Eastern Poland ideal for outsourcing

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Eastern Poland Macroregion is getting more and more attractive for companies from BPO sector (Business Process Outsourcing). It results from i.a. relatively low labor costs, dynamic development of infrastructure, favourable local politics and a lot of educated young people. Over 10,000 people from Eastern Poland have already found employment in the BPO sector.

BPO (Business Process Outsourcing) means contracting selected business processes to outside suppliers. These are often strategic areas for the company, however, not the primary area of its business. For years, experts have been pointing out that Poland, due to its favorable geographical location, cultural proximity to Western markets and a favorable relation of costs to work quality, is one of the most attractive countries in the world for foreign investors in the BPO sector.

OUTSOURCING WINKS AT THE EAST

Over the years, investors have focused primarily on the biggest Polish cities. However, now the major players are facing the growing competition - Eastern Poland Macroregion with 5 voivodships: Lubelskie, Podkarpackie, Podlaskie, Świętokrzyskie and Warmińsko-Mazurskie. It has over 8 million inhabitants, with approximately one third being below 25 years of age. There are as many as 53 higher education facilities with over 330,000 students.

IwonaChojnowska-Haponik, Director of Foreign Investment Department at the Polish Information and Foreign Investment Agency (PAIiIZ) says: We have been observing a growing interest in the companies from modern services sector in Eastern Poland Macroregion for a couple of years now. She mentions the fact that the cities in the region offer a great number of educated employees whose financial expectations are still lower that in other Polish cities, where BPO sector has been developing for many years now, and where the growing competition contributes to the growth of remunerations. Iwona Chojnowska-Haponik explains:Most of the big cities of Eastern Poland have recently offered modern office space with the technical infrastructure inevitable to conduct business in the modern services sector. Additionally, representatives of local authorities, seeing the opportunity for urban development thanks to BPO sector investments, not only created teams dedicated to serve investors and understanding the specific nature of such projects, but also began to actively present their offer to companies.

THE MACROREGION AS THE RISING STAR OF BPO SECTOR

Similar conclusions may be drawn from the reports by such consulting firms as Colliers International which has published "The map of BPO Rising Stars 2013 in Poland". It identifies 10 cities, not only from Eastern Poland, where outsourcing services have the biggest potential. The company experts noted that an increasing number of BPO clients started to ask about some of the less well known locations, such as Lublin, Kielce or Olsztyn. The report shows that i.a. rental rates in Eastern Poland capital cities can be up to 50 % cheaper than in the main office markets. In Kielce the rental cost per square meter is 9-11.5 euro. Lublin is more expensive (10-12 euro), whereas Białystok (7-10 euro) and Rzeszów (8.5-11 euro) are cheaper. It has been also pointed that cities such as Lublin, Kielce and Olsztyn have healthy volumes of office space under construction and planned. Another consulting firm, Jones Lang LaSalle, in their reports on alternative BPO sector locations, draws attention to the cities of Eastern Poland Macroregion in the context of foreign language skills, noting that the knowledge of Russian there is a lot higher than on average, and the knowledge of English and German is at the same level as the whole country's average.

CITIES DEVELOP INFRASTRUCTURE FOR MODERN SERVICES

The cities of Eastern Poland Macroregion themselves are competing in emphasizing their advantages to the potential BPO sector investors. They enlist i.a. their demographic potential, low costs of labor and rental rates, development of modern infrastructure and office space. Joanna Bobowska from the press office at the Mayor's Office in Lublin enlists: Each year in Lublin there are approximately 90,000 students enrolled at higher education facilities. Additional advantage is the labor cost which is about 20% lower than in other Polish cities. Lublin already has the biggest office space in Eastern Poland, reaching the total of over 100,000 m2, and there are plans to create another 70,000 m2, also in the area of special economic zone. Office space rental rates are about 30-40% lower than in Warsaw or other big cities. She adds that BPO sector development is listed as the priority for the city economic development in Lublin 2020 strategy, and that 3,500 people already work in this sector.In the coming year, we expect several new investments in the sector and we hope that the results will exceed our expectations, Joanna Bobowska notes.

BPO sector development is also important in Białystok. It is there that, in order to fulfill the investors' expectations, a report on IT/BPO/SSC sectors has been commissioned. Urszula Mirończuk, the spokesman for the president of Białystok, explains: It will serve as a tool helping to make strategic decisions. She emphasizes building favourable investment environment and positive relations with prospective investors.

Individual approach to investors is also emphasized by Kielce where about 2,000 people already work for the BPO sector. UCMS Group Poland, providing outsourcing services in the field of accounting, payroll and human resources for international companies, decided to locate its BPO service centre there a couple of weeks ago. Dozens of people will be hired there. Anna Kaczmarska, Finance Director in UCMS Group Poland, says: While looking for another location for our next office in Poland, we paid attention to such criteria as: transportation connections and distance to Warsaw, employees availability and qualifications, office space availability, local administration support, IT infrastructure availability and quality, and office operation costs. Several dozens of cities underwent a very detailed analysis and we visited 3-4 cities qualified for the second round several times. Our final choice was Kielce.

MieczysławPastuszko, the Director of Department for Structural Projects and City Strategy in Kielce City Hall, says: What indicates our attractiveness is primarily the number of students, their fields of studies, knowledge of foreign languages and office space availability which, in terms of attractiveness, can compete with cities like Kraków or Warsaw. He notes that, although the decision to promote Kielce among investors as an attractive location for BPO sector was taken a few years ago, the process itself is tedious, and the competition among cities remains quite big. Pastuszko says:It is inevitable to make contacts and generally build favourable environment. Promotional operations, commercials purchased e.g. in British trade magazines or visits at trade fairs are of help here. We are trying to be active and stand out in comparison to other cities e.g. by organizing Eastern Poland Business Forum once again. The Forum is scheduled for June and it is one of the events organized as part of Eastern Poland Economic Promotion Programme which PAIiIZ S.A. is responsible for. And there will be more of such events. A conference and a study visit "Appetite for outsourcing. Development perspectives for BPO centres in Kielce and other cities of Eastern Poland" is scheduled for April. Its main organizer is the local government of Kielce and a consulting firm Deloitte.

According to the data from PAIiIZ, there are over 35 companies in the sector of modern business services which, according to the incomplete information, employ or will employ 10,000 people in Lublin, Białystok, Kielce, Rzeszów and Elbląg. Iwona Chojnowska-Haponik, Director of Foreign Investment Department at PAIiIZ S.A. says:It's not only Polish companies having here their Shared Services Centres dealing with telemarketing, debt collection and customer service, but also companies offering IT and accounting services, or conducting research and development activities. She adds that the most of investments from this sector are located in Lublin where Orange already has its big customer service centre, and from where a Hindu outsourcing giant Genpact offers its services to international clients. Director Iwona Chojnowska-Haponik emphasizes:An interesting example is Rzeszów where, due to the rise of aviation sector and the emergence of the so-called Aviation Valley (Dolina Lotnicza), a lot of research and development centres were created. More and more often, investors already present in Poland and looking for further locations, look to Białystok, Olsztyn or Kielce where they can get skilled employees, but also, more recently, they have the ability to locate themselves in modern office buildings which offer modern technical infrastructure essential for conducting activities in the area of modern services.

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