Subcontracting and location decisions in 2003

This article deals with decisions to outsource part of the administrative or software development departments of industrial, commercial or financial companies. A study by Accenture and the Economist Intelligence Unit found that 30 per cent of companies worldwide outsource at least some of their accounting or finance functions.

More than 100 engineers will be working forSunin Prague by the end of this year. The US company’s presence dates back to 1994 and in 1999 it acquired a Czech company specialising in development tools for Java (April 2003). The German software developerSAP, which employs 28,900 people in 50 countries, including around 1,000 in Bangalore, India, has opened a subsidiary in Sofia. Around 200 Bulgarians were hired to develop Java applications for servers.

The US consultancy and software solutions integrator,Logica CMG, will, with 200 new jobs, expand its existing activities in Prague and Brno, which handle client support for the whole of Central Europe and South East Asia and both American continents. Part of the new activities will be moved from the current production centre in Western Europe, the cost of training and retraining will be subsidised to the tune of 48 % for Brno and 20% for Prague (May).

Cap Gemini Ernst & Young(CGEY) has just acquired a business services outsourcing (BPO) company in Kraków. Formerly a part of PwC Polska, it currently serves only one client, handling all the global finance and accounting functions for Stamford, a US-based international paper company (July).

The multinationalDHLhas announced its decision to move most of its IT activities from Great Britain and Switzerland to the Czech Republic. This new European IT operations centre, whose initial phase will create 500 jobs, aims to manage and support DHL’s entire European IT infrastructure from a single location, including the development of software. Within the next 5 years, 500 M € could be invested (August).

Symbol Technologies, a US company, will be moving its operations to Moravia, in the north east of the Czech Republic, to provide servicing and repairs for bar code scanners, portable computer equipment, communication systems, etc. to customers in Western as well as Eastern Europe. More than € 13.5M should be invested and 500 new jobs created (August).

Accenture, a management consulting and technology services company, plans to expand its Prague-based service centre, which provides BPO to clients throughout Europe. From 300 at present, the number of employees could rise to 1,500 by 2008 (October).

The world’s third largest software manufacturer,Oracle, will set up a support hub in Hungary, with about 50 people assisting its European units in the company’s data warehouse division (September).

The software development centre set up byMotorolain the Special Economic Zone of Cracow (Poland) now employs 230 people and will eventually employ 500 (October).

Compuware, a Nasdaq quoted software developer, has opened a subsidiary in Poland, as its systems are used by various Polish banks as well as by PZU, the incumbent insurer (October).

Philipshas announced that it will transfer its European accounting services centre from Dublin to Lódz, planning to employ 400 by 2006 (October).

Siemens, a German conglomerate which employs 50,000 people in R&D, of whom 30,000 are engaged in software development, has announced the creation of 10,000 such jobs in lower cost countries, including some in Eastern Europe. It was not clear whether these would be new jobs or relocations from Germany (December).

A London-based car rental company,Avis, has opened a 250 person new business support centre in Budapest, which will take care of customer services, financial processing and IT development in Europe, Africa and the Near East. The € 25 M invested are part of a larger two-year investment programme worth a total of € 55 M (January 200 4).

For more analyses of the EU’s enlargement process, see the

enlargement website of DREE.