BULGARIA is among the most attractive outsourcing destinations in Europe and the entire world, an analysis published on November 22 reported.
“Offshore attractiveness in Europe continues to migrate eastward as Bulgaria, Slovakia and Romania all enter the index for the first time,” said A.T. Kearney in its Annual Global Services Location Index. A.T. Kearney is one of the world’s largest management consulting firms.
The Global Services Location Index (previously known as the Offshore Location Attractiveness Index) shows that India remains the best offshore location by a wide margin, although wage inflation and the emergence of lower-cost countries has decreased its overall lead.
Dynamics in Central and Eastern Europe are instructive, A.T. Kearney says. While the more-established offshore locations included in the previous years’ indices (the Czech Republic, Hungary and Poland) slipped slightly in the rankings, several newer contenders from the region made strong debuts in the index.
Despite continuing improvements in people skills, infrastructure and business environment, the Czech Republic slipped from 4th to 7th position in the world, largely because of the rise of Thailand and the Philippines, but also because of increasing wages and other costs in the Czech Republic.
Poland and Hungary also slipped from 10th and 11th to 18th and 19th, respectively, for similar reasons. Russia actually improved its position among the original 25 countries (from 21st to 17th), but dropped in the overall rankings to 27th, due to rising wages. Moreover, despite improvements, Russia still ranked 39th out of 40 on business environment metrics.
At the same time, strong performances by three new entrants in the index (Bulgaria at 15th, Slovakia at 16th and Romania at 24th) on a global scale reflect what many on the ground have observed - as costs in the most advanced Central European countries converge toward EU-levels, companies are moving farther East in their search for high-skill, low-cost solutions.
A.T. Kearney’s analysis has ranked Bulgaria second in Central and Eastern Europe after the indisputable leader - the Czech Republic. Meanwhile, this country is leading in the region in terms of the financial structure of its appeal as an outsourcing destination.
The index assigns weightings reflecting the drivers of offshoring decisions based on A.T. Kearney research and engagement experience. Because cost advantages have been the primary impetus behind offshoring, financial factors constitute 40 percent of the total index weight. People skills and availability and business environment each receive a 30 percent weighting.
Companies that have already been present in Bulgaria through outsourcing some of their operations here believe that the scope of industries is becoming larger. While initially there were only software developers, the range of outsourcers in Bulgaria includes now also call centres, engineering manufacturers, apparel companies and others.
Foreign investors expect to see a growth of between 30 and 40 per cent in outsourcing operations towards Bulgaria next year.
Specialists say that there are at least two key factors that make this country an attractive outsourcing destination. One of them is the constant strive of businesses all over the world to minimise the production cost, while the other is the proper combination of qualified specialists, cost of labour and product quality in Bulgaria.
One of the booming outsourcing sectors is call-centre services, which has an increasing importance in the globalising economy. Since local firms from sectors like mobile communications, public services, information technologies, banks and others have already opened their own call centres here, they are now signing for the same activity with companies from abroad.
It appears that many Bulgarians have knowledge and can work in several languages, which is an advantage when comparing this country to the most attractive outsourcing destinations on a global scale, like India or China, which are the leaders in the world ranking.
A.T. Kearney has found that the Middle East and Africa appear to be the next frontier in offshoring as countries such as Egypt, Jordan, United Arab Emirates and Ghana perform well.
The A.T. Kearney Global Services Location Index analyzes the top 40 services locations worldwide against 40 measurements in three major categories: cost, people skills and availability, and business environment.
