Why Eastern Europe is becoming a nearshore and offshore staple for regional and global buyers?

The landscape of global business services/business process outsourcing (GBS/BPO) is evolving rapidly, and Eastern Europe (EE) is emerging as a prominent hub. In particular, customer experience (CX) and back-office operations have emerged as key sectors driving this success in the region.

This article delves into key factors that make EE an ideal nearshore and off shore destination for GBS/BPO operations, drawing insights from the recently released 2023 GBS.World Competitiveness Index for CX and Back Office[1]. These factors include market size, talent pool, English proficiency, and cost competitiveness – all contributing to the region’s growing appeal.

Eastern Europe’s GBS/BPO market

Eastern Europe boasts a thriving GBS/BPO market, with an estimated market size of US$33.4 billion and a workforce of 1.4 million professionals, as reported by GBS.World | Genesis GBS. These numbers underscore the region’s significant contribution to the global outsourcing industry. Additionally, Poland’s ranking of 4th best in the world in Ryan Strategic Advisory’s Most Favored Offshore CX Deli very Locations[2] serves as a testament to its attractiveness for businesses seeking CX solutions.

As will be discussed, Poland also outshone numerous global competitors in the 2023 GBS.World Competitiveness Index for CX and Back Office, consistently ranking in the top 5 EE countries, and cementing its position in the top 10 world-wide for each category.

Factors driving Eastern Europe’s GBS/BPO desirability

• Talent

Eastern Europe’s reputation as a GBS/BPO hub is supported by its tech-savvy youth population and exceptional education system. Educational institutions focus on equipping students with modern business skills, consistently producing highly skilled professionals that are well-versed in industry practices[3]. Collaborations between academia and industry ensure graduates possess both theoretical knowledge and practical skills, making them valuable assets for businesses seeking GBS/BPO expertise.

In Poland, for example, approximately 44% of its youth population hold a higher education qualification[4]. Similarly, 55% in Lithuania hold a tertiary education degree, and 46% of Latvians have Bachelor-level degrees or higher[5].

The region’s strategic investment in education and talent development cements its position as a strong GBS/BPO contender, offering not only tech-savvy professionals but also a deep understanding of industry intricacies – collectively enhancing EE’s appeal for companies looking to leverage top-tier talent.

• English proficiency

According to the 2022 Education First English Proficiency Index[6], EE countries consistently demonstrate a high level of English proficiency, reflecting their commitment to preparing a globally competitive workforce.

Croatia, a notable standout in the region, achieved a remarkable ranking of 11th in the world, placing it in the Very High Proficiency category, along with Poland in 13th place.

Additionally, Slovakia, Romania, Hungary, and Lithuania all secured positions in the top 20 globally, earning recognition in the High Proficiency category. They were joined by Bulgaria, Czechia, Latvia, Estonia, and Serbia, further emphasizing the widespread prevalence of high English-proficiency levels across EE.

This linguistic capability is a significant asset for the region, as it effectively minimizes language barriers and fosters seamless communication with clients and customers worldwide. In this way, EE provides an alternative offshoring option for buyers seeking the delivery of English CX services.

Moreover, this linguistic advantage not only enhances customer interactions but also ensures that EE professionals can effectively collaborate with clients and partners from diverse linguistic backgrounds.

• Cost competitiveness

Results from a GBS.World | Genesis GBS salary-comparison survey revealed that EE offers competitive labor costs compared to other outsourcing destinations. In this comprehensive survey, salary comparisons were drawn up to evaluate the salary landscape in EE cities, such as Poland, Hungary, and Czechia, against countries like Australia, the USA, and the UK, as well as against general Central European salaries.

The results showcased major cost-saving opportunities offered by EE. For instance, businesses can realize substantial savings, ranging from €1,428 to €1,745 for monthly Contact Center Agent salaries compared to salaries in general Central European countries. Furthermore, for roles like Team Leader/Supervisor, monthly salaries in EE are notably costeff-ective, resulting in potential savings of approximately US$1,573 to US$2,534 when compared to the United States.

This cost-effectiveness is a pivotal factor that entices businesses to EE. It enables organizations to strike a balance between maintaining operational efficiency and significantly reducing overall expenses. By leveraging the cost advantages offered by EE, businesses can allocate resources more strategically, invest in growth, and remain competitive in the global marketplace.

GBS.World competitiveness rankings

Based on research from 179 in-depth interviews with global enterprise executives across the globe, the 2023 GBS.World Competitive Index showcases the major outsourcing destinations of choice for numerous sectors and subsectors. The CX and BackOffice results provide valuable insights into EE’s performance and highlight its rise as a hub for GBS/BPO operations.

Poland stands out as a major contender in the global and regional rankings as a top outsourcing destination of choice. Not only did it position itself in the top 10 worldwide for each category, but it also came first in the world for the Digital Contact Communications category.

Additionally, Poland ranked first in the region for 4 out of 5 categories: Customer Lifecycle Management/Value, Customer Service & Support, Digital Contact Communications, and Customer Sales & Conversions.

The fifth category, Back Office, saw Romania securing the top spot in the region and ranking in the top 10 worldwide.

Other strong EE countries include Hungary, ranking as Outstanding (the highest possible regional ranking) for all 5 categories in the region and earning a spot in the top 10 worldwide for 2 categories; Croatia, ranking as Outstanding in 3 categories regionally and securing a spot in the top 10 worldwide for 1 category; and Czechia, ranking in the top 10 worldwide for 2 categories and earning the Outstanding ranking in 2 categories regionally.

Eastern Europe: a GBS/BPO powerhouse

Eastern Europe’s ascent as a GBS/BPO powerhouse is fueled by its robust market size, a talent pool brimming with tech-savvy professionals, high English proficiency, and cost competitiveness. These factors make the region an irresistible choice for businesses seeking to enhance CX and streamline backoffice operations.

As the 2023 GBS.World Competitiveness Index indicates, EE is well on its way to becoming the go to destination for global buyers, reshaping the GBS/BPO landscape for years to come.

Author: Mark Angus,  CEO of market research consultancy, Genesis Global Business Services and Founding Partner of The World Source Marketplace for Global Business Services (GBS.World)

^{[1] 2023 GBS.World Competitiveness Index for CX and Back Office.}

^{[2] Ryan Strategic Advisory Most Favored Offshore CX Location.}

^{[3] OECD and UNICEF Report: Education in Eastern Europe and Central Asia.}

^{[4] Poland Ministry of Education 2019 Education at a Glance Report.}

^{[5] Eurostat 2021 Educational Attainment Statistics.}

^{[6] 2022 Education First English Proficiency Index.}

This article comes from magazine:
FOCUS ON Business #13 November-December (6/2023)