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The latest ABSL report “Investment Potential of Polish Cities. Comparison of modern business services sector locations” compares the attractiveness of Polish cities for different categories of modern business services centres depending on their functions. Investors and city authorities receive an additional tool supporting investment processes. It is the first report to include both an objective ranking based on hard data indicating potential and actual attractiveness and a subjective ranking based on managers’ assessments.
The modern services sector in Poland consists of over 1500 business process outsourcing (BPO), shared services (SSC/GBS), IT and research and development (R&D) centres. According to PAIH data, in 2020, 58 new investments were decided to locate in Poland, 44 of which concerned business services. Due to the international character of services – 71 percent of entities belong to foreign companies, the majority of business service centres provide them to clients from all over the world, thus the industry is an important exporter. The factors in favour of locating centres in Poland are its favourable location, convenient time zone allowing to serve other regions and the potential of the market, i.a. in terms of the labour market and the size of the educated workforce in relation to other economies of Central and Eastern Europe.
Different needs of investors
Investors responsible for the location of modern business service centres make investment decisions taking into account a number of different factors depending on the nature of the business service centre. The report collects data, which shows that, as a rule, centres of knowledge-intensive business services, so-called KIBS or regional headquarters, prefer urban locations, including large cities with a metropolitan character, especially capital cities. Smaller centres are preferred by national or foreign entities that optimise costs and realise the simplest business processes. Smaller centres or even areas outside urban centres are also chosen by entities serving clients from industrial sectors, for which customer proximity is important. The most complex situation takes place in the case of the R&D sector, where the important stimulators of the investment inflow include the region’s expenditures on investment processes, including the number of research and development staff or the number of research units, as well as the achieved results.
– Taking into account the New Industrial Policy that is being developed, it is worth remembering that Poland is a beneficiary of the trend related to nearshoring, i.e. moving business processes closer to production or decision-making centres. In addition, the tendency to shorten supply chains in the global economy may result in centres in Poland taking over orders flowing so far to Asia. Regardless of what industry we are talking about, it requires a back-office in the form of providing various types of business processes, which is why we should also think about business services. The more so as the industry gives smaller cities a chance to gain new investments, and thus new workplaces – says Wojciech Popławski, the vice-president of ABSL.
Subjective evaluations and hard data
The comparison of the cities’ positions in subjective and objective rankings brings significant differences and should be an important signal shaping the investment attracting strategy for local authorities. These differences may indicate a change in the way the centres are perceived by investors and thus point to future trends.
The subjective ranking was prepared on the basis of the ABSL 2020 survey, based on responses from the management of modern business service centres in Poland. Seven cities were evaluated: Warsaw, Wrocław, Kraków, Tricity, Łódź, Poznań and Katowice and GZM. The winner in the subjective ranking was Tricity, followed by Poznań and Wrocław. The following categories were assessed: accessibility by road, rail and air, size of talent pool, labour costs, availability of modern office space, its quality and rental price, general assessment of quality of life, quality of local universities, quality of cooperation between centres and local universities, as well as corporation with local investor support agencies or development agencies.
The objective ranking is based on statistical analysis. The same categories as in the subjective ranking were evaluated. Additionally, several to a dozen features of a given category were taken into account in order to correctly assess the position of a given centre in relation to its competitors. The objective ranking covered 15 urban centres. Apart from the cities assessed in the subjective ranking, the analysis also covered Lublin, Rzeszów, Bydgoszcz, Szczecin, Białystok, Kielce, Radom and Tarnów. The objective ranking places in the first three positions: Warsaw, Kraków, and Katowice and GZM.
– A thorough analysis of both rankings provides valuable knowledge for local authorities by indicating the discrepancy between the perception and the actual state of affairs and thus be a guideline for information and promotion activities. The discrepancies may also be a premise for the existence of more deeply rooted problems requiring remedial or pre-emptive action. The comparative analysis of rankings creates space for implementation of changes, increasing investment potential of a location and increasing its competitive attractiveness – adds Wojciech Popławski.