IT-BPO Cluster Brochure
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Transcript of IT-BPO Cluster Brochure
In 2008 KPMG recognized Lviv
as one of the best IT-BPO1
destinations along with 30 other
cities in the world and among 11
cities in the EMEA2 region
Source: Exploring Global Frontiers, KPMG, February 2009
The Program for Economic Development and
Increasing Lviv City Competitiveness was
launched by the Foundation for Effective
Governance (FEG) together with Lviv city
authorities and Monitor Group in October
2008. According to the developed strategy Lviv
needs to accelerate economic development
by driving the development of key highly
competitive clusters such as Business Services
and Tourism and supporting overall economic
growth through focusing on four key economic
pillars namely, aligning education with business
needs, investment promotion, boosting
governance transparency, and investing
in supporting infrastructure. In order to
implement the strategy, City Administration
together with the city leadership have
established Lviv City Competitiveness Center
with two focused Task Forces – Business
Services and Tourism Task Forces.
1 IT -BPO - Information Technology and Business Process
Outsourcing; 2 EMEA – Europe, Middle East, and Africa
LVIV CITYCOUNCIL
We are making every effort to fulfill this ambition and your participation will facilitate the process.
Lviv does have unique advantages such as geographical, cultural and mental proximity to Europe as well as highly educated and talented labor pool.
In the course of preparation to host the European Football Championship 2012, we aim at attracting large-scale investments in order to develop state-of-the-art infrastructure with particular emphasis on public transportation, hotels, business parks, airport and railway to bring them in line with international standards.
The City Administration is strongly committed to providing investors with administrative support, local tax incentives, transparent and business-friendly regulations, and consulting.
We believe that our local government, city environment, unique atmosphere, and bright talents – engineers, developers, scientists, and managers – will do their best to bring change in the world.
Andriy Sadovyy
Lviv City Mayor
Lviv can become one of the most comfortable and attractive cities in Europe to live and work in as it has already become for the Ukrainians.
OvErvIEw
Being a fast growing and at the same time •ancient city, Lviv has repeatedly been recognized by international experts as an attractive destination for foreign investments in the field of business services and innovations.
Lviv’s key advantages are its favorable •geographical location, historical heritage, and rich cultural traditions which make it a true European city.
It has become an important technological and •r&D center of Ukraine since the end of the 20th century due to high-quality educational background and talented labor force. The core specialties are technical engineering, applied sciences, economics, and IT. The majority of students and almost all the staff in Business Services companies have a good command of foreign languages - russian, Polish, English, as well as German, French, Spanish, Italian, and Slavic ones.
Intellect and creativity were the factors that •fostered a rapid growth of such industries as Business Services in the city. Possessing a large pool of skilled labor force, Lviv has an undoubted superiority in the development of this industry. IT-BPO sector in Lviv is attractive due to insufficient capitalization and investments.
Lviv is expecting substantial investments •into its infrastructure in connection with Euro 2012 preparation, primarily into transportation, hotels, and business parks.
Lviv city authorities are striving to create a •welcoming business climate for investors by providing them with information support, improving business set-up procedures, and offering various incentives.
Lviv is open to the world and invites investors •and business partners for cooperation!
IT-BPO DesTInaTIOn OPPOrTunITIes
CITy SnAPShOT
Geographic Locationwestern Ukraine, 75 km from the border with Poland to the south-east, in the centre of East-ern Europe
Transport Facilities/ Connectionsrailways, Airport, A3, A5 international routesBy air: Kyiv – 1 hour (550 km), warsaw – 1 hour (400 km), Prague – 1.5 hours (850 km), Moscow – 2 hours (1120 km), Budapest – 630 km, vienna – 720 km, Paris - 1850 km, London – 1950 km
Time Zone: GMT +02:00
Population: 765 000
ClimateMild moderate continental climate, with the average summer temperature + 20°C, and average winter temperature – 3°C
Main IndustriesElectronics, engineering, tourism, IT, construc-tion, chemicals, food
GrP: $31 Bn
GDP per capita, PPP: $4,3001
average salary: $2601
FDI: $275 mln (~$30 mln in innovations)1
KEy CITy ASSETS
DIsCOver LvIv
Competitive Labour CostAverage monthly salary in the business •service sector in 2007 was 2-3 times lower than in Krakow, wroclaw, and Budapest
Human resource Potential
130,000 students and a pool of highly •educated graduates from 38 higher education institutions
Western Mentality and entrepreneurship spirit
Long historical and cultural connections with •Austria, hungary, and Poland
Cultural centre of Europe included in UnESCO •world heritage List
59% of citizens want to have their own •business
Trans-Border Location
Key transportation corridors connecting Lviv •with the EU (to be modernized in accordance with EU standards)
Developing Infrastructure. Office supply
rapid growth in ICT infrastructure, mainly •telecommunications and Internet services
Office space supply: 60 000 sq.m in 2009 and •more than 150 000 sq.m till 2012 forecast
eurO 2012 Perspectives
Total construction investment of ~$1Bn will •significantly improve city infrastructure
The number of planned to be constructed 3* •and 4* hotels to be doubled
Quality of Life
Cost of living is more than twice as low as in •Kyiv and CEE capitals including housing costs
Little traffic. EBrD loan of €38 mln granted •to develop city’s transportation
Air pollution is much lower than in Ukraine •on average
1 2007
Source: Monitor Group, Lviv bureau of statistics
EDUCATIOnAL FACILITIES & ABILITIES In FOrEIGn LAnGUAGES
PeOPLe MaTTer
Lviv is the leading educational center in ukraine and one of the largest in Cee:
38 universities and institutions •
130,000 students •
30,000 highly educated graduates every year •
Lviv has a large pool of university students...
Krakow
Lviv
Bucharest
Budapest
Prague
Brno
Bratislava
170128
100
91
80
63
56
The main universities are the following:
national Polytechnic university• - 31,000 students (25% of the overall students pool in Lviv), specializing in Applied Sciences, Engineering, and IT;
Ivan Franko national university• – 25,000 students (20% of the overall students pool in Lviv) specializing in both humanities and Applied Sciences, especially in Foreign Languages and Mathematics;
Lviv Commercial academy• – 8,500 students (7% of the overall students pool in Lviv) with focus on Commerce, Management, Science of Law and International Economics;
national Forestry Technical university of • ukraine – 7,000 students (5% of the overall students pool in Lviv) specializing in Ecology, Forest Management, Technologies;
Danylo Halytskyy national Medical • university – 5,000 students (4% of the overall students pool in Lviv) specializing in Medicine.
More than 30,000 students study deeply Engineering & IT and additionally more than 5,000 - Mathematics and Applied Sciences.
Key trends in Lviv education sphere:
Lviv is increasingly attracting more students •from the other regions of Ukraine
Quality of education is on a rise, especially •after recent reforms by the national government
Graduates of Lviv universities are sought •after by leading Ukrainian employers.
Due to its proximity to Europe and the crucial international cultural role, Lviv is abundant with the students and graduates with good command of foreign languages, where English is prevailing.
...and multilingual population
native: Ukrainian, russianeasy to Find: English, German, PolishCan be Found: French, Spanish, Italian, Slovak, Czech, hungarian, Bulgarian
Source: Monitor Group, Lviv bureau of statistics
SKILLED LABOr FOrCE
QuaLITy PLus CreaTIvITy
Lviv, as well as the whole ukraine, stands out for its vast pool of highly educated, talented, and skilled labor force.
Together with lower operational costs of setting up and housing business, competitive salaries of well-trained and hard-working personnel make Lviv very attractive to outsource activities.
average wages in comparison with some of capitals of Cee countries
Krakow
riga
vilnius
Budapest
Prague
Kyiv
Lviv
1,958
1,595
1,320
1,611
1,291
1,038
598
Key facts about Lviv labor market:
Labor force is highly flexible and trainable •due to low average age
Lviv is an “exporter” of skilled personnel •to EU and north America especially in ICT sphere
Labor code is flexible with low firing costs •compared to other CEE Business Services centers
The key advantages of Lviv pool of human resources are their talents, ideas, and creativity.In the 20th century, Lviv became one of the important centers of Engineering. And afterwards, in the beginning of the 21st century the city became one of the leading centers in IT and software development.
The most important benefit of the Lviv’s workforce in IT-BPO sector is that experienced staff is equipped with high-end managerial skills.
$, PPP (based on purchasing power parity), 2007Source: Monitor Group, Lviv bureau of statistics
BUSInESS InFrASTrUCTUrE
yOur COMFOrTaBLe PLaCe TO WOrK
In 2009, Lviv was recognized as the cultural capital of ukraine and the most comfortable ukrainian city to live in.
Lviv business infrastructure is still underinvested and underdeveloped.As Lviv co-hosts EUrO 2012, city authorities plan to build the state-of-the-art infrastructure, especially public transportation system, hotels, business parks, an international airport, and railways up to the international standards in 1-2 years.
Office Space Supply:
More than of 60,000 sq.m, 70% of them of B •and C classes (among them Lemberg Business Centre, Dominant Plaza, Optima Plaza, nTOn Business Centre, and others)
Plan to be doubled by 2012, especially class B•
Modern exhibition hall in Lemberg Business •Centre
Hotels and Private accommodations:
49 hotels in the city, including five 4 star •hotels
2 115 hotel rooms in Lviv hotels•
101 hotels in Lviv region•
high supply of private first-class apartments •for rent
Quality of Life:
Cost of living is twice as low as in Kyiv and •other CEE Business Services centers
Lviv does not suffer much from traffic •problems
EBrD granted the loan of • €38 mln to develop city’s public transportation
Air pollution is much lower than in Ukraine on •average
Crime rate is rather moderate•
OvErvIEw OF BUSInESS SErvICES SECTOr
reaDy TO GrOW
Lviv Business services sector has shown a rapid growth in 2005-2008.
The main reasons for that appeared to be skilled labor pool, boosting domestic and foreign markets and direct investments.
Business services Clustersales Growth in Lviv, %,
CAGr: +33%
05 06 07 08
100
134
213
234
Business Services is one of the fastest growing industries in Lviv with average annual growth rate 33% for the last 4 years.
More than 20 foreign Business Services companieshavealreadybenefitedfromdoingbusiness in Lviv.
recent ~40% currency depreciation of •the Ukraine national currency - hryvnia significantly improved cost competitiveness
Economic crisis led to a significant increase •in the number of unemployed specialists and reduced wage demands
Minimum Total yearly Costs per IT specialist, 2007
Poland
hungary
Estonia
romania
Czech
Bulgaria
ukraine
32.8 32.430.7 30.1 30.0
27.326.0
The labor costs were rather lower than in Cee BPO centers.
In 2008, the world economic slowdown resulted in further decline in wages and operational costs in business services sector.
2005 is taken as the base period
Source: Monitor Group, Lviv bureau of statistics
strengths
Challenges
Source: Monitor Group, Lviv bureau of statistics
Macroeconomic and political risks are still •significant
IT-BPO OPPOrTUnITIES In LvIv
OuTsOurCInG? BraIn sOurCInG!
attractiveness and Competitiveness of the Key service areas in Business services
software • Localization
Full-Cycle software • Development
Cee Contact Centers•
Payroll services•
embedded systems•
software for CDMa•
IT Consulting•
KPO / LPO•
Financial • Transactions
Procurement•
Finance and accounting• network Services•
Data Storage•
Enterprise Application •hosting
record / Account Management•
Bookkeeping•
Competitiveness (Local Assets, Incumbent Firms, Location . . .)
Attractiveness (Size, Market Growth . . .)
low
Full-Cycle Software
CEE Contact Centers
Embedded Systems
Software for CDMA
Software Localization
IT Consulting
KPO / LPO1
Payroll Services
Finance & Accounting
Financial Services
high
education/ Linguistic skills
expertise/ Competencies Capacities Customer base Examples of leading companies in the field
SoftServe, ELEKS Software, Lohika
high
Austrian Airlines, Adelina Call Center, Kyivstar
SoftServe, Intellias, GlobalLogic, ELEKS Software
Impulsis
ELEKS Software, Lohika
SoftServe, Epam
Lviv Juridical Center, Pravo
Skelia
DK-Ukraine, J&L Consulting, Contracty-Audit
Source: Monitor Group
Lviv has more than 10 attractive highly competative business service subindustries.
Lviv is well positioned to capitalize on the future trends in the global outsourcing market by developing its current Business Services cluster with focus on high value-added target areas.
Bank Lviv
First of all, the key driver of investments in IT and R&D in Lviv is its large pool of brilliant minds, highly educated and skilled young staff that attract foreign outsourcers. Moreover, the innovation potential of the city is really underestimated.
Secondly, now is the right time to start. The attractive location of the city, decline in costs and wages, strong commitment of the local government and growing loyalty and awareness of young talents make Lviv your prospective nearshore business services hub.
Last but not least, since Lviv has missed the first wave of investments in the BPO industry in CEE, nowadays it is seriously underinvested. The city, like an uncut diamond, is a great opportunity for those who plan to come first and be served first.
So we welcome reliable investors and IT-BPO companies to Lviv with open arms and are ready to support all innovative, creative, and progressive projects.
Oleksiy SkrypnykChair of Business Service Cluster Task Force
By stating that Lviv is a prospective IT-BPO center in Europe I would like to emphasize the following:
Oleksiy SkrypnykChair of Business Service Cluster Task ForceCEO of ELEKS Software+38 (032) 297 12 51 [email protected]
victoriya DovzhykCo-chair of Business Service Cluster Task Forcehead of Economic Development Division of Lviv City Council+38 (032) 297 57 [email protected]
Serhiy KiralHeadofForeignEconomicRelations&InvestmentOfficeofLvivCityCouncil+38 (032) 254 60 [email protected]
Contact Information