There are tremendous opportunities for markets in the European nearshore to attract BPO investment. But destinations must offer linguistic diversity and a tech savvy workforce, says a new report.
War in Ukraine. Persistently high inflation. Looming recession in two of the region’s largest economies, Germany and the United Kingdom. Life in Europe has been fraught over the past year as geopolitical upheaval converged with pocketbook worries that invariably impact customer experience (CX).
In its latest Front Office CX Omnibus Survey, Ryan Strategic Advisory has registered the concerns of enterprises as they adapt to this uncertain business landscape.
It finds that common worries have not engendered a common set of sourcing strategies. Instead, executives across Europe are exploring a range of domestic, nearshore, and offshore service delivery models for provisioning end-users with customer services.
In Central Europe, Poland continues to dominate customer experience. Despite the variations in service delivery models across Europe, CX decision-maker preferences converge on certain locales as nearshore destinations of choice. Poland—along with Egypt—stands out as a go-to hub for outsourcers seeking scalable multilingual delivery in Europe’s nearshore.
- Without the EU, Poland would be a much poorer place
- Emerging Europe’s best-connected cities
- Poland’s blooming relationship with South Korea
Poland’s resilience as a favoured nearshore destination is remarkable, the survey claims.
Shortly after the conflict in Ukraine began in February 2022, forecasters speculated that a westward shift in European nearshore investment may occur, as outsourcers sought to mitigate risk by shrinking sites in Central Europe and adding to headcounts in places like Portugal or Greece.
Such a shift has yet to materialise.
As a NATO and EU member, Poland is deeply embedded in Western multilateral institutions. This anchor of stability has helped ensure that business in Poland has continued at a brisk pace over the past year.
Overall, while the number and value of foreign direct investment projects launched in Europe barely grew in 2022, as compared to 2021, Poland saw a 16 per cent increase in the number of new projects, including 71 business process outsourcing (BPO) and four information technology outsourcing (ITO) investments.
The secrets of Poland’s success
Poland’s expanding outsourcing sector owes little to new sites in its historic business centers, Warsaw and Kraków.
Rather, as with other mature offshore destinations like India and Mexico, it is Poland’s abundant secondary cities that offer the mix of ample talent pools, sound infrastructure, and improving accessibility that foreign executives fancy.
These sites include Wrocław, the Tri-City region (Gdańsk, Gdynia and Sopot), Łódź, Poznań and Lublin.
An abundant supply of class-A office space in many Polish cities, as well as numerous smaller sites and lower-grade facilities, means that outsourcers looking to expand are spoiled for choice. And by tapping the human talent spread throughout the country, Poland offers a rare mix of basic outsourcing strengths with a growing reputation for AI-powered advanced technology solutions.
“Service delivery to Western Europe used to skew toward locales with multilingual capacity or where agents possessed vertical-specific skills. But in the wake of the Covid-19 pandemic, as the region grapples with geopolitical upheaval and stubbornly high inflation, both are necessary,” says Sean Goforth, director of research at Ryan Strategic Advisory and author of the report that accompanies the survey.
Winners and losers
Aside from Poland, a clutch of smaller destinations in Central Europe retain significant nearshore appeal, according to the survey.
Slovakia, Hungary, and Croatia enjoy elevated levels of favourability in Germany, Italy or the UK. Each relies on multilingual CX, increasingly through digital channels where accent concerns are muted. Croatia also offers sizable populations of residents who speak Italian, German, and of course the native Slavic tongue.
Among customer experience buyers in the German market, Georgia tied for fifth in the list of desirable offshore destinations. This preference reflects the success of recent investments by global outsourcers to utilise the country as an English-German alternative.
Alas, while some destinations appear to be gaining traction, others are losing it. Out of 50 offshore options, CX decision-makers in France and Germany prefer at least 46 others to Kosovo. Serbia, the Balkan neighbour with which tiny Kosovo has repeatedly clashed over the past year, fared almost as poorly. Given the growing list of local and global operators providing CX from Belgrade, this is unfortunate for Serbia.
Outsourcers have an increasing bias toward stable destinations. Still, this does not appear to be affecting wider perceptions of other countries in the Balkans. Indeed, in addition to Croatia’s ongoing favourability, North Macedonia has emerged as a heavily favoured location for outsourced CX services in the eyes of CX decision-makers in France, Germany and Italy.
“There’s tremendous opportunity for markets in the European nearshore to attract BPO investment. But destinations must offer linguistic diversity and a tech savvy workforce,” adds Goforth.
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