Bulgarian outsourcing industry notes double-digit growth

For the seventh consecutive year, the Bulgarian outsourcing industry noted double-digit growth and now accounts for 3.6% of Bulgaria’s GDP, the Bulgarian Outsourcing Industry 2017 report noted, as prepared by the Bulgarian Outsourcing Association (BAA).

The share of the services sector in GDP has grown steadily in recent years, with 2.8% in 2014 and 3.4% in 2015. There are a number of factors for these ongoing positive trends, the most important being the availability of skilled labor, active interaction between business, education and the state, as well as the preservation of the flat tax and the expansion of the package to encourage foreign investment, Svetoslav Ivanov, executive director of BAA, said in an interview with Bloomberg TV.

Bulgaria is positioning itself among the top 10 most desirable countries on a global level. A number of international companies have built offices in Bulgaria and continue to expand their business. Its main advantages are geographical position, a flat tax, which is very attractive to investors and, last but not least, the well-developed human resource in terms of language knowledge and IT training.

Bulgaria’s BPO sector remains the leading segment with a share of 53% of the total turnover of the outsourcing industry in 2016. The ITO sector accounts for 47% of the sector turnover but stands out with the higher profitability. The BPO sector share in 2015 stood at 58% versus 42% ITO share. HRO and FAO segments are also growing with great potential for growth in the future, the report showed.

The largest cities in the country – Plovdiv, Burgas and Varna – together with Sofia have developed into a leading outsourcing destinations. Main factors influencing the attractiveness of the cities remain the availability of human resources and educational institutions, well-developed infrastructure, high-class office buildings and strategic geographic location.

Bulgaria is the world’s ninth “most preferred” outsourcing destination in consultancy A T Kearney’s 2014 Global Services Location Index.

“The interest is steadily growing,” says Plamen Panchev, TEZ managing director and chairman of construction group Sienit Holding, which played an important role in creating the TEZ, said.

Ilia Krastev, chief executive of A Data Pro, a content, data and business intelligence services company, adds falling birth rates and education as challenges “that could put a brake on sustainable growth”. He says Bulgaria must make it easier to hire foreigners, stop a brain drain, attract natives who graduated abroad and improve quality of life.

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