There is no doubt that in the last decade we have seen advancements in technology that many of us couldn’t fathom. Communication has bee made easier and cheaper, robots are cleaning our floors and answering our customer service inquiries, and Smart technology allows us to control almost all of the appliances in our house with our voices.
Along with technological advances, there have been several changes in business reforms and regulations. Eastern Europe and South Asia have made the most reforms so that it is easier and more cost-effective to business, according to the World Bank’s ‘Doing Business’ Report.
The World Bank’s Ease Of Business
The World Bank went into further detail when they listed the countries rankings from 2019. New Zealand topped the Ease of Doing Business Index.
Ukraine climbed five spots in the World Bank’s Doing Business ranking this year to 71st place. This year Lithuania climbed to its highest-ever ranking, placing itself in the 14th place while this year’s Doing Business report ranked Estonia 16th
The statistics demonstrate that particularly in Eastern Europe, the improvements that were made to business regulations had an important positive effect on the ease of doing business within the O&O sector.
Expansion of the O&O Sector
As you would expect, as it got easier to do business in the CEE region, the number of Outsourcing and Offshoring companies operating in the area also grew. Since 2010, there have been 1999 O&O companies acquiring modern office space. 144 companies already had a significant presence in a city, however, 47 of those companies were able to expand into other cities. More specifically:
- 68%expanded into one other city
- 19%expanded into two other cities
- 13%expanded into three other cities
By looking at the numbers, you can see that there is a healthy combination of new companies as well as existing companies being able to mature and expand. These are just the numbers that have expanded into Central European Cities, it doesn’t take into consideration the O&O businesses that have expanded further afield.
Growth per CEE city
Colliers International produced a white paper that stated the growth of O&O businesses in terms of thousands of square meters. Warsaw had the most expansion, acquiring almost 350,000m2. Krakow saw a growth of over 200,000m2.
Budapest, Bucharest, Wroclaw, and Prague all experienced growth of more than 100,000m2. Those cities that made very little expansion were Lubin, Bydgoszcz, Tallinn, and Szczecin, not expanding more than 50,000m2.
The ranking of the cities based on the O&O company size saw little change over the time period. What did change, was the space that these companies were occupying, showing an overall growth of 80%.
Operating Costs
Unlike many other industries worldwide, the rate that O&O businesses in CEE expand is not related to the cost of running the business; rather than expansion being dependant on costs and savings, it relies on ‘O&O experience.
Romania, Serbia, and Ukraine are perfect examples. They have significantly lower wages yet beautiful modern office spaces and extremely skilled labor pools. In 2010, Colliers International predicted that this would be how O&O businesses evolved, and the chances are, we will see more of this in the future.
Let’s not forget that a company’s growth and expansion is also determined by the success of its marketing and inward-investment agencies. How a company represents itself and the effort the government puts into the industry can make or break foreign interest. Poland has seen first hand the positive effects of government inward-investment.