Not just about the money

Companies looking for a location for a service center find the general business environment, the level of state investment in education and the prospects for young people more important than low labor costs. These are the findings of AT Kearney's latest Global Services Location Index, which compares business, personal and financial conditions for services locations.

According to Aleksander Kwiatkowski, president of AT Kearney Poland, China and India are perfect examples of this trend. He says that both countries are ranked in top positions even though wages are less competitive than they were a few years ago. At the same time, the number of students has skyrocketed. "Foreign investors are certain they will find young, qualified and relatively cheap workers in the future. Countries which are interested in that type of investment should take care of education and create a friendly climate for entrepreneurship," Kwiatkowski says.

Poland maintained 18th position in 2006, mainly thanks to the low growth of salaries and infrastructure costs. Kwiatkowski believes, however, that Poland's position is now insecure despite the fact that the Czech Republic and Hungary were in lower positions compared to last year. "Certain trends taking place in both the global economy and our own indicate that we should be careful about our competitiveness. Our qualified and cheap labor power is flowing away and the question is whether our education system will be able to rebuild that. The other thing is that new players are coming onto the market. Competitors are emerging on the other side of the border," says Kwiatkowski.

EU accession helped Bulgaria to be ranked in the top 10. Estonia is another country which has recently entered the service market, with Latvia and Lithuania close behind. "Thanks to a relatively large number of workers and an improving business and legal environment, Estonia may be compared to Ireland 15 years ago," adds Kwiatkowski.