When you think of the leading offshoring markets, China and India might come to mind. And rightly so—by many accounts they’re the two largest offshoring markets in the world. According…
If the idea of a significant offshoring market conjures visions of a major urban area, this image of Krakow, Poland might surprise you. Yet new investment projects in the business process outsourcing/shared service center (BPO/SSC) sector are driving a boom in nearly every large Polish city. But what is drawing businesses and real estate investors to Poland?
POLAND ON A ROLL
You might think that Poland’s attractiveness is simply due to a lower cost of doing business. But many companies are going into Poland due to the availability of qualified staff as well as the attractive cost environment. In my conversations with organizations, I’ve learned that companies such as Hewlett Packard, Credit Suisse and UBS are developing their Polish operations and transferring increasingly advanced processes.
When deciding to outsource processes or invest in a new opportunity, cost is certainly important; but two other factors should also be top of mind: availability and quality. In addition to assessing the availability of office space, other considerations include the pool of highly qualified labor, whether the city is home to higher-education institutions, the quality of infrastructure as well as the stability of the political situation.
Thanks to an attractive combination of these factors, many Polish cities have discovered huge investment and development opportunities. According to a recent report from the Association of Business Service Leaders (ABSL), there are 593 investor companies with business services centers in Poland—of which 461 are foreign investors. The first city in the queue for BPO companies was Krakow, which was soon joined by Wroclaw, Tri-City, Poznań, Katowice, Lodz and Szczecin. These cities compete intensively with each other, which has only led to improvements in what they have to offer.
These well-established cities are still very attractive for new projects, and there are also areas of untapped potential that offer qualified staff and a lack of competition. A great example is Capgemini’s decision to open a branch in Opole. Other smaller cities to watch include Lublin, Kielce, Rzeszów and nine other “rising stars,” which you can read more about in this report, developed in partnership with Colliers International, the Polish Agency for Information and Foreign Investment (PAIiIZ) and Advisory Group TEST Human Resources.
THE FUTURE OF THE SECTOR
Another area to keep an eye on is the anticipated structural change in PAIiIZ, which has often been the first point of contact for foreign investors or the companies representing them. The government plans to set up a new entity based on PAlilZ, the Polish Information and Foreign Investment Agency, which will become the new primary point of contact. Therefore, it is important that this institution and others can convey that Poland is a business-friendly country. The ABSL plays an important role in this, as the organization brings together companies from the BPO/SSC sector.
The ABSL estimates that by the year 2020, 300,000 jobs will exist in Poland’s BPO, SSC, IT and research and development center sector, up from 212,000 in 2016. This projection is excellent news for the Polish economy as well as the real estate market, as many investors continue to see the BPO/SSC sector as a powerful force behind the development of office space.
Driven by growth in this sector, developers are buying new plots and constructing new office buildings. The resulting increases in property taxes are creating new sources of income for cities and expanding the importance of the Polish market—generating a chain of events that is likely to continue to create valuable opportunities.
A version of this post was originally published in Outsourcing&More magazine.
Sebastian Bedekier is the Poznań Regional Director for Colliers International. Sebastian is responsible for developing new business, acquiring clients and providing office leasing advisory in the Poznań region (West Poland). He specializes in BPO/SSC projects and works with companies representing sectors such as financing, legal, audit, medical, IT, new technologies, air transport and many others.