The new wave of outsourcing destinations rich with talent

The maturation of the outsourcing industry accompanied with recent technological developments has resulted in major diversification of services. The demand has shifted from cost-driven to higher value creation services.  In previous articles we have talked about the trends which are transforming this industry and initiating expansion of the scope of services. However, what is even more interesting is the expansion of providers of services (outsourcing companies) across a much wider geographical area. With more complex activities being outsourced, clients are turning towards more nearshore locations where the quality of the services provided is much higher.


The new players

For a while now, the Baltics have been the most attractive outsourcing destination for the Western countries, especially for the Scandinavian region. This has been mainly due to their cultural and language proximity with the Nordic countries.

However, in the last decade service providers from CEE and SEE have intensified the competition. Poland is in the lead, followed by Slovakia, Hungary, Romania and The Czech Republic. Many global companies have opened offices in these countries like Oracle, IBM HP, Sutherland and more and have further expended their operations. BUT, the intensified competition has caused high level of stuff attrition between the outsourcing companies resulting in increasing of costs.

Clients once again are in the search for new location which offers skills and knowledge at affordable prices. The core CEE market, for example, has hourly wage 75% lower than in the EU-15, but good quality of services. It comes as no surprise that 30% of the top 100 global outsourcing companies have relocated in this region.

Third group of locations have emerged as new countries have become more transparent places in which to do business. Croatia, Serbia and Macedonia are the newest players in the game which offer untapped talent with surprisingly lower cost profile.


Macedonia – the safe middle ground

Macedonia is often overlooked when promoting the Western Balkans for outsourcing opportunities.  But, if we look more carefully at the data and numbers when comparing countries from this region we cannot ignore the potential that this small country in the heart of the Balkan offers.

Education and language skills

First, it has young, educated & skilled workforce. The main university cities produce influx of fresh talent from higher education of round 10 000 students annually. The highest density of university graduates is found in Skopje, Tetovo and Bitola. Furthermore, in the last decade the government has supported education abroad by providing scholarships for graduates who successfully manage to enroll in one of the top 100 World Universities (Shanghai ranking). The students are than obliged to return to their home country and share the knowledge and experience gained. This has produced young driven, population with a shared world view and more importantly has increased the cultural fit between western countries and Macedonia.

In addition, it offers abundance of both regional and major language skills. Statistics show that more than 90% of pupils (age 7-18) studied more than 2 languages in 2012, an increase of 20% since 2007. The opportunity to provide multilingual operation has been recognized as major advantage for outsourcing companies in this region in comparison to other outsourcing destinations (India, The Philippines).

Also, Macedonia has one of the youngest populations in Eastern Europe – 42% are under 30. What is even more important, the outsourcing industry has made a reputation as an appealing career opportunity for young graduates in the country.

Cost savings

In addition to the rich talent pool, Macedonia has major competitive labor costs when compared with countries from the region:

Finally, when it comes to ease of doing business indicator, Macedonia has emerged as a leader in the region as a result of the implementation of major reforms in administration and legislative.

I hope I spiked some interest. Join the conversation with your own insight or some questions. I would be happy to discuss some more.