AT Kearney: Bulgaria holds ground in office outsourcing

The latest rating of the global business consultant AT Kearney indicates that Bulgaria still has positive potential for outsourcing of offices in spite of the economic downturn. It is still an attractive destination, especially in the financial and accounting sectors, maintenance and development of computer systems and databases, client support, research and development and labour intensive services.

Office building investors have an increasingly arduous task in the midst of the downturn: finding tenants for hundreds of thousands of sq m of office space at a time when managers are trying to cut costs.

According to the latest edition of global management consulting firm AT Kearney’s Global Services Location Index (GSLI), deteriorating cost considerations and improved labour quality are driving a dramatic shift in outsourcing locations.

The GSLI report shows that once competitive central European countries have yielded ground to countries in Asia, the Middle East and North Africa. India, China and Malaysia retain the top three positions they have occupied since 2004.

The downturn has been particularly marked in central and eastern Europe where established premier outsourcing destinations have slumped in popularity. The Czech Republic, for example, has fallen to 32nd place from 16th, Hungary to 37th place from 24th and Slovakia to 40th from 12th. Meanwhile, Bulgaria has also registered a decrease, albeit a significantly milder one - from ninth down to 13th place.

Reasons for the decline of central and eastern European countries were said to be the drastic escalation in costs driven by wage inflation. Meanwhile, low-cost countries in Southeast Asia and the Middle East have made substantial advances as the quality and availability of their labour forces improve. Egypt, Jordan and Vietnam ranked in the GSLI’s top 10 for the first time ever.

In Bulgaria, in particular, according to Stroitelstvo Gradut, the market has been facing increasing pressure over the past few months due to economic weakness. This forces companies to reduce spending on office space, so releasing more unused areas.

Vacancy rates in Sofia have soared up to double digit percentages while rent levels have regressed to the values of two years ago. A few major property transactions like Hewlett Packard Global Delivery Bulgaria Centre, which completed a 8 000 sq m move in an office complex in Kambanite business centre, and the VMWare software developer with five storeys in the East Tower at GM Dimitrov Boulevard, have been hailed as positive indicators for the future by local analysts.

Source: http://www.sofiaecho.com/2009/05/25/724507_at-kearney-bulgaria-holds-ground-in-office-outsourcing