issue 1 - Roland Berger

nearshoring industry report f
However, the South Asian subcontinent is
still the offshore location of choice for all
kinds of services, an enduring consequence
of India’s successful economic run over
the past several years. Of the companies
surveyed in a study titled “Service Offshoring,”
37 percent had awarded outsourcing
projects to India. However, 22 percent of
all projects are commissioned specifically to
Central Europe. The study was conducted
across Europe in spring 2004 by Roland
Berger Strategy Consultants together with
the United Nations Conference on Trade
and Development (UNCTAD). In more than
100 interviews, executive boards and upper
management from a select group of Europe’s
top 500 companies reported on their
challenges and experiences.
Central European companies reap benefits
from the outsourcing of business processes
to countries such as Poland, Hungary, the
Czech Republic or the Baltic states—a procedure
known as “nearshoring.” The Central
Europeans score points with their geographic
proximity, same or nearly same
time zone, similar culture, highly qualified
employees, good infrastructure and EU subsidies.
Plus, their personnel costs are lower.
In a study of wages worldwide, personnel
“SOME PEOPLE COULD HARDLY
BELIEVE THAT VIENNA IS CLOSER TO
KRAKOW THAN TO INNSBRUCK.”
consultants from Watson Wyatt estimated
that programmers in Central Europe earn
up to 75 percent less than their US or
German counterparts. According to the
UNCTAD study, 70 percent lower labor costs
are a driving factor in considering the offshoring
of operations. Hansjoerg Siber, vice
president of Capgemini Systems, an IT
service provider, is one of those who have
established a foothold in Central Europe for
offshoring projects. “Not too long ago, Austrian
business partners, for example, could
hardly believe that Vienna is closer to
Krakow, Poland, than to Innsbruck,” says
Siber. Taking over the BPO center of International
Paper (the world’s largest paper
manufacturer) in Krakow was a smart move
to convince Capgemini customers this is in
fact the case. Alongside this came a multiyear
contract to supply financial and accounting
services to the paper group. Siber
says that after just one year, his IT consultants
have extended their reach and are working
for numerous international companies.
In May 2004, EDS, a Texas-based IT service
giant—and Capgemini rival—that had
already taken its first steps into Central
Europe invested almost $8.5 million in a
new BPO center in the Hungarian capital of
Budapest. The reason was that the 110
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