Know Emerging Global BPO Destination – Lubin, Poland

The phenomenon of offshoring, namely transferring business processes abroad, is highly valued by economists who estimate that the greatest world’s economy, the USA will have transferred 1.5 million jobs in the services sector by 2015, Germany will have transferred 0.5 million jobs and Great Britain 2500 jobs. The data may increase sharply as they mainly refer to great international companies and this instrument is becoming increasigly popular among medium-sized as well as small-sized companies. Accordingly, we can observe a market mechanism which will force the implementation of offshoring services among other players in the market who want to maintain their competitive policy.

So far Wroclaw, Warsaw and Cracow have competed for investments in the services sector. Nevertheless, high concentration of BPO companies in these cities resulted in investors seeking new locations such as academic centres offering lower labour costs and offering alike living conditions.

Town Hall in Lubin, Poland. Source: Wikipedia

Town Hall in Lubin, Poland. Source: Wikipedia

Lublin is one of the new locations for the BPO sector which holds the promise of success. It has been pointed out by the KPMG analysts in the report Poland as the destination for Shared Services Centres who perceive Lublin as a key location for offshoring in the Polish sector of services among such cities as Warsaw, Cracow, Wroclaw or Tricity.

The first major international player in the BPO sector, namely Indian company Genpact, located its investment in Lublin in 2008 which confirmed its friendly atmosphere for the BPO sector investments.

The development of the potential of Lublin for the financial services sector dates back to the 90’s when Company ?agiel was set up in 1990 which was soon taken over by KBC group which is a financial services broker. Bank Cukrownictwa Wschodniego SA and Bank Depozytowo-Kredytowy were established in Lublin and the latter was the first Polish bank to obtain Moody’s rating and was put on the world’s list of trustworthy companies.

The most renowned Lublin companies which operate in the BPO sector include: Inteligo, Orange, Polskie Centrum Marketingowe (PCM) which located their call centers in Lublin, Asseco offering IT services, and Polish Telecommunications Accounting Services Centre.

The prize for the best european shared services centre confirms the level and quality of services offered by Lublin companies. TP SA Accounting Centre in Lublin was awarded “Best New Captive Shared Services Organization – Winner 2009” in Budapest in 2008 during the contest Shared Services Excellence Awards which is held annually.

Potential of Lublin in specialized services sector was also noticed by governmental institutions because the first e-court of laws was created in Lublin.

Lublin is not only has 352,000 inhabitants but also 715,000 people who inhabit the metropolitan region in the vicinity of Lublin. An outstanding characteristic of Lublin is one of the highest rate of students in Poland, whereas the total number of students is more than 100 000, which places Lublin fifth. Lublin is a relatively young city of strong development potential. Over 67% of Lublin Inhabitants are at working age and nearly 40% of the population is younger than 35 years old.

A significant criteria taken into consideration in the process of outsourcing business services to other locations is the labour costs, which are about 20% lower in Lublin compared to other parts of Poland. It is crucial that due to the powerful academic base, education and the quality of work offered by the Lublin inhabitants is equally good in comparison to other cities which still remain good locations for the BPO sector.

The labour market in Lublin is characterized by substantial proportion of the unemployed which creates an opportunity of employment without the pay pressure occuring in other cities.

Office spaces are indispensable in the process of creating the BPO centers. Although in recent years we have witnessed an obvious and dynamic development of commercial properties market in Lublin, the supply of high standard office spaces is insufficient. Currently it is estimated that Lublin offers 50 000 m² of modern office spaces, whereas 30 000 m² are under construction and 40 000 m² are in the initial phase of designing. Most of the investment projects are carried out by the local developers including Centrum Zana S A, Batory Sp. z o. o. This fact guarantees that an increase in the demand for modern office spaces will be balanced by the rapid increase in the supply.

A significant drawback of Lublin in terms of infrastructure is the lack of international airport which is pointed out by potential investors in the BPO sector. The nearest and at the same time the biggest airport in Poland is situated in Warsaw, 160 km away from Lublin. To meet the expectations of both investors and the inhabitants, the city has made an effort to build an international airport in the immediate vicinity of Lublin, in ?widnik 10 km away from Lublin. This project is supported by Regional Operation Programme of the Lublin Province. The contract to build the runway and other infrastructure was put out to tender in 2009. The openning of the airport is planned for 2012. According to the company strategy, the airport is going to provide the connection with Warsaw, some specific destinations in Asia as well as a permanent connection with one of the hubs in Europe.

Lublin offers high standard of living and it is perceived as an eco-friendly city with the unique atmosphere of the Old Town, which attracts with its magical backstreets, antique houses, pubs and restaurants. Thanks to the organization of film, theatre and music festivals of international renown, which offer a rich mosaic of cultural events, Lublin has become the most significant cultural centre of eastern Poland. Lublin is aspiring to the title of The European Capital of Culture 2016.

Observing the development of the BPO sector in Poland it seems apparent that the stage of advancement of the projects implemented in new locations is sequential. The first projects concerned with services offshoring in new places are usually concerned with not complicated processes, such as call centres. In the next stage services in IT and other specialised sectors are implemented, followed by research and development (R+D) and competence centres.

Due to the substantial number of students, Lublin is likely to become an attractive location for the sector concerned with such services as call centres, accounting and IT centres as well as specialized services including medicine and law. Whereas in the future along with the development of the BPO sector, Lublin may become a location for research and development centres (R&D) making use of its academic potential.

Lublin has the opportunity to become the location of middle-sized companie in the BPO sector mainly from the European Union (Germany, the Benelux, Great Britain) as a part of nearshoring. The companies from these countries tend not to outsource their services into distant geographical areas such as India due to high risks involved.

In many cases international companies which have decided to to enter the Polish market choose not one but two locations for their business activities, therefore Lublin is likely to become a complementary location for the already existing shared services centres.

Taking into consideration all the above mentioned factors new investments in Lublin are just a matter of time.




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