When looking for a business subcontractor abroad, lower labor costs have long ceased to be the only factor that matters. In the new report “Executive Brief. Outsourcing 2020,” experts from the global company 7N analyze the attractiveness of countries specializing in offshoring or nearshoring, taking into account as many as 13 criteria. After considering them, Poland ranks 10th in the world and 4th in Europe.

Nearly half (45 percent) of companies worldwide, due to changes brought about by the pandemic, intend to outsource more business processes to their contractors rather than perform them in-house. This conclusion from the NNT Ltd. 2020 Global Managed Services Report prompted 7N to prepare another edition of the ranking of the best locations for IT services outsourcing.

This year's report took into account 13 criteria for assessing the attractiveness of countries. The starting point for the “Executive Brief. Outsourcing 2020” report is the perspective of Western European companies, and the subject of the study is 50 countries that specialize in offering IT services to foreign partners.

Nearshoring—that is, seeking subcontractors abroad but within one's closest region—remains a strong trend. That is why right after the “cheap” Philippines and India, which open the ranking of the most popular places for IT services outsourcing, Ireland placed next, and the top ten best locations also include the Czech Republic, Hungary and Poland.

Poland Among Top Ten Best Countries for IT Services Outsourcing [REPORT] — illustration 1

How does Poland compare with other countries?

Poland receives good marks from the report's authors for:

  • attractive operating costs and developed infrastructure - it is rated higher than in Ireland, Hungary and most European countries;
  • a relatively high human development index (HDI, i.e. a composite of national income, education level and life expectancy);
  • low local prices - the best rating in the region; globally, only Asian countries have lower living costs;
  • low operational risk - assessed as less severe than in most countries worldwide;
  • proximity to Western Europe - although travel costs lost importance in 2020, geographic proximity still facilitates communication thanks to the same time zone;
  • English language proficiency - among the leaders of the ranking, only Ireland fares better.

Poland received average marks for:

  • the pool of IT talent - despite a relatively large number of people with suitable qualifications, the developed domestic IT sector already engages many of them; Poland can nevertheless boast a greater number of available talents than, for example, the Czech Republic
  • forecasts regarding the number of graduates of technical fields - we fare better than other countries in the region, which bodes well for the future, but worse than countries in Asia and the Americas;
  • market competition - everyone in the top 10 best locations is rated better;
  • cultural compatibility - other Central European countries achieved a comparable result;
  • urban population - compared with its neighbors, Poland's population is less concentrated in large metropolitan areas.

The report's findings contradict the general belief that Poland has vast resources of programmers ready to work somewhat more cheaply than their Western colleagues. Many of them are highly qualified professionals already engaged in attractive projects, so it is not easy for potential new players to acquire skilled Polish employees. The Polish IT market is the most developed in the region. Competition for human resources here is greater than in neighboring countries, which means we rank lower in the overall comparison than the Czech Republic or Hungary.

A competitive market forces Western managers toward more deliberate action and encourages them to look for specialists together with a trusted partner already well established in the domestic IT market. Poland benefits above all from a predictable business environment and developed IT infrastructure - notes Jakub Strzemżalski, Vice President IRD at 7N.

Although the Philippines and India top the “Executive Brief. Outsourcing 2020” ranking, the report's authors warn company managers against simply seeking low-cost suppliers. Instead, they suggest taking into account the total cost of engagement (TCE), which includes all aspects of cooperating with foreign partners.

The full report is available on the WEBSITE.

Summary

The “Executive Brief. Outsourcing 2020” report by 7N places Poland 10th in the world and 4th in Europe in terms of attractiveness for IT outsourcing. The country stands out for, among other things, its developed infrastructure, proximity to the West and good command of English, but it loses ground due to competition in the domestic technology market. The report's authors advise Western managers to factor in the total cost of engagement (TCE), not just prices, when choosing a partner.