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Looking beyond Brexit - inward investment to Poland

Is the pandemic an opportunity for increased investments in Poland?

By Łukasz Grzeszczyk, key accounts director, Hays Poland
Header  ukasz grzeszczyk hays poland

2020 was a difficult year both due to the pandemic and various geopolitical events taking place around the world, which also influenced investment decisions made on a global scale. Despite the challenges faced by individual market sectors and the persistent uncertainty, in terms of investment projects Poland has not lost, but maybe even gained. The factors contributing to the rise in foreign investments in the country include the increased favour afforded to nearshoring rather than offshoring, and the consistently attractive ratio of the number of high-quality available workers to the costs of running a business.

The Covid-19 pandemic undeniably had a considerable impact on the investment market in Poland. During the initial shock, which fell during the second quarter of 2020, many global corporates had to make strategic business decisions, including those related to ongoing and planned investments. The consequences for Poland were twofold. On the one hand, the pandemic meant that some projects were put on hold, and companies that had chosen Poland as their investment destination withdrew their plans, seeking to effect cost savings and deciding to wait out the turmoil within the global market. There were, however, organisations that decided to cut costs through investments, and Poland frequently became a beneficiary of this strategy. Investors decided, for example, to liquidate two service centres globally and merge their pool of skills in a new centre, located in Poland.

Geopolitical events were another factor that influenced the Polish investment market. Conversations with various organisations showed that the implementation of some investment projects was suspended until the presidential elections had taken place in the US and Brexit was finalised. In the latter case, some investors wanted to wait for the outcome of the UK-EU negotiations. At present it cannot be said definitively that the UK's exit from the EU directly translated into an inflow of investments to Poland. However, this trend was somewhat noticeable within British companies that were already present in the Polish market, and as a result of Brexit decided to transfer some of their jobs from the UK to Poland. It is possible that when the Brexit dust settles and the pandemic ends, some British organisations will take on the role of potential investors in Poland.

The events in Belarus are also among the geopolitical factors that have been recently affecting the flow of investments into Poland. Last year, social unrest convinced some international companies with IT and customer service centres located in Belarus to search for a more secure location. Poland has emerged as a significant alternative destination, helped by the Polish Investment and Trade Agency’s Poland Business Harbour programme. The initiative offers IT specialists and companies assistance in relocating to the territory of Poland. Time will tell if it is a beneficial programme, but the initial assessment is positive. Investor enquiries from Belarus to Poland have been consistent, and in this respect, as a country we are seeing more traction than for example Lithuania, which put a similar idea in place. Although the programme’s aim was to serve mainly the eastern part of Poland, according to investors, cities historically located in the west of the country have more potential to attract and retain workers from across the eastern border.

An increase in nearshoring

The effects of Covid-19 have led investors from various market sectors to give up offshoring investments, and opt for nearshoring. Companies with geographically remote business service centres or supply chains typically suffered more as a result of the pandemic than those who chose nearshoring. Having a service centre in Asia, for example, where the existing restrictions were in some cases much more serious than in Europe, showed many companies from other global regions that geographical distance can result in both advantages and disadvantages. In a crisis situation, cultural differences and poor infrastructure were also more noticeable. Meanwhile, stringent lockdowns in one part of the world may deprive a company on another continent of support in a key business area, for example they might have to manage without an IT helpdesk. It is, therefore, not surprising that the latest investor inquiries in Poland have come mainly from other European countries, as companies recognise the potential of Poland’s central geographic location. The number of potential investors from the Americas and Asia have been fewer in recent months, and there are definitely more from Scandinavia, Germany, the UK, France and Switzerland.

Investors and their needs

Poland is known to investors as a mature and diversified market, offering wide access to qualified employees who speak foreign languages. They are therefore more and more often interested in locating senior roles in Poland, which will also allow them to set up key decision-making centres here.

Recently, Poland has had the attention of pharmaceutical and medical-devices companies, who see the potential for employing highly qualified employees in the clinical-trials sector here. Other investors have also included many organisations from the IT and technology industries who value the quality of Polish programmers and tech talent available on the market. Enquiries also come from the financial industry and, invariably for Poland – from the manufacturing sector. In the latter case, investment projects have been recently related to the automotive industry, especially the production of batteries and electrical components.

Investment decisions are largely based on the availability of employees with specific skills. In terms of investors’ interest, roles in broadly understood IT – with particular emphasis on experts in the field of digitalisation and cyber security – lead the way. Finance is another equally popular area of expertise, with roles related to accounting, KYC (know your customer) and AML (anti-money laundering). Investors also ask about roles in procurement and HR, and market access within the pharmaceutical industry. Investors from the manufacturing sector are mainly interested in the availability of blue-collar production workers in a particular location.

What really matters?

The key issue for investors when analysing the potential of particular locations is the available talent pool. Therefore, despite the increasing popularity of remote work, big cities still have an advantage over smaller cities and towns in terms of attracting investment projects. Development potential is also important when choosing a location, and investors want to know whether it will be possible to expand the business in a given place by several dozen or even several hundred jobs.

It is also extremely important to assess whether a given location has the power to attract and retain employees. Investors therefore take into account the quality of life, the environment, and what the city has to offer its population. In this respect, local government bodies and regional investor assistance centres also play a key role. In addition, the availability of modern office space and communication infrastructure remain highly important.

Poland is perceived as a market offering good value for money. However, investors often complain about the complicated payroll calculation system. Labour costs are not constant, which makes it difficult to forecast monthly expenses. For investors, this is often an off-putting aspect.

The future ahead

Poland is competing mainly with other countries from Central and Eastern Europe for investment projects, but more and more often also with Portugal, Spain and France. The second half of 2020 was a time when as a country we secured many projects, but also lost some of them, mostly due to our image on the international scene.

Poland is assessed more comprehensively than ever before –  and not only from a worker availability perspective. Our image and respect for values that are most important for foreign employers are taken into account more and more often. Recently, we have observed a few cases where Poland lost major investment projects to Portugal, despite the fact that Polish salaries are considerably lower, and the supply of modern office infrastructure is larger. On the one hand, it is promising that Poland is more and more often the only country from the region that competes for investment projects. On the other hand, it is worrying that we sometimes lose to a theoretically weaker opponent.

In terms of investment, Poland can gain a lot from the pandemic, but as a country we must work on our overall image on the international stage. Investors already know that the Polish market is mature and has a lot to offer, and it will be the nuances that will more often determine their choice of location. More advanced processes will certainly be transferred to the country, and the first investors who chose Poland as a country where key strategic business processes are serviced will largely determine what will happen in the future.


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