How Warsaw is catching up Poland’s outsourcing boom

Firms in the business support services sector are a big driver of demand for office space in many of Poland’s cities.

November 11, 2019

Poland’s long-running outsourcing boom is no longer just boosting its regional cities as the business services sector grows its presence in Warsaw’s office market.

Regional cities such as Kraków, a traditional base for outsourced operations, historically benefitted from the fact that salaries were lower than in the capital.

However, as salaries have caught up with Warsaw, multinational companies are increasingly looking to the capital. The business services sector in Warsaw grew from 7,000 to 56,000 employees between 2010 and last year.

Credit Suisse, Goldman Sachs, JPMorgan and Standard Chartered bank have all taken space for services operations in Warsaw over the past two years.

“Warsaw wages are still higher than in Kraków but the gap has narrowed in recent years,” says Mateusz Polkowski, JLL head of research and consulting, Poland. “In some sectors, such as IT, salaries are comparable.

“The decision to be based in the capital is also related to the size and skills of its talent pool, even if the cost may in some cases be higher.”

Fuelling the Polish economy

Despite the new focus on Warsaw, demand for office space among the business service sector remains high across Poland, accounting for as much as half of all office space leased, according to JLL.

In Kraków, 57 percent of its office market is leased to the services sector. Year to date, three largest office lettings in Poland involved business services in Kraków; UBS leased 19,300 sq m at Fabryczna Office Park, Motorola Solutions Systems Polska leased 17,100 sq m at Green Office and Sabre leased 16,000 sq m at Tischnera Office.

Meanwhile the services sector accounts for around half of the office market Łódź and Wrocław, according to a recent report by Poland’s Association of Business Service Leaders.

The presence of major global corporates such as IBM, UBS, Cisco and AstraZeneca in Poland is often supplementary to the firms’ other European bases, says Lukasz Dziedzic, senior research analyst, research and consulting, JLL Poland.

“Cities which can offer a strong pipeline of highly-skilled, bi- or tri-lingual staff are well-positioned to benefit from the expansion of European headquarters of multinational companies and the rising corporate need for young professionals.”

Boosting the talent pipeline

While the growth of the outsourcing market shows no signs of abating - employment in the sector is tipped to rise to by 29,000 to 336,000 by the start of next year – it’s not just about a pipeline of multilingual staff.

In Poland, 53 percent of business service centres provide support to the neighbouring German market and there are concerns that the number of German speakers available won’t keep pace with demand, according to the German Outsourcing Association.

“Such is the scale of demand across the growing business services sector, concerns that the wider Central and Eastern region may struggle to provide sufficient talent in some areas are understandable,” says Dziedzic. “But the talent is spread far and wide and there’s an increased focus on equipping students with IT and foreign language skills in schools and universities.”

And while the business services sector has already changed significantly over the past decade, more growth will lead to firms having to work harder to attract and retain the skilled workforce they need. This could lead to disruption to the traditional business services office model to create a more user-centric office environment and introduce more flexible ways of working.

“The business service sector plays such a big part in the overall breakdown of office occupancy in Poland,” Polkowski says. “It’s likely that these firms will lead the way on things such as flexible office space and more modern workspaces.” 

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