The last word: CEE’s value proposition is stronger than ever

In 2022, Ukraine’s IT sector exported more services than the year before. Its resilience and agility have shown what the country, and more broadly, the emerging Europe region is capable of.

Earlier this week I joined the CrossConnect Forum, a conference aiming to offer European businesses —primarily British as it was held in London — an opportunity to engage with partners from the Americas. I participated in a session focused on the benefits and liabilities of the four core shores: Africa, Asia, Eastern Europe and Emerging Americas. 

Most of the discussion centred around access to talent. However, the impact of Brexit and Russia’s brutal invasion of Ukraine took up quite a big chunk of the session. 

“Globally, the industry has grown by leaps and bounds over the past 30 years, reaching 300 billion US dollars,” said Rohitashwa Aggarwal, partner at Everest Group, giving an overview of the business services sector. And despite the “series of unprecedented events and escalations […] the sheer robustness that the industry has shown reignites the confidence in this model.”  

After the Covid-19 pandemic alone the industry bounced back at a much higher rate, almost at 10-15 per cent. 

“And even in 2023, with all the macroeconomic challenges, the series of layoffs that we are seeing, there is huge demand for talent, technology, need to outsource more from a customer experience standpoint, from operations. The growth projection looks small compared to the last few years but if compared to the last decade, it stays on point,” Aggarwal added. 

What Britons want 

Alistair Niederer, a global executive specialising in customer experience management and business process outsourcing (CXM and BPO), and currently director at NeedleRock, says Brexit hasn’t impacted the business services sector and the delivery of services into the UK.  

“The fundamentals of the business haven’t changed. I don’t think Brexit has impacted the labour force. A lot of the labour force that left the UK wasn’t really involved in the BPO industry,” he says.  

Marcus Pemberton, VP Customer Success at Relative Insight, a UK-based company, agrees: “I don’t think for our sector, for technology [Brexit] has had a real meaningful impact other than the broad macroeconomic,” and adds that if talent is less available domestically, his company finds it in other European locations. 

What do British buyers of CX and BPO services want? Niederer says it’s always been about the language, about accents, as CX historically started with voice. 

“Voice was hugely outsourced to India, then the Philippines came along but never offered an alternative, so you had to move to Eastern Europe, to the likes of Poland, and now South Africa,” Niederer added.  

The language box is ticked by Caribbean talent, according to Jeff Pappas, senior managing director at Newmark. “The Caribbean accent is extremely harsh. And then you listen to them call and they transform their accent. If you’re calling from Texas, they’re speaking with a Texan accent, from New York — you’re speaking to a New Yorker, from California — a Californian,” he said. 

Making an impact 

Traci Freeman, head of marketing and growth at Business Process Enabling South Africa (BPESA) points to the fact that the British customer is now very mature, knowing what they are looking for.  

“There is a desire for a more boutique offering, working with partners and setting up their own captive sites where you control the environment and you’re not just one of many. There is a desire for the UK buyer to have a meaningful engagement with the community that is going to be working with the brand,” Freeman added. The emerging delivery destinations in Africa, such as Rwanda, have learned to add that component from the beginning and they look at impact sourcing. 

I picked up on that note to add another important aspect related to the ongoing war in Ukraine. Several British companies that Emerging Europe helped select new delivery locations made it clear to us that not being involved with Russia was particularly important for them.  

In fact, if we look broader, within less than two months after the launch of the invasion, out of almost 100 British companies operating in Russia, only one remained, according to research for the Yale School of Management. At the same time, businesses from France, the United States, Japan, Germany and Italy topped the list of those that chose to remain. I argued that delivery locations and businesses that disregard this aspect, might find it more difficult to attract British buyers and investors. During the UN resolution vote demanding that Russia leave Ukraine, countries such as India, South Africa, Uganda, Ethiopia abstained, alongside 28 other nations.  

Serbia, which until recently was seen as Russia’s strong ally, can be less favoured by British investors. One of our customers said that explicitly. So can Georgia, an emerging outsourcing destination, which did not join the sanctions that Western countries had imposed on Russia. In June 2022, unlike its peers — Ukraine and Moldova — Georgia was not granted European Union candidate status, and in early March this year, the government was forced to withdraw its controversial “foreign agents” legislation from parliament following two days of violent protests and sharp criticism from the West. 

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Gaining importance 

I also argued that with just a few exceptions, emerging Europe remains a strong delivery location and that the war launched by Russia has in fact made the sector stronger. Not only has it drawn even more attention to the region but also grown the awareness of global buyers and investors of its capabilities.  

Ukraine’s resilience and agility have shown what the country, and more broadly, the region is capable of. In 2022, Ukraine’s IT sector exported more services than the year before. The IT Ukraine Association and the Ukraine Contact Centre Association are growing its international outreach to show their members deliver services despite the war. The latter joined an international exhibition in Berlin in early March and its president, Iryna Velychko, met with her counterparts from the DACH countries to increase collaboration. 

I also say that Ukrainian companies have become more aggressive, in a positive meaning of the word, and more self-confident, if they weren’t before, that they can deliver high quality services. They have also internationalised heavily by opening offices not only in Europe but also across other continents and grown their skills to talk with foreign buyers.  

And I haven’t heard from potential investors that they have lost their confidence in the emerging Europe region. On the contrary, unlike other locations, the region has built its strong value proposition and clearly is not merely a flavour of the year. 

Matt Sims, EMEA president at Alorica, who I spoke with during one of the coffee breaks at CrossConnect, confirms that. In January 2023, Alorica, which employs some 100,000 people globally, launched operations in the city of Łódź, Poland. 

“It is without a doubt that Poland and Czechia offer one of the most exciting business investment opportunities in the world, especially in business services,” said Peter Ryan, principal at Ryan Strategic Advisory, who moderated the session. “This was validated in the most recent Offshore BPO Confidence Index 2022 that was jointly published by Cognitive Copy and Ryan Strategic Advisory. Czechia ranked fourth and Poland fifth.” 

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