Would the success of the modern business services sector in Poland be possible without Poland's membership in the European Union?
Poland's accession to the European Union was certainly a breakthrough moment for us. When choosing projects, investors try to minimize risk and ensure a high percentage of predictability and return on investment. This requires stability, predictable international law and a transparent tax system. EU membership makes us more predictable for investors present on the European market. Accession to the EU was a huge leap forward for Poland and we certainly took advantage of this moment in history.
In 2023, the estimated share of the sector in Poland's GDP was 4.5%. These are data from the ABSL report. What should you do to maintain this level and maybe even fight to increase it?
We start with the success of the sector and the success that Poland has achieved in the field of modern business services, and this success was not achieved once. What has happened in recent years – apart from the often double-digit increase in employment in the sector, and above all the increase in the value of service exports – is a series of successes. But the world doesn't stand still. We made perfect use of all the advantages of our country that we could use – talents, geographical location, competitive salary levels at that time and favorable economic conditions, because many foreign companies investing in Poland took advantage of various types of relief. However, for several years we have been observing a trend that we must face. The world has become unpredictable. We have experienced a pandemic, and there is a war going on on our eastern border. Artificial intelligence is developing, which makes it necessary to change industries, work on securing talents and developing competences of the future. Another issue is the increasing competition, which requires raising qualifications. This is where the concept of KIBS comes into play – Knowledge Intensive Business Services, i.e. advanced knowledge-intensive processes that require a completely different type of specialists. Another issue is leadership development, because we want leaders and innovators who create trends to play an increasingly important role in the sector, and this requires specific competences and experience. The mentioned 4.5 percent share in GDP is a lot and, having observed the evolution of the sector over the last dozen or so years, we at ABSL are convinced that further growth lies ahead. However, the environment and requirements are changing and you need to adapt to them.
The revolution in artificial intelligence is helping or hurting the sector? There are fears that AI will put some specialists out of work.
First of all, it is changing the sector and this is a trend for which we are well prepared. If we wanted to stop in one place and continue to create the industry as it is today, i.e. defined by the number of new jobs we create in the traditionally understood outsourcing and process area, then artificial intelligence obviously interferes when we talk about the number of employees, because in simple terms way takes over routine and repetitive operations. However, it helps because it somehow forced transformation and moving to higher-level processes. Instead of talking about change, we had to prepare for it and simply start implementing it. And many companies have been doing this for several years and they do not see the threats associated with artificial intelligence. On the contrary, they want to use it to improve employee qualifications and deal with more advanced processes.
How much of the sector do these companies make up?
The latest edition of the ABSL report says that 57 percent all processes covered by the sector are highly knowledge-intensive. However, I think that the definition of this type of service is a bit different from how we would like to see the level of advancement of processes. I think that those companies that use complex algorithms and actually harness artificial intelligence may account for 40-50 percent. sector. This is a percentage that gives great hope and shows that companies have not missed the moment of AI popularization, but are very actively and boldly implementing these technologies.
How long might the transformation of the sector you mentioned last?
It will never end. It will never happen that we will say to ourselves that we have mastered artificial intelligence and now there is no longer any risk of being left behind. We are in a cycle that forces us to constantly change and redefine ourselves. These roles, which 10 years ago were key and basic from the sector's point of view, are now automated. In two to three years, the processes that we think of today as basic will be completely different and we will observe subsequent stages of development.
What is needed to make the modern business services sector in Poland attractive to foreign investors?
It is the sum of many components and no one will be able to achieve success in this field alone. At the end of the day, business knows best what is needed and in what direction processes and work should evolve. But that's not enough. There is a need to work on the ecosystem in the business-university-administration triangle. And our current ecosystem will not provide us with the level of sector growth and competence that we have enjoyed over the last 10-15 years.
In the case of universities, the key is the process of educating future employees of the sector, who will be prepared to work in a slightly different or completely different environment than those entering the labor market 20 years ago. We need, among others: engineers prepared to take on new technological challenges faced by the sector, who will also be equipped with soft skills. Knowledge of foreign languages or the ability to navigate in an international environment is no longer a competitive advantage. The human resources base must adapt to new conditions, which involves building digital awareness and developing competences in the field of advanced algorithmic technologies and their use in everyday work. The second area is the mentioned soft skills, ranging from communication, through the ability to work in a group or in a very diversified, international environment, to all leadership skills. Without the latter, we will not be able to attract foreign companies to Poland, because we will not have leaders capable of leading the transformation we are talking about.
What does the sector expect from the state?
First of all, stability and certainty that there will be no legislative changes that could worry investors. Factors such as legal unpredictability, surprises or failure to fulfill promises may cause companies interested in launching or developing operations in Poland to wonder whether this is really the right direction. The competition is huge, and in business no one likes surprises – neither good nor bad. We also need to look at the entire legislative ecosystem, e.g. in the field of obtaining work permits for foreigners. This is our Achilles heel, because on the one hand we are facing demographic challenges and therefore there is less and less talent, and on the other hand we have long procedures for granting work permits to foreigners who want to come here and whom we really need. We expect cooperation and changes in this respect.
Is there such a thing as economic diplomacy? What makes some companies decide to locate large investments in the development of new technologies, e.g. in Germany, and not in Poland, which is still cheaper?
Economic diplomacy is a very broad concept that is not limited to the conditions of a specific ruling team or to the issue of legislation. It also concerns the creation of a broadly understood process that will promote analytical solutions and business intelligence tools and that will take into account ESG trends. The authorities, both at the central, regional and even local levels, should keep up with the times and support companies – meeting their needs with proposals for long-term tax relief. It is not that companies that locate their business service centers in Poland only want to save money and withdraw capital from us. These are companies that want to invest in the long run.
Another issue that is important when deciding where to invest is innovation, and here we still have a lot to improve, also due to legislation and incentives for investors. Finally, what comes into play is that companies keep the most valuable jobs with themselves, i.e. in the country of their headquarters, and we want exactly the opposite: we want decision-making and leadership positions related to new competences to be located here. This is the currency in the new game. Pure mathematics and statistics related to the increase in the number of newly created centers and new jobs in a given year are no longer enough. The approach to measuring the sector's development requires changes – not only in terms of gross domestic product, but also taking into account effectiveness, efficiency and the level of innovation. These are the elements on which we must work with the government and universities to be competitive with countries that have watched us closely in recent years and have drawn reasonable conclusions.
The mass layoffs in the Krakow office of Aptiv, widely commented on by the public, are behind us. The media reports on plans to reduce employment in subsequent shared services centers. In Krakow, which is one of the key points on the map of business service centers in Poland, companies reported to the labor office their intention to dismiss over 400 employees in January and over 500 employees in February, as reported by “Gazeta Wyborcza”. Is layoffs in the sector a disturbing trend or a temporary blip?
It's definitely a trend. Is it disturbing? I would rather say predictable. Is this just temporary shortness of breath? No, I wouldn't consider it a temporary setback, because we are talking about the transformation of the entire sector. This change has been coming our way for several years and at this point it has accelerated a bit. For us, this is part of the natural cycle of transformation that is happening and will continue to happen. It does not only concern Poland, but the entire region. Transforming jobs, optimizing costs and increasing efficiency are also present in the sector abroad. We talked about artificial intelligence – this trend will continue. Jobs that have been relatively secure so far, those – I would say – the least knowledge-based – will mainly be automated.
The second thread is related to the issue of economy and unpredictability. Certainly, there is currently an increased level of risk and a reduced appetite for investments, especially those that might not bring a quick return, and in the current reality, companies rather think about a quick return on investment – they do not want to wait long because it is not known what will happen in a few years . Therefore, you need to be attractive here and now and able to adapt to a new situation.
We analyze these trends very carefully. Please also remember that the numbers we talked about here – about 1,000 people nationwide – represent less than half a percent of employment in our sector, and we are opening new centers and creating new jobs all the time.
What role does ABSL have to play in the event of collective redundancies?
We are in all major cities in Poland, we constantly monitor information on changes in the number of employees and we try to help, provide jobs, promote employees and help in finding employment, mainly in the region and industry, and if this fails, then in the sector at the level of the entire country. As ABSL, we definitely have our role in this respect and we try to fulfill it with due diligence.
Interviewed by Dominika Pietrzyk
