BSS in Lublin on the rise

As stated in the report, the total headcount at BSS companies in Lublin amounts to 7,400, which demonstrates a 10% growth YoY. Out of all BSS industries, IT sector is responsible for the highest employment reaching over 5,000 people. Among Tier 3 and Tier 4 cities, Lublin recorded the highest absolute increase in the number of jobs created in the sector leaving behind the cities like Szczecin and Rzeszów. Furthermore, the average headcount at BSS companies in Lublin is 111.

In the period under analysis, 5 new BSS investors launched their operations in Lublin. What’s characteristic for the new investors in Lublin is the fact that they are reinvestments of the businesses which are already present in other parts of the country. These include Capgemini Cloud Infrastructure Services, Lingaro, Venture Devs, Onwelo and Predica. One of the reasons for this phenomenon is that Lublin is still considered as a place where growing businesses can find the right workforce which other cities may lack. It is worth noting that 19% of the companies’ representatives questioned signalled the plan to open up a new location in Poland, mostly aside from Cracow, Warsaw and Wroclaw. The shortage of skilled people continues to be number one challenge in the BSS business. However, 85% of those surveyed claimed their company plans to increase the employment within the next year, compared to only 3% of those planning to reduce it. Demographic issues are also the reason why it is the group of employees aged 35-44 that grew the most (by 3%). For reference, the share of two youngest age groups of employees (<25 years and 25-34 years) in the total number of BSS workforce decreased. What is more, over 75% representatives of companies surveyed by ABSL report the competition among companies to be another major challenge they face.

In Lublin, just like at the country-wide level, USA remains the country of origin of the biggest number of foreign investors. Currently, 8 business services investors from the USA have their centres in Lublin. On the other hand, Germany is number one in terms of countries from which BSS businesses in Poland receive orders. What is interesting, Ukraine remains the top country in terms of the origin of foreigners employed by business services centres in Poland, also in Lublin.

The report presents also the office space market in 9 most developed cities in Poland, including Lublin. The total office space in Lublin amounts to 205,582 sqm, out of which 25,000 sqm have been delivered in 2018, including Spokojna 2 as the biggest building offering 18,500 sqm of A-class office space. Just like in previous years, tenants’ portfolio is mostly represented by companies from BSFI sector, but also the activity of BSS and IT businesses on the office markets becomes more and more visible. It is notable that the vacancy rate drops (it stood at 13% as of April ‘19), while the prime office headline rates remain stable and range between EUR 10.5 – 11.5/sqm/month, reads the report. 2018 was also a record-breaking year in terms of gross take-up rate (14,000 sqm) clearly indicating both the growing interest of new players in Lublin and the development of existing tenants.

The fact that the office market in Lublin is booming is demonstrated by most recent activity of local developers who have just commenced construction works for their new A-class investments, e.g. CZ Office Park 3U as the next stage of developing the office park by Centrum Zana Holding (adding further 16,500 sqm in a 6-storey building), Wojciechowska 9a of 6,700 sqm built by W9 Investments S.C. J.Urban D.Piątek and G7 building of 14,500 sqm developed by JBU Sp. z o.o. Sp.k. next to the existing G5 project at Gęsia Street. After their completion scheduled for 2020, the total office space in Lublin will reach the level of 243,282 sqm.

In partnership with Randstad and Randstad Source Right, ABSL dedicates a part of its report to labour market situation and wages in the BSS sector. With 9 universities and colleges, a total of 60,900 students and 16,400 graduates Lublin remains an academic centre of Eastern Poland with more than 17,600 students at faculties with a substantial potential for the business services sector (ICT, languages, technical and engineering, business and administration). According to Randstad and Randstad Source Right data, Lublin remains highly cost-competitive for the biggest cities in Poland in terms of HR. Average salaries for developers and business analysts with 3 years’ experience in Lublin are 27% and 30% respectively lower than for the same positions in Warsaw.

This, together with the availability skilled workforce and modern office space puts Lublin at the forefront of the most attractive business locations in Poland.

The full report is available at https://absl.pl/wp-content/uploads/2019/06/raport_absl_2019_EN_190602_epub.pdf