Bulgaria's outsourcing sector is undergoing a successful transformation in a changing environment
Standing at one place in the 21st century is a recipe for failure. Our dynamic world has forced companies and entrepreneurs to be constantly on the watch for expected and unexpected changes both in global and local economy and politics. It is inevitable – this is the only way to grow in the globalised world.
Outsourcing industry is one of the most visible dimensions of this reality. From outsourcing of manufacturing to one of high-tech services and business processes – there is hardly a part of the global economy unaffected by this.
Bulgaria takes centre stage in the colourful jigsaw puzzle of outsourced services. It all started when the country's southern parts became a hotbed of outsourced sewing businesses. Today, these small companies remain an important employer in regions with high levels of unemployment and labour migration. In the early 2000s, Bulgaria also appeared on the map of outsourced software services and call centres. In a matter of years, the landscape in this field changed as well. The entrepreneurs quickly realised Bulgaria's advantages and got a reputation as suppliers of outsourced services in Southeastern Europe, relying on several key factors. Bulgarian workforce is trained, competent and fluent in foreign languages. The country is comfortably located between East and West, and allows easy communication with most of the world. The Internet connection is fast and the taxes are low. The EU membership provides additional security and predictability. Thus, with local and international investments in the 2010s, the portfolio of outsourced services and processes in Bulgaria quickly expanded and got richer. Today, the country is a leader in ITO and BPO services in Southeastern Europe.
According to a report of the Association for Innovation, Business Excellence, Services and Technologies (AIBEST) from mid-2022, Bulgaria and Romania are the main hubs for outsourced services in Southeastern Europe, with 44% of business operations in the region concentrated in Sofia and Bucharest. In 2021, Sofia also kept its place within the first 100 in the Global Innovation City Index by Tholons.
According to the 2021 annual report of AIBEST, in 2020 the ITO and BPO industry in Bulgaria made 6.6% of the country's GDP; in 2019 it was 5.5%. The change was done while employing roughly the same number of people in the sector, about 79,000. The growth of operating incomes was 11.2%. This is an incredible development when one considers that 2020 went under the sign of the Covid-19 pandemic and lockdowns, expanded work from home and a blow on the global economy. According to predictions, in 2024 Bulgaria's ITO and BPO sector will make 11.2% of the national GDP.
To a significant extent, the success of the Bulgarian outsourcing industry during the Covid-19 pandemic was because it offered a reliable, high-quality service close to corporate clients who suddenly realised how vulnerable they are when they delegate an important part of their processes and services to partners in Asia and Africa.
The evolution of outsourced services in Bulgaria continues. Outsourcing of certain activities is no longer the sole way of doing business in this field, now centres for shared innovative services (SSC) with high added value are all the rage. The fields they cover are finance and accountancy, trade, human resources, IT services and others, and they rely on innovative thinking and interdisciplinary approach.
The business's behaviour during the Covid-19 pandemic demonstrated that it can deal with unexpected challenges. However, the conditions in which it has to operate remain complicated – high inflation, a war in Ukraine, broken delivery chains, political instability in Bulgaria. Many companies feel that the government can do more on concrete policies such as preserving the low taxation, attracting Ukrainian professionals, and investing in a qualified workforce.
"There is a need to stabilize the political situation in the country, ensure rule of law, improve health and education systems so that more educated Bulgarians can discover the European model in their own country," says Vesela Kerekova, HR Manager of IntelliWay Services (www.intelliwayservices.de), a Bulgarian company that outsources property management services on the German market. "It is important to improve the image of Bulgaria in Europe so that we can attract more investors. The state could support private businesses by investing in paid internships, training of young people and retraining of mature ones. Training a new employee costs a lot to the companies and has an uncertain result, so often companies turn to people with experience."
The lack of qualified workforce is among the major challenges that practically all businesses in Bulgaria experience. The ITO and BPO field is among the good examples in the country for workplace policies aiming at the talents' retaining, development and wellbeing. Such jobs go along with good salaries, solid social benefits and teams that cherish the individual and pay attention to each employee.
Thanks to this combination of internal and external factors, of talent and determination, the ITO and BPO sector in Bulgaria remains among this country's overachievers – an amazing story that is doomed to success.