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Hunte, Everest: Romania takes a slice of 8% from the CEE services ratio

The share of services offered by CEE (dubbed by Everest “nearshore Europe”) in the outsourced services segment is “definitely increasing” says Rupert Hunte, client director, Everest Group.

2015-10-26 17:04:48 - by Bogdan Tudorache

With a global sourcing market size expected to reach 160-165 billion USD this year, up 9% over 2013 levels, more investors more to the CEE region, leaving riskier areas. Today Romania takes 8% of the region’s IT and BPO market, less than Poland (27% share), Hungary, Ukraine, Slovakia and Czech Republic (all have 10-11% shares) and Ireland (14%).

But while in 2011-2013 period investors setting up new shops preferred Poland (27%), Ireland (25%) and Romania was getting 16% of that interest, now Poland has dropped its growth rate to 13%, Ireland to 20% and Romania kept the same growth pace of 16% in 2014-2015.
Also, as Bucharest, Cluj and Timisoara activities saturate, investors move towards Iasi and Bacau, according to the Everest survey consulted by Outsourcing Today.

The share of nearshore Europe in global services delivery is increasing from 8% in 2013 to 10% in 2014, while Asia Pacific (APAC) dropped from 80% to 74% during the same period, in terms of headcount and full-time equivalent positions (FTEs).

“Europe has taken Asia for the first time in new center set-ups and expansion, with the investors preferring nearshore Europe in quite significant numbers, of 42% in the first half of 2015,”Hunte adds.

Recent activities in Europe focused on engineering services and R&D, analytics and cloud services. Players have set up centers in both tier 1 and tier 2 cities of CEE, the Everest study reveals.

In comparison to the 42% preferences for CEE, investors also concentrate on APAC (40%) and less in Latin America, which saw a decrease to 14% from the previous half (H2, 2014) of 27% - demand ratio that unsurprisingly moved to CEE’s account.

“A significant demand comes from the investors moving from Northern Africa – from countries such as Morocco, Algeria and even Egypt,” Hunte said.
Many investors move to CEE countries, and companies tend to simplify and to reduce costs, says Hunte.

Everything is moving towards more simple ways of doing business rather than making it compact, from sophistication point of view. A lot of companies look to add value to their services rather than reducing costs, and Romania fits in this scenario, says Hunte.

“The recent study in banking and financial services in CEE reveals out of the 20 respondents, all consider that cost reduction is crucial, however, the flexibility, understanding the business aspects and what they need to do has a major impact in taking decision,” says Hunte.

“Also, standardization and harmonizing what they have to what they want and the influences the digitization and automation are having in the banking and financial sector are crucial, also in Romania,” says Hunte, explaining that clients in this field form Romania and CEE would rather look at that problems addressed when choosing a BPS (business process services) provider.

“However, besides the banking and financial sector, there are also investors in other areas looking significantly towards the region,” says Hunte.


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