The Polish Business Process Outsourcing (BPO) and Shared Service Centre (SSC) industry was worth USD 3.4 billion in 2012 an increase of 20% from the previous year, according to ASPIRE, the (Polish) Association of IT & and Business Process Services Companies. Knowledge process outsourcing (KPO) constitutes about 6% of the Polish BPO market. This is negligible compared to countries like India and the Philippines, where the outsourcing market exceeds USD 10 billion annually. However, Poland has certain unique strengths which attracts investment to this sector:

• Language capabilities: Most professionals have a working knowledge of English, followed by German, French, Spanish, and Italian.
• Near-shore: The geographic proximity to Germany, France, Netherlands, and the United Kingdom (UK), which form a major portion of the client base.
• EU member: Since Poland became a member of the European Union in 2004, companies setting up centers can be assured of safeguarding their Intellectual Property (IP) rights.
• Investment support: Companies which setup outsourcing centers are eligible for cash grants from the EU Structural Funds and incentives under the annual budget, subject to certain criteria.
• Government support: At the national level, government support includes tax incentives to outsourcing firms. At the local level some cities, for instance Lublin, have earmarked special economic zones or parks to foster KPO sub-sectors such as LPO and Healthcare Process Outsourcing.

  These above factors have contributed to the growth of KPO in Poland, albeit little. In 2012, there were about 22 Decision Support & KPO centers in the country. Irevna and McKinsey established KPO centers in Poland in 2009. New KPO entrants in 2012 include Hewlett Packard which opened the largest KPO center in the country, and Capita opened a Legal Process Outsourcing (LPO) center to cater to clients in the UK.

  The Polish KPO industry can continue to grow by adopting measures to increase domain expertise, build a talent pool, and advertise its KPO potential.

• Move up the value chain: Existing outsourcing centers need to add more advanced horizontal processes, such as Analytics, to their service portfolio. These “high-performance” services command a higher price in the market, and build domain expertise in the fastest growing KPO sub-sector at the same time.
• Build relevant skill sets: The diverse KPO sub-sectors, from Analytics to LPO, require workers from different academic disciplines. Universities and colleges need to tailor their curricula so that graduating students are equipped to work in these sectors.
• Better marketing: Poland, and its main BPO association ASPIRE, needs to clarify the differentiator of the country’s KPO sectors from others in countries like India, the Philippines, and China. When speaking at international forums and conferences, highlighting the country’s KPO capabilities is a must.

As destinations get saturated, Poland has a great opportunity to tap into the global KPO market. With its unique strengths, it has the capability to become a leading provider of KPO services, as long as the industry leaders, associations, and stakeholders adopt certain measures.

- Deepti Krishnan, Analyst, Sourcing Practice

By Deepti Krishnan

2013 looks to be a slow growth year for Legal Process Outsourcing (LPO). 45% of the buy-side enterprises surveyed in the “State of Outsourcing 2013 Study” said that they had no plans to outsource or were going to decrease the scope of their LPO projects in the next 12 months. Only 19% plan to venture into a new LPO partnership or increase the scope of their ongoing LPO relationship.

LPO providers are also facing increased competition from new entrants that are reaping the benefits of onshoring and nearshoring. Carillion, a construction company, had a deal with CPA Global to outsource legal work. But now, it uses its own LPO venture: Carillion Advisory Services (CAS). CAS operates out of Newcastle in the United Kingdom, and is staffed by 60 paralegals. Another big entrant into the already crowded LPO provider space is Capita, an outsourcing giant, which recently added LPO to its service portfolio. It signed its first major deal with Pinsents in 2011. Capita’s 550-seat LPO center is located in Poland.

While law firms and corporate counsels are still outsourcing legal processes, the type of work is low-value. In Association of Corporate Counsel’s 2013 survey of Chief Legal Officers, eDiscovery is one function, which is primarily outsourced. This process forms the bulk of legal work outsourced, however, most eDiscovery firms are not traditional LPOs. For instance, Kroll, an investigation firm, has a suite of products, which includes the eDiscovery software “Verve”.

Discovery costs are directly proportional to the number of documents, where typically clients are charged USD 1 per document. If a case has 5 million documents for review, then the client will have to pony up USD 5 mn. eDiscovery technology that incorporates predictive analytics brings down the cost significantly, thus increasing the technology’s attractiveness to law firms and corporations with tight budgets.

The method by which predictive coding is used to determine whether a document is relevant to the case at hand is by developing algorithms to look for specific phrases and text in the document. For the legal industry, predictive coding enables a program to predict whether documents should be classified as responsive or non-responsive to a discovery request, relying on input by attorney reviewers on a sample set. Predictive coding reduces the cost of eDiscovery as the pricing is no longer linear. Most of the expense is incurred when grading the sample set and the cost increases marginally with an increase in the size of the document set. A 2011 study, “Technology-Assisted Review in E-discovery Can Be More Effective and More Efficient than Exhaustive Manual Review”, found that technology-assisted review can achieve at least as high recall as manual review, and higher precision, at a fraction of the review effort, and hence, a fraction of the cost.

Vice Chancellor J. Travis Laster of the Delaware Court of Chancery recently ruled that predictive analytics should be used in document review. This will help reduce costs as time taken to review legal documents for relevance will decrease. However, predictive coding only works in cases where the documents are text-heavy, not in patent review where documents have graphics. It also does not work in needle in the haystack investigations, as predictive coding is in its infancy, and privileged documents may slip through the cracks.

LPO providers that offer eDiscovery solutions need to incorporate predictive coding into their technology. Not doing so might sound the death knell of this line of business as new eDiscovery software with prediction algorithms come on the market. eDiscovery customers will migrate to the provider that offers the most cost-effective solution and adoption of predictive coding will ensure lower costs for both parties.

- Deepti Krishan, Research Analyst, Value Notes

These nations have the potential to reshape the global economy
By Myra P. Saefong, MarketWatch

As the big headliners for economic growth lose their appeal, the search for new stars has begun.

The “New Tigers” of the world are nations that have flown below investors’ radar, but are most likely to stand out in the years ahead as economic powerhouses such as the U.S., Japan, Germany, France, the U.K., Italy and Canada give up the spotlight to countries experiencing stronger growth.

Poland and Turkey in Europe, Peru and Colombia in Latin America, the Philippines and Indonesia in Asia, and Ghana in Africa, among others, have the potential to draw attention away from their better-known regional peers, defy the global slowdown, pique investor interest and reshape the global economy.

“An economic tiger should have a pattern of growth that is more than just a quarter or two,” said Karim Rahemtulla, emerging markets/options director at Wall Street Daily. “It has to be growing due to some type of competitive advantage that is afforded by its population, either through education or skilled or unskilled labor.”

Also, the political system must “recognize the need for growth and encourage it through looser monetary policy and with incentives for foreign direct investment, while at the same time moving to a system of legal protection for investors’ capital,” said Rahemtulla.

The world has already seen much of these strengths in Brazil, Russia, India and China, also known as the BRICs, which have taken center stage in recent years. Growth there remains strong, but they’re no longer seeing the spectacular expansions investors have come to expect.

The growth available in the BRICs is far from over, and “years and years of growth are left as the countries modernize, increase efficiency and continue to expand their middle classes,” said Bill Kornitzer, a portfolio manager of the Buffalo International Fund.

But the “avenues of growth will change as these economies mature and I believe we are already witnessing this as China moves from an economy focused on cheap exports to one focused more inward toward a rising consumer class,” he said.

Against this backdrop, “some other smaller ‘emerging’ or ‘growth’ economies are becoming increasingly important,” said Gene Huang, FedEx chief economist. “These countries may not have the size of the BRICs, but they play a significant role in the global supply chain.”

Source: Market Watch

The best countries to do business http://idealog.co.nz/blog/2012/03/infographic-best-countries-doing-business

—

Kraków (Poland) tops world industry ranking for shared services, technology and outsourcing. Kraków has again topped the list of emerging global outsourcing locations in the 2012 Tholons “Top 100 Outsourcing Destinations.” The city has maintained its number 1 status from the last ranking in 2010, having steadily improved its position from 4th place in 2009 and 5th place in 2008. As the top placed emerging city, Kraków’s is banging on the door of the top 10 established cities, which is again headed by Bangalore. There are no new entrants in the top 10. Mumbai, Delhi, Manila and Chennai join Bangalore to make up the top 5 as in 2010. Dublin (which slips from 7th to 8th place) and Shanghai (in 10th place) are the only cities in the top 10 outside India and the Philippines.

—

China’s software and IT outsourcing industry is booming, rising by a third in 2011 to reach a whopping 1.84 trillion Yuan, (A$275 Billion) according to new government figures released by the Ministry of Industry and Information Technology. The stats, seen by state-run news agency Xinhua, represent around a 4% increase on the average for the growth rate from 2006 to 2010. These figures suggest China is rapidly closing the gap with India’s outsourcing sector. According to NASSCOM, India’s IT outsourcing trade body, the sector is expected to grow by 15% this year to reach $100 billion.

—

Philippine-based business process outsourcing firm SPi Global is urging the government to re-introduce Spanish language courses in schools to give the Philippines a competitive edge in voice-based BPO. Latin American countries are becoming more popular with countries like the US, one of the Philippines’ major customers for BPO, which requires bilingual support.

—

Jabra is the brand of GN Netcom, a subsidiary of GN Store Nord has announced its membership of the Microsoft LyncTM Hosted Pack Reference Architecture Partner Ecosystem to Provide Cloud Based Communications.

Microsoft Lync Server 2010 Multitenant Pack for Partner Hosting is a UC hosting solution for telecom and hosting providers. It delivers a foundation for service providers to add an economical UC service to their existing portfolio, and at the same time allowing them to configure their service and build upon it in their own unique ways to add value to and differentiate their solutions.

—

Congratulations to Cliff Rosenberg, Managing Director, LinkedIn Australia, New Zealand & South East Asia and his team, for achieving a tremendous milestone today. They exceeded 3 million members from Australia on the LinkedIn network!

LinkedIn connects over 150 million members worldwide to find jobs, gain and share insights, grow a business and much more. To join LinkedIn, visit www.linkedin.com

To join The Sauce LinkedIn group, visit http://www.linkedin.com/groups?about=&gid=3239261&trk=anet_ug_grppro

According to report released by an industry research and advisory firm in Canada named XMG Global, by the end of this year, Beijing will have US$ 35.76 billion of  the world’s outsourcing industry, which amounts for 23 per cent of the total. India holds top spot for now at US$ 54.33 billion or 43.7 per cent of the total. The XMG’s major expert, namely Lauro Vives, notes that China is climbing up to the top based on an impressive 30 per cent growth rate which far surpasses the 14 per cent seen in India. The latter’s “weakening…is due to the substantial efforts of China, the Philippines, and other offshoring destinations in building their capacity to attract significant amount of investment,” he explained.

In fact, Manila now ranks a respectable third at US$ 8.85 billion in total revenue, which is 7.1 per cent of the world total, as 2010 ends. Its 23 per cent rate of advance is three points better than 2009′s. “While India continues to remain the leader, the rest of the offshore countries are now beginning to mature,” Vives said of the trend towards a more diverse outsourcing scene.

He added that the global outsourcing market will end this year at an estimated net worth of US$ 425 billion. This is just under 14 per cent higher than 2009. But this year’s level is less than last year’s 14.4 per cent because of slow investment expansion.

Vives said, however that “This is expected as most of the outsourcing opportunities, pending due to recession, are just starting to obtain green lights this year.” It indicates that 2010 will be a robust year. For the last 10 to 20 years, outsourcing to India has long dominated the outsourcing landscape. But that appears to be changing with recent emerging players raising their heads to take advantage of the outsourcing game.

Although there are some good options for outsourcing to Latin America, Eastern Europe and Russia, Mexico and other Asian counterparts like Vietnam and the Philippines, China is touted take the lead in the next few years as the leading outsourcing country. Despite worries that the Philippines might become the biggest business process outsourcer in a decade or so, China is closing in on the gap within the industry.

The clear advantage that China brings to the table is the three billion people or more that populate the mainland. With more and more engineers graduating from Chinese universities, there is scope for more work to come their way.

One criticism that points to China is that despite the fact that the country boasts its Internet skills among its population, the English speaking capacity is significantly lower than those of workers found in countries where Internet skills are far less. This discrepancy will cost China but only to a certain extent because everything is so cheap in China.

Talking about cheap, companies will want to consult several vendors before deciding to hire one in China. Cheaper does not necessarily mean better. Just as the euphemism, ‘You get what you paid for,’ is an apt description of quality all around the world, the same is true in China. There will be several points where point of contacts of outsourcing firms will have to define and spell out clearly what kind of product or service is desirable for the company.

China has traditionally been good at process development when it comes to manufacturing and that tradition continues to grow. We buy everything from TV sets to cellphones from China. They have a way of bringing the basics to life and for a price that is fraction of its rivals – patent infringement aside, of course.

Just a few years ago, there were controversies over Chinese products coming into the U.S. that was tainted, for example seafood that had salmonella in it. Another big scare was lead found in paint in children’s toys manufactured in China by Mattel. And there was a domestic scare about the ubiquitous ‘Chinese pork bun’ being made out of inedible materials.

All this goes to show that if you’re going to outsource to China, you will have to engage in frequent monitoring of products and also engage in constant communication with vendors so that standards are not misinterpreted. If that can be achieved, China outsourcing offers value for the money.

Victor Fic

http://www.biztechreport.com/source/victor-fic

Poland has pursued a policy of economic liberalisation since 1990 and today stands out as a success story among transition economies. Before 2009, GDP had grown about 5% annually, based on rising private consumption, a jump in corporate investment, and European Union (EU) funds inflows. GDP per capita is still below the EU average, but is similar to that of the three Baltic States.

Since 2004, EU membership and access to EU structural funds have provided a major boost to the economy. Unemployment fell rapidly to 6.4% in October 2008, climbed back to 8.9% by January 2010, but remains below the EU average. In 2008 inflation reached 4.2%, more than the upper limit of the National Bank of Poland’s target range, but fell to 3.5% in January 2010 due to global economic slowdown.

Poland’s economic performance should improve over the longer term when the country addresses some of the remaining deficiencies in its road and rail infrastructure and its business environment.

The Polish legal system is based on a mixture of Continental (Napoleonic) civil law and holdover Communist legal theory; changes are gradually being introduced as part of broader democratization process, court decisions can be appealed to the European Court of Justice in Strasbourg

Poland has a population of 38 million who are mostly Roman Catholic. At the end of July 2010, there were 11.4 % registered unemployed.

Recently, a Polish trade delegation participated in the Global Outsourcing Conference in New York and presented the business case for Poland’s Silesian region, promoting Katowice, a city in Southern Poland. This is part of an ongoing effort to portray Poland as an attractive outsourcing destination for BPO/ ITO and KPO. Mateusz Skowronski, Manager of the Investor Assistance Centre of Katowice City, listed the city’s and region’s strengths: favorable investment climate, highly qualified workers, a modern office space market and academic centres.

“Poland has been portrayed very positively in the press and was highly valued in numerous rankings,” added Pawel Pytlarczyk, the Polish Trade and Investment Consul.

AT Kearney Foreign Direct Investments Confidence Index, ranked Poland 6th in the world, up from 22nd place a year ago.

More and more advanced processes and functions are being outsourced to Poland. Companies are looking to retain their core talent and processes while seeking ways to reduce costs in non-core business functions. These typically include administrative finance, financial operations such as payment processes as well as HP, supply chain, procurement processes and IT.

Business Process Outsourcing (BPO) has been growing steadily in Poland for the last couple of years and this trend is expected to accelerate in the future. Poland, which is still considered a market with untapped potential, is home to more than 370 BPO and Shared Service Centers operating and expanding around the country.

It is estimated that by the end of the year about 60,000-70,000 people will be employed in this sector. Major global players are active in BPO and R&D centers including IBM, Accenture, GE, Hewlett Packard, Microsoft, Siemens, UPS, JP Morgan Chase, CapGemini, Unilever, Thomson Reuters, Motorola, Google, and Samsung.

The sector is represented by ASPIRE which is the leading association of IT and Business Process Services companies in Poland.

ASPIRE brings together major players in Poland to pursue a common strategy in promoting opportunity in outsourcing and offshoring in Poland and across Central and Eastern Europe.

Located in Krakow in the South of Poland – eastern Europe’s outsourcing hub – ASPIRE is a founding member of the Central & East European (CEE) Outsourcing Association, an umbrella organisation for national outsourcing associations across the CEE region.

The association has extensive international links aimed at developing better understanding of the differing roles played by different geographies in the global outsourcing and offshoring landscape. ASPIRE is allied to the Australian BPO Association. www.aspire.org.pl