Regional urban centers in our country are returning onto the path to growth. It is shown in the data on business development recorded in the first half of this year, and future investments of the BPO/SSC sector may seriously raise their position
After strong turmoil, business situation is stabilizing. According to STR company, two-thirds of Europe have already returned to their offices. In France, more than 80 per cent of employees returned to regular office work, whereas in Germany, Italy and Spain over 70 per cent of people are back in the office. In Poland, this percentage is still low. Walter Herz analysis shows that, similarly to Great Britain, where the ban on working in shared offices is currently being processed, in our country only one third of employees returned to work in the office.
Polish companies usually operate the same as before COVID, and some even exclude remote work. Some of the companies using offices have introduced a hybrid work mode, that combines home office with work in an office, with half of the team taking turns. A completely different position on the return to offices has been adopted by international corporations that have introduced a complete home office and are not planning any changes in the near future. Among others, American companies operating in Poland, which are responsible for a large part of employment, decided to permanently work from home, which significantly affects the statistics.
Business services sector has maintained continuity in Poland
Home office dominates the IT industry and broadly defined marketing, advertising and communication, where remote work was popular before the virus. Companies from the business services sector also quickly switched to operating in crisis conditions. Thanks to their international presence and the use of solutions implemented in other markets, such companies switched to remote mode overnight, maintaining continuity of work.
BPO/SSC sector is doing great during the pandemic. Moreover, it can make a significant contribution to re-launching our economy and returning to growth. According to ABSL representatives, Poland has a chance to take over some of the processes carried out in other countries, thanks to the extensive facilities and network of centers conducting advanced projects, not only in Warsaw, but also in many regional centers.
There is every reason to believe that modern services for business, which already employs over 340 thousand people, will see a further increase. The course of action adopted in the current conditions opts not only for shortening and relocating supply chains, but also locating business support services and processes supporting production within the territory of the European Union. BPO/SSC sector, the second largest branch of the Polish economy in terms of the number of jobs, may paradoxically benefit from the pandemic. Remote work requires appropriate premises and access to technological infrastructure, a stable internet connection and mobile equipment, which India, the world’s Mecca of outsourcing, cannot cope with during the lockdown. Hence, home office, unprecedented in its current scale, can change the global balance of power when it comes to this business field.
Especially that Microsoft and Google intend to revolutionize our digitization market soon by investing many billions of zlotys. The American giant, as part of its partnership with Operator Chmury Krajowej (National Cloud Operator), will invest in the development of cloud computing and the digitization of Polish business. Whereas, Google is planning to create the most modern data center in our country.
BPO/SSC companies will migrate to stable locations
Global outsourcing companies are likely to look for safer and more stable locations now, and Polish regional cities have a good chance of getting on a short list of alternative locations. A similar situation took place after the financial crisis in 2008, when many new BSS projects appeared in Poland and employment doubled. What is more, today we have a much more extensive base and experience, and our country enjoys a better reputation than several years ago.
However, the provisions on adapting labor law to the new reality and those related to the possibility of employing foreigners will be of key importance to investors. Measures have already been taken in this regard, and the modern business services sector will cooperate with the government on regulations supporting investors. Cooperation with ABSL is to help assess the needs of investors and identify factors that will support the further development of investments that create new jobs in Poland.
Further expansion in the regions
– Companies from the business services sector associate the prospects of development in our country primarily with regional business centers, which are cheaper than Warsaw. Mainly Cracow, which is the Polish capital of outsourcing, Wroclaw with undisputed reign of IT, but also with such agglomerations as Katowice and Łódź. The uninterrupted development of the industry in the regions is confirmed by the market data. In the first half of this year, companies from the BPO/SSC sector, which are the main users of offices in the regions, despite the health crisis, have leased almost 140 thousand square meters of space outside of Warsaw, almost half of which is in Cracow – informs Mateusz Strzelecki, Partner / Head of Regional Markets at Walter Herz. The expert adds that capital of Małopolska province clearly strengthens the position of the regional leader. This is also indicated by the increase in supply. In the first half of this year, a dozen or so buildings with approx. 180 thousand sq m. of office space were commissioned in the regional cities, with the largest number also in Cracow.
Good shape of the regions is best evidenced by the historically highest demand for offices recorded in the first half of this year. According to Walter Herz, IT companies are responsible for more than half of the lease volume generated outside Warsaw at that time. In Wrocław, thanks to high absorption, which was higher in the first half of this year than the average for the four previous quarters, the vacancy rate in office spaces even dropped. Moreover, over 80 percent of contracted space went to IT companies during this period. The first six months of this year were also particularly successful for Łódź, where over 50 thousand sq m. of office was leased.
Local business support
Investors focus on regions because they offer lower costs of running a business than Warsaw, while having well-qualified staff, modern office facilities and very good infrastructure enabling an attractive quality of life. In addition, companies investing in regional cities can count on the support of local authorities, which adapt their strategies to the current conditions.
– Pandemic changed the world’s economic order. The tools we used to attract investors have largely ceased to exist – fairs, conferences and economic missions are no longer organized. Therefore, our strategy has evolved in the short term towards promotional and informational activities corresponding to current opportunities. Hence the recent digital campaigns: aimed at the Belarusian IT sector and – earlier – targeting the phenomenon of the return of industry from Asia – says Adam Pustelnik, First Deputy-Mayor of Łódź. – What is the idea for Łódź in the context of BSS in the long term? The universities in Łódź and the bold use of the PPP format as a tool to improve the quality of life in the city in various fields will be of key importance for me. These three letters should be a symbol of a new economic opening for Łódź – adds Adam Pustelnik.
Polish Investment and Trade Agency (PAIH) also runs more projects in the business services sector, than last year. The agency plans to complete some of the over 40 implemented projects that can bring even over 7 thousand new jobs, by the end of 2020. Also, it estimates that despite the pandemic, this year may be even better for the BPO/SSC sector than last year.
In addition, PAIH representatives pay attention to the quality of jobs already created this year. In the first half of last year, 400 high-quality jobs were created in new projects, while 536 of this year’s jobs were created in research and development centers. In centers launched by, among others, American software supplier Hyland, German IT company GFT and Alcon, Swiss leader in the contact lens market.
