outsourcing in central eastern e - bulgaria

Presenter: Sava Vladov, Sofica Group JSC

Bulgarian Web Association (BWA) and Partners

WHYOutsourcing in BULGARIA

/37

BULGARIA General informationStrategic geographic position as a bridge between Europe and Asia Labour force:Highly skilled, multilingual work force Europe's most competitive salary levels 45,000 Bulgarian students in Europe

Free movement of capital

No restrictions on after-tax repatriation of profits

Up to 1 year minimum salary and reimbursement of social/health care security for employing young people and disadvantaged people through the Employment Agency

Government financial support for Priority Investment Projects

Excellent climate, natural scenery, food and hospitality

/37

BULGARIA

GeneralInformation

/37

BULGARIA General information

Official nameCapitalTerritoryOfficial languagePolitical system

Human Development Index*:2007: 53 (1 = most, 177 = least developed)2006: 54 (from 177)2005: 55 (from 177)2004: 57 (from 175)

*- The HDI provides a composite measure of three dimensions of human development: living a long and healthy life (measured by life expectancy), being educated (measured by adult literacy and gross enrolment in education) and having a decent standard of living (measured by purchasing power parity, PPP, income). Between 2000 and 2007 Bulgaria's HDI rose by 0.65% annually from 0.803 to 0.840 today.

Republic of BulgariaSofia110.550 sq kmBulgarianParliamentary Republic

/37

BULGARIA General informationStable and predictable business environment

Stable GDP growth (6.0% for 2008, total GDP EUR 33.8 bn for 2008)

Inflation (0.6% for 2009)

Growth of FDI – 28.6% of GDP (2009 est.)

Favorable credit rating, political stability

10% flat tax rate – the lowest in Europe

ICT National Policy

IPR protection

EU member January 2007

/37

BULGARIA General informationMain Macroeconomic and financial indicators

54%20%

26%

EU's most favourable taxes: 10% corporate income tax rate; 0% in high-unemployment areas 10% flat tax rate on personal income 2-year VAT exemption for imports of equipment for investment projects over € 5 million, creating at least 50 jobs depreciation of 2 years for computers and new manufacturing equipment opportunity for R&D expenditure write-off 5% withholding tax on dividends and liquidation quotas (0% for EU tax residents )

GDP, current prices mln. EUR 34.1Final consumption mln. EUR 28.8Gross fixed capital formation mln. EUR 11.4Exports of goods and services mln. EUR 20.6Imports of goods and services mln. EUR 28.4

Source: NSI, ЕА, MF, BNB

Real sector 2008:

2009Inflation, end of period 0.6Inflation, annual average 2.8Registered unemployed (end of period) 338 144Foreign direct investments (mln. EUR) 192.4

/37

BULGARIA

DoingBusiness

/37

BULGARIA Doing businessIn 2010 Bulgaria was ranked 44th out of 183 countries by the “Ease of Doing Business Index” of the World Bank.

Economies are ranked on their ease of doing business, from 1 – 183, with first place being the best. A high ranking on the ease of doing business index means the regulatory environment is conducive to the operation of business. This index averages the country's percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings are from the Doing Business 2010 report, covering the period June 2008 through May 2009.

Ease of …

Doing Business 2010

rank

Doing Business 44Starting a Business 50Dealing with Construction Permits 119Employing Workers 53Registering Property 56Getting Credit 4Protecting Investors 41Paying Taxes 95Trading Across Borders 106Enforcing Contracts 87Closing a Business 78

/37

BULGARIA Doing business

/37

Starting a business in Bulgaria. Eastern Europe & Central Asia comparison:The challenges of launching a business are shown below. Included are: the number of steps entrepreneurs can expect to go through to launch, the time it takes on average, and the cost and minimum capital required as a percentage of gross national income (GNI) per capita.

Indicator Bulgaria Eastern Europe & Central Asia OECD Average Procedures 4 6.7 5.7Time (days) 18 17.4 13.00Cost (% of income per capita) 20.7 21.5 15.5Source: 2010 World Bank, Ease of Doing Business Index

BULGARIA Doing businessStarting a business in Bulgaria. Eastern Europe & Central Asia comparison

Source: 2010 World Bank, Ease of Doing Business Index

/37


/37

Paying taxes. Eastern Europe & Central Asia comparison:The data below shows the tax that a medium-size company in Bulgaria must pay or withhold in a given year, as well as measures of the administrative burden in paying taxes. These measures include the number of payments an entrepreneur must make; the number of hours spent preparing, filing, and paying; and the percentage of their profits they must pay in taxes.

Indicator Bulgaria Eastern Europe & Central Asia OECD Average Payments (number per year) 17 46.3 12.8Time (hours per year) 616 336.3 194.1Profit tax (%) 4.5 10.9 16.8Labor tax and contributions (%) 22.9 23.1 24.4Other taxes (%) 3.9 9.4 3.3Total tax rate (% profit) 31.4 43.4 44.5Source: 2010 World Bank, Ease of Doing Business Index

BULGARIA Doing businessPaying taxes. Eastern Europe & Central Asia comparison


/37


/37

Employing Workers. Eastern Europe & Central Asia comparison:The difficulties that employers face in hiring and firing workers are shown below. Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The Rigidity of Employment Index is an average of the three indices.

Indicator Bulgaria Eastern Europe & Central Asia OECD Average Difficulty of hiring index (0-100) 17 31.9 26.5Rigidity of hours index (0-100) 40 29.9 30.1Difficulty of redundancy index (0-100) 0 25.9 22.6Rigidity of employment index (0-100) 19 29.2 26.4Redundancy costs (weeks of salary) 9 27.8 26.6Source: 2010 World Bank, Ease of Doing Business Index


/37

Protecting investorsThe indicators below describe three dimensions of investor protection: transparency of transactions (Extent of Disclosure Index), liability for self-dealing (Extent of Director Liability Index), shareholders’ ability to sue officers and directors for misconduct (Ease of Shareholder Suits Index) and Strength of Investor Protection Index. The indexes vary between 0 and 10, with higher values indicating greater disclosure, greater liability of directors, greater powers of shareholders to challenge the transaction, and better investor protection.

Indicator Bulgaria Eastern Europe & Central Asia OECD Average Extend of disclosure index (0-10) 10 6.1 5.9Extend of director liability index (0-10) 1 4.3 5Extend of shareholders suits index (0-10) 7 6.1 6.6Strength of investor protection index (0-10) 6.0 5.5 5.8Source: 2010 World Bank, Ease of Doing Business Index

BULGARIA Doing businessProtecting Investors


Note: The higher the score, the greater the investor protection

/37

BULGARIA

Outsourcing

/37

BULGARIA OutsourcingRank

CountryFinancial attractive

ness

People skills and availabilit

y

Business environme

nt

Total score

1 Bulgaria 2.83 0.89 1.62 5.34

2 Romania 2.63 0.91 1.58 5.12

3 Lithuania 2.31 0.81 1.99 5.11

4 Latvia 2.28 0.86 1.96 5.15 Czech

Republic1.74 1.14 2.07 4.94

6 Russia 2.39 1.45 1.08 4.92

7 Germany 0.42 2.1 2.4 4.91

8 Hungary 1.95 1.01 1.92 4.88

9 Poland 1.82 1.22 1.73 4.77

10 Slovakia 2.05 0.94 1.75 4.73

11 France 0.4 2.03 2.29 4.72

12 Ukraine 2.63 0.97 0.99 4.58

13 Turkey 2.01 1.23 1.29 4.54

14 Spain 0.57 1.9 2 4.47

15 Ireland 0.27 1.56 2.26 4.09

In 2009, AT Kearney rates Bulgaria as The “new offshoring star in Europe”

From a financial attractiveness Perspective Bulgaria consistently ranks As number 1 most competitive destination in Europe and number 13th worldwide based on the following three categories:

Financial attractiveness

People and skills availability

Business environment

Source: AT Kearney: Global services location index, filtered for Europe, 2009

/37

BULGARIA OutsourcingThroughout the years of outsourcing experience, Bulgaria’s service portfolio has broadened and the number of suppliers has increased. Below are shown some of the major providers present on the Bulgarian market. Service AreaApplication service provider

Applications support

Customer care

Data capture integration and analysis

Data center support

Desktop maintenance, hardware

Engineering services

Finance and accounting

Human resources

Procurement

Real estate

Telecommunications networks support

/37

BULGARIA OutsourcingBanking and financial services Unicredit Citibank BNP Paribas ING AIG Allianz Generali

Consumer Goods

Manufacturing ICT Utilities/Energy

P&G Unilever Kraft Nestle Coca Cola

EPIQ Melexis Solvay Liebherr Aurubis

HP Microsoft IBM Siemens Adecco SAP Oracle Nokia Cisco Vodafone

Lukoil OMV Shell EON CEZ AES Enel

Major partnering countries: Germany, France, UK, USA, Canada, Scandinavian countries

/37

BULGARIA

Why Outsourcing

/37

BULGARIA Why OutsourcingBusiness process outsourcing (BPO) Involves the transfer of the day-to-day execution of an entire business function to an external service provider. Business segments typically outsourced in Bulgaria include data processing services, administration payroll, telemarketing, accounting, billing and credit control, back office operations, product support, customer support, legal database maintenance; the list of services is endless.

“With an abundance of educated and multilingual prospective employees, Bulgaria is certain to continue to make inroads into global business process outsourcing” Statement by Peter Ryan, Data Monitor analyst

Over 465,000 high school students are studying one foreign language, 200,000 students are studying 2 and 3 foreign languages. All university graduates study at least 1 foreign language.

Knowledge Process Outsourcing (KPO) can be defined as high added value processes chain where the achievement of objectives is highly dependent on the skills, domain knowledge and experience of the people carrying out the activity. While KPO derives its strength from the depth of knowledge, experience and judgment factor; BPO in contrast is more about size, volume and efficiency. KPO services in Bulgaria have extended to various industries such as financial services, banking, insurance, marketing and research and legal services.

IT Outsourcing (ITO). Bulgaria is a country with strong base of education. Excellent mathematics, science andengineering schools and highly skilled professionals are found here. This is the best place for the high-end, complex, but small-scale projects and contact centres.

IT outsourcing market value (USD Mln) 250Number of IT outsourcing companies: more than 410Number of employees involved in IT outsourcing industry: more than 8 200

/37

BULGARIA Why OutsourcingIT outsourcing & language capabilities Bulgaria has a proven history of delivering high quality IT outsourcing services in these areas: Operating systems support (Windows, UX, AIX, Solaris, Novell, Linux, etc.) Network support (CISCO, 3Com, Juniper, Broadcom products, etc.) Storage Backup & Recovery (Data Protector, Legato, Tyvoli, Backup Exec, EVS, etc.) Database administration (MSSQL, Oracle, mysql, DB2, PostgreSQL) Messaging & collaboration (MS Exchange, Lotus Domino, SendMail, Novell Wise, etc.) Application support (various customer applications) Mainframe support (AS400 ,zOS) System security (Symantec, McAfee, Trend Micro products, etc) SAP Development (JAVA, C, C#, C++, Java Script, Perl, .NET, PHP, XML, HTML, Python, etc.) End User Workspace Services

Bulgaria is a very attractive outsourcing destination, when it comes to delivering services in any of the languages below:English, German, French, Italian, Russian, Spanish, Serbian, Greek, Turkish, Romanian, Bulgarian, Dutch, Portuguese, Polish, Slovak, Czech, Hungarian, Slovenian, Norwegian, Finnish, Swedish, Danish, Flemish, Lithuanian, Latvian, Estonian, Ukrainian, Croatian, Chinese (Mandarin)

/37

BULGARIA Why OutsourcingBulgarian ICT ClusterBulgarian ICT Cluster is a business organization specialized in information and communication technologies. The cluster was established December 2004 with the aim of promoting equitable and effective cooperation, exchange of information, ideas and good practices in the field. The organization’s main priority is the use of information and communication technologies as a way to achieve economic growth and sustainable development.

Objectives: To improve competitiveness of companies. To establish a brand of the Bulgarian ICT sector on the world market; To promote a positive public attitude to the wider application of information and communication technologies; To ensure adequate training and development of human resources for the ICT business.

Main areas of activities: Support for the ICT state policies and practices ICT market environment Education and Professional Qualification Branding, positioning and promotion

/37

BULGARIA Why OutsourcingBulgarian ICT – RELIABLE PARTNER

Bulgaria is a UNIQUE outsource destination:

Stable business environment

Legal framework harmonized with the EU legislation

More than 20 years of experience in the outsourcing

industry

Leading cost-quality location for BPOs in Europe

10% corporate income tax

Well-developed educational system specializing in

electronics, engineering,

and computer sciences

/37

BULGARIA Why OutsourcingCity: SofiaPopulation: 1 267 098Economic activity of the population: 75.8%Avg Rent prices: City Center: 5-25 €/m₂Business parks: 8-13 €/m₂Percentage of vacant office space: 18%Education: 98 771 university students, 16 825 graduates each year

City: PlovdivPopulation: 376 297Economic activity of the population: 66.1%Rent prices:City Center: 2.5-12 €/m₂Education: 27 201 university students, 3 176 graduates each year

City: RusePopulation: 167 043Economic activity of the population: 66% Rent prices: 4-18 €/m₂Education: 8119 university students, ~1 900 graduates each year

City: VarnaPopulation: 351 931Economic activity of the population: 69.8%Rent prices:City Center: 4-12 €/m₂Business parks: 12 €/m₂Percentage of vacant office space: 26%Education: 32 027 university students, ~5 777 graduates each year

Source: indeximoti.bg & National Institute of Statistics

/37

City: Veliko TurnovoPopulation: 66 958Economic activity of the population: 35% Education: 5 245 university students

City: BourgasPopulation: 208 402Economic activity of the population: 63.9%Rent prices:City Center: 3-10 €/m₂Education: 11 919 university students, 1 098 graduates each year

BULGARIAOutsourcing

Development Trends

/37

BULGARIA Outsourcing Development Trends IT will remain the backbone of Bulgaria’s outsourcing services throughout 2010, where up to 20% growth is expected.

Even more rapid growth is expected in BPO – up to 25% for CY 2010.

Bulgarian companies will continue to proactively expand their portfolio of provided outsourcing services and supported languages.

The financial attractiveness and availability of skilled workforce will lead to a further rapid development & growth of the other 4 major outsourcing cities in Bulgaria, apart from Sofia.

/37

BULGARIA Outsourcing Development Trends

/37

NEW APPROACH?

From clustering companies

to

Clustering…countries

Cooperation of small and fragmented countries

(or small, but clustered industries)

make

BIG capacity and recognized brand

www.bwa.bgEstablished in 2004The main branch organization of the web companiesMembers: 55 big, middle and small companies in 3 categories: Web studios, Web media, Web servicesMember of: - The Advisory Council on electronic communication, post services, information society and electronic management under the Ministry of Transport, Information technology and Communications (MTITC) - Central and Eastern European Outsourcing Association (CEEOA), www.ceeoa.org- European Center for Women and Technology (ECWT), www.womenandtechnology.eu

Our Mission: BWA keeps up with the web technologies development for achieving professional standards for quality web services and products in Bulgaria. BWA promotes the advantages of web and Internet among the business society, general audience, and government and non-government organizations in Bulgaria and EU.

Our goals: - Strengthen position of the companies, which work in the field of information and communication technologies (ICT) and protect their interests on the Bulgarian and European market- Develop quality standards for work in the web; Unite the professional organizations in the field of ICT- Strengthen the web technologies as a momentum for the development of the business and the society as a whole

Bulgarian Web Association (BWA) and Partners

/37

Bulgarian Association of Software Companies (BASSCOM) www.basscom.orgBASSCOM is the industry association of leading Bulgarian software development companies. Its mission is to promote competitive advantages and long-term traditions in software development as well as to encourage acquisition of best practices to raise company excellence.

ADECCO www.adeccobulgaria.comAdecco is well-positioned and informed career partner to business and individuals. The company aims to set the standard for best practice in the HR consulting industry.AII Data Processing www.aiidatapro.comAII Data Processing is a major outsourcing provider focused on boutique BPO, information and editorial operations outsourcing, data processing and business services, including credit management, telesales and telemarketing.

ICT Cluster Bulgaria www.ictalent.orgBulgarian ICT Cluster is a business organization specialized in information and communication technologies. The organization’s main priority is the use of information and communication technologies as a way to achieve economic growth and sustainable development.

BWA Partners for the Webinar /37

SOFICA GROUP JSC www.sofica-group.comSofica Group JSC is the leading independent BPO service provider on the Bulgarian market. The broad range of services offered by the company are structured in three distinctive service lines, namely HR outsourcing, Contact Centre services and Managed services.

Bulgarian Web Association (BWA)

Dora VassilevaChairman of the Board of Directors Tel.: +359 2 916 68 15Е-mail: [email protected]: www.bwa.bg

Zornitsa SimeonovaExecutive SecretaryTel.: +359 2 916 68 15, 952 22 27Е-mail: [email protected]

Contacts /37

Sources /37

Ministry of Finance of the Republic of Bulgaria/http://www.minfin.bg/en/

Bulgarian National Bank/http://www.bnb.bg/index.htm?toLang=_EN/

National Statistical Institute /http://www.nsi.bg/index_en.htm/

2009 UN, Human Development Report /http://hdr.undp.org/en/statistics/

2010 World Bank, Ease of Doing Business Index/http://www.doingbusiness.org/

2009 A.T. Kearney, Global Services Location Index/http://www.atkearney.com/index.php/Publications/global-services-location-index-gsli-2009-report.html/

/37

BESTPRACTICES

Best practices - HP /37

A Success Story

HP Global Delivery Center in Sofia On February 1, 2006 Hewlett-Packard Co. officially opened a new technical operation in Sofia - Global Delivery Center. Bulgaria was chosen amid severe competition from a list of 14 countries including Russia, Ukraine and Romania. The purpose of the center is to provide clients and partners of the company worldwide with high-value and cost effective IT and business remote services. The decision was a key strategic initiative by HP Services aimed at transforming the way in which HP delivers value to its customers, ultimately resulting in a world class global delivery model leveraging industry best practices. Three companies, Adecco, Sitel and Sofica Group, partnered with HP in the implementation of the project.

Sofia Global Delivery Center today employs approximately 2100 employees (high level technical experts, service desk agents, specialists providing business and financial analysis , supply and administrative services). The Center in Sofia was recently appointed as Strategic one in IT Outsourcing business, among all other Global delivery Centers in Europe, Middle East and Africa. There are plans for significant growth (double size) in next 3 years.The factors for this decision are the excellent results and marvelous achievements which have been made for 4 years of GDC existence in Bulgaria.

Best practices - SAP /37

SAP Labs Bulgaria – 10 years of success Year 2000: SAP AG Buys part of Prosyst

The story of SAP Labs started at year 2000 with 60 software developers experienced in Java Enterprise technology in a small office building and 6 rented apartments. Year 2002: SAP Labs Bulgaria: Technological subsidiary of SAP AGIn 2002 the Labs became reality with the establishment of SAP Labs Bulgaria as a subsidiary of SAP AG - the German giant in the software application development industry and ERP systems. During the next years the Labs was certified to ISO 9001:2000, since 2004, recertified in 2007 and was continuing growing like number of employees as Sofia has proved to be a strategic location for SAP with its geographical position and offerings of highly educated specialist with the relevant technology expertise.

Year 2005: Relocation to a new buildingAt year 2005 SAP Labs Bulgaria reached 340 R&D software developers and in the next years became Best Employer for 2006 and 2008 in Bulgaria (rated by Hewitt ). In addition SAP AG was continuing investing into the location in terms of new positions and also relocation into a new modern office able to complete the growing office space needs.

At present: Year 10th

On the 10th year of its existence the total strength of SAP Labs Bulgaria is close to 500 employees in two main areas – Research & Development and Global Services and Support which brings even more opportunities for future growth. During the decade Sofia Labs has shown that the investment of SAP was worthy and is looking ahead for new strategic challenges.

Thank You!

/37

outsourcing in central eastern e - bulgaria

Documents