Intelligence

Kaunas: Ticking all the right boxes

The centre of Lithuania’s economic, academic and cultural life, it is no surprise that Kaunas has gained international recognition in recent years as a business process outsourcing destination of choice. Located only 100 kilometres from the country’s capital Vilnius and just over 200 kilometres away from the port city of Klaipeda, Kaunas is the perfect destination for a variety of businesses.

For the vast majority of investors who have chosen Kaunas, the primary factor in the decision making process was the city’s abundance of talent. Many investors say that there is an increasing number of Lithuanians returning from abroad to work in the country, and many Lithuanians leaving Vilnius are returning to Kaunas to re-establish their roots.

“Access to local talent and excellent infrastructure were the key reasons for choosing Kaunas over other European cities,” says Ilona Antonovičiūtė, head of NKT’s shared service centre in Kaunas. NKT is a global front-line supplier to the energy sector who develop, manufacture and market high quality cables, accessories and solutions for electrical infrastructure. “We looked at other locations where our factories are already operating, for example in Poland and the Czech Republic. However, these markets are already saturated to a certain extent with service centres, unemployment is low and competition for the right people is high. Kaunas has great potential for attracting more investors because of a pool of young professionals keen on working in international companies and an expanding infrastructure.”

“Over 50 per cent of the population speak three languages, and being a small country with no natural resources we must focus on being able to conquer new markets and create value outside of our home market. Language capabilities are also present due to our history, everyone older than 35 speaks fluent Russian and most people under 35 speak English, especially those with higher education,” adds Vytenis Šidlauskas, partner at Alliance for Recruitment (AFR), the largest recruitment company in the Baltics focusing on IT, shared services and manufacturing.

He also points out that 56 per cent of the population in Lithuania have a university degree. “We are ranked first in the EU,” Mr Šidlauskas says with pride.

The role of KTU

According to Mr Šidlauskas, both local authorities and universities are welcoming new investments and providing them with the attention that they can no longer receive in bigger cities in emerging Europe.

“That obviously helps to increase confidence from international companies that maybe heard of Kaunas for the first time just a few weeks ago. We expect Kaunas to receive much more focus from site selection consultants, advisers and global companies themselves looking to tap the talent pool of a city that has not already been spoilt by the attention of hundreds of international employers,” explains Mr Šidlauskas.

“One of the main reasons for choosing Kaunas over other locations was the talent pool that Kaunas can provide. Around 1,000 IT students graduate from Kaunas University of Technology (KTU) every year with their high-level knowledge in technology and with perfect skills in English. We hire young people, graduates or even students and additionally training them to work in our company,” explains Jonas Lukosius, country manager Lithuania at TransUnion Information Group, an American consumer credit reporting agency with offices globally.

It is not all about tapping the existing talent pool: companies are giving back to their communities.

As Mr Lukosius explains; “we work closely with KTU to fine tune their education programmes. Our presence in Kaunas helps the city and region to be more focused in the market we are operating in.”

Talent is not limited to Lithuanians either, as Lina Žalpytė, Head of AFR‘s Kaunas office, explains:

“The number of foreigners has been growing, predominantly from Europe. We have also noticed a very positive trend of re-emigration. Lithuanian specialists or students, who went to study or gain experience abroad, are now coming back to Lithuania to continue their professional career here, as international companies and job opportunities are now present in their home country or cities.”

Investor confidence

The close working relationship between the national and local investment promotion agencies is further strengthening investor confidence in the country.

“Prior to becoming mayor, I built my private business in Kaunas. Due to my efforts it grew into a multinational corporation with over 8,000 employees. This experience has given me the best insight as to what is needed for a new business investor. Every member of the team working in the municipality of Kaunas already knows this. We are flexible, fast, open-minded and ready to help at any time. We all are well aware that a successful business creates the greatest added value for any city and its people. Overall, this perception is strongly reflected in our daily work,” Visvaldas Matijošaitis, the mayor of Kaunas, tells Emerging Europe.

“Invest Lithuania and Kaunas IN are working hand-in-hand towards the common goal of not only bringing new investments into Lithuania but also maintaining this competitive environment and working towards the ease of doing business here,” explains, Ms Antonovičiūtė

As a result of the new investment, the real estate market in Kaunas has expanded.

“For a long time, Kaunas had an issue with lack of commercial real estate. Now this issue has been resolved as new business centres have started operating over the last few years. We were very lucky from the beginning by being able to set up our office in one of the most beautiful places in Kaunas, the Zalgirio Arena,” explains Jonas Lukosius.

“The availability of office space in Vilnius is around three per cent compared to approximately 10 per cent in Kaunas. In addition, if you compare the average monthly rent of prime office space, in Vilnius it’s about 14 to 17 euros per square meter versus 12 to 14 euros per square meter in Kaunas,” adds Jurgita Šilaikytė, head of brokerage at NewSec, a real estate management company covering the Nordics and Baltics.

Capital of culture

Whilst Kaunas has a long history, it is also known as a student town, with seven universities and over 35,000 students, and the mix of old traditions and culture with a young and modern vibe make the city an ideal place for new ventures.

“Kaunas is becoming more international; however, it still keeps its own style and face, it is no surprise why UNESCO has listed it as a City of Design. What’s special about Kaunas is that it is a student town, there are places to go out in the Old Town, lots of interesting events, including sports, the Kaunas Hansa days, the KaunasJazz music festival, the Pažaislis classical music festival and many others, while at the same time it offers quality living conditions for families – including schools for English speakers. Kaunas will also be the European Capital of Culture in  2022,” explains Ms Žalpytė.

“Lithuania is continuing the positive trend of attracting more investments because companies like the Lithuanian business mindset, communication style and excellent infrastructure. I see that Kaunas is quickly growing and catching up to Vilnius. There’s a lot of potential here. There’s enough room for everyone, as industry is diversifying by attracting more companies from new industries and new functions,” concludes Ms Antonovičiūtė.