OUTSOURCING FUTURE

OUTSOURCING FUTURE

Wed, 09/02/2020 - 17:25

In 2020 the sector is undergoing transformation that will make it stronger

The unforeseen Covid-19 pandemic that shook the world in 2020 put to humanity and global industry a lot of questions whose answers are yet to be found. One thing can be said with a high-degree of certainty, though: the IT and BPO outsourcing sector is bound to become one of the most able to adapt to and to benefit from the changed environment.

While it remains unknown for how long the Covid-19 pandemic will continue to rage and whether mass lockdown will repeat across the world, sensible companies seek ways to secure uninterrupted work processes. For many of them outsourcing activities and services to off-shore companies is a natural step in this direction.

Statistical data and surveys are still accumulating, but some preliminary results already make these trends more clear. In July, for example, surveys by Opinium and LiveArea showed that for about a third of UK companies outsourcing of activities is an integral part of their strategy for combating the coronavirus crisis consequences. According to an ISG survey for Europe, the Middle East and Africa showed that during the second trimester traditional outsourcing has dropped with 16%, and cloud-based services saw an unusually low growth of 7%. The 5% decrease in revenue in the IT and BPO outsourcing sector is explained with the sudden blow the Covid-19 pandemic dealt on industries such as tourism, transportation, hospitality, retail and financial services.

Two major trends for 2020 in the outsourcing sector are off-shoring of whole processes rather than of single services, and the aim of client companies to outsource a service to multiple partners, which are even located in separate countries, rather than to a single subcontractor. Some analysers even predict that the complete business model will radically change and that as early as the end of 2020 we will witness a transformation from chain to network model of partnership. The latter's advantages are particularly important in a world that is still seeking an effective solution for the war with a dangerous and highly-contaminant disease: improved flexibility, higher levels of cooperation and more value. For now, the main fields where this trend is becoming more visible are IT services, web development, product development.

In the conditions of a global instability, a growing number of client companies switch their interest from seeking cheap outsourcing partners to ones that provide quality and the opportunity it provides to reduce risks for their business operations. This is why many firms start to reevaluate their strategy to off-shore to traditionally cheap destinations, such as Southern and Southeastern Asia, and move to the closer, more predictable and secure Southeastern and Eastern Europe.

All of this means that in the new environment will benefit outsourcing companies that are ready to adapt to the changed needs of the market. Sensible firms already have prepared plans that secure a trouble-free work process under lockdown and pay special attention to digitisation and virtualisation of their activities.

Where does Bulgaria fit in this picture as a country that in the past 20 years developed a strong and competitive outsourcing sector?

In 2019, the IT and BPO outsourcing sector in Bulgaria experienced steady growth and was optimistically predicting that in 2022 it would provide 80,000 workplaces and would make 9% of the Bulgarian GDP. The attractive salaries, work conditions and social benefits turned the IT and BPO outsourcing sector into a magnet for young and ambitious Bulgarians, and into a factor with real potential to change the negative trend of young people emigrating from the country. In their aim to sustain and expand their growth, outsourcing companies in Bulgaria invested in training their own specialists and opened offices not only in Sofia, but also in big cities such as Plovdiv, Varna, and Burgas, and even in smaller ones.

In the past few years the Bulgarian outsourcing sector also underwent a quality transformation. From an industry that initially relied on low expenses as the main factor of attracting investment, it evolved into a sector that confidently invests in innovation, development of technological products and modern business services and solutions.

"From the perspective of cost wise outsourcing, Bulgaria cannot always compete with WorldWide outsourcing locations, but the country is a part of the EU restrictions and local legal framework allows good employment flexibility and attractive tax for freight companies to invest here," says Viktoria Petrova, Country Manager of Soitron-Bulgaria (www.soitron.bg). "The Bulgarian labor market has plenty of IT and BPO experts, with strong skillset in a variety of key languages and adaptive mindset, and a tempting cost advantage, compared to other EU countries. The future of Soitron-Bulgaria is in the hands of our employees. We strive to empower their talent and seek potential not only for Business Development but also Personal Development in parallel with our business growth. Our plan is to continue growing and modernizing the way we operate as an outsourcing company."

"I would definitely point out the highly skilled and well-educated people of that we consider as the most valuable assets for our business," says Philippe Rouvrais, Head of Delivery-Europe and IT Outsourcing of Modis, a global leader that connects the world of IT and engineering with the business (www.modis.com). "For sure, the country's location and trade relations as part of the EU also contributes to its attractiveness as an outsourcing destination and place to invest. In addition, an already longstanding experience and expertise in traditional outsourcing activities has helped to strengthen Bulgaria's positioning as a destination of choice for outsourcing during this Covid-19 pandemic."

Low corporate tax, the relatively lower labour cost compared to other EU countries, the trained workforce, the location in a time zone that allows easier work with Europe- and US-based clients, and the fast Internet connection are the main advantages of Bulgaria as an outsourcing destination. The technological preparedness is also crucial when choosing an outsourcing partner during the Covid-19 pandemic as it allows easier, faster and safer transition to work from home without or with minimal losses for the client company. This already became evident this spring, when Europe-based outsourcing companies transitioned much more effectively to work from home than their competitors in countries such as India.

Bulgarian outsourcing companies effectively started working from a distance. How well they did during the months of the emergency state became visible from the fact that many of them continued to hire. The sector also abstained from state help for businesses affected by the lockdown.

Large international and local IT and BPO outsourcing companies in Bulgaria usually attract most of the attention and this is understandable as they set the standards, attract the biggest investments and hire a lot of people. But the sector's vitality also depends on small and mid-size companies. They are created by young and ambitious teams who want to "break the wall" and have both the potential and the desire to achieve something new. However, in order to unleash their potential fully, such companies need a space and an organisation that can help them to materialise their grand ideas and to find prospective partners.

"The Bulgarian Association of the Software and Services Industry (www.bassi.bg) was created focusing on medium and small companies from the software and services sectors in Bulgaria," explains one of its founders, Blagovest Kirilov. "The main goal is to improve collaboration between BPO and ITO companies and to be a clustered hub for shared practices and growth. BASSI members have the advantages of being connected to new partners, markets and opportunities, shared best practices in a secured environment, as well as being part of a network of experts and various distribution channels to foster growth for their respective sectors and the region."

Thanks to the efforts, forward thinking and bravery of the companies in the IT and BPO outsourcing industry in Bulgaria, the future of the field in the country looks promising. What better news in such an unstable year? 

Issue 167-168

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