Currently, there are around 600 BPO, SSC, ITO and R&D centres, across Poland, employing almost a quarter of a million people and the sector is set for further growth.
Jadwiga Emilewicz, Undersecretary of State at the Ministry of Economic Development, spoke to Wiktor Doktór, President of the Pro Progressio Foundation, about the development of the business services’ sector and the opportunities that the so-called “aspiring cities” offer in this sector.
Business process outsourcing (BPO), shared services centres (SSC) and research and development (R&D) centres are a major destination for foreign direct investment (FDI) in Poland. You have been in office for the last ten months. Will the current government’s policy continue to support the growth of this industry in Poland or are we, perhaps, in for some changes?
The Polish government consistently advocates its business support services’ policy. The Polish economy relies on the inflow of foreign capital, to a large extent, and as such it will be one of the decisive factors in the success of the Responsible Development Plan. Here, at the Ministry for Economic Development we strive to ensure that all foreign companies, including those in the BPO and SSC sector, are afforded equal opportunities and an environment that is conducive to investments. Those investments which stand to generate the most added value for the Polish economy receive the most attention.
In my opinion investments which create high salaried specialised jobs are best. And that is why we would like to see these linked with a transfer of technology to Poland. We are also very interested in investments which entail cooperation with local businesses, creating regional clusters.
We are also looking at introducing mechanisms based on grants, repayable instruments and tax exemptions which should encourage foreign businesses to increase the number of their investment projects in our country. Investors can expect preferential terms for conducting business operations in selected Polish locations. Works are in progress on the “Business Constitution” which will introduce a number of solutions to facilitate operating a business in Poland. The public procurement act will be amended, to ensure that contracts are awarded to reliable providers with the best product(s) and not just the bidders with the lowest prices.
Thus far, references to BPO, SSC and R&D investment products were mostly associated with foreign investments. Is this not also a chance for our home grown, Polish businesses to heed the example given by their foreign counterparts and to establish their own shared services centres?
Within the context of the Responsible Development Plan, as proposed by the government, companies with Polish capital will assume a particular role in our economy. The development of domestic companies, in the business support services’ sector, is important to us. Every Polish business that declares an intention to create BPO, SSC and R&D facilities, and which satisfies certain requirements, will certainly be granted the right to take advantage of the tax exemptions.
Currently a group that includes dozens of BPO and ITO companies as well as SSC and R&D facilities is already active. In total, these companies employ in excess of 50,000 people. If one takes into account the small and medium enterprises that provide IT outsourcing or financial and accounting outsourcing services, this number grows by tens of thousands of employees. The growing demand for outsourcing services in Poland means that services centres with Polish capital are facing a stable growth outlook.
Do businesses, which are engaged in research and development as well as start-up type enterprises, play an important role in the services’ ecosystem? Does the Ministry have far-reaching plans about the development of start-ups in Poland?
Of course we do. That is exactly the purpose of Start in Poland, the largest programme in Central and Eastern Europe and which is aimed at young, creative entrepreneurs. We want to show that we not only value entrepreneurship, but also innovation. Start in Poland also aims to demonstrate that there are alternatives to working in large corporations; there are different career path models. Start in Poland is an umbrella programme that encompasses numerous institutions and activities.
One of its fundamental components is the PFR Venture platform that is based in the Polish Investment Fund and is designed to consolidate funds for equity instrument that are addressed at start-ups. The next seven years may see the establishment and growth of 1,500 businesses in Poland; including those producing top quality innovative technologies and that are able to compete on foreign markets.
Almost PLN 3 billion (€690 million) of EU funds will find its way to start-ups who locate their business in Poland. Financial instruments are available in one place, with clearly defined and transparent terms for applying. The funds will come from the Intelligent Development Programme, amongst others. The programme will also be supported by private funds.
In addition, young people aged up to 35 years, will be able to submit their ideas for innovative businesses to Starting Platforms which will provide comprehensive support for the creation and growth of young businesses in Eastern Poland. The authors of the best concepts will primarily receive a package of free and “tailor made” services, aimed at converting their ideas into marketable and innovative products and services. The established start-ups will then be able to apply for as much as 800,000 zloty to develop their activities.
If we take a closer look at the map of Poland, in terms of the locations of BPO/SSC-type centres, we see that the lion’s share are concentrated in cities such as Warsaw, Kraków and Wrocław. Cities with more than 300,000 residents also boast a large number of BSS investments. Should smaller towns also compete for investments in this sector?
Of course they should. This is already happening, in many cases. Opole, Olsztyn and Rzeszów are good examples of this. If smaller towns have the right infrastructure and workforce to support these types of activities, then they can advertise themselves as good locations for such business. I would like to see smaller towns; the so called “aspiring cities” also compete with the larger urban centres.
Furthermore, one of the objectives of the Responsible Development Strategy is to support Polish entrepreneurship and innovation, particularly in small and medium-sized towns. We foresee the implementation of a key project, which aims to develop the workforce for the business services’ sector in medium towns. This is to ensure support for smaller academic centres with growth potential in terms of business services, including BPOs and SSCs, as well as information and research and development services.
We are aware of the significant disproportional development between the regions and that is why additional support is available for businesses that are interested in investments in areas where, thus far, they were unable to take advantage of the available opportunities. Vast and untapped potential lies therein.
The interview is an edited version of the original piece published by Outsourcing&More.
Main photo: Expo Milan 2015 Universal Exposition. Detail of Poland Pavilion