The role of international business service centers keeps increasing in the global economy. In Latvia, however, their potential remains largely unexplored, says New Hanza City project’s developer Pillar representative Guntars Cauna.
Business centers’ specifics are dictated by their functions, says Cauna. The most common functions are accounting or wage management, data processing and functions that are more mechanical than creative.
Caune explains that other countries, including Latvia’s neighbors, know the potential of business centers. In Eastern Europe, companies like Barclays, Deutsche Bank, IBM, Citi, ExxonMobil, Capgemini, Lufthansa, Hewlett-Packard already work in such a way.
One of the most attractive markets in Europe for large companies is Poland, because it is a country with large labor resources – 40 million residents.
“Poland also actively works in this direction by inviting companies over. It is no surprise that the main events and conferences in specific industries often take place in Poland now,” emphasizes Cauna.
Aside from Europe’s most attractive countries like Poland, the Czech Republic, Romania and Hungary, there are also global competitors like India, the Philippines, Brazil and other countries with large populations and low labor costs, says Cauna.
“It is hard for Latvia to prove itself in this context because the country’s population is small and labor accessibility is limited. Thereby Latvia is not very attractive to large global companies. This is why our country should attract average level players or identify competences in which we are more competitive and productive. Medium and large companies from Scandinavia should be considered one of the target markets, because Scandinavian countries are relatively nearby,” Cauna said.
Pillar representative says there are approximately 30 businesses in Latvia that provide international business services. These include Tele2, Accenture, Circle K, Runway, Cabot, Tieto, Atea, Visma and Evry. Together, these companies have 7,000 jobs, which basically employ approximately 1% of the capital’s total population (nearly 700,000 residents). In Krakow (760,000 residents) international business services are provided by 6.6% of the city’s population. In Wroclaw (more than 630,000 residents) international business services are provided by 5.4% of residents.
Caune informs that it is planned to establish multiple business centers in Skanste by 2024.
“Theoretically, the number of employees in the business services field is planned to be tripled in the next couple of years. We could even reach Krakow’s level – 42,000 residents. In labor tax terms, this sector could bring the country approximately 85 to 95 million euros, securing those people annual income around 110 to 120 million euros,” Caune explains. (BNN/Business World Magazine)