Portugal as a nearshore outsourcing destination

Execu&ve Summary

PORTUGAL AS A NEARSHORE OUTSOURCING DESTINATION 2015 EDITION

2 | Portugal as a Nearshore Outsourcing Des&na&on

Index

1.   Portugal, a Nearshore Outsourcing Des&na&on (2015 Edi&on)

2.   Conclusions

The current study was based on informaGon obtained from various sources deemed reliable and credible by the enGGes that used it. NBSE-‐Nova Business School of Economics and Portugal Outsourcing AssociaGon did not validate the informaGon when producing this study. Portugal Outsourcing AssociaGon may in future update this study and the informaGon contained herein. The AssociaGon may also produce different analysis from the ones expressed in this paper. The copying, reproducGon, distribuGon and disposal of this study are prohibited. However, the informaGon contained herein may be used in the preparaGon of other documents, studies or for public use, without commercial purposes, and subject to obtaining, whenever appropriate, the respecGve authorizaGons from the sources used; references to this study, to Portugal Outsourcing AssociaGon and to the sources used must always be guaranteed.

PORTUGAL OUTSOURCING

The AssociaGon and main goals

Associação Portugal Outsourcing gathers some of the top ITC and BPO service providers in Portugal with the objecGve of contribuGng for the development of the Portuguese Outsourcing Sector and its impact on the country’s economy by raGonalizing resources, maximizing efficiencies and creaGng jobs.


4 |

Portugal Key macroeconomic indicators 2009-‐2014 Varia&on of GDP (%)

Infla&on (%)

Popula&on (millions)

Varia&on of Imports (%) *

* Change year overyear

0,9%

-‐1,4%

2011 2009

-‐3,0%

-‐1,8%

-‐3,3% 2013 2014 2012 2010

1,9%

-‐8,3%

2014 Q3

2,9%

2013 Q3

7,4%

1,8%

2010 Q3

8,8%

2009 Q3 2012 Q3 2011 Q3

6,1%

Varia&on of Exports (%) *

2014 Q3 2013 Q3 2012 Q3

6,7%

-‐7,0%

2011 Q3

5,3% 3,7%

2009 Q3

3,9%

-‐8,8%

2010 Q3

10,4210,4910,5410,5710,57

2010 2012 2009 2011 2013

-‐0,3%

0,3%

-‐0,9%

3,7%

1,4%

2,8%

Portugal as a Nearshore Outsourcing Des&na&on

2014 (1)

(1)  No data available at the issuance date of this report

5 |

Domain: Country

PORTUGAL AS A NEARSHORE OUTSOURCING DESTINATION

  Exports continue to show a continuous growth

  Higher economic activity is reflected in a GDP growth in 2014, inverting previous years contractions


Infrastructures

Competences Costs

Country

GDP growth rate (%*) Eurostat 2013 (PT: 2014 data) (1)

R&D and innovation investments (% of GDP)

IMD World Competitiveness Yearbook 2013 60 Countries

Ease of Doing Business Rank The World Bank – Doing Business 2015

189 Countries

Governance Matters Score The World Bank Group

The Worldwide Governance Indicators, 2013 Update

215 Countries; Ranking [0; 100]

Enabling Trade Index WEF(1) - The Enabling Trade Index 2014

138 Countries; Index [min 1; max 7]

Networked Readiness Index WEF(1) and INSEAD - The Global Information

Technology Report 2014 148 Countries; Score [min 1; max 10]

Domain: Country

RO PL HU CZ ES IE

5.07 4.73 4.51 4.49 4.32 4.24 3.96

CZ IE RO

-1.20 -0.70 0.20 0,9 1,50 1.70 3.40

HU ES IE CZ RO

RO CZ ES IE

3.90 4,30 4.30 4.40 4.50 4.80 4.80

ES PL IE

13th 25th 32nd 33rd

CZ

44th

RO

48th

HU

54th

ES HU

76.97

RO HU ES PL CZ IE

77.62 76.42 74.71 70.24 54.29 90.01

(1)  No 2014 data available for ES, CZ, IE, HU, PL and RO Values from 2014 edition; * = % change to previous year. (2) No data available for Romania

0.50 0,77 1.21 1.33 1.49 1.72 1.84

HU PL

PL

PL

4.69

2014

EU’s Member States Growth Performance on Innovation ‘06-’13

EU Innovation Scorecard 2014 60 Countries [0 -100%] (2)

CZ HU ES IE PL

0,9% 1,0% 1,4% 1,7% 2,4% 3,9%

6 | Portugal as a Nearshore Outsourcing Des&na&on 6 |

Domain: Infrastructures


  The quality of infrastructures continues to be a competitiveness factor highly valued by foreign investors.

7 | Portugal as a Nearshore Outsourcing Des&na&on 7 |

8 |

Country

Competences Costs

Infrastructures

Domain: Infrastructures

Quality of overall infrastructure World Economic Forum, The Global

Competitiveness Report 2013-2014; 148 Countries; Ranking [0-1]

Intellectual property protection World Economic Forum, The Global

Competitiveness Report 2013-2014; 148 Countries; Ranking [1-7]

e-Government Rank United Nations Global

E-Government Survey 2014 193 Countries ; Ranking [0-100]

Availability of Latest Technologies in Your Country

The Global Information Technology Report 2014 148 Countries; Ranking [0 -148] (1)

14th 30th 33rd 24th

CZ ES

5.4 4.5 4.0 3.8 2.9 3.9

PL HU IE

3.7

HU ES

6.0 5.1 4.9

PL

4.0 3.4

IE

5.2

CZ

6.1

(1)  No data available for Romania

Investment in Telecoms (% of GDP) IMD World Competitiveness Yearbook 2014

60 Countries [0 -100%] (1)

Communications Technology meets Business Needs

IMD World Competitiveness Yearbook 2014 60 Countries (1)

RO

RO

ES

12th

HU

39th

NL

37th

IE

22nd

CZ

53rd

PL

42nd

RO

64th

CZ ES HU PL IE

42nd 39th

0,53 0,40 0,39 0,47

CZ PL CZ IE ES

0,35 0,38

HU

Internet Bandwidth Speed (per internet user kbps)

IMD World Competitiveness Yearbook 2014 60 Countries (1)

10th 21st 23rd 14th

CZ IE ES PL HU

51st 29th

15th 33rd 53rd 30th

ES IE CZ HU PL

102nd 57th


9 |

Domain: Competences


  Significant progress on the flexibility of the labour laws and on incentives for job creation.


RO CZ PL IE

CZ RO

PL

Country Infrastructures

Costs Competences

10 |

Domain: Competences

Language skills IMD World Competitiveness Yearbook 2014

60 Countries; Ranking [0;10]

English Proficiency TOEFL (IBT) TOEFL 2013 Score [0;120]

Labour Regulations IMD World Competitiveness Yearbook 2014

60 Countries; Ranking [Index from 0;10]

Local Availability of Specialized Research & Training Services

The Global Competitiveness Report 2014-2015 144 Countries (1)

Public expenditure on education (% of GDP)

IMD World Competitiveness Yearbook 2014; 60 Countries

IE PL PT

7.17 6.82 5.31 6.73 5.04

92 89 91 90

5.2

ES HU PT

4.8 5.5 4.5 3.0 4.8 5.7

3.08 3.05

HU ES

CZ HU IE

6.68 6.12 4.69 4.83 3.75 4.25

RO ES

(1)  No data available for Romania;

5.14 4.69

CZ

PL RO CZ

95

HU RO CZ PL ES IE

96

CZ CZ ES IE PT HU PL

24th 27th 31st 25th 85th 35th

Availability of Scientists & Engineers

The Global Competitiveness Report 2014-2015 144 Countries (1)

CZ IE HU ES PT PL CZ

8th 15th 55th 11st 62th 56th

Quality of Education System The Global Competitiveness Report 2014-2015

144 Countries (1) CZ CZ ES ES PT HU PL

5th 77th 79th 40th 96th 88th

IE


11 |

Domain: Costs


  Reduction in unit labor costs equate Portugal to Eastern European countries;

  Increased tax burden is offset by the demand for efficiency or reduction in operating margins;

  However, Corporate Tax may be further decreased in 2015.


12 |

Country

Competences

Infrastructures

Costs

(1)  Priciest come last in the ranking/index. (2)  No data available for Romania.

Domain: Costs

Cost of Hotels The Hotel Price Index™

Review of global hotel prices: January - December 2013; 68 Cities (1)

Labour Costs per hour (in €) Whole Economy, excl. Agriculture and Pub. Adm.

(costs include wage + non-wage – subsidies) (% Change 2013/2008) Eurostat, March 2014 (2)

Cost of Telecommunications

IMD World Competitiveness Yearbook 2013; 60 Countries

Labour Compensation per Unit Labour Input

OECD System of Unit Labour Cost 2012 (growth rate) 30 Countries (2)

Total Tax Revenue (% of GDP)

Eurostat, 2012

ES IE CZ RO PL

64th

HU

60th 57th 56th 51st 46th 44th

HU ES PT RO

9.51

PL

19.91 29.19 32.66 33.91

CZ IE

34.76

CZ PL RO IE

28.50 35.00 34.90 30.20

ES

39.30 32.50 33.60

HU

HU CZ ES PT

-0.2

IE

0.2 0.4 2.8 5.8 8.0

PL

ES PT PL RO

4th 11th 18th 29th

HU CZ

31th 7th

IE

38th

0.1

CZ IE HU PL

-5.2 -5.1 0.5 12.4 8.7

Cost of Living IMD World Competitiveness

Yearbook 2014 60 Countries (1)

ES


Conclusions


Country

Competences

Infrastructures

Custos Costs

1 2

•  Portuguese companies are ‘going abroad’ focusing on external markets and exports;

•  Increased job function competitiveness as a result of i) labour flexibility and ii) reduction in wages and ‘extra hours’ compensation, along with iii) national grants and incentives for creating new jobs;

•  Forecasted relief of personal and corporate tax burden will encourage more economic activity and foreign investment;

•  Portuguese Public Administration’s adoption of Outsourcing models and solutions is still below EU average. This is a challenge for local service providers which may lack the required critical mass to get into large operations. However, positive signs are being observed as it is starting to implement operational models like Shared Services for specific Central and Local Government functions.

Conclusions

On the past 5 years, Portugal has been recognized by Gartner as one of the 13 World’s Developed Countries with more potential to ‘perform’ as an ICT services platform. This is regarding both the perspective of providing transnational services from Portugal and, the location perspective to invest and establish Shared Services and Competence Centers.


1 2

Country

Competences

Infrastructures

Custos Costs

CONCLUSIONS

Future Challenges

•  Portugal’s competitiveness as a viable nearshore location for IT based outsourcing operations has increased in the past 3 years;

•  The skills of the talent base outperform the arguments of offshore destinations. This is particularly true for knowledge based processes due to a extremely low turnover rate.


Associação Portugal Outsourcing www.portugaloutsourcing.pt General Secretary -‐ Guilherme Ramos Pereira [email protected] T: (351) 926 621 975

“Portugal as a Nearshore Outsourcing Des4na4on”, 2015 Edi&on in associaGon with


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Portugal as a nearshore outsourcing destination