As the cost of doing business in Asia has increased in the last couple of years, more and more HR departments based in Western Europe are looking closer to home: Eastern Europe, the Baltic States or Turkey, where labor costs are low.
This article accompanies HR in a Turbulent EU.
Increasingly, experts say, human resource executives in Western Europe are looking outside the region to hire and employ top talent in areas such as engineering and information technology -- partly because of a gap in skills but largely to save money at a time when the ongoing Eurozone crisis is hitting the bottom line.
Over the last decade, European forms have shifted operations to destinations such as India, China or Hong Kong to recruit and emply top technical talent while curbing costs. But as the cost of doing business in Asia has increased in the last couple of years, more and more HR departments based in Western Europe are looking closer to home -- Eastern Europe, the Baltic states or Turkey, where labor costs are low. Officials say that moving jobs to these regions -- or even outsourcing work that had been done in-house -- is a way of dealing with a stagnant labor market, restrictive layoff rules and other impediments in the West.
The growth of outsourcing is reported to be high in countries such as Bulgaria, was once known as "the Soviet Silicon Valley," and Romania, where wages for IT personnel are roughly one-third of those of their counterparts in Western Europe has led to as many as 2,000 software development firms. Bloomberg News recently reported a boom in international firms opening operations in Baltic nations such as Latvia and Estonia to capitalize on lower salaries, few strikes and a workforce that is well-trained and multilingual.
"Poland and other places in Eastern Europe are graduating larger number of engineers," says Jay Doherty, a partner with Mercer Human Resources who specializes in workforce planning. He says European firms that once looked east only for unskilled laborers are increasingly seeking professionals in that region. He said clients are also looking at Turkey, which has a strong education system and an economy that has held up well in the global slowdown.