Sitting Pretty In Prague: DHL's Tech Triumph

It finds plenty of tech talent as it opens a network services center

Walk into the network operations center at DHL's IT Services Center in Prague, and the first thing you see is the magnified projection of a computer monitor that's as big as the screen in your local cineplex. On either side of the screen, which tracks every operation handled by DHL's global network, are two televisions broadcasting news and weather. When you're running a company that ships a billion packages a year, tracking the weather is just as important as monitoring fuel prices. "We got news about the [2004 Asian] tsunami early, thank God," says Richard du Plessis, head of production services.

The tsunami could have been a disaster for DHL, which has a network operations center in Cyberjaya, Malaysia, as well as in Prague and Scottsdale, Ariz. Luckily, the Cyberjaya facility suffered only a few power surges. As part of DHL's "follow the sun" policy, Cyberjaya manages the network for eight hours a day. At 10 a.m. Central European Time, Cyberjaya hands off to Prague. Eight hours later, Prague hands off to Scottsdale. That way, the global shipping company can track packages at any hour. "What we do here is not a call center. It's high-end IT," says Stephen McGuckin, Prague-based managing director of IT services.

Prague's highly skilled pool of IT workers was a big reason why DHL decided to invest more than 500 million euros over five years in the IT center. Not only are the city's engineers cheap -- McGuckin says the cost of doing business in Prague is one-third that of Western Europe -- but they also have the training and experience necessary to do sophisticated work such as designing and building new software. (Simpler tasks such as programming are outsourced to India.) And Prague's lively music and club scene attracts a lot of young people from around the world. About three-fourths of DHL's 900-strong workforce in Prague are Czech nationals. The rest hail from 46 other countries. "People love living in Prague," says McGuckin.

Of course, cheap wages are also a big draw. The average salary for a Prague DHL worker is just 20,000 euros ($23,570). And wages are not rising as fast as DHL initially estimated. "We assumed if we had 10% salary inflation in Prague, and Western Europe had 2% inflation, for 10 years the cost here would still be half that in Western Europe. But the rate of inflation is only 2%," says McGuckin.

Other pluses are Prague's numerous air links to the rest of Europe, its good infrastructure, and a business-friendly climate. "We made the decision to come here in 2003, and since then it has become even more desirable," says McGuckin.

In fact, DHL's 11,000-square-meter IT center in the Chodov neighborhood on the outskirts of Prague is becoming the hub of a new tech-services office park. Consulting giant Accenture Ltd. (ACN ) recently opened a branch in an adjoining building, and other U.S. companies are scouting out the area. DHL is planning to add 600 employees when its second building is ready next year.

Given the Prague facility's importance to DHL's global operations, every precaution has been taken to make the center immune to natural or man-made disasters. "We have two of everything," says du Plessis. Not only is the computer network backed up by a duplicate system eight kilometers away but DHL also has two generators and two fuel tanks in an underground chamber beneath its courtyard that can keep the facility going for five days if there's a power outage. DHL has left nothing to chance -- and that includes choosing Prague as the site for its European IT center.

By Patricia Kranz in Prague

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