Kanda Consulting Ltd.

Bulgaria continues to rank highest among the global services locations in Southeast Europe (SEE), outscoring all rival offshoring destinations. According to the 2019 edition of management consulting firm A.T. Kearney’s Global Services Location Index, Bulgaria went down two spots to the 17th place but maintained its leading position in SEE.

Shared service centers are the most rapidly developing sourcing segment in Bulgaria in the last five years.

The outsourcing industry continued to grow rapidly with operating revenue jumping by 19.5%, and reaching EUR 2.4 bln.

In 2018, the outsourcing industry registered its record high net profit for the period 2014-2018. Moreover, after two years of decline, in 2018 the profit jumped by 57.4% y/y to EUR 174.3 mln. The growth was fuelled by the performance of the BPO sector where the net profit reached EUR 107.0 mln, compared to EUR 61.3 mln in 2017.

In 2018, labor costs in the sourcing industry increased by 17.2% y/y, at a significantly lower rate than the 19.5% rise of the aggregate operating revenue. In 2017, the total labor costs had grown at a slightly faster rate of 20.7% y/y.

The global sourcing industry will accelerate its growth in the next five years. All segments will also grow faster than in the period up to 2018, being led by the SSC, which will double its size within the analysed period. BPO will become the smallest segment in size, but it will still grow at a higher rate than ITO. The latest major trend in Bulgaria’s sourcing industry is the rapid entry and expansion of shared service centres of global technology companies and financial institutions, such as the World Bank Group, Facebook and the Financial Times, to name only a few. This is a sign of the improved image of the country as a destination where high value-added services are provided by skilled talent and is a prerequisite for further development of this segment.