By Tomasz Borowiecki, Business Services Director, Hays Talent Solutions, Poland – The Business Services Sector (BSS) industry emerged in Poland only at the beginning of the 21st century, yet it has already been recognized by experts as a highly developed, mature market for global BSS projects, with excellent prospects for continued growth in the coming years. The rapid development of this sector is a positive surprise, making it already equal to the more traditional automotive industry in the number of generated employment and is to become one of the main branches of the Polish economy.
Even though the sector of modern business services is one of the most recent on the Polish market, the specialists of the industry have managed to prove their value globally, and the high quality of their performance attracts new investors. Currently, Poland comes third on the list of countries globally with employment generated in business service centres.
At present, shared services and outsourcing centres employ experienced experts mostly in the accounting, IT or customer service area. The demand for such employees will constantly grow covering also new processes. Alongside, with the already mentioned ones, global processes of HR (including recruitment, training, etc.) and marketing, logistics or purchasing are more frequently supported by Poland. Simultaneously, the number of companies transferring to Poland advanced functions such as controlling, financial analysis or business decision support is growing.
A real breakthrough comes in the fields connected with the financial sector, where the amount of positions occupied by Fund Accountants or Anti Money Laundering (AML) and Know Your Customer (KYC) specialists is growing.
The BSS industry has a significant input in the number of new jobs generated on the Polish labour market. Currently, according to findings of the report “10 years of the business services sector in Poland”, compiled by the The Polish Information and Foreign Investment Agency and Hays Poland, there are over 150,000 people employed in 659 companies from the Business Services Sector in Poland and both these numbers are expected to grow considerably. Shared Services Centres employ almost 57,500 people, which makes 38% of the total employment in the sector. The second group includes Business Process Outsourcing companies, where 42,600 people are employed. The final positions are occupied by IT centres (34,700 employees) and R&D (15,300).
Business services centres in Poland are located in 23 cities. The main Polish locations for BSS activities are 11 metropolises hosting more than 10 centres. These are: Kraków, Warsaw, Wrocław, Łódź, Silesian Metropolis (Katowice and Gliwice, among others), Tricity (Gdańsk, Gdynia and Sopot), Poznań, Bydgoszcz, Lublin, Rzeszów and Szczecin. The centres operating in those locations employ almost 98% of all employees of the sector.
In terms of the number of centres, Warsaw leads the group with 133 companies, followed by Katowice and other cities of the Silesian Metropolis (83 centres) and Kraków taking the third position (78 centres). The situation looks different in relation to the number of persons employed in the centres. In this case, Kraków is the leader, with employment exceeding 30,000 people, which makes up 20% of all the employees in the sector. Second place is occupied by Warsaw (27,400 and 18%) and the third by Wrocław (23,000 and 15%).
Interesting conclusions can be also drawn in relation to the type of centres by city. The biggest number of SSCs are located in Kraków and Łódź (46% and 41% of all companies respectively). Relatively many IT centres operate in Warsaw, Lublin, Tricity and Rzeszów (44%, 43% and 40% respectively), whereas research and development sites dominate in Rzeszów (27%) and Wrocław (26%).
Foreign investors on the Polish BSS market
Considering the country of origin, the Polish BSS industry is still dominated by domestic investors. Among 659 companies currently present in Poland, 214 are companies with Polish shareholding. Nevertheless, the number of foreign firms transferring their processes to Poland is on the increase and the local authorities are offering various incentives in order to attract more firms to the region. Further positions are occupied by enterprises from the United States (155), the United Kingdom (49) as well as Germany (44) and France (42). The share of Scandinavian and Finnish companies is also significant – in total, 57 companies from Denmark, Finland, Norway and Sweden invested in Poland.
This order changes when considered in the context of the employment generated by companies from each of these countries. In this case, companies from the United States hire the highest number of employees. Worth highlighting is also the increase of French companies’ share in the market. They make up less than 7% of all centres located in Poland, but they contribute as much as 12% of the total employment.
Foreign companies from different countries have similar preferences in terms of their location choices. They prefer cities with good transportation links, large supply of multilingual graduates and modern office space. Enterprises from the USA select mainly large cities, traditionally associated with the Business Services Sector. 22% of them have their seat in Warsaw and 21% in Kraków.
Polish companies prefer to locate their businesses in Warsaw (23%) and Katowice (17%), but they are also the first to select locations outside the list of the most popular cities among companies in the sector, e.g. Kielce, Elbląg, Białystok or Piła, where the labour cost is lower. German companies mainly decide on Wrocław (24% of them located their businesses there), which is partially motivated by common good knowledge of German language among local students and young graduates. Companies from the UK have less clear preferences. Although the majority (20%) decided to open a centre in Warsaw; Kraków and Katowice are not far behind (16% each).
French companies seem to be the most dispersed, with 27% of them having their seat in other cities than the Business Services Sector main ones.
Multilingual aspect of outsourcing
In recent years, the linguistic field of study has gained popularity among Polish students, due to rapidly changing market demand. More and more languages are used in the sector nowadays, as an increase in number of processes outsourced to Poland and new investors coming in each year can be observed. In total, the companies from the Business Services industry provide services in 36 languages, the most popular being English (86%) and German (53%), followed by French (39%), Italian (29%) and Spanish (25%). Among the variety of languages, some centres include even such niche ones as Thai, Hebrew, Kazakh and Catalan.
In 12% of companies Polish is the only language spoken. These are mainly Polish companies, focused on servicing the domestic market. On the other hand, over a half of companies provide services in one foreign language, this mainly being IT and R&D centres. Only 12% of IT companies and 16% of R&D companies provide services in a language other than English. Significant differences can also be observed when comparing the average number of foreign languages in which services are provided, depending on the type of the centre. For SSC and BPO companies the number of languages spoken is four and for IT and R&D companies – only one.
Optimistic future of BSS in Poland
The future of the Business Services Sector in Poland is very optimistic with great prospects. A question arises as to whether the sector has a chance to continue its development at such a stunning pace of about 20% per annum, both in the scope of the market value and the increase in employment.
In connection with the significant increase of the base against which the employment growth is calculated, 20% growth will be difficult to maintain. Nevertheless, the annual growth of several thousand new jobs in the sector is realistic. It seems that a very high level of self-awareness exists in the sector, consistently striving to eliminate the barriers which could potentially constrain its further development, such as availability of employees with specific skills (particularly language and technical skills), specific legal regulations or tax issues. Initiatives aimed at continuous business climate improvement, especially for the benefit of the BSS companies, are also noteworthy. They are willingly undertaken by public institutions, business support institutions and local authorities in particular.
Considering the interests of potential investors in Poland as a BSS location, one can expect that the swift stream of investments in the business service sector will not cease. What is more, qualitative changes within the sector are expected too. Companies seem to be more prone to locate in Poland their more complex processes rendered to their clients virtually around the world. Two factors seem to play the key role here. The first one is the quality of human resources – its creativity, flexibility and eagerness to acquire knowledge in particular. The second is investment incentives. A vast array of incentivised investment initiatives, together with the allocation of significant financial assistance co-financed by the EU structural funds, are dedicated to the implementation and commercialisation of the outputs of R&D works. They are expected to be an important incentive to introduce or expand the R&D component in companies in the Business Services Sector.
If you are interested in the full version of the “10 years of the business services sector in Poland” report please contact: firstname.lastname@example.org
The author: Tomasz has over 10 years of professional experience gained in the UK and Poland. He spent last 5 years in the area of recruitment working for both volume and top level executive projects. In 2015 he has taken responsibility for the Business Services teams within Hays Talent Solutions in Poland, focusing exclusively on SSC/BPO sector, where he offers consultation and advice to top clients in the field and investors interested in the Polish market. Tomasz, a native Polish fluent in English, obtained Master’s Degree in English Linguistics from Wroclaw University. He also holds Level 5 Certificate in Management and Leadership from Chartered Management Institute in London.
This article was published in the Outsourcing Journal Special Edition “Nearshoring Europe Edition” in Q4/2015. You can download this edition (150 pages, PDF) free of charge here (membership with German OutsourcingA association required (free, personal membership available) >http://www.outsourcing-journal.org/Special-Editions/outsourcing-journal—nearshoring-europe-edition.html