IESF Group recruiting international

Outsourcing of business processes in Europe from the perspective of Human Resources

Since the turn more than a quarter century has passed. The so-called low-wage countries of the East (Poland, Czech Republic, Slovakia, Slovenia, Romania, Hungary, Turkey, Bulgaria, etc.) have done a great deal. On the other hand the cost pressure in the mature markets is stepwise becoming higher and higher, forcing local companies to seek for lowering the total costs.

The conditions for the individual sectors are very different, depending on how they operate on the global market, manufacturing complexity, kind of competition etc. However, if the rationalization and optimization possibilities in the "mature" markets are maxed out and there will be no better economic conditions (taxes, social security, government requirements) etc., there is nothing left than to relocate other parts of the business processes (production, administration, marketing and so on) to low wage countries. The companies thereby are facing major tasks and partly also from the stakeholders who may not agree out of political of ethical reasons. It is not always possible to put rational decisions before emotional ones.

As an international recruitment consultancy with East offices in Czech Republic, Poland, Turkey and Bulgaria, we support companies in the search of cadres and specialists in low-wage countries for 20 years. Here big changes occurred. At the beginning we could still talk about pioneer days, the knowledge of the countries in the East were but little to non-existent and the education of the people was still east marked. This has now changed completely. Globalization is everywhere and has arrived in the East. On the one hand, thousands, mostly large Western companies moved from the beginning of the turn operations to the east and have made a great contribution to train their local employees to new Western standard. Further the efforts of local education were high resp. the will of the people to meet the Western standards is enormous. Today's generation of 30 years in the east is as well, if not better educated than their counterparts in the West. Mostly they speak perfect English or German. The boundaries are blurred today.

If we are requested by companies with respect to their recruitment needs in the East, we face the same challenges as in the West. The HR-markets are firm also in the east. The good experts and cadres are wanted because local companies also strive for quality and more and more western companies outsource eastwards and want to grow the local markets. In each of the above countries, we see some significant growth in the most diverse sectors. While it was rather production outsourcing in the past, today follow operational processes in Administration, IT, HR, Finance, Marketing etc. Complete shared services centers are built. Of course the wages and prices in the East will rise as well, as has happened in Asia, so expected similar conditions prevail in more than 20 years as here. But this also means that today's eastern markets will be just as attractive as ours here. For example currently Sofia (Bulgaria) has become a hotspot for software development and call centers. Settlements from various West countries, Germany, USA, France, Sweden, Austria, Israel, etc. are increasing. Here also the comparatively very low corporate tax of 10% is attractive.

The movement that we see today comes from medium-sized companies which want to also relocate to the East. This is about individual functions of administration, finance, marketing etc. In principle, each function is possible, which can be easily integrated by cloud and server systems into the operational processes and their work can be done wherever they can pursue. Here, the costs (salary, benefits, office rents, taxes, etc.) can be reduced in some cases up to 80%. Any disadvantages, organizational, additional expenses, controlling, difficult team building processes etc. fall of no consequence in relation to the overwhelming advantages.