Outsourcing or not
It is time to roll out the red carpet for Bulgarian investments in high-tech products, created in Bulgaria
Outsourcing is an industry in which someone is well aware of where in the world to develop a particular business. Now in Bulgaria, and in a few years at some other place, a destination may emerge where a service is offered with a sufficiently high quality at a better price. This industry of shared services is as dynamic as the world itself - it works on a global scale, with global clients, for global companies.
In Bulgaria, there are world-class
companies with large volumes of work and high turnover because they have the
know-how, but also the flexibility to offer services in a way some other
business needs. The outsourcing is actually the sector with the most dynamic
technological transformation. Robots, automation, artificial intelligence and
chat bots are being introduced – all of them innovations that first begаn to appear here. Few of the
classic industries can afford to make such investments. This is the sector in
which constant added value is observed. In the early phase, this
business started with telephone and transaction-related services that had to do
only with the number of workers, while the focus now is on technological
change, which also offers more challenging career development opportunities for
people involved in this industry.
In recent years, there have been two main
trends. One of them is related to the entrepreneurial business - after the entry
of multinational market setters who create the market, the time of the
emergence of successful Bulgarian companies with a modern spirit came. The
other is that certain companies, which themselves are too far from a certain
business, started to open shared services centres. They developed quickly and
achieved high quality. But in this exact sector, change is the most constant
thing. That is why, if conditions are created in Bulgaria for the development
of this business, then, despite the increase of the labour costs, in case that
this labour generates high added value, the sector will continue to grow.
The business is based on dynamics, and the
possible migration of outsourcing companies to other destinations should not
bother us, says Stefan Bumov, Chief Operating Officer of HeleCloud and
co-founder of the Bulgarian Outsourcing Association (BOA). He explains: “Let’s
have a clear understanding of how to minimise the risk with specialisation in
certain areas. It’s not a problem part of the traditionally oriented
outsourcing businesses to leave the country in search of cheaper opportunities.
The main risk will be the loss of competitiveness associated with new high-tech
development trends - automation of processes and use of artificial intelligence.
The question is to what extent the business in Bulgaria will be able to further
develop their staff in this direction. But people here are qualitative and
We also come to the question of why
outsourcing, and not our own products. “The product know-how in Bulgaria is not
well developed yet and this is a consequence of the transition period the
country went through. Outsourcing was the first step that had to drive the
knowledge economy, because the risks here are significantly smaller. Own
products will be the next step in development. But there is a problem:
Bulgaria, despite its low taxes, is not the best place to create high-tech
products. Product companies prefer to position themselves in the United States,
the United Kingdom and Israel, where the legislation is much better adjusted to
protect intellectual property. There are many supporting R&D activities
there, while in our country, there is not even a focus on the accumulation of
intellectual property. Key item that could easily make the product globally
appealing are lacking,” says Plamen Tsekov, co-founder and CEO of ScaleFocus
and a member of the Board of BOA. It is a flaw that technological know-how is
not valued and the state does not support the companies that create it. When
there are birds, houses should be made for them, Plamen Tsekov adds.
Outsourcing will continue to thrive at the
expense of the development of own products, until the right conditions are
created. Currently, in the big race among the high-tech R&D companies,
Bulgaria is neither a factor nor a driving force. Our country has great
potential for innovative developments, but here is not the best ground for
their cultivation. Now, if someone has a good technological idea, they patent it in the
United States, since there, they will find the best protection, and can also be
supported by investment funds. Bulgaria would become an attractive place for
product companies if they are sure that their know-how here will be protected
Maybe it is time to roll out the red
carpet for Bulgarian investments in high-tech products created in Bulgaria...
- The outsourcing sector in Bulgaria forms
2.4% of the labour market and more than 67,300 people have been employed there
by the end of 2017. By 2021 the number is expected to exceed 79,000.
- The revenues are more than EUR 2.1 billion for 2017, forming 4.8% of GDP, compared to 4.2% in 2016. The revenue of the sector is expected to double to EUR 4 billion by 2021 and its relative share of GDP to reach 7.9%.
- More than 480 companies are involved in
Business Processes Outsourcing (BPO) and IT Outsourcing (ITO), with the ratio
being almost flat, with a slight dominance of BPO at 51%.