POLAND: An Introduction to TMT

Introduction 

The technology, media and telecommunications (TMT) sector remains one of the key strengths of the Polish economy. While the effect of the COVID-19 pandemic was mostly negative, it did spur high levels of investment in, and spending on, information and communication technology (ICT) services. During the past calendar year this spending has, however, visibly decreased internationally, affecting many global IT companies. The impact on Polish firms has fortunately been rather limited in scope, resulting predominantly in the freezing of positions rather than the laying-off of staff.

Poland continues to attract the attention of start-ups, investors, big-tech and multinational companies operating in the TMT sector, thanks to the globally recognised reputation of Polish IT engineers, access to a well-educated workforce, the growing infrastructure and logistics. In addition, Poland’s economic foundations remain stable – the inflation rate has dropped significantly over the last year, and the war in Ukraine has had no visible impact on Poland, including its TMT sector.

Technology 

Some perceive IT as the jewel in the crown of the Polish economy. There are hundreds of native Polish software development companies and start-ups offering top-class services to various industries (eg, banking/finance, the internet of things (IoT), health, education, energy, e-mobility and gaming). Most of these firms handle international work.

A significant trend regarding the Polish ICT market is that products and services originating from Poland are becoming increasingly sophisticated and innovative, as well as conforming to the latest industry trends and standards. An increasing number of Polish IT companies are seeking technology and/or industry specialisation and are developing their own proprietary products (eg, in the field of fintech, AI, e-mobility or IoT markets). This has been spotted by many international companies, which have established software development offices, R&D centres (tech hubs), and business process outsourcing and shared services centres (BPO/SSC) units in Poland (eg, in Warsaw and Krakow). Due to its geographical location, Poland plays a pivotal role in setting up hardware plants and data centres of key importance for Central and Eastern Europe. Given the post-pandemic preference for shorter supply chains and reduced operational business dependencies, Poland has virtually become a first-choice location in the region, as seen by Google’s Cloud Region launch in 2021 and Intel’s decision in late 2023 to set up its semiconductor production plant near Wroclaw.

Artificial Intelligence 

AI has already had a notable impact on Poland, where a combination of economic stability, progress-oriented legislation and a flourishing tech ecosystem has made the country an attractive destination for AI investment and development.

It is worth underlining that the Polish government has demonstrated its interest in the AI industry by forming AI-dedicated work groups within the structure of the Ministry of Digitalisation, as well as adopting an ambitious policy that reinforces the country’s thriving IT environment. It has also recently become clear that the AI Act, a legislative proposal from the EU, has drawn the attention of Polish businesses. Innovative firms have started to seriously consider the potential risks and opportunities lying behind the AI Act, and the term “AI Governance” may very soon be on everyone’s lips.

Polish IT companies, particularly those in the medtech, fintech and IoT sectors, are becoming increasingly visible through their innovative AI solutions. Their achievements are being paralleled by several e-commerce giants (operating popular online marketplaces or postal deposit and collection services), leveraging generative AI for enhanced shopping and logistics.

Fintech 

Poland’s fintech market is at the forefront of global trends in terms of its development dynamics. Financial institutions in Poland, both banking and non-banking, are open to new technologies. One innovative, unprecedented example is the BLIK project – a local mobile payment system which was launched in Poland thanks to the agreement of key Polish banks, and which is currently used by almost 13 million users a month.

Furthermore, the financial sector is increasingly turning to cloud solutions, which are regulated by specific local standards established by the Polish Financial Supervision Authority (“KNF”). The market is also preparing to implement a package of EU regulations on digital finance, including DORA (cyber-resilience) and MiCA (crypto-assets). A long-awaited package of EU regulations aimed at building “open finance”, including the latest Payments Services Directive (PSD3) and the Financial Access Data framework (“FIDA”), is also on the horizon.

Moreover, in September 2023, an amendment to Polish law in the field of banking outsourcing came into force. The new regulations eliminate several barriers limiting the development of IT in the banking sector. With immediate effect, local regulations no longer limit the number of entities participating in the outsourcing chain, which was previously a significant practical problem, especially in the implementation of products based on cloud technology. There is also no requirement to obtain permission from the Polish Financial Supervision Authority to engage a supplier from outside the EEA. The new regulations also no longer require the supplier to assume unlimited liability for damages to the banks’ customers.

Telecommunications and Cybersecurity 

New legislation is also being drafted for the telecommunications sector in Poland, namely the Electronic Communications Law. This heavily debated act will replace the current Telecommunications Law, and implement the European Code on Electronic Communications, which is long overdue.

In addition, telecommunications companies are obliged to implement regulations from the new Act on Combating Abuse in Electronic Communications, which came into force in September 2023 and which aims to combat phenomena such as smishing, phishing, spoofing and others.

In October 2023 the Polish Electronic Communications Authority (“UKE”) conducted a C-band auction, more widely referred to as a 5G auction. This is expected to be a milestone in the development of high-speed internet connections and the IoT industry.

At the present time, the development of the cybersecurity industry is being shaped by a number of major factors, including increasing awareness of various threats to IT systems and infrastructure, as well as changes in both national law (the processed National Cybersecurity System Act) and EU law. The challenge for 2024 will certainly be the implementation of the NIS 2 Directive in Poland and then the implementation of the standards and regulations resulting from it. NIS 2 will affect enterprises from many sectors of the economy, including: energy, telecommunications, IT, utilities, manufacturing, banking and financial services, and public administration.

Trends and Perspectives 

The year 2024 promises to be particularly interesting for the new technologies sector in Poland. According to market insights, IT companies are cautious but generally optimistic about the future. It is expected that companies utilising AI-based solutions will take the lead. The challenge will probably be regulatory issues that will affect the sector directly and indirectly, in particular the EU AI Act, DORA regulation and the NIS 2 Directive.

On the other hand, it is expected that Poland will spend more on the digitalisation of the Polish public administration. The process was accelerated during the pandemic and it drives demand for professional IT services, including cloud-based services, thereby helping to shape the TMT industry in Poland. Digitalisation has become a priority for public administration bodies due to increasing cybersecurity threats resulting from, among other things, the development of AI technology.