Welcome to the matrix approach
The latest report from real estate consultancy CB Richard Ellis (CBRE) has noted a new trend in the CEE offshoring business. According to CBRE's Global Offshoring Markets Review, the choice of destinations has remained consistent over the past few years, with Poland and the Czech Republic figuring among the most popular countries in the CEE region. However, an increasing number of top global firms are looking further east in considering future offshoring locations.
The report discusses the implementation of a novel "matrix approach" when selecting a location. This approach is based on a number of factors that go beyond strictly geographical and economic considerations. Multinational companies, such as Credit Suisse and Shell, are now putting more of an emphasis on issues relating to risk - particularly socio-political and economic stability and market maturity - as well as local skillsets, business environment, infrastructure and overall costs.
According to CBRE's Barbara Fryzel, who provided an analysis of the study's findings, the number of locations worldwide that can fulfill most or all of these requirements is growing, particularly with regard to Central and Eastern Europe.
"Clients often demand a complex analysis which takes into consideration the various criteria defining their specific business model and benchmarks them against the potential and capabilities available in various geographic locations," said Fryzel. While the established markets of Poland and the Czech Republic are still attractive to investors, due to the good skillsets and language proficiency possessed by the local workforces, countries like Romania and Bulgaria are also moving forward thanks to comparable skillsets and lower labor costs.
Due to this matrix approach to offshoring, other emerging economies such as Croatia, Lithuania and Latvia are seen as strong competition for the more traditional offshoring markets. Ukraine, Belarus and Serbia also have the potential to acquire their own share of the market.
A number of companies, such as software giant IBM, have opted to scatter their offshoring centers throughout the region, in both established and developing markets, in order to make full use of the strengths and weaknesses of each local economy. With the growing number of markets on offer, it seems that firms can afford to be more selective in deciding upon offshoring destinations.
