Posts Tagged ‘Poland’

Poland Emerging As Major European Outsourcing Hub

February 28th, 2013

The first time Javier Bofarull Marques left Spain for Poland, it was for love. It was 2006, a boom time in Spain, and his friends thought he was crazy. He recently moved back to the Eastern European country and it was for a job this time because Spain’s economic crisis left him unable to find work there.

Poland’s economy has grown for 21 years straight, while some Western European countries are trying to recover from their most crippling recession in generations. The result is a striking change in its infancy: a country whose poverty and political oppressiveness once drove its people abroad in droves is now attracting workers from the West.

“Here I am recovering my dignity,” Bofarull Marques, 44, said from Krakow, where he landed a job with an international firm as a senior financial accountant after a fruitless eight-month search in Barcelona. “Poland is giving me another chance.”

The number of people from richer Western countries working in Poland is still small, and some Poles still migrate to Britain and other higher-wage countries in the West. Nonetheless, years of economic growth and European Union membership are indisputably transforming this country of 38 million people, the largest of the former Eastern Bloc states now in the EU.

A key source of this phenomenon comes from an outsourcing sector that has exploded in recent years, turning Poland into “the leading outsourcing destination in Europe,” according to a recent report by Jones Lang Lasalle.

The phenomenon began nearly 10 years ago when some international companies began outsourcing simple tasks to Poland; workers would key invoices into computer systems, or Poles with knowledge of various languages would answer customer questions on help desks, taking calls from across Europe. Since then, the tasks have grown increasingly sophisticated, and now include software development along with a wide range of accounting, financial and legal services.

The result has been the growth of new and challenging jobs that are limiting a brain drain from Poland and which are attracting people like Bofarull Marques, who is thrilled to be developing his skills and staying independent while some of his friends in Spain, where the unemployment rate is 26 percent, are moving back home with parents.

The tasks being performed in Poland now are many: graphic designers develop marketing campaigns for companies thousands of kilometers away, workers use Hebrew or Italian to procure orders for a Swiss agriculture company from an office in Krakow, accounting teams prepare tax filings for the French or other governments and research centers develop computer software used in German cars.

There are now office buildings and office parks sprawled across many Polish cities where the outsourcing takes place, including Gdansk, Warsaw, Wroclaw and Lodz. But the clear leader is Krakow, which was even ranked this year as the world’s No. 10 outsourcing destination worldwide — ahead of even Shanghai and Beijing — by Tholons, a Washington-based offshore consulting and investment advisory firm.

Foreign companies are attracted to Poland for several reasons, including labor costs that are roughly half of those in Western Europe.

But executives says it goes far beyond that and commonly cite the following factors:

— Polish university graduates often have strong backgrounds in information technology and engineering, a continued legacy of the communist-era educational system, as well as widespread knowledge of English and other foreign languages.

— Poland is a sizeable country in the center of Europe and produces about 400,000 university graduates each year. This is a “fantastic talent pool,” said Marek Grodzinski,” who heads a business center for the French outsourcing company Capgemini in Krakow. “That’s a great pool for firms like ours.”

— Political stability and a strong rule of law strengthened by EU membership. “Political stability gives Poles an edge. China is also an emerging location for outsourcing,” but international property protection is a risk, said Przemek Berendt, the vice president for global marketing at Luxoft, an IT services outsourcing company headquartered in Russia. “But as an EU member, Poland protects intellectual property rights.”

That’s important for companies like Luxoft, which creates trading platforms for investment banks and automotive software.

The outsourcing sector in Poland now employees more than 100,000 people working for international companies, and is projected to grow another 15 to 20 percent by the end of the year, according to the Association of Business Service Leaders, a group that represents more than 70 companies.

There are no statistics on how many non-Poles work in the sector. For now, the numbers are small. In some cases, foreigners at Polish universities stick around after graduation; sometimes a Polish romantic partner is also part of the equation. But some of the companies are also starting to bring non-Poles to perform certain jobs if they can’t find the right person locally.

Krystian Bestry, a top executive in Europe with Infosys BPO, an Indian company with a center in Lodz, said his company has “imported” some workers from the Netherlands to Poland because it needed Dutch speakers.

“Our offer is attractive to them,” Bestry said. “While Polish wages are lower than Dutch wages, the cost of living in Poland is also much lower.”

Some other countries in the region, including the Czech Republic and Slovakia, have also attracted outsourcing, though on a smaller scale given their smaller size. Hungary has, too, though it has been spooking foreign investors since the government of Prime Minister Viktor Orban took office in 2010 and started to show an authoritarian streak. Meanwhile, Romania and Bulgaria also offer lower costs to investors, and have grown as outsourcing destinations, though a greater perception of corruption there has kept some companies away.

Companies that have outsourced parts of their business operations to Poland include Shell, IBM, Google, HP, Motorola, Heineken, Procter & Gamble, UBS, Citibank, Credit Suisse and many others — altogether more than 50 companies from the Fortune 500 list. There are also some companies devoted solely to carrying out accounting, legal work and software development for other companies. One is Capgemini, which provides business and computer outsourcing for almost 100 corporations, including Coca-Cola and Volkswagen. It operates five centers in Poland.

Some corporate leaders are clearly worried about a perception that the jobs being created in Poland represent the loss of higher-paying jobs back in home countries. Some refuse to say how many employees they have in Poland, while some companies that use the services produced in Poland ask that their contracts be kept secret.

Jacek Levernes, a member of the board at Hewlett-Packard Europe and the head of the Association of Business Service Leaders, said there is no doubt that Poland’s outsourcing sector is thriving thanks to the financial crisis in the 17-nation eurozone and elsewhere as companies seek savings. Still, he argues that the phenomenon, overall, does more to help than hurt workers in the West. He argues that if, for example, a French company barely making a profit because of the financial crisis cuts costs by outsourcing some of its internal accounting to Poland, that could be the margin of savings that keeps the entire company afloat.

“If the company must find savings, but doesn’t, it goes bankrupt — and hundreds or thousands of employees lose their jobs,” Levernes said.

The booming outsourcing sector amid a larger economy that keeps growing has left Bofarull Marques more optimistic about the future of Poland than Spain, and he expects to make Poland home for many years, perhaps even until retirement. It was not the scenario he imagined when he first moved to Krakow in 2006 for a girlfriend.

The relationship eventually ended, but along the way he bought an apartment, made friends and witnessed Poland’s economic transformation. He moved back to Spain in 2011 but only managed to find work for a short time before ending up with the mass of unemployed. Eight months of trying to find work were enough for him and so he returned to Krakow last April and quickly found work with Capgemini. The company does business back in Spain, and puts his language skills to use with that.

“When I left Spain the first time, my friends called me crazy and I often regretted the decision,” he said. “But now, with a view to the past, I think I was lucky.”


Poland feels the outsourcing heat as Romania, Ukraine step up the competition

October 16th, 2012

The outsourcing market in Eastern Central Europe keeps growing, thanks to the rise of new markets for BPO (business process outsourcing) and KPO (knowledge process outsourcing). While growth in outsourcing’s traditional powerhouses has flattened a little, countries in the region with lower wages are stepping in to pick up the slack.

Poland remains the biggest outsourcing destination in Easter Central Europe; however, according to a series of reports published recently by real estate services company Jones Lang LaSalle, it’s facing new competition.

Thanks to its lower wages, Romania’s outsourcing industry is growing quickly, especially in BPO and KPO.

Romania is now ranked as the ninth among offshoring locations by the number of jobs created, according to Jones Lang LaSalle, and the country is nearing regional leader Poland in terms of growth. Between 2008 and 2012, 11,438 jobs were created in Romania as a result of outsourcing 40 projects, the reports said — that’s only 2,000 less than in Poland, a country that is almost twice as large in terms of population.

“Most major [outsourcing] players have opened at least one centre in Romania,” the report said (PDF), with companies including Adobe and Intel already setting up R&D centres in the country.

Emerging destinations
The growth in Romania’s outsourcing market has had a knock-on effect on the industry’s location: companies are no longer clinging exclusively to the capital Bucharest, but are now looking towards university towns including Targu Mures and Craiova in order to get easy access to an educated workforce.

“These emerging destinations are often shortlisted by numerous companies, with either new or existing operations elsewhere in Romania,” the report added.

While the raw growth rate in Romania’s outsourcing slowed over the last three to four years, the country is moving up the outsourcing stack, shifting from just providing call centre services to delivering a wider range of IT outsourcing.

(Romania may be learning from its bigger neighbour — similar transitions are afoot in Poland, which is moving from providing purely basic outsourcing services to delivering more advanced ones, along with using more provincial centres where costs are lower.)

For companies with cost arbitrage on their minds, Poland is facing competition from not just Romania, but Ukraine too — the value of its IT outsourcing market hit $1bn in 2011, the Financial Times reported earlier this month, up tenfold in the last decade. Among those setting up shop in the former Soviet republic, according to Kyiv Post, is Nestle, which recently opened a service centre — right across the border in the former Polish town of Lviv.

For the moment, however, Poland remains Europe’s outsourcing leader, according to Jones Lang Lasalle (PDF).

“There are 370 BPO/ITO [IT outsourcing], SSC [shared service centres] and R&D centres with foreign capital active in Poland employing more than 90,000 people,” the report says. “There is also a strong presence of local centres providing services to Polish corporates. Annual employment in this sector is growing at a steady rate of about 20 percent (between 2008 and 2011) and the share of Polish employment in relation to the entire CEE region is increasing, reaching 38 percent at the end of 2011.”

Other countries in Central Europe, including the Czech Republic, Slovakia and Hungary, remain stable in terms of outsourcing developments.


IBM opens another service delivery center in Poland

September 15th, 2010

IBM has recently inaugurated its new service delivery center in Wroclaw, Poland. The earlier centres are established in Krakow, and an innovation center in Warsaw, Poland. The Wroclaw center is located in Wojdyla Business Park, and has already hired a number of technology and engineering graduates from the university town, as well as many skilled IT professionals.

IBM offers various innovative services such as; business continuity, resiliency services, IT strategic, infrastructure and architecture services, integrated communications services, maintenance and support services, middleware services, site and facilities services, storage and data services, outsourcing and service services, among others. IBM has been consistently building its presence in Wroclaw. An agreement was signed last year by IBM and the Polish government to cooperate on the creation of a new IBM Information Technology service delivery centre in Wroclaw.

The Wroclaw center is part of a highly efficient network of IBM centres, to be found in 20 countries, with multiple sites in many of the countries. The Wroclaw center will primarily concentrate on providing IT and business process outsourcing services to IBM clients on an international level. It will support the IBMaEUR, by strategic outsourcing of clients, providing server systems operations, end user, and security services, which will include maintenance and monitoring of the hardware and software computer systems.

In a release, the General Manager, IBM Poland, Anna Sienko, said that, “IBM’s global delivery centers are critical in delivering information technology services to our clients around the world. We chose Wroclaw for our newest facility based on criteria including its highly educated and experienced professionals, language skills and a favorable business environment.”

The Marshal of the Parliament of the Republic of Poland, Grzegorz Schetyna added that, “This newest IBM investment is crucial for our economy to take a step forward. I see this as a major opportunity for Poland’s talented and skilled people to work and cooperate in a globally integrated world.”

The service will also utilize collaborative problem solving and defect prevention processes based on the service management standards. Employees will be responsible mainly managing the servers and storage systems, which are critical for ensuring optimal Information Technology infrastructure performance for IBM clients.


IBM Opens Service Delivery Center in Wroclaw, Poland

September 11th, 2010

New facility will provide high value information technology services to IBM clients

WROCLAW, Poland, Sept. 10 /PRNewswire/ — At a ribbon cutting ceremony today, IBM (NYSE: IBM) and leaders of Poland’s business and public sector communities announced that the new IBM technology service delivery center — located in the Wojdyla Business Park in Wroclaw, Poland — is now operational. The new center is part of an extensive network of IBM service delivery centers in more than 20 countries, with multiple sites in many of those countries, providing information technology (IT) services and business process outsourcing capabilities to IBM clients around the world.

“This newest IBM investment is crucial for our economy to take a step forward,” said Grzegorz Schetyna, Marshal of the Parliament of the Republic of Poland. “I see this as a major opportunity for Poland’s talented and skilled people to work and cooperate in a globally integrated world.”
The new service delivery center will primarily support IBM’s strategic outsourcing clients, providing server systems operations, security services and end-user services, including maintenance and monitoring of computer hardware and software systems. The services utilize collaborative problem solving and defect prevention processes based on service management standards. Employees will manage the servers and storage systems critical for ensuring optimal IT infrastructure performance for IBM’s clients.
“IBM’s global delivery centers are critical in delivering information technology services to our clients around the world,” said Anna Sienko, general manager, IBM Poland. “We chose Wroclaw for our newest facility based on criteria including its highly educated and experienced professionals, language skills and a favorable business environment.”
The center has already hired a number of technology and engineering graduates as well as skilled IT professionals.


Infosys to expand back office operations in Poland

September 6th, 2010

Infosys Technologies is set to expand its back office operations in Poland in the next two years to offer business process outsourcing (BPO) services to more European and global clients, a senior official of the IT bellwether said Monday.

‘We will ramp up our headcount to 1,500 people by 2012 from about 1,000 this year at our Lodz BPO facility in Poland to serve at least 20 clients across verticals in Europe and American markets,’ Infosys BPO Poland Sp Vice-president Krystian Bestry told IANS here.

The $4.8-billion global software major runs two large back offices in Poland and the Czech Republic to provide transaction services in diverse areas, including finance, accountancy, procurement, taxation and compliance issues.

‘We currently serve 10 active clients, including top European firms in manufacturing and consumer goods sectors. The services are provided in 22 languages,’ Bestry said on the margins of the Polish-Indian Investment Forum.

The company has three centres at Lodz and two in Prague where it employs about 450 people for providing non-voice transaction services.

Though investment in infrastructure facilities has been a modest $10 million in Poland, 95 percent of its assets are in the form of people and they account for major operational expenses in the form of compensation and perks.

‘We employ different nationalities from Europe and other countries in line with the requirements of our global clients. Majority of our employees are post-graduates in economics, finance and business management,’ Bestry said.

Infosys chose Poland to set up the back office operations in view of its central location in Europe and at Lodz, which is also in the heart of the country.

‘In addition to its strategic location in Europe, Poland has cost-effective labour force, talent pool, political stability and pro-active government, which offers sops for overseas investment in manufacturing and services sectors,’ Infosys BPO Head S. Dandapani said.

The Polish subsidiary contributes around 13 percent of the company’s BPO revenues, which was $352 million in fiscal 2010.

As an end-to-end outsourcing services provider, Infosys BPO has 12 delivery centres worldwide, including five in India and seven in Asia-Pacific, Europe and South America (Brazil and Mexico), where 18,500 people work on 24x7x365 days.

According to Iwona Chojnowska-Haponik, Polish foreign investment department director, Poland emerged as a top destination in Europe for back office services, thanks to talent pool and demographics, as half the country’s population is under 35 years of age as in India.

‘Besides cost advantage and huge labour force, the government offers tax exemptions for local and overseas firms setting up operations in special economic zones and cash grants through European Union funds as seed capital,’ Haponik said at an interactive session between Indian and Polish business leaders.

With over two million students and 400,000 graduates per year, Poland emerged as a major hub for back office services. About 360 BPO firms operate in seven cities across the country, providing transactional services in 26 langauges.


Poland Information Technology report Q1 2010

February 20th, 2010

Poland is expected to maintain its status as one of the Central and Eastern Europe (CEE) region’s fastestgrowing IT markets over the 2010-2014 forecast period, thanks largely to EU funding for information and communication technologies (ICT) and information society-related initiatives. BMI forecasts growth in many IT market segments over the next few years, particularly as EU funds support new public sector IT initiatives.

IT spending per capita of around US$205 is considerably below the level of, say, the Czech Republic. Poland accounts for less than 2% of EU IT spending and also lags behind fellow EU newcomers Hungary and Slovakia on per capita IT spending. There are also broad disparities in PC penetration between urban and rural areas.

The IT market is expected to grow at a compound annual growth rate (CAGR) of 9% between 2010 and 2014, with IT services driving growth for the sector as a whole. Enterprise IT spending should pick up in 2010, with an improvement in the external trading envrionment triggering upgrade cycles postponed from 2009. Business and consumer investment will remain vulnerable, however, to any sign of weakness in the eurozone or global economic recovery.

Industry Developments
Poland’s National IT Infrastructure Plan for 2007-2013 was formally adopted by the government in 2008, following a public sector IT spending slowdown in preceding years. In 2009, EU funding drove a series of projects, with the IT component to be worth nearly EUR1bn. According to Poland’s National IT Infrastructure Plan, some 75% of funds spent on government IT projects over the next five years is expected to come from the EU.

BMI forecasts that wireless internet access will grow rapidly. Poland’s broadband operators are also encouraging xDSL and cable-based broadband take-up by offering new innovative services, such as IPTV, video on demand and VoIP in double- and triple-play packages. Such services will encourage subscriptions and drive spending on computers and other household electronics products.

Competitive Landscape
In September 2009, the European Commission approved a regional aid packaged of EUR54.5mn for Dell Poland to support the establishment of a manufacturing facility in Lodz. In H109, Dell said that it would move its European manufacturing base from Ireland to Poland and cut 1,900 out of 3,000 jobs at its Limerick plant.

In 2010, Microsoft hopes that sales of its Windows 7 operating system, launched in October 2009, will boost its sales in the Polish market. In the summer of 2009, Microsoft continued to lay the groundwork for the new operating system launch and released the enterprise version of the software in August. Going forward, IT service providers will focus on providing specialised vertical solutions, particularly for key segments such as financial services and telecoms. In 2009, Comarch, a global provider of software and services for the telecoms industry, completed a major project for leading telecoms company Polkomtel. The solution was to facilitate billing of mobile virtual network operators (MVNOs) and content providers.

Computer Sales
Poland’s computer hardware sales are projected at US$3.1bn in 2010 and are forecast to reach around US$4.2bn in 2014. The Polish addressable market for computers is estimated at around 3.2mn units in 2010 and this annual total could increase to 5.9mn by the end of BMI’s forecast period. PC penetration reached around 50% in 2008 and BMI projects that it could reach 70% by 2013. Falling prices of both desktops and notebooks have been a major growth driver for the hardware market, along with EU aid and overall economic recovery. Research has revealed that Poles are starting to purchase more high-end computers.

The Polish software market is projected to be worth US$1.7bn in 2010 and is likely to grow to US$2.6bn by 2014, giving a CAGR of 11%. The launch of the Windows 7 operating system has the potential to impact positively on sales in 2010. Rising computer penetration in the enterprise sector has driven continued growth of software demand, despite software piracy issues.
The procurement of basic software packages such as enterprise resource planning (ERP) still accounts for about half of enterprise software spending, particularly in the manufacturing sector. However, vendors are increasingly focused on more specialised applications, such as customer relationship management (CRM) and business intelligence, where faster growth is possible.

IT Services
IT services spending, projected at US$3.0bn in 2010, is the fastest-growing sector of the IT market and is expected to rise to US$4.5bn by 2014. In 2010, vendors are expected to benefit from IT projects tendered across sectors ranging from universities to banks and financial institutions, utilities to the public sector. With a larger installed IT base, acceptance of the need for IT services is spreading through many organisations. While systems integration as wellas hardware and software support and installation still collectively account for more than one-half of total IT spending, outsourcing has become the fastestgrowing segment.

The internet market continues to be constrained by high telephone charges and relatively low levels of computer penetration. Moreover, there are wide regional disparities, with internet penetration about twice as high in urban as in rural areas.

A recent Forrester survey revealed that, while overall online banking uptake and PC availability remained low, Polish internet consumers already matched southern Europeans in online shopping. Poland even outperformed Spain, with 30% of online consumers having previously purchased something online, compared with just 29% in Spain.

How broadband will develop in the longer term will greatly depend on the Polish regulator’s success at forcing Telekomunikacja Polska (TPSA) into a functional split, as well as its continued liberalisation of the market. The regulator believes that the split will happen in 2010 or 2011, but there are high risks that it could be delayed longer than this. How wireless technologies are deployed to the rural regions will also be a major factor in the proliferation of broadband.


V-th Annual Outsourcing Forum – Poland as European knowledge process outsourcing center. 19th January 2010. Warsaw, Poland

November 23rd, 2009

Roadshow Polska in cooperation with Ernst&Young and Forbes have pleasure to invite you to the next, V-th edition of ANNUAL OUTSOURCING FORUM – POLAND AS EUROPEAN KNOWLEDGE PROCESS OUTSOURCING CENTER which will take place on 19th January 2010 at Hyatt Hotel in Warsaw.

During this edition we have decided to consider new issues and face new challenges which will, as we expect, result in a discussion very interesting both to participants and media.

The leading topics will include Knowledge Process Outsourcing, Outsourcing of the State functions, Barriers for BPO development from corporation perspective, Poland in BPO sector in three years and Barriers for BPO development in Poland from the perspective of self-government, government, university and industry.

During the event Forbes awards will be announced.
This event is a cyclical consequence of previous Outsourcing Forums – Poland as European Service Hub conferences which enjoyed enormous popularity as well as they won a circle of loyal participants. The objective of the Forum is to promote Poland as a modern center of BPO services as well as present and discuss the latest trends in the outsourcing market both in Poland and worldwide. We will analyze how the situation in the financial markets worldwide influenced BPO sector and what perspective of development BPO investments face currently in Poland.

Forbes, as the Main Media Partner, will issue a special album about the event, outsourcing and BPO investments 6 weeks after the Forum (as a supplement to Forbes). We are also planning, together with E&Y (Contents Partner) and Forbes, to send a survey to towns/corporations and outsourcing companies (the result will be discussed during the event as well as used in Forbes publication, among others).

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