Hungary: Outsourcing to boost jobs
By Kester Eddy
HUNGARY and neighboring countries should continue to benefit from companies in western Europe, especially the UK, Germany and France, seeking to outsource work in cheaper locations, according to the latest prognosis by property company Cushman & Wakefield Healey & Baker.
The report quotes independent research which indicates that western Europe will outsource some one million jobs to offshore locations in the next 10 years, of which around 60% will consist of financial, manufacturing and IT-related activities.
Along with boosting employment prospects in the targeted countries, the movement of jobs will has serious implications for real estate developers, particularly in the office and industrial sectors.
"European companies and institutions are likely to have outsourcing property requirements of 37 million sqm over the next 10 years to 2015… of which 40% (ie some 15 million sqm) is set to be in central and eastern Europe," the C&W/H&B report states.
Office space is expected to make up some 13 million sqm, or just over one third, of the total property requirements, with the remainder comprising manufacturing and warehousing facilities.
The report classifies Hungary, along with Poland and Czech Republic as "preferred countries" for outsourcing locations, due to low-cost real estate, skilled labor, and membership of the European Union.
However, it does not clarify what proportion these countries will take of the total 15 million sqm of new property requirements predicted to be destined for the wider region.
In Hungary, which has just over 1 million sqm of modern office space, the most recent data indicates vacancy rates are at a record low (in modern times) of around 14%.
Office take up last year, at a record 240,000sqm, was almost double the total for 2003, buoyed, experts say, by western companies outsourcing work.
It is however clear that central Europe faces stiff competition from lower-cost countries such as Estonia and Lithuania (rated as "expanding" countries for outsourcing), as well as from Russia, Turkey and Ukraine (rated as "emerging" centers).
Outsourcing is no longer merely about call centers and manufacturing, and increasingly such functions as payroll administration and even research and analysis are moving overseas, the report notes.
A GROUP of IT companies, along with the Budapest Technical University, last week announced the foundation of the Hungarian Outsourcing Association.
The association, whose 11 founding members include international names such as IBM Magyarország, Siemens and British Telecom, seeks to both make Hungarian companies aware of the business opportunities available in outsourcing, and promote Hungary as a quality outsourcing location.
Source: The Budapest Sun 06/05
