Why Google put a research lab in Poland

When Artur Hibner graduates from college this year, he won't have to worry about getting well-paid work in his field right here in Krakow, Poland's thriving former royal seat.

For years, Western technology firms have come to Eastern Europe to lure away talented computer-science graduates like Mr. Hibner, who attends AGH University of Science and Technology. But now, the region's universities are producing so many top programmers that many firms are changing tack – and setting up shop at the source.

IBM, Motorola, and Google have all opened research labs here in Krakow in recent years, while Deutsche Telecom, Microsoft, Sun Microsystems, and other giants have come to Budapest, Prague, Bratislava, and other cities where universities churn out skilled coders.

"They are looking for all kinds of people, from hardware developers to programmers," says Marek Zaionc, head of the computer-science department at Krakow's Jagiellonian University. "We have a lot of good young people in these fields, and we're still a lot less expensive than other parts of Europe."

Eastern Europeans have dominated international programming competitions in recent years, attracting the attention of tech firms. Last year's TopCoder Collegiate Challenge drew 21,000 registrants from around the world, but half of the 48 finalists were from former Soviet bloc nations, including the winner, Petr Mitrichev of Russia, who also won last year's Global Code Jam, a Google-sponsored competition.

Tomasz Czajka, a 2004 graduate of Warsaw University, became a national celebrity in Poland after winning three TopCoder competitions in 2004-2005, racking up winnings of more than $100,000.

"When we saw these trends, of people from Eastern Europe winning these contests, we decided to take a closer look," says Kannan Pashupathy, Google's head of international engineering operations. "People have a huge interest in software, and there's a much deeper grounding in mathematics in the curriculum in these countries."

The region's universities have long been strong in hard and technical sciences, especially under Soviet rule, which emphasized industrial and military production. Tech firms began taking notice after 2000, when it became clear that Poland, Hungary, the Czech Republic, and Slovakia would be joining the European Union in 2004.

Cultural, geographic, and economic proximity to Western Europe has given the region an advantage over global competitors like India. Salaries in the region are much higher than in India, but still one-third to half of those in Western Europe. Bratislava, Slovakia's capital, is a few minutes' drive from Austria, while Kosice, Krakow, and other cities are a short flight from London, Paris, or Berlin. EU membership makes investing all that much easier for western firms.

Mr. Czajka's celebrated TopCoder victories have made programming particularly attractive to young Poles. "Everyone knows Tomasz Czajka and everyone wants to be like him," says Hibner, who recently won an international math competition. "Last time I was in Warsaw, there was a huge poster of him in the center of the city."

At AGH, the computer-science department now gets seven to eight applicants per spot. "We could easily take many times more students if we had the professors and facilities to handle them," says department chief Krzysztof Zielinski. "We're happy to provide computer engineers for the companies – it is our job – but we need some help from them. Right now, we are alone."

Indeed, computer-science professors from across the region say they fear their departments will be sucked dry by Western firms. The private companies offer salaries two or three times higher than those at the university – several times more if the job is in the US or Western Europe – making it difficult to recruit new professors or to replace those who leave.

"If this department is destroyed," Mr. Zielinski says, "there will be no new engineers."

The problem is even more critical in Kosice, a city of 240,000 in impoverished eastern Slovakia, whose year-old information-technology industry has expanded so fast it is having trouble finding programmers. "So many people had left the region to find work in Prague, Bratislava, or London, it made it hard for us to achieve critical mass," says Jozef Ondas, a native who is CEO of T-Systems Slovakia, a subsidiary of Deutsche Telekom.

T-Systems, Siemens, and other companies in Kosice have found a solution: working together to help local universities increase their capacity to retrain engineers and other people with the necessary math skills, and to improve professors' incomes.

"We said: Why fight over the same 200 graduates each year?" says Mr. Ondas, CEO of T-Systems. "Let's invest and create an educational system that can produce 500 specialists each year."

"Businesspeople have come to the conclusion that they need the universities, not just their graduates," says Anton Cizmar, vice rector of the Technical University of Kosice. "I think it's a miracle what has happened here."

"If you invest in the university system and support research in areas of interest, students will naturally gravitate into those areas," says Mr. Pashupathy of Google, which opened its Krakow lab earlier this year. "It's a nice circle which ultimately benefits everybody."