Good prospects for the Polish business services sector
For years, the Polish business services sector (BSS) has been considered one of the fastest growing in Europe. It is also recognised as one of the most stable and promising sectors in the CEE region. In terms of employment, and despite the recent of economic changes, the Polish BSS sector has been recording an increase in its share in the labour market. It constantly attracts new investors who review their outsourcing strategies based on lessons learnt from the COVID-19 pandemic. Poland is becoming one of the beneficiaries of this trend.
Factors stimulating the growth of foreign investments in the country include global corporations’ increased favouring of nearshoring over offshoring and the attractive proportion of available high quality workers relative to operational costs. A competitive and diversified office market and an attractive investment incentive scheme are other strong arguments for locating investments in Poland. These are the conclusions of the Onshore, Nearshore, Offshore: Unsure? report published by JLL and Hays Poland.
PANDEMIC CHALLENGES
The COVID-19 pandemic undeniably had an impact on the Polish BSS sector. During the initial shock of the second quarter of 2020, many global corporations had to make strategic business decisions, including those related to ongoing and planned investments. The consequences for Poland were twofold: on the one hand, some projects were put on hold. Companies that had chosen Poland as their investment destination withdrew their plans, seeking to effect cost savings and deciding to wait out the turmoil within the global market.
On the other hand, the Polish BSS labour market slowed down its growth in the first wave of the pandemic but recorded a strong rebound after a few months. Its high flexibility, combined with a marginal reduction in jobs, made it a stable industry, increasing its attractiveness in the eyes of both candidates and potential investors.
SAFE(R) NEARSHORING
In the face of global turmoil and uncertainty, many organisations decided to cut costs through investments, and Poland became a beneficiary of this strategy. Investors decided, for example, to liquidate multiple service centres in different locations and merge their pool of skills in single new centre located in Poland.
The effects of COVID-19 have led investors from various market sectors to give up offshoring investments and opt for nearshoring. Companies with geographically remote business service centres or supply chains typically suffered more due to the pandemic than those that chose nearshoring. For example, having a service centre in Asia, where in some cases the restrictions were stricter than in Europe, showed many companies that geographical distance can result in both advantages and disadvantages.
During the crisis, cultural differences and poor infrastructure became more noticeable and made the switch to remote working extremely difficult or even impossible in many cases. Meanwhile, stringent lockdowns in one part of the world may deprive a company on another continent of support in a key business area. Such issues very often resulted in payment backlogs or management without an IT helpdesk.
POLAND'S POTENTIAL FOR BSS INVESTMENTS
It is, therefore, not surprising that the latest investor inquiries in Poland have come mainly from other European countries, as companies recognise the potential of Poland’s central geographic location. Investors are tempted by a mature and large labour market, wide availability of modern office space, well-developed IT infrastructure and attractive incentives. Poland is known to investors as a mature and diversified market, offering broad access to qualified employees who speak foreign languages. They are therefore increasingly interested in locating senior roles in Poland, which means servicing even more advanced processes. Recently,
Poland has attracted the attention of pharmaceutical and medical equipment companies, which see the potential for employing highly qualified employees in the clinical trials sector.
Multiple organisations from the IT and technology market as well as the financial industry have expressed a similar interest.
Investment decisions are largely based on the availability of employees with specific skills. In terms of investors’ interest, roles in IT – with particular emphasis on experts in the field of digitalisation and cybersecurity – lead the way. Finance is another equally popular area of expertise, with roles related to accounting, know your customer (KYC) and anti-money laundering (AML). Investors also ask about roles in procurement and HR, and market access within the pharmaceutical industry.
A HIGHLY-QUALIFIED WORKFORCE
Poland is competing mainly with other countries from Central and Eastern Europe for investment projects and more and more often with Portugal, Spain and France. Although salaries in the Polish BSS sector are often higher than in neighbouring countries, Poland often wins the competition for investments mainly due to the quality of available candidates. There are many educated specialists
on the market who are fluent in foreign languages. Due to the central location of Poland, centres operating in the country support business processes in the largest number of foreign languages in the region. In addition to popular European languages, there are also centres employing people speaking Scandinavian and Baltic languages.
Poland has made itself known to foreign investors as a country worthy of locating service centres. This is due not only to the excellent ratio of the high quality of skills to their price but also the maturity of the BSS sector. Poland is the largest and historically best-developed business services market in the CEE region, which investors perceive as a guarantee of the success of their project. For this reason, they are willing to accept higher wages than, for example, in the Czech Republic or Hungary. The strength of the Polish business services market is also evidenced by the fact that it employs many foreigners. The sector most often attracts workers from the CEE region but has recently seen an influx of people from Western Europe – Portugal, Italy, Spain and the United Kingdom.
REMOTE WORK
The business services sector has dealt very well with the market changes triggered by the COVID-19 pandemic. Overnight, employees of service centres in Poland moved from offices to their homes, maintaining the continuity of supported business processes. The universality of remote work has also opened the way for companies to recruit the best specialists, regardless of location.
There are many indications that remote work will continue in Polish business service centres for longer. This may be an opportunity for smaller urban centres, which will more often appear on the list of potential locations for new investments in business services. Nevertheless, metropolises still have an advantage over smaller cities and towns in attracting investment projects. Development potential remains key when choosing a location, and investors want to know whether it will be possible to expand the business in a given place by several dozen or even several hundred jobs.
It is also extremely important to assess whether a given location has the power to attract and retain employees. Investors therefore take into account the quality of life, the environment, and what the city has to offer its population. In this respect, local government bodies and regional investor assistance centres also play a key role. In addition, the availability of modern office space and communication infrastructure remain highly important.
WHAT COMES NEXT?
Poland is assessed more comprehensively than ever before. Investors take into consideration much more than workforce availability, office market and cost of running a business in the country. Respect for values that are most important for foreign employers are taken into account more and more often. Investors already know that the Polish market is mature and has a lot to offer, and it will be the nuances that will more often determine their choice of location. More advanced processes will certainly be transferred to the country, and the first investors who chose Poland as a country where key strategic business processes are serviced will largely determine what will happen in the future.
Author: Łukasz Grzeszczyk, Executive Director – Client Relations, Hays Poland
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