Doing Business Index Analysis: the Czech Republic vs. Ukraine

The Czech Republic today is amidst the TOP leading IT outsourcing destinations of the Eastern Europe. Obviously, many global tech giants like the country and local business market. Earlier in the Blog, we have also analyzed Doing Business Indices of Poland , Hungary, Bulgaria, and Ukraine.

The next country we are analyzing is the Czech Republic which has the second largest IT talent pool in the CEE region – according to different data there are from 160K to 170K IT specialists. The business environment of the country is viewed as one of the best in the world. Moreover, the Czech Republic has the lowest unemployment ratio in Europe which equals 4,1% only.

Ease of Doing Business Index

The general Ease of Doing Business Index Report ranks the Czech Republic 36th in the global rating. We would like to analyze and summarize the main advantages of the country, its economic state as well as compare it with the Ukrainian one.

To conduct a business the following items should be taken into account when starting a business or cooperation with foreign partners, however, which business model suits the best is up to you:

  • Starting a business in the Czech Republic is viewed as one of the easiest issues, since it requires 8 procedures amounting to up to 15 days (in Ukraine this number may reach 20-25 days, in Bulgaria – 18 days);
  • Dealing with construction permit, getting electricity supply and registering property might take almost 1 year with 30 different procedures;
  • Such aspects as getting credit, protecting minority investors, and resolving insolvency are most often not taken into consideration.

The Czech Republic is one of the countries with the most strict legislation and legal requirements toward the business establishment. In terms of IT outsourcing, the country is extremely popular amidst the global IT services providers, although the Czech technical engineers are also expensive if compared to the Ukrainians.

The main legislative requirements

  • Fixed-term contracts aren’t prohibited for permanent jobs
  • Fixed-term contracts cannot last longer than 9 years; therefore it can be long lasting as well
  • Minimum monthly wages – $550
  • Max working days a week – 6 days
  • 10% of an hourly pay over the salary for night shifts, 10% premium for working weekly rest day
  • Overtime work payment – 25%+ to the salary from an hourly rate
  • the Czech legislation doesn’t envisage any restrictions on night works as well as there are no restrictions on overtime work
  • 200 working days of the paid annual leave
  • Maximum probationary period – 3 months
  • Dismissals due to redundancy are allowed by the law

The Czech Republic vs. Ukraine: opinions

Comparing the two countries in terms of doing business ease, the Czech Republic is, of course, winning in terms of laws and strict legislation, however, the timing for dealing with the construction permit, getting electricity supply and registering property are almost equal. Yet, high corruption level in Ukraine doesn't bring much benefit to the local economy. Many business owners rarely go to a country and establish a company from scratch as elsewhere in the world: renting facilities or buying ready made ones are the most popular options. However, starting the partnership cooperation in the target country is on top. Another reason Ukraine loses in the race for attracting new foreign companies (besides IT outsourcing - this sector is successfully growing) to establish or invest into the Ukrainian business because of the tough political situation and military actions taking place in the eastern region of the country. Successful growth of the local IT companies shows the prosperous future ahead for businesses here, therefore, it is better to analyze the market segment before making up the final decision.

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