Going for gold

How CEE countries are primed to take advantage of the rapidly changing nature of the global sourcing industry

Throughout the last few years, the business services sector has been impacted by several disruptive trends, principally the sheer volume of new technologies being implemented, driving increasingly rapid change in and to many aspects of the workplace and approaches to service delivery. New technologies, to include digital, cloud computing, IoT, data analytics and intelligent automation, combined with the ever-changing political and financial landscapes have created an industry divided about the speed at which to embrace these changes. The introduction of these technologies has created a tumultuous atmosphere with automation initially being met with uncertainty and resistance within key delivery destinations. This turbulence has inhibited outsourcing’s ability to achieve its full potential as buyers and service providers struggled (and continue to do so) to mutually align their objectives – with the service providers too often still seeking to maximise the number of full time employees deployed and the buyers aiming to extricate as much value as possible through outcome-based models.

The UK is certainly struggling to come to terms with this transition within the industry. The political uproar and media furore following the collapse of Carillion, a major provider of services to the British Government, earlier this year only sought to accentuate an already volatile situation, with an invigorated opposition party advocating for the dissolution of public sector outsourcing. This has created the most capricious working climate in recent memory and thus amidst the turmoil, it is integral CEE countries and companies help promote the virtues of outsourcing, whilst simultaneously seizing this potential opportunity with both hands – the potential being that British companies now more than ever need fast access to flexible, innovative and skilled labour to help them achieve their quickly changing business objectives.

Perfectly positioned

CEE countries are perfectly positioned to take advantage of the situation created by the transitional changes occurring within the industry. A relatively recent entrant onto the business services scene, these countries have garnered a reputation for producing high value services through the use of a highly skilled labour force, operating at consistently high rates of productivity. The labour force possesses a conscientious and diligent work-ethic, with high levels of English fluency, a quality that objectively appeals to many nations in the Western world.

Unlike other leading delivery destinations such as India and the Philippines, the CEE countries have typically been awarded contracts on a smaller scale, but consisting of higher value transactional work. The smaller size of these contracts means their talent pools are not under the same level of threat to automation as countries such as India, who are predicted to lose about a third of their current work to robotic process automation (RPA), which has led to a wholescale upskilling and repositioning exercise for India. This therefore places CEE countries, who also benefit from close proximity and aligned timezones and cultures, in a strong position to continue growth, providing they continue their investment in talent and infrastructure and maintain an appealing environment for investors.

Investment growth

Over the last couple of years, the GSA has witnessed huge growth in its member companies investing in CEE countries such as Poland, Czech Republic, Romania, Bulgaria and the Ukraine – for the delivery of business services ranging from customer service through finance and accounts to software development –  with the Ukraine being the most recent destination to cement its reputation as a key tech hub within the global sourcing landscape. The investment has come in the form of direct investment in establishing and growing shared service centres, as well as through partnering with domestic players. Companies such as Ciklum, Nix Solutions, Epam, ScaleFocus, 60k and N-iX are all examples of CEE-based companies that have gained stable footholds in the global sourcing eco-system, helping to diversify the UK service provider community whilst enhancing the reputation of CEE-based operations – driving growth for all firms.

However, for CEE countries to take full advantage of this opportunity open to them, it is integral standards do not drop or stagnation occur. They cannot sit on their laurels, and it is imperative that talent continues to be developed and nurtured, specifically at middle management levels, where an ongoing dearth is predicted. Furthermore, as the landscape continues to evolve at a pace, the CEE region must ensure it stays value competitive – a significant increase in costs or attrition rates will negatively impact their opportunity to capitalise on the advantage afforded to them. This could and should be a golden period for the CEE-region to prosper as a leading delivery destination serving buy-side companies directly, as well as service providers, around the world.

I only wish the UK government would take the opportunity afforded by the business services sector a fraction as seriously as the CEE region does – in the UK this remains an under-valued and under invested sector – which is playing directly into CEE’s hands. Please grab the opportunity, but simultaneously please help us promote the positive virtues of the sector globally, to help stave off the anti-outsourcing rhetoric that’s sweeping British politics and if successful could have significant repercussions globally!

The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.