Bulgaria is nowadays a leading global outsourcing and offshoring destination, featuring world-class qualified and talented workforce speaking variety of languages and with high-end technical skills. The mix of multilingual talent pool, competitive operational costs, cultural proximity, flexibility and expertise in the outsourcing industry make Bulgaria top outsourcing destination in Europe and one of the best in the world.
The Bulgarian Outsourcing industry will employ more than 60,000 people by 2020.
This is one of the forecasts included in the latest report commissioned by the Bulgarian Outsourcing Association (BOA) and prepared in October 2015 by SeeNews, a consultancy delivering company profiles, market reports and analysis for the emerging markets.
In 2014 the outsourcing sector employed more than 33,300 end-of-year (EoY) employees and 31,700 full-time employees (FTEs). However, the real number is higher as these figures might not entirely encompass part-timers and freelancers.
According to the BOA`s survey, the current comprehensive study of the outsourcing industry in Bulgaria encompasses 180 individual companies from business process outsourcing (BPO) and information technology outsourcing (ITO) fields. Following are some of our major findings for the sector’s development in the five years between 2010 and 2014.
Total outsourcing industry turnover in 2014 stood at EUR 964 mln, 13.7% higher than in 2013, showed BOA`s report.
The turnover in the ITO sector was EUR 384 mln in 2014, up by 7.5% from 2013.
The BPO sector reached a turnover of EUR 580 mln, an 18.2% increase compared to 2013 and almost double the value in 2010.
The typical ITO providers generate average annual revenue per FTE employee of more than EUR 43,000 in 2014, whereas the value in the BPO sector reaches only EUR 25,000 – an average of EUR 28,000 for non-voice-based services and EUR 22,000 for call-centres.
Costs, Salaries, Employment
The costs in the industry have been on the rise between 2010 and 2014. The total value of the expenses in the outsourcing industry in 2014 was EUR 901 mln compared to EUR 544 mln in 2010, indicating CAGR of 13.4%.
Employment expenses form the largest share of annual costs. The employment expenses grew by a compound annual growth rate (CAGR) of 21% during the 2010-2014 period, according to the latest figures from Bulgarian Outsourcing Association`s survey.
The employment in the past ten years was speeding up and is expected to further accelerate in the next five years powered by both intrinsic market growth and new companies entering the vendors market as foreign investors. New outsourcing centers emerged across Bulgaria led by the cities of Plovdiv, Burgas, Varna and Veliko Tarnovo.
With double-digit growth figures in revenues and employment, the market is still far from mature, but its startup phase is no longer evident as the rates of growth diminish.
As more companies are entering the market, the need for qualified personnel will lead to a growing number of companies entering regions outside the capital Sofia in search of talent elsewhere. Despite high unemployment rates in Bulgaria, qualified developers, linguists and data scientists will be harder to find. The competition-led deficit will induce an increase of salary costs but at a slower pace.
To maintain their profitability, companies will also have to deliver more complex and specialised solutions, while still remaining flexible and cost-effective in solving the problems of their customers.