The Contingent Labor Market in Poland

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In this interview, Tomasz Bąk discusses the changing situation of outsourced services as well as challenges and opportunities for working in Poland.

1. How have outsourced services in Poland changed over the past 10 years?

Tomasz: This can be described with two words: spectacular growth. 20 years ago there was no outsourcing to speak of in Poland, 15-12 years ago it was still a relatively new concept, and today even the most advanced business processes and projects are outsourced and the sector of business services is expanding rapidly. For example, there are now 470+ SSC/BPO Centers in Poland. 66 of these centers were created in only 2013 and 60 percent of those were created by new investors with no service centers previously established in Poland, pointing to the spectacular growth.

The growth is not only in quantity but quality. 87 percent of the service centers have expanded the scope of their services in recent years. A few years ago only the most basic processes had been outsourced, while today even the most complex IT programs are given to external companies. Three key elements that have made this expansion possible are:

  • The economic situation of Poland has improved as I describe in my answer to the question about what locations within Poland clients are moving to.
  • Poland has very good access to very well-educated and multilingual professionals who are a lot more inexpensive than their colleagues from western countries.
  • Poland has one of the biggest and most dynamic office and real estate markets in Central Europe.

2. What industries are most interested in using contingent labor in the Polish market?

Tomasz: I have found that all production companies are using production workers, and I don’t see any particular industry that has higher needs or is more common than the others. From global furniture manufacturers to global household goods manufacturers to logistics centers and car factories, the list goes on and on. I cannot think of an industry that is not present in Poland and that is not using contingent labor.

3. Which locations within Poland are clients moving to?

Tomasz: There are a lot of reports available publicly that highlight some of the more popular locations. For example, Tholons Top 100 Outsourcing Locations is an acknowledged ranking of outsourcing cities around the world. The 2014 edition lists Wroclaw (65th), Warsaw (32nd) and Krakow (10th), but the ranking is 2-3 years behind the real market. Those locations are already very saturated and the companies have to compete for the candidates by offering them better work conditions. This mitigates one of the two biggest advantages of the Polish labor market: an inexpensive workforce. What the investors should be looking at are the other big cities that have not made it to the lists yet: Tri-City, Lodz, Katowice, Szczecin, Bydgoszcz, Torun and many more. A large number of progressive companies are already located there, and there are plenty of well-educated and highly qualified candidates available. Poland has been experiencing an educational boom since the mid-1990s. The universities are producing over 400,000 (yes, four hundred thousand) graduates every year and their skill and knowledge is widely recognized across Europe. The specialists here are nothing short of those in Germany, France or UK and often rated higher than in other countries.

Another important factor is the presence of Special Economic Zones established in or around most Polish cities. Investors who participate in the cost of local infrastructure development and create jobs in one of those SEZs can count on significant tax discounts at least till 2020. So far, this method of cooperation between the state and investors has been very beneficial for everyone involved.

The last element is the EU funds. Projects focusing on innovation or infrastructure can apply for European Funds from one of multiple development programs.

With all the above, there are no location(s) that the clients are not moving to or starting new businesses in. There is still so much room in the market that it’s just a matter of picking a location.

4. What skills are most commonly adopted for contingent labor in the market?

Tomasz: Most of the contingent workforce is comprised of non-qualified workers performing simple tasks on production lines. Some jobs require more knowledge, skills, or a relevant license (for example: drivers, forklift truck/machine operators, mechanics, etc.). Adopting contingent workers for office jobs or specialist positions does happen, but it’s rare.

5. Are there any laws or processes in particular that are the most challenging for clients looking to expand in Poland?

Tomasz: While there’s no real threat for investors in Poland, high market saturation and workforce availability is something to be closely looked at while planning expansion or a new investment. While in most of Poland it’s easy to find relatively inexpensive and qualified workers, there are some regions where the investors have to compete for candidates. This can most often catch multinationals with a less comprehensive view of the market off-guard. For example, sometimes it happens that a multinational organization looks to launch a manufacturing or logistics center in a Polish city, but fails to analyze the data in order to match the relevant city with worker costs. Very often this can result in these organizations choosing a city that might have relatively higher salaries and benefits costs, but failing to match salary and benefits packages with the costs of that city.

6. Are there any other challenges for clients working within Poland?

Tomasz: Generally, no. Poland’s labor law and market are predictable and consistent. While fiscal and tax regulations are quite complex, once the investor manages to get through all the necessary bureaucracy, there’s nothing to worry about. There are no strong social, cultural, political or legal obstacles to achieve business stability.

Tomasz Bąk joined ManpowerGroup in March 2014. He is responsible for building TAPFIN infrastructure in Poland.