The outsourcing industry contributes 5.2% to Bulgaria’s GDP
The size of the outsourcing sector in Bulgaria amounts to EUR 2.4 billion for 2018. This is identified by the data in the Annual Report of the Bulgarian Outsourcing Association (BOA) for the development of the outsourcing industry in the country. Last year, outsourcing contributed 5.2% to Bulgaria’s GDP compared to 4.8% in 2017. The outsourcing industry’s results for 2018 are better than expected- the operating revenue grew at 19.5% surpassing the 15.8%, predicted by last year’s report. If the positive trend persists, the industry’s revenue is expected to double to EUR 4.8 billion and contribute up to 9.2% of the country’s GDP by 2022.
The annual analysis is created by SeeNews and includes data about 583 Bulgarian companies dealing with business processes outsourcing (BPO) and IT outsourcing (ITO) in 2018. The ratio between the two outsourcing subsegments is almost offset, with a slight advantage for ITO (only 3 companies more).
The outsourcing sector accounts for 2% of the Bulgarian labor market. More than 73,600 people were employed in the industry at the end of 2018 (over 9% growth in comparison to last year). The number is estimated to exceed 80,000 people by 2022. Meanwhile, the outsourcing industry generates 8.5% of all salary costs in the economy for 2018. This indicates that the salaries in the sector are many times higher than the country’s average. Outsourcing companies also account for 7% of all social security contributions paid in the economy during the year.
The analysis highlights the double growth in the number of Shared Services Centers (SSC) operating in the country as one of the important development trends for the Bulgarian market during last year. More than 1/5 of all employees in the industry are engaged in this subsector. The employment rate in this type of companies has grown up to 25% during last year. Due to the size of SSC and the high quality services provided in Bulgaria for their mother-companies, this subsector also accounts the largest contribution to the state in terms of paid salaries and benefits as an absolute burden.
“We have witnessed significant transformations in the sector since the establishment of the Bulgarian Outsourcing Association in 2012. We went from an industry, almost entirely cost-oriented to a sector that creates added value through innovation, technology product development, modern business services and solutions. It is the important social and economic footprint we leave behind, that empowers the development of the new middle class in Bulgaria. Outsourcing is among the sectors that stimulates young people to stay in the country and gives them growth perspectives. Outsourcing as a term, used to describe our business, has begun to limit the meaning of what we do and what we target to do with our development strategy. In order to continue growing and attracting the right set of minds and partners in and out of Bulgaria, we ought to reposition the entire sector. A logical next step is our new name Association for innovation, business excellence, services and technology AIBEST, which was recently voted by the Association’s members.”, says Ilia Krastev, Chairman of the Managing board of the Association and CEO of A Data Pro.
Over the past years, the outsourcing industry has built a national presence. The largest hubs for outsourcing services are still the big cities with universities, but there is a tendency for the activities to be moved outside the capital. Sofia, Plovdiv and Varna are the three biggest outsourcing centers, but Veliko Tarnovo and Burgas are also starting to attract more and more new companies.