Closer to home

Poland has the fifth-best offshoring environment in the world, according to the Economist Intelligence Unit. The group's recently published report says that while traditional outsourcing powerhouses such as China and India still offer a significant cost advantage, they often fall short when it comes to the specific needs of European companies, where demand for outsourcing services is now growing stronger than in US-based firms.

According to the report, the biggest reasons European companies choose to locate their offshoring activities in countries closer to home are language skills, proximity and cultural similarity.

"India is not enough if you want to address the growing market in Europe for offshoring," says Małgorzata Stachowicz, manager of Hewlett-Packard's business process outsourcing center in Wrocław, in the report. "To attract the European market you need European languages and cultural understanding."

From the perspective of a German company looking to invest in offshoring, the report ranks Poland third, just behind Hungary and the Czech Republic. The Czech Republic ranks third in the world in the group's offshoring environment rankings, which is largely put down to the success of the Czech Republic's investment agency, CzechInvest.

The report points out that Poland has become a particularly attractive location for companies wishing to outsource R&D operations, while Slovakia is rapidly catching up to other countries in the region in terms of market maturity. The Baltic states are also benefiting from the trend, and have become an especially attractive nearshore location for Nordic companies.