From the Editors

Here’s to the sweetspot

All over Europe, from the auditorium of the European Bank for Reconstruction and Development in London to the exhibition pavilions at MIPIM in Cannes, I have heard one phrase more than any other this year when discussing sourcing in emerging Europe: the region is right now in a sweetspot.

The reason is simple: when it comes to looking at the three main criteria sourcing companies consider when scouting new investment destinations – cost, location and access to talent – emerging Europe ticks all three boxes. It also offers a fair bit more. Security, amazing digital infrastructure (often much better than traditional infrastructure) and, increasingly, innovation. This is no longer a region that robotically carries out repetitive processes at low cost. This is a region that is redesigning those processes. A region that is emerging from its shell and beginning to take the lead in creating a world in which digitalisation and AI will move us all beyond what we ever thought possible.

When we published the first edition of our now quarterly magazine Emerging Europe back in the spring, our cover story focused on the fact that large parts of the region could no longer be considered ‘low cost’. We spoke to key players in a wide range of business sectors, and most agreed that cost was no longer the primary motive behind their decision to relocate businesses and services to emerging Europe: access to a wealth of talent is now far more important.

Price still has a role to play: talent must be available at the right price. But the evidence so far suggests that salaries have some way to go before emerging Europe will have to start worrying about becoming uncompetitive. The sweetspot has ample proportions. Indeed, it could well be argued that a far more pressing concern for emerging Europe is not that salaries are too high, but that they are too low. If the region wants to make sure that the talent currently attracting increasing numbers of investors is still around in five years time, then emerging Europe could probably use a pay rise.

This is probably the biggest challenge the industry faces in our region. The demographics are not promising: that has to change, and all stakeholders – including business and government – need to ensure that the matter is given more importance.

In our new special report, dedicated to the sourcing industry, we have brought together some seriously good talent of our own. Contributors from across the world of sourcing who can all boast a wealth of experience in dealing not just with the many challenges the industry faces, but who also know how take best advantage of the many opportunities which continue to present themselves. It’s rare to find so much knowledge in one place, but so deep is the interest in emerging Europe at the present time that we found most industry insiders all too keen to share their insight.

To everyone who helped make the special report happen, we extend our thanks: we look forward to seeing you at our Innotech Summit in Stockholm.

Here’s to the sweetspot.