Resilient to Crises, Dynamic in Change, Hungry for Innovation

International tensions have accelerated the processes of reshoring (relocation of services previously carried out in another location), especially nearshoring and friendshoring, which very much favors European countries that are perceived as secure destinations due to their geographical and cultural proximity to the majority of global clients. The shortening and regionalization of global value chains is seen by some decision-makers as a symbol of a new era of globalization and a harbinger of a new economic order.

Technological developments and climate change will continue to force legislative changes that will affect the global economy. The increased importance of ESG factors will change existing business models. Additionally, legislative bodies will need to regulate artificial intelligence, as exemplified by the EU's AI ACT agreement to promote high-tech innovation in Europe in a safe and secure way. However, differing solutions and their application in AI legislation around the world may affect national and regional competitiveness in the global market. So reinforcing the EU's role as a global leader, while ensuring the highest standards of climate protection, innovation and high-tech development, will send a strong message to investors that Europe is a safe haven for business.

Our motto for 2024: 'Transform to thrive'

Over the past two decades, Poland has undergone a remarkable transformation, becoming one of the leading resilient economies in Europe. At the same time modern business services sector has also experienced significant change, evolving from simple transactional processes to knowledge-based roles that create added value. Data indicate that highly specialized services are becoming the main driver of growth, with their market share exceeding 57 percent in 2023. It is thanks to their expansion, the role of the entire continent on the global map of modern business services is growing. According to Grand View Research, the value of the global business processes outsourcing market will reach 525.2 billion dollars by 2030 (261.9 billion in 2022).

The forecast of steady growth has backing in recent experience - the sector has remained robust to the disruptions in the global market caused by the COVID-19 pandemic and Russia's invasion of Ukraine. The industry in the 27 countries of the European Union employs already 4.2 million people. If you include the European Economic Area (EEA), candidate countries and the United Kingdom, employment exceeds 5 million. The sector attracts new investments, increasing its importance to local economies and contributing to economic growth throughout Europe.

What Lies Ahead for the Business Services Sector in the Next 10 Years

The modern business services sector has used the recent crises as a catalyst for change. There has been a process of accelerated digitalization and changing working patterns. With a team of business services centers managers, as part of the 'ABSL Strategic Foresight', we came up with scenarios for the development of the Polish sector over the next 10 years. Its success will largely depend on the ability to innovate, the adaptation of the education system to technological developments, and measures to curb Poland's demographic crisis.

In the most optimistic scenario, decisions that affect the development of entire global organizations will be made in Polish business services centers. We would therefore like the centers to evolve into decision-making hubs rather than units performing and selling services to other branches of a particular organization. We assume that the industry in Poland can come to the forefront of technology in the next decade, with the sector employing 600,000 people. Poland’s advantage is based on the size of the talent pool, scale of operations, adaptability and creativity. These factors are even more significant as repetitive tasks are increasingly being taken over to some extent by artificial intelligence, while new, more challenging roles are being created in the sector at the same time.

Another scenario sees Poland being closer to the global technological forefront, but not in its vanguard. Innovation is sporadic and reactive, the level of automation, virtualization and personalization is partially applied, while simple processes are automated and relocated to low-cost countries. The stable growth of the global economy with additional incentives for investors will generate growth with lower dynamics, but will be accompanied by advanced processes, which are beneficial for both the economy and the labor market as well as the entire business ecosystem in the long term. The main factor limiting growth opportunities will be insufficient education reform. This scenario assumes that the sector’s workforce will grow to 550,000 employees in 2033.

Innovation Drives Investment

Poland is one of the leading business services locations - both in the European Union and globally. Moreover, compared to Europe, our country has the greatest growth potential in the area of KIBS (knowledge intensive business services).

In order to develop, the modern business services sector requires an economic diplomacy strategy that supports competitiveness and is geared towards attracting foreign direct investment. What attracts investors is innovation and technological advancement. UCTAD data confirms that in 2022 Poland's share of global FDI inflow reached 2.3 per cent with 29.5 billion of inward investment (down 0.4 per cent year-on-year). This meant that Poland ranked 4th in Europe and 14th in the world for FDI investment.

We need support for both innovation in Poland and across the continent, especially in view of the global economic downturn. Europe faces the challenge of addressing the technology gap. If it fails to catch up with other players in key technologies, it will be vulnerable across all sectors in terms of growth potential and competitiveness, jeopardizing its relatively robust performance in terms of sustainability and social inclusion. Even if EU policies create a more conducive environment in which European companies can compete, they need to accelerate in order to grow and successfully compete not only nationally and regionally, but globally as well. The World Economic Forum estimates that 70% of new value created across the economy over the next ten years will be digitally based. This will force European policymakers and companies to go on the offensive to make a radical shift in technological capabilities and competitiveness.

The modern business services sector is in for an interesting time. However, Poland has a package of assets to not only maintain but also strengthen its position as a leading location for the industry. The competencies of the workforce and their experience, as well as the flexibility and speed of adaptation to change will allow the industry to grow spectacularly. A major contribution to this expansion will come from being able to attract highly-specialized services involving complex processes as well as an increasing number of global roles.

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