Fifth of companies plan to ‘outsource’

By Anna McLauchlin

Date: 30/09/04

ALMOST one-fifth of companies plan to relocate or outsource their European activities to another country over the next two years, a survey of senior executives from 500 European companies has shown. And for the first time, 'competition from Asia' is cited as the factor likely to have the greatest impact on business over the next ten years.

The annual European Cities Monitor, carried out by property firm Cushman & Wakefield Healey & Baker (C&W), found that central and eastern Europe is still the favoured destination for outsourcing, thanks to its skilled and low-cost labour force.

Warsaw will see the biggest influx of companies over the next five years, followed by Moscow, Prague and Budapest.

"The tendency to open offices in central and eastern Europe will continue for a few years yet," said C&W head of research David Hutchings. "The only cloud on the horizon for [this area] could be the advance of Asia with its even lower cost base."

Outside the EU, companies are looking to Shanghai, Beijing and New Delhi as the top choices.

C&W also asked executives to rank EU cities on business priorities like market access, availability of qualified staff, external transport links, telecommunications, cost of staff and languages spoken. As in 2003, London is the number one choice, followed by Paris, Frankfurt, Brussels, Amsterdam, Barcelona and Madrid.

The survey shows that sunny Spanish cities Madrid and Barcelona are closing the gap on Brussels and Amsterdam, as more than any other city in Europe they are considered to be improving themselves as business locations.

New member states have also risen sharply in executives' estimation, with Prague reaching 13th place.

According to the annual European Cities Monitor, a survey of senior executives from 500 European companies, almost one-fifth of companies planned to relocate or outsource their European activities to another country over the following two years. And for the first time, 'competition from Asia' was cited as the factor likely to have the greatest impact on business over the ten years to come.