Sofia: Outsourcing Services 2017 – New Report from Sofia Investment Agency

Sofia Investment Agency published the Sofia – Outsourcing Services 2017 Report, prepared by  Institute for Market Economics for Investment Analysis Department at the Agency. Find out below a summary of the report or download the full PDF version of the document.

Sofia BPO sector in figures

• The outsourcing industry accounted for 3,6% of national GDP in 2016, with 3,4% in 2015 and 2,8% in 2014
• Over 90% of the outsourcing activities in Bulgaria are concentrated in Sofia
• The total output of the sector surpassed 5 billion BGN in 2015 and formed 9% of Sofia’s total output in 2016
• In 2016 the added value of the outsourcing sector in Sofia reached a record-breaking 2.2 billion BGN – 50% increase compared to 2011
• The number of enterprises in the sector reaches 24 000 or 20% of total companies in Sofia
• Currently, the outsourcing industry accounts for 10% of the added value in the city

Company segmentation and demography

Nearly half of the employed in the BPO sector in Sofia work in micro-enterprises. However, with several major companies, entering or expanding their activities in Sofia, the sector is currently undergoing a consolidation. The number of companies with over 250 employees has increased from 11 in 2011 to 19 in 2016. For the same period, the number of employed in companies with 250+ employees increased from 9% to 18%.

One of the most important characteristics of the sector in Sofia is the fact that the majority of the companies provide consulting services, which enables compact teams and using freelancers, making employment statistics more flexible.

The outsourcing industry in Sofia is also characterized by the significant growth in the number of enterprises. For the reported period, the growth in the number of outsourcing enterprises in Sofia is about 16% (compared to  7% on a national level). In 2016, the number of enterprises in the BPO sector reached 20% of total companies in Sofia or about 24 000 companies.

Investment activity and export of services from the BPO industry

The share of investment made in the outsourcing industry in Sofia has been growing for the past several years.  At the end of 2016, foreign direct investments have reached 1 billion euro, cumulative for the period 2000-2016.  the biggest growth in foreign direct investments – 170%, was registered in the sub-sector of Administrative office activities, and additional market services, which includes call centers. The biggest growth in foreign direct investments – 170%, was registered in the sub-sector of Administrative office activities, and additional market services, which includes call centers. The biggest growth in FDI was registered in Architectural and engineering activities; testing and analysis – over 70 million euros.

Between 2011 and 2016, the export of services from the outsourcing industry has tripled. At the end of 2016, export revenues reaches 1,4 billion or 7% of Sofia’s total export, compared to 0,4 billion BGN and 4% of total export in 2011. With 230% growth in export, the sector outpaced the average growth in export revenues for other sectors of the economy in Sofia, which was 100% for the same period.

Labor market

With the development of the outsourcing industry, the number of people employed is also growing. The number of employed reaches 68,5 thousand or over 10% of total employed workforce in Sofia. This is an increase of 23% for the sector since 2011, compared to 8% growth for Sofia and 2% for Bulgaria. With 14 000 employed, the Legal and Accounting activities is the biggest in terms of employment. The sub-sector, demonstrating the fastest growth in number of employees, over 46%, is Headquarters activities, management consulting.

A specific trait, which defines the sector is the high rate of employees with higher education. In 2016 the share of employees with tertiary education reached 80%. Outsourcing companies, however, are increasingly employing people with secondary or lower education, due to the insufficient workforce in Sofia and the rest of the country.

The employment rates per age in the outsourcing industry differ significantly from the average for the country. As in the IT sector, the outsourcing industry is characterized by a large share of young people employed – 38% under 34 years, compared to 33% of the total workforce employed in Sofia.

The share of women employed in the sector is significantly larger than the share of men. The sector employs 40,1 thousand women, which is 2/3 of the sector’s total labor force. The sub-sector with the biggest share of women employed is Legal and Accounting services with over 70%. The only outsourcing sub-sector where women’s share is under 50% is Architectural and Engineering activities.

Considering the dynamic growth and the skilled workforce employed, it is not surprising that the outsourcing industry provides above average net wages for Sofia. In 2015 the average gross wage of the employed in the sector reached BGN 19,4 thousand annually, compared to BGN 14,5 thousand for Sofia.

In the full document Sofia – Outsourcing Services 2017 you will find a detailed overview of the main indicators of the BPO sector in the capital – Added value analysis, investments, export and employment rates, current state and opportunities for business development, and more data, highlighting the ever growing importance of the sector for Sofia’s economy and the economy of Bulgaria.

You can download the full document here.

If you have further questions regarding the report or other data on the investment climate in Sofia, do not hesitate to contact our team at contact@investsofia.com.