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Unused potential of Central and Eastern Europe

Companies of oursourcing and offshoring sector occupy nearly 20 per cent of office space in the CEE region. Experts convince that this part of Europe has a potential to attract another companies.

Hewlett-Packard, IBM, Thomson Reuters, Genpack, AON Hewitt, Capgemini, KPMG, Lufthansa, Electrolux, UniCredit, Credit Suisse, Volvo... the list of companies of the outsourcing industry, which decided to invest in the region of Central and Eastern Europe (CEE) may go on and on. Currently, they occupy nearly 20 per cent of total office space in this region, according to “Outsourcing and Offshoring in CEE: A Rapidly Changing Landscape” research, compiled by Colliers International. It means a 80 per cent increase within three years, from 2010 to 2013.

 

The development of the outsourcing and offshoring (O&O) industry in the CEE region is beneficial especially for Poland. In the top ten of cities with the biggest percentage interest of office space occupied by this sector, nine of them are cities from Poland (on the last tenth place is Brno). Investors in the industry willingly locate themselves in Cracow, Łódź, Wrocław, Szczecin, Katowice, Tricity, Poznań, Warsaw and many other Polish cities.

 

In the context of all region, established position among companies of the O&O sector have Budapest, Prague, Cracow and Warsaw. It is worth to point out that these cities are the most expensive ones considering operational costs. So why are companies willing to invest here? According to authors of the research, it is caused most of all by organic rise of located companies there, and by the fact that their presence attracts another tenants of this sector. Damian Harrington, Regional Director of research department in Colliers International for Eastern Europe, says that companies of the outsourcing and offshoring industry are trying to invest in places where they can count on low costs. Simultaneously, cities in which the saturation of companies in this sector is the biggest, are the most expensive considering operational costs. It shows that the accessibility of an adequate personnel acquires growing importance – points out Damian Harrington.

 

Which industries have an influence on the intensive sector development in countries from Central and Eastern Europe? Primarily, these are IT, telecommunication and professional business services. Moreover, the need for services in the industry of retail and logistic trade is also increasing.

 

Future

 

Hitherto, only 30 per cent out of the 100 biggest global outsourcing companies invested in the CEE region. It shows how large potential still lays in this part of Europe. But if it is going to happen, firstly some obstacles need to be realized and overcome. The first of them is so called “anti-offshoring”, which means a negative influence of political moods on business increase. A significant is also a necessity of larger automation of processes served by the O&O sector. As some companies claim, within nearest five years, BPO processes may be completely automated. Such tendency will considerably affect the demand for office space. On the other hand, the need for so called data centres will increase.

 

Full version of the report in PDF is below.

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