Poland
There are an estimated 500 offshore outsourcing centers in Eastern Europe, and Poland is poised for major expansion in the coming years. According to some of the largest IT companies outsourcing services will grow in the areas of large and medium businesses, particularly in the manufacturing and financial sectors. Warsaw, Krakow, Poznan, and Sczecin are just some of the key locations that are primed for the outsourcing market, and many more are expected to emerge in the future.
According to KPMG, an audit and consultancy firm, Poland ranks third for shared services centers and business process outsourcing in the world after India and China. Poland's key assets are its trained and educated workforce, economic stability, depreciation of the zloty, and political stability.
Poland specializes in software products focusing on projects for embedded systems, business analytics, human resources, finance/banking and accounting, multilingual contact centers, tele-information network management, or programs that use languages like C and C++. Experts believe that the expansion of outsourcing in trade, heavy industry, and telecommunications will result in further development, particularly among call center services or help desks services.
Poland’s rates are actually higher than many of its offshore competitors. EU membership, its proximity to and relationship with Western Europe as a venue for custom software development have resulted in these higher wages. Poland also has problems in fostering and managing opportunities for its IT specialists, due to the European Union's broadening adjustability.
According to the World Fact Book 2011, the country has created a successful policy of economic liberalization since 1990. Its gross domestic product (GDP) rose to an estimated 6 percent due to private consumption. The creation of the Polish Chamber of Information Technology and Telecommunication (PIIT) has advocated on behalf of the IT market to companies that are situated in Poland.
Country overview
Poland has a population of around 38.4 million, mostly comprised of people under the ages of 35 years old, making it one of Europe's youngest. Almost 98 percent speak Polish, and some regions speak immigrant languages such as Czech, Eastern Yiddish, Greek, Lithuanian, Russian, and Slovak. It is also a multi-national country, with Brazilian, Russian, British, Spanish, Indian, Italian, and Portuguese nationals living in Poland as well.
Poland was conceived in the 10th century and achieved its golden age in the 16th century. However, its strength weakened in the following centuries as it was partitioned by Austria, Prussia, and Russia. Poland gained its independence in 1918, albeit briefly. During the Second World War Poland was overrun and overtaken by the Germany and the Soviet Union. During the early 1990's, the country was able to change its economy into one of the most dynamic and productive in Central Europe. Small and medium state-owned companies were privatized, and an open and flexible law was created to develop the private business sector. It made progressive alliances with NATO in 1999 and the European Union in 2004. Poland transformed into a democratic, market-oriented nation with active memberships in Euro-Atlantic organizations.
Poland has the sixth largest economy in the EU, and one of the most dynamic in Central Europe. Despite the economic crisis, the nation was able to maintain its economic stability due to the sharp depreciation of Poland’s currency (zloty). Poland is the EU member that achieved the highest GDP growth in the midst of the recent global economic problems, managing to maintain a strong GDP worth an estimated USD $470 billion or $725 billion when calculated using the purchasing power parity.
EU membership has allowed access to funds in order to bolster the economy, helping to fight unemployment which had dropped to 6.4% in 2008. Unemployment has since reached staggering levels of 11.8%, two percept higher than EU averages. In 2011 Poland’s government announced its plans to develop business-friendly reforms increase workforce participation, reduce public sector spending and encourage corporate privatization.
Source: CIA Factbook, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Source: World Bank, 2009
Cost competitiveness
Poland has large regional business centers aside from Warsaw, which is a major advantage for offshore companies who prefer non-capital cities as the location for their operations. Usually, businesses outside the central districts have lower costs, and companies can utilize this well to save up on their expenditures.
Employee compensation:
Employee compensation is the greatest component of any outsourcing operation. A typical project will include several junior resources, along with some high-skilled and senior oversight/ project management. Junior resources generally offer the greatest savings in comparison to their US counterparts. A junior software developer/engineer with less than four years experience can provide savings, with salaries ranging from $9,338 to $19,747 USD, with is roughly 21% of similar US salaries. More senior Web developers and engineers earn 40% of comparable US counterparts.
Project managers for IT with high levels of experience earn within thirty to fifty thousand dollars US, which is 38% of US salaries. BPO resources offer similar savings, with junior and senior personnel earning twenty-three and forty-four percent respectively.
High-level operations management positions offer virtually no benefit, earning almost 97% of what US staff earn. Junior customer service representatives come with savings of 37% below US rates
Real estate
The office occupancy cost for Warsaw is around $52.34/sf/yr. This figure is high compared to the Philippines ($24.6), the U.S. ($42.3), and even Canada ($50.1).
Office lease agreements in Warsaw have taken a stricter tone in its office lease agreements. According to CB Richard Ellis, the economic slowdown and uncertainties in the future market trends have led banks to impose stringent credit policies to companies. The policy asks that 40 to 60 percent of the office space should be pre-leased before giving the construction loan. Banks also demand "high own contributions to the project," which can consequently slow down--or even complicate--the development. Analysts believe that office markets will be hugely undersupplied in the future should the investors and banks continue their strategy of imposing these restrictions.
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Source: PayScale, SourcingLine, February 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: PayScale, Sourcingline, March 2010
Source: CB Richard Ellis, Colliers International, SourcingLine, March 2010
Source: Colliers International, SourcingLine, March 2010
Source: KPMG, October 2009
Source: KPMG, October 2009
Source: Doing Business (World Bank), 2010
Real Estate : Office occupancy costs are for Warsaw.
Resources and skills
Polish programmers have gained an excellent reputation within the industry, attracting some of the best technology firms including Motorola, IBM, and Google. All three have established their research centers in the country.
Exports of computer and information services
The volume of IT services exports indicates the size and maturity of the IT outsourcing sector that serves the global market. According to the International Monetary Fund's (IMF) Balance of Payments statistics, Poland exports around USD $938 million of computer and information services, less than one tenth of United States production.
Education and skills
Poland has one of the best-educated populations in Europe. It has an estimated 130 state higher education academies, 17 universities and 18 technology universities. More than 30,000 scientists employed in the country hold PhD degrees. Similarly, Polish IT professionals have high levels of education, and according to the largest competitive software development community (TopCoder), four polish universities have been included in the top 25 schools in the world: University of Warsaw, University of Wroclaw, Jagiellonian University, and Poznan University of Technology.
According to UNESCO, Poland has an average of about 533,000 university graduates every year which is six times the number of graduates produced in India. The country may not be able to compete with India in scale, but the quality of its work through education and training outweighs this minor disadvantage. For example, more than 45 percent of the country’s population is in universities compared to India's 10 percent.
Language
For decades Russian has been the second language of choice in Poland. However, it has been replaced by English or German as the most common second languages studied and spoken.
Its English speakers comprise around 29 percent of the whole population, ranking seventh among nations for the number of English-speaking residents.
Technological readiness
Poland enjoys a high number of internet subscribers, placing in sixth among the countries with the most number of users per 100 inhabitants. Similarly, it also belongs in the top ten for the most number of broadband Internet access.
Source: CIA Factbook, 2009
Source: IMF, 2008
Source: IMF, 2008
Source: UNESCO, 2009
Source: UNESCO, 2009
Source: OECD PISA, 2006
Source: OECD PISA, 2006
Source: OECD PISA, 2006
Source: UNESCO, 2009
Source: UNESCO, NASSCOM, SourcingLine, 2009
Source: UNESCO, 2009
Source: International Telecommunications Union, 2009
Source: International Telecommunications Union, 2009
University Graduates : No data in UNESCO Global Education Digest 2008.
Business and economic environment
Economic competitiveness
Economic competitiveness is a important component to the long-term development of an outsourcing location. Poland has an above-average overall index, joining in the top ten countries with the best overall index scores.
Infrastructure
The quality of roads affects employee productivity and costs, which can consequently increase or decrease an outsourcing company's expenditures. According to the World Economic Forum, Poland ranks at the bottom of the list, with Bulgaria, Ukraine, and Romania. However, it places ninth among the top ten countries with the highest rating in the quality of electric supply.
Labor market efficiency
According to Doing Business survey co-published by the World Bank, Poland ranks above average in employment market flexibility, such as hiring and firing employees. The leading countries on the list include Canada, Malaysia, Thailand, Czech Republic, and Israel.
Regulation
Poland ranks 72nd in the overall Ease of Doing Business index, followed by Czech Republic, Pakistan, China, and Ghana. The level of complexity in starting a new business for Poland is below average, having a 28-point difference with Hungary, which ranks first in the list. It takes around 395 hours to prepare and file taxes compared to Jordan (101), Canada (119), Malaysia (145), the U.S. (187), and the Philippines (195).
Corruption perception
The country ranks 8th among the countries with the best corruption perceptions index scores. China, India, and the Philippines are some of the outsourcing locations with the most corruption challenges and perceptions in the world.
Legal protection
A nation's economic competitiveness is correlated with its complexity in enforcing contracts. Poland ranks below average in the list, ranking in 7th to Pakistan as the country with the most number of steps required to enforce a contract. It also takes around 830 days to complete this process, which is tedious compared to Russia’s 281 days.
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: The Global Competitiveness Report, 2009
Source: International Telecommunications Union, 2009
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Transparency International, 2009
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: Doing Business (World Bank), 2010
Source: The Global Competitiveness Report, 2009
Source: BSE-IDC Global Software Piracy Study, 2009