sites were located in the region in 2012, according to new research by consultancy Tholons. Poland's second city Krakow was the highest ranked of the area's outsourcing locations, ranked 11th out of 100, followed by the Czech capital of Prague, which took the 20th position, and the Hungarian capital of Budapest in the 27th spot.

"Eastern Europe continues to emerge as a stellar outsourcing destination, especially for higher-value services," Tholons said (PDF).

"The strength of services outsourcing in Eastern Europe can be primarily attributed to its supply of a technically skilled labour pool — recording 500 to 1,500 tertiary graduates for every 100,000 population... Due to this labour supply advantage, the region has become the immediate choice for many Western European service buyers of high-value processes, such as those found in the R&D and ITO spaces," it added.

While the individual rankings of the region's main outsourcing hubs remained largely static, Tholons put the lack of change down to the growing competition from second-tier cities in India such as like Jaipur, Coimbatore, and Bhubaneswar "as global service providers realize the capabilities of these cities as supplementary locations for tier-one cities."

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Eastern Europe's own tier-two cities are on the rise, with Poland's Wroclaw seeing the biggest gains in ranking, jumping six places from its 2011 position to 78th in 2012.

And, as the Polish outsourcing industry has bemoaned previously, the established hubs are facing competition from upstarts in the region. Four Eastern European cities made the ranking for the first time: the Ukrainian city of Lviv, Romania's second city Cluj-Napoca, Belarus' capital Minsk, and the Croatian capital Zagreb.

"As the global IT-BPO industry escalates to higher-value services, Eastern Europe has already established the necessary precursors to maximize the gains in complex services... In the coming years, the most considerable challenges for the region will be seen in how it can prudently and proactively navigate through Europe's current fiscal crisis, while at the same time maintain developmental gains of the region's services outsourcing sector," the report said.

South Asia, and primarily India, remains the top outsourcing region. Thirteen cities made it into Tholons' top 100 outsourcing locations in 2012 located in India, with Bangalore, Mumbai, and Delhi making the top three. Only one South Asian city outside of India made it into the rankings: Sri Lanka's capital Colombo, in 19th place.

"As technology adoption increases and processes refined, South Asia retains its place as the leading destination for services outsourcing globally," the report said, while adding: "South Asia is not without challenges to overcome. Attrition and perception issues will remain as areas that need immediate actions."

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NASK took the action late last week--the first time the registrar has taken such steps against infected domains--after being approached by anti-spam organisation Spamhaus. Spamhaus has also contacted Austrian and Russian CERT organisations to de-activate Virut servers outside Poland.

NASK reports that it sinkholed 23 domain names. As well as the domain seizures, Virut's two command and control servers were also deactivated.

The Virut botnet was ranked fifth in the world in terms of infections, NASK and CERT Poland said, citing a statistic from antivirus company Kaspersky Lab. Virut is thought to have infected machines associated with 890,000 unique IP addresses during 2012 in Poland alone, NASK said.

The revenue generated by Virut is estimated at around 1 million zloty (€250,000), according to prominent Polish security blog Niebezpiecznik, while Virut even came with its own end user licence agreement (EULA), as security blogger Brian Krebs found out.

Virut has been on the radar of the Polish CERT since 2006. According to Team Furry, a research group, the botnet was created by two Poles, and it is now used to send spam, carry out DDoS attacks, and steal data. While the identities of those behind the botnet have been known since 2007, no legal action has been taken against them.

Virut may now be working in conjunction with the Russian Waledac botnet, Symantec believes. Despite Waledac being publicly killed off in early 2010, there is evidence that the botnet has been reactivated: the Virut virus now appears to also be downloading variants of the Waledac worm onto compromised PCs. According to Niebezpiecznik, the Waledac-Virut combination is able to send 3.6 billion spam emails every 24 hours.

Currently, the centre plays home to around 100 engineers, who work mainly on Google TV, Infrastructure and analysis for Google's sales department. The Krakow centre's focus is mostly on engineering, rather than research – the majority of which is carried out in the US.

As well as Poles, the workforce numbers among it a fair few workers from the former Soviet states, as well as Americans and Germans working here, with English the standard language. According to Wojciech Burkot, who heads up the R&D facility, the medieval, classic atmosphere of the city with its huge student population is a big draw for most of the workers, even when the wages are lower than elsewhere. "Google is pretty open about the fact that you can work wherever you want to, so I'm pleased to see a lot of people actually choose to work here," he says.

Before Google opened the R&D centre, Krakow-born Burkot was asked to choose where in Poland the search giant would set up shop.

"Personal considerations apart, I would opt for Krakow," Burkot, who has run the centre located in Krakow's Rynek Glowny area since it opened its doors in 2006, told Google bosses when asked for his decision. His choice of Poland's second city and his own hometown – which has approximately 750,000 inhabitants – was nevertheless weighted by a number of factors, he tells Central European Processing.

A healthy ecosystem

While Google may have given Burkot carte blanche on where to establish the facility, realistically the location boiled down to a choice between Krakow and the capital, Warsaw.

"Both cities had good universities," Burkot says. "What tipped the scales was the environment. There were more international tech companies in Krakow than in Warsaw: Motorola, Sabre, IBM, you name it. Tech companies tend to cluster because of movement of people and available expertise. If you are the only tech company, you get some kind of inbred culture. You cannot compete against others and there is no healthy cross-pollination."

Krakow's talent pool

Looking at the city's potential talent pool and education environment, the choice of Krakow is not surprising. There are nine universities in the city, of which five either offer technical courses, or are wholly devoted to technical subjects.

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Engineers from Poland and further east have a good reputation, which Burkot attributes to the tougher realities of life compared to Western Europe and the US - even now, being a graduate in Poland does not guarantee high wages or even steady work. Nevertheless, pursuing a technical career path can open doors. "For example, I knew I couldn't really compete on the regular job market," Burkot says about choosing a career in Communist Poland. "But I had a talent for math and science, and realised quite early on that this gave me a more level playing field. That's how it went for me, and I think that goes for many others as well."

Not only are technical subjects intellectually demanding, they are based on the same rules regardless of country, Burkot adds. "Science is the same everywhere. You don't need any special real-life experience to grasp it or even excel at it."

Burkot gives an example of how that works in practice: "During job interviews, I kind of have the same questions lined up by now," he says. "The given problems can usually be solved in a theoretical manner, or in a programmatic manner. When someone shows a preference for one over the other, I try to push them in the other direction. When I look at candidates from eastern countries, they ace any question. I had a young Georgian, who was fresh out of university, was better than one of the professors there. He even asked 'where's the difficulty? I heard that Google interviews were hard'." 

Hard science, soft West

Such a talent pool is a huge plus for any area, Burkot says, and it offsets the fact that Polish universities do not feature in any list of the world's top educational institutions. "The basic education here is quite good," Burkot says, adding there is a difference between that broader-based education and academic excellence, which can see certain areas prioritised. "If someone [in Poland] has the choice of studying a tough subject or an easier one, he would rather go for the former" - the opposite of what is happening in the West, Burkot says.

And that is also part of where the risk lies for countries like Poland, Burkot believes: the drive to become more like the countries that are thought to be doing better. "There exists a constant need for confirmation here," he notes, pointing to the drive of Poland not only wanting to be 'liked by' the West, but also be like the West. "That mentality is definitely a threat."

Silicon Valley? Not quite yet...

But for now, Poland is proud of the fact it is the only EU country that has managed economic growth even when the economic crisis hit hard in this part of the world. Much of it is thanks to the tech industry: for example, according to a recent study by the Association of Business Service Leaders, the number of people working in outsourcing – typically in technology related fields - exceeded 100,000 in Poland in 2012.

"When I look at candidates from eastern countries, they ace any question" — Wojciech Burkot, Google

Krakow in particular tries to sell its image as a smaller version of Silicon Valley in Europe. For Burkot, however, such comparisons are based on hype. "For that, you would need an interaction of three things: large tech companies, universities in the area and a start-up culture," he says. "There is too little of that interaction here, especially when it comes to the start-up culture." While Krakow does have a burgeoning start-up community, it is still in its infancy, he says.

"Here, an acceptance of calculated risk is missing," Burkot says. "In Silicon Valley, there is easy access to venture capital, there is access to expertise and there is a way back. Many professors in Silicon Valley spun off their own company based on their ideas, and then go back to teach at the university." Ironically, that willingness to take calculated risk exists there because there is some kind of emergency parachute, which is wholly lacking in Poland.

"If you fail there, you are not automatically disqualified. If you fail, you can always go back to college and you know what not to do next time. Here, it would be more difficult to get funding the next time around. That breeds risk aversion."

Open source in Poland has so far had had something of a mixed reception. While some government institutions go out of their way to include open source in their IT environments, others go out of their way to keep it out. However, there are signs that open source software could find more fertile soil in this part of Europe in the future.

When the German city of Munich announced in November it had saved €10m after switching to open source office software, Polish commentators began demanding to know why the country's government agencies didn't do the same. At best, the Polish tech community suggests, the country's government is lagging in its approach to open source. At worst, lobbyists and companies have succeeded in trying to keep the public sector as vendor locked-in as possible.

"The law says public tenders cannot demand a specific product or company. Unfortunately, there are ways here to circumvent that with an alternate description" — Michal Wozniak, FWIOO

But the situation could be worse, according to Michal Wozniak, president of Poland's Foundation for Free and Open Software (FWIOO).

"I think the situation here is quite similar compared to Western Europe. About 90 percent of government agencies are using free software in some way or the other," he says. "However, there is need for improvement."

One organisation that demonstrates what Wozniak sees as the public sector's antiquated outlook towards open source is the Polish tax office. "They have a program that allows businesses to file their tax returns electronically," Wozniak says. "However, they only offered a Windows version of it." When developers managed to reverse-engineer the code and build a Linux version, they were sued by the tax office for doing so without its permission. "The developers won the case in 2007, but they stopped their project as the legal proceedings had consumed too much of their time and energy. So far, nobody picked up where they left off."

Are tenders open to open source?

When it comes to open source, a great deal of scrutiny is given to tenders written by the government. The tenders are supposed to be product neutral, but that's something some parts of government are struggling with, Wozniak says. The FWIOO runs a project keeping tabs on how fair public IT tenders are towards open source products, naming and shaming those government agencies that don't keep to the rules.

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"Like in other countries, the law says public tenders cannot demand a specific product or company," Wozniak says. "Unfortunately, there are ways here to circumvent that with an alternate description. For example, we encounter tenders that state a product name, supplemented with 'or an alternative'. That makes it very hard for would-be open source vendors to know what exact specifications are needed."

One example he names is the municipality of Mielec, in south eastern Poland. Rather than stipulate a particular company's products - and so risk breaking vendor neutrality - "they simply wrote in a tender for a new IT system that it should 'not be open source,' in the hope they could escape naming and shaming". Wozniak argues that this not only throws up ideological issues around software, but practical ones as well. "Even Windows uses protocols and tools that are in some way open source, so that would be problematic for them." After intervention, the Mielec tender was altered.

Another typical, and somewhat ironic, recent example of a bad tender is one from the CBA, the government's anti-corruption bureau. The agency specified that the vast majority of the hardware covered by the tender must come with a Microsoft OS on board. "They used the argument that they are vendor-locked," says Wozniak. "That particular example got a lot of bad press though, because of the nature of the agency."

The other side of the coin

However, Wozniak also sees examples of good practices in Poland. "In Jaworzno, all schools have implemented a Linux-based system with centralised login and home directory," he says. "When a student switches schools, for example from primary school to secondary, he can log in to his profile from there." Wozniak expects schools to become the main driver for open-source implementation in Poland in the coming years.

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"Microsoft has moved Poland from 'developing' to 'developed'," Wozniak notes. "That means that the discount for educational institutions is much lower than it was. And as schools here are always strapped for cash, they will be looking for alternatives."

Wozniak cites the example of the CyfrowaSzkola (digital school) project, run by the government, in which textbooks are digitised. "While not specifically focused on open source, it does have a strong open-software element," Wozniak says. Supplying schools with laptops for pupils is also part of the project, "and some of those laptops have Linux on board," he notes. The FWIOO has its own programme going in light of the CyfrowaSzkola project.

That kind of policy might eventually spill out to other sectors. Most institutions in Poland are on extremely tight budgets, meaning they could do without licensing costs. While open source is not necessarily less expensive when all the associated costs are taken into account, it does allow for much needed flexibility, which can in turn lead to savings, advocates like Wozniak argue. 

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Nonetheless, the business services industry is under threat from the lower-waged, newer countries of the EU, according to Poland's Association of Business Service Leaders (ABSL).

The ABSL, which represents 55 major outsourcing companies, has said the number of service centres in Poland, which include business processing outsourcing (BPO) services and other technology-related centres, has risen from 337 last year to 375 this year. At the start of December, the number of people working in the business services industry hit 100,000 for the first time, and that number is forecast to increase by another 15,000 to 20,000 in the coming year – making the segment the fastest growing in terms of jobs within the Polish economy.

Poland is by far the largest market for outsourcing services in Eastern Europe. Almost one half of new outsourcing jobs have been created there, with the rest coming from the Czech Republic, Slovakia, Hungary, Romania and Bulgaria. The last two countries are probably the most likely to start nipping at Poland's heals, as wages there are 10 to 15 percent lower than in Poland.

"That risk will always exist," Marek Grodzinski, vice chairman of the ABSL and director of Capgemini's Polish BPO centre, told the Polish broadsheet Rzeczpospolita. "That's why we should concentrate on opening centres that are focused on the expertise of the workforce."

Not that Poland is expensive, at least compared to Western Europe. A junior accountant can count on around €600 per month, while a starting R&D technician would be able to get €750. In other parts of Europe, people with the same qualifications would be able to earn at least one and a half times that salary.

The question remains whether the business services sector can bolster the Polish labour market enough for the country's economists to be optimistic. Unemployment has already risen to around 13 percent, while the economic prognosis for 2013 remains bleak.

Start-up scenes have long been a game almost exclusively played in the US and Western Europe. But, with multinational tech companies establishing themselves in Central and Eastern Europe, more and more people try are trying to make it big with their own IT companies, making the area now a viable option for new start-ups.

"Just a few years ago there was nothing," says Zuzana Fedorkova, an analyst who also writes for East Europe start-up blog Eastist. "But that changed into excitement, and now there is a lot more excitement. You see communities come together around incubators and accelerators. The scene is really bubbling up."

"For example, Budapest is taking off as a start-up hub. People from there would tell me that the word 'start-up' was not even in their language two years ago. Now the city has a small community. It is catching up."

The start-up scenes differ from country to country, according to Fedorkova. While some countries have one central start-up hub, usually the capital, others are more spread out. "Romania, and especially Bucharest, is growing rapidly," Fedorkova says. "Because there are many companies based there with tech operations and outsourcing companies, the area is full of people who have experience of working for large companies." An entirely different example is the former Yugoslav countries. "Considering the lack of accelerators or incubators, there is a very healthy entrepreneurial mindset there," she says.

By far the largest market for potential start-ups in the region is Poland. "Poland is a funny example. Most would think the start-up community is concentrated in Warsaw, but we also see healthy clusters in Krakow and Poznan."

Learning from experience

One of Poland's smaller incubators is Invemax. Its CEO Adam Labedzki co-founded the Gdansk-area based operation about six months ago, and has already attracted a small community of some fifteen new companies.

"Start-ups cannot find local investors, while investors have a hard time pinpointing start-ups close to them" -- Adam Labedzki, Invemax

The main reason Labedzki started an incubator was the difficulty he and two friends experienced when wanting to build their own company. "We wanted to bring a taxi application to market of the type that is already successful in countries like Germany and Israel," he recalls."We quickly ran into problems with finding investors, despite the fact that the model was proven in other countries. By the time we found a suitable investor, a larger IT company from Warsaw had picked up the idea. We decided the project was too risky, because we could not compete with a project backed by a large media company."

The experiment taught Labedzki some useful lessons. "It was a good learning experience. I found that the main problem was that start-ups cannot find local investors, while investors have a hard time pinpointing start-ups close to them. So that is why we started an incubator, and it has been growing ever since."

Labedzki's example is typical one for many start-ups, and taking an idea from abroad and adapting it for the home market is both the region's strength, and its weakness. (One of the best known examples of the phenomenon in Poland is GaduGadu, an ICQ-inspired chat program that became an immediate hit in the Polish market.)

The inspiration industry

But that's starting to change. "There is always going to be an 'inspiration industry'," says Fedorkova. "But I think we will see more ideas from this region that can't come from San Francisco."

One example comes from rural Eastern Croatia. One young entrepreneur from the region travelled to Silicon Valley as part of the 500 Start-ups program. "He returned to his hometown and started a business," Fedorkova says. "Matija Kopic developed cloud-based software to help farmers manage stock management using new IT techniques. Such ideas are less likely to come out of Silicon Valley, because there everybody is talking to the same tech-minded people.

"But here we have someone helping people who don't even know where Silicon Valley is. People here are drinking less of the Kool-Aid of 'there is an app for everything'."

At the same time, however, Fedorkova notes that true success stories are few and far between. "But the early stories are coming through, and we get launches that people abroad are excited about. Ultimately, it ought to lead to international success."

Invemax's Labedzki agrees that the region is shifting towards developing its own ideas. "It used to be very hard to find investors who would buy into an unproven concept. Many would think: 'OK, your idea is really innovative, but there has to be something wrong since it hasn't been done in America yet'."

That has been changing since a year or so ago, Labedzki reckons, while Michal Olszewski of the Poznan-based incubator LMS Invest says changes in the nature of investment programs in Poland are also having an effect.

"People here are drinking less of the Kool-Aid of 'there is an app for everything'" -- Zuzana Fedorkova

"Most start-ups get their money from special local funds that are derived from European programs," Olszewski says. Currently, the most popular program in Poland is the 8.1 program. "You don't have to have a good idea. You just need to fill out forms. Many of them would just try to rake in the money without doing anything worthwhile."

"However, that program is coming to an end. The terms get worse each year, becoming more of a loan."

That has a positive effect for Polish incubators like LMS Invest. "Start-ups more and more come to foundations like ours. It still is European money, but the rules are different. No limiting paperwork, but they need solid business plans."

While it makes it harder to gain initial funding, Olszewski notes that such start-ups are more likely to succeed. "I believe in a lean way to begin a start-up. In Poland, it is common that would-be start-ups would come in with a vague idea and they won't even start coding until they get the money. It is something that evolved from the 8.1 program."

The rise and rise of Central and Eastern Europe

So what is the main driver for start-up growth in countries like Poland and this particular part of Europe?  Fedorkova cites the outsourcing industry that has been established over the years. Entrepreneurs usually don't come straight out of university, but have a background at a large company. Also, it provides for a large pool of mentors, especially in a larger country like Poland. "These people have tremendous experience working at large companies doing really specialised things," she says. "You don't find that in the smaller countries I've been to.  You would have a hard time finding someone who can give you in-depth advice on user experience."

Labedzki thinks there the region has notable advantages for start-ups. "First of all, developers here can match for example the Russians and the Chinese in terms of technical skills," he notes. Like Fedorkova, he notes the experience many people have within larger tech firms. "Also, the costs to start a company here are lower than in for example Western Europe."

However, there is still some progress to be made. "Currently, it is more people with projects, rather than companies," Fedorkova says.

Pilots of NFC (near-field communication) technology on mobiles have been underway for quite some time now, and the first commercial offerings, from operators T-Mobile and Orange, are now appearing on the market. 

The services allow Polish consumers to associate their credit card with an NFC-enabled phone. By swiping the device over payment terminals equipped with contactless NFC readers, Polish shoppers can pay for goods or services. For small payments of up to 50 zloties (around €12.50), there's no need to enter a PIN number — just hold the phone over the reader.

Such terminals have already popped up across the country in large numbers, and use MasterCard's PayPass system to enable mobile contactless payments. 

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Poland is already a leader in contactless payment availability when it comes to bank cards, according to IDC analyst Michal Wlasenko.

"In just three years, between 2009 and 2012, banks issued 13.4 million cards (40 percent of all cards present in the market)", he says, "which consist mostly of debit cards with the option for contactless payment enabled.

"At the same time, the installed base of contactless payment-enabled points of sale (POS) reached 70,000 in 2012 (around 30 percent of all POS terminals) — one of the highest per capita level across EU."

Now contactless payment is being taken one step further in the country, with Polish consumers able to make wave and pay payments using their mobile as well as their bank cards.

The new offerings are aimed at young urbanites. T-Mobile's MyWallet service is available to subscribers who have MasterCard debit cards or credit cards issued by either Polbank or mBank, with other banks to be added soon. Orange's Orange Cash service is restricted to mBank for the time being. Both operators offer a 'SIM-centric' model, whereby bank cards are associated with a phone's SIM card rather than to an app on the device.

A boost for card payments' popularity?

NFC might be the push needed for card payments to finally take off in the country, which has yet to embrace cashless transactions in the same degree as many of its European neighbours: the average number of cashless transactions per capita in Poland is around 40 percent of the EU average, Wlasenko said.

And, while the average EU citizen conducts around 76 cashless transactions per year, Polish consumers only make 31, the National Bank of Poland reported last year (PDF) — a situation made worse as smaller, privately owned shops in poorer parts of the country don't tend to offer card payments because of the high transaction fees that financial institutions charge. 

With NFC, however, it could be a whole different story. By the end of this year, about 100,000 NFC payment terminals will be operational in the country, a number that estimates say will double by 2015. By comparison, Germany, whose population is twice as large as Poland's, has just 1,000 NFC terminals in the entire country — showing the potential for Poland to leapfrog countries in its adoption of the technology.

According to a survey by payment processor First Data from 2011, Polish users say they prefer NFC card payments to cash payments, while mobile payments are preferred over both. In that sense, Polish users are ahead of their cousins in Germany or the UK.

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Last piece of the puzzle

But that doesn't necessarily mean consumers will take up the new payment method. "This last piece of the puzzle can clearly be decisive," says Wlasenko. "First, even tech savvy smartphone owners might often be wary of bundling their bank accounts to hackable smartphones.

Secondly, Wlasenko says, short battery life on modern smartphones is another reason consumers won't necessarily rely on contactless payments. "Nobody would like their wallet to run out of battery. So given today's technology one couldn't just leave their bank card at home for good, but need to carry it as a backup solution," he says.

"Finally, the current card-based contactless payment options are already very convenient and advanced, so it is hard to find a reason, from a consumer point of view, to gain much value in switching from card NFC payments to contactless smartphone payments," Wlasenko adds.

Vodafone is the first company to announce a large-scale LTE service in the country, confirming on Tuesday that its network will go live on 31 October.

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The operator will offer download speeds of up to 75Mbps in a number of Romanian cities by the end of the year, with users able to test out the services for free. Next year, it expects to increase speeds to a maximum of 100Mbps and move to a paid-for model.

Orange will not be far behind its rival, with CEO Jean-Francois Fallacher last month announcing the operator expects to begin deploying its LTE network before the end of this year. It has been trialling LTE for a number of months: in February the company was granted an experimental licence for LTE frequencies in the country's capital Bucharest in February.

Both companies will use equipment from Chinese manufacturer Huawei for their LTE deployments.

Romania's planned 4G launches follow the completion of the country's spectrum auction last month. The auction, run by Romanian telecoms regulator Ancom, saw telcos including Cosmote, Romania Cable Systems and 2K Telecom – as well as Vodafone and Orange – all successfully bidding for slices of 4G spectrum. All of the licences awarded are valid until 2029.

The scramble for LTE in Romania means the country is one of Europe's early adopters of the next-generation mobile tech: Vodafone has only rolled out LTE in Europe in two other countries: Portugal and Germany, for example.

Countries in Central and Eastern Europe have been working hard to expand their LTE networks in order to compensate for their lagging cable broadband infrastructures. LTE projects in Poland started back in 2010, while countries like the Czech Republic, Slovakia, and Hungary have also been expanding their LTE coverage rapidly, although mainly on a local level.

Poland remains the biggest outsourcing destination in Easter Central Europe; however, according to a series of reports published recently by real estate services company Jones Lang LaSalle, it's facing new competition.

Thanks to its lower wages, Romania's outsourcing industry is growing quickly, especially in BPO and KPO.

Romania is now ranked as the ninth among offshoring locations by the number of jobs created, according to Jones Lang LaSalle, and the country is nearing regional leader Poland in terms of growth. Between 2008 and 2012, 11,438 jobs were created in Romania as a result of outsourcing 40 projects, the reports said — that's only 2,000 less than in Poland, a country that is almost twice as large in terms of population.

"Most major [outsourcing] players have opened at least one centre in Romania," the report said (PDF), with companies including Adobe and Intel already setting up R&D centres in the country.

Emerging destinations

The growth in Romania's outsourcing market has had a knock-on effect on the industry's location: companies are no longer clinging exclusively to the capital Bucharest, but are now looking towards university towns including Targu Mures and Craiova in order to get easy access to an educated workforce.

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"These emerging destinations are often shortlisted by numerous companies, with either new or existing operations elsewhere in Romania," the report added.

While the raw growth rate in Romania's outsourcing slowed over the last three to four years, the country is moving up the outsourcing stack, shifting from just providing call centre services to delivering a wider range of IT outsourcing.

(Romania may be learning from its bigger neighbour — similar transitions are afoot in Poland, which is moving from providing purely basic outsourcing services to delivering more advanced ones, along with using more provincial centres where costs are lower.)

For companies with cost arbitrage on their minds, Poland is facing competition from not just Romania, but Ukraine too — the value of its IT outsourcing market hit $1bn in 2011, the Financial Times reported earlier this month, up tenfold in the last decade. Among those setting up shop in the former Soviet republic, according to Kyiv Post, is Nestle, which recently opened a service centre — right across the border in the former Polish town of Lviv.

For the moment, however, Poland remains Europe's outsourcing leader, according to Jones Lang Lasalle (PDF).

"There are 370 BPO/ITO [IT outsourcing], SSC [shared service centres] and R&D centres with foreign capital active in Poland employing more than 90,000 people," the report says. "There is also a strong presence of local centres providing services to Polish corporates. Annual employment in this sector is growing at a steady rate of about 20 percent (between 2008 and 2011) and the share of Polish employment in relation to the entire CEE region is increasing, reaching 38 percent at the end of 2011."

Other countries in Central Europe, including the Czech Republic, Slovakia and Hungary, remain stable in terms of outsourcing developments.

According to reports, Facebook says the office will cover 46 million users in over 30 countries across the region. Until now, the area was served by the European headquarters in Dublin, Ireland.

Currently, Facebook has nine million users in Poland and is the second most-visited online property after Google. The social network overtook the Polish social network NK earlier this year.

Rumours that Facebook would set up shop in Poland began at the start of the summer, with a big question mark hanging over where the offices would be located. Wroclaw, already home to the Polish branch of Google and offices of other tech companies, started a campaign to attract Facebook to the city.

Wroclaw's efforts turned out to be in vain, as earlier this month Facebook's preference for the Polish capital became clear when it created a new Careers page for the city. (Although at the moment there are no open positions available.) The offices are located at the ZloteTarasy mall and office centre, next to the city's main railway station.

Facebook's Warsaw office will start with around five new positions, with the focus being on marketing and sales. The unit will for now be led by Diego Oliva, Facebook's regional director for Southern, Central and Eastern Europe, the Middle East and Africa.

Facebook is in the process of broadening the geographical reach of its operations. Earlier this year, the social network opened an engineering office in London, the first of its type outside the US, and has also opened a regional advertising office for the Middle East in Dubai.

The new Wroclaw location, one of 10 such centres worldwide, offers security services based on its X-Force Protection System managed security suite. By the end of the year, IBM expects to employ 70 IT specialists in the centre who will be monitoring client systems.

IBM has expanded rapidly this year in Poland. Earlier this month, the company opened new offices in Poznan and Krakow, having already cut the ribbon on premises Wroclaw and Katowice in March.

Anna Sienko, country general manager for Poland and the Baltics, told Central European processing that the Wroclaw opening is the result of a trend to more complex services being outsourced.

"In the beginning, Poland started with offering simple BPO [business processing outsourcing] functions and call centres," she says. "I think lower-level services can be found in other countries for a lower price. Also, the experience available on the Polish labour market is growing, meaning people are more on the lookout for more advanced jobs."

It's also seen a shift in the nature of IBM's clientele - traditionally the company has catered to Fortune 500 customers and governments. "Services like these are too expensive for SMBs to maintain themselves," says Marisa Viveros, vice president for cybersecurity innovation at IBM, adding that IBM is now also catering to the small business sector with its security services.

According to Viveros, the main issue in setting up security centres like this one lies in knowledge and education. Higher education technology courses do not specifically cater to IT security, she says. "For example, we see that network security skills and cryptography are on a high level in universities, but work needs to be done on data management, secure software development and policies."

General IT knowledge in Central Europe is at least on par with fully mature markets, however, Viveros adds.

IBM's expansion in Poland contrasts with reports further west. Unconfirmed reports earlier this year in Germany and this week the Netherlands speak of pending staff cuts there. The company did not comment on these stories, but does distance itself from any suggestions of transferring labour to 'cheaper' countries.

Sienko stresses that the availability of a well-educated workforce factors more heavily than wage costs for IBM. "I haven't had a cost discussion in over two years," she says.

Moving east

Any wage differences between Poland and Western Europe have also not resulted in the huge drain of talent initially feared. "When the labour market in Germany was opened for Poles, there was the fear that people would rather skip across the border to work there. But we've had zero issues with that," Sienko says.

The pace of IBM's expansion in Poland also comes as the result of projects undertaken because of the Euro 2012 football tournament, as well as Polish attempts to develop e-government, she adds.

The Polish economy, unlike most European countries, is still growing rapidly. "That means the IT industry is growing, and the majority of our clients here that have headquarters in other countries are doing extremely well in Poland," Sienko notes.

Polish newspaper GazetaWyborcza reported on Monday that a push to digitise key local government services will instead be delayed by two years, meaning Poles will have to wait until at least the start of 2015 before they can access the services online.

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The whole idea of what the newspaper calls 'e-Poland' is that Poles will be able to conduct business with local government over the internet, instead of having to deal with civil servants sitting behind counters at city hall — for example, individuals would be able to request ID cards online.

In a country where carrying an ID card is mandatory, online registrations would put an end to the processing of ID cards being tied to a particular municipality. Digitising ID card registrations would save tens of millions of Euros over a five-year period, according to the Polish government.

The modernisation would also mean that the Polish government can do away with anachronistic citizen registration laws that stem from communist times — especially the widely despised laws that enforce registration within a municipality. Even tourists are, officially, required to register with the local government, and the registration process is not only mandatory but riddled with red tape.

Delays

The e-Poland project was meant to kick off at the end of this year, with citizens able to opt in to use the online services. Scrapping old-fashioned paper-pushing altogether was planned for the start of 2014. However, Roman Dmowski, the vice-minister of internal affairs, told Gazeta that the whole scheme has experienced severe problems.

Among them were issues that stem from the procurement processes of two key government IT systems. After irregularities were found in the call for bids for the systems, the Polish anti-corruption agency CBA now investigates virtually all calls for bids that have to do with digitisation projects — which in turn has caused delays to the rollout of e-Poland.

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Another problem is that the ministry decided to redraft the requirements of some e-Poland projects, Dmowski said, over concerns of vendor lock-in, with local authorities having to go cap in hand to the original vendors for small changes to certain parts of the system.

"For us that is unacceptable in the long term," Dmowski says. "In its new form, systems will be using neutral technology, which means that each system will be built by multiple parties so none of them can monopolise it."