Servicing Europe
Big names
Among the companies that have already established or are setting up similar centers in the country are world-famous firms such as Avon, Hewlett-Packard, Philips, Philip Morris, Siemens, Citibank and Volvo. Tobacco producer Philip Morris is to invest zł.19 million in its Service Center Europe (SCE) in Kraków, which provides accounting services for the tobacco giant's European branches.
"In 2005 we employed 90 people in the SCE, from young analysts with little experience to managers with years of work behind them. In 2006 we plan to employ around 100 people," SCE representative Sławomir Latecki says. Although currently the center provides only financial services for Philip Morris in Europe, starting from 2007 it will also support the European branches with HR management. The number of jobs there will rise to 500.
Electronics producer Philips is currently constructing a new building in Łódź to house the company's European Service Center (ESC), dealing with finance and accounting. The already existing center employs 540 professionals. "Eventually, close to 600 will find a job in the center," Philips spokesperson Beata Jedynak says. "At the final stage of its development ESC will supply services for more than 100 Philips units over 20 European countries," she adds.
Pulling power
The main reason why large foreign corporations are setting up their financial, accounting, HR or IT centers in Poland is a labor force that is much cheaper than in the West, but which is also highly skilled and well-educated. "Philip Morris has decided that Kraków is the best location for its center because of the highly-skilled work force with specialized skills and knowledge of languages," the company said in a press release.
There is an additional factor which distinguishes Poland from its main competitors in the region, such as Hungary and the Czech Republic. "The second-tier cities in Poland are much larger than the ones in the other countries, and they are significantly cheaper than Warsaw," says Romek Lubaczewski, director of the shared services center advisory departament for Central and Eastern Europe at PricewaterhouseCoopers (PwC).
Kraków has become Poland's main center for shared services with around 4,000 employees working in the sector. Apart from Philip Morris, IBM, Delphi and Cap Gemini have service centers in the city. Wrocław is the second most popular location, with Siemens, Hewlett-Packard and Volvo opting for the Lower Silesian capital. HP's accounting center for its global e-business operations employs more than 1,000 workers and is the company's largest such center in Europe.
Great estimations
Lubaczewski estimates the total number of those working in multinational companies' service centers in Poland at around 10,000, but it could be even higher. "Including companies providing outsourcing and off-shoring services the number could be over 20,000," he claims. Just three years ago the number was estimated to be around three or four times lower.
Does the influx mean that Poland is becoming the shared services center of Europe? "It already is," Lubaczewski claims. "Now the challenge is to keep us in that situation, to maintain the position," he adds.
Easy come, easy go
These types of centers are highly mobile and relatively easy to establish. There is a danger that just as they are now leaving Western Europe for Poland or the Czech Republic, in a couple of years' time they could go to Romania or Ukraine. "We have to expect them to move. That's life, that's business," Lubaczewski admits.
He thinks that in order to maintain Poland's position as the regional leader in the field, there should be more support for these centers from local governments as well as the state. Lubaczewski also sees the proper use of EU funding as a possible incentive for investors.
According to Lubaczewski, accounting and finance service centers are a safer bet than IT centers to stay in Poland long-term. "Because of their nature [IT centers] are more likely to move to new, cheaper locations," he claims, adding that Romania is becoming the IT center in the region. "Government grants and EU funds should, to a larger extent, go towards accounting and financial centers," he says.
Nevertheless, the PwC expert believes that Poland will continue to be one of the best locations to establish service centers and companies will keep moving to Poland. "I wouldn't be surprised if in three years the number of people employed in service centers and in companies providing outsourcing services reaches 100,000," Lubaczewski says. "But it won't happen without enough help from the government," he concludes.
