In the beginning of March Bulgaria launched a national campaign in support of its accession in Schengen. According the Deputy Prime Minister for European Policies Coordination and Institutional Affairs Meglena Kuneva, the accession of the country in the travel free Schengen zone should become a national task. Bulgarians should be aware that Schengen is a synonym of security, economy and prestige.
The joint efforts of the Deputy PM, the Justice Minister and the Culture Minister resulted in the campaign “Bulgaria in Schengen. It’s Time!” The campaign was opened at the Archeology Museum in Sofia. In the video it is stated that the double standard concerning Bulgaria’s accession in the Schengen area is unacceptable.
The video comes in several language versions and presents Bulgarians from all spheres of life, smiling, with the national flag in the background. Upon launching the national campaign, the Deputy Prime Minister stated that the accession of Bulgaria into the Schengen zone will become a fact when the public opinion on that matter is united.
The realtors today often speak about interest towards the Sofia office market and increased number of the investors, mainly large international companies looking to outsource their business. In general the Sofia office market goes through lasting period of recovery and faces a positive trend ahead. The share of the vacant office premises in Sofia has fallen with nearly 30 % in the last quarter of 2013 to 26 % for the last quarter of 2014. That is so due to the strong interest towards the office premises of class A and the expansion of the international companies which have decided to outsource their business in Sofia.
The rental levels of the Sofia offices vary between 10.5 and 13.5 Euro/sq.m. and the number of available office premises is dropping down. The investments in office buildings for 2014 have increased and many office projects that were postponed are now being restarted. Bulgaria and its capital Sofia is now only provoking the interest of the companies that wish to start a business in the area but are also managing to keep that interest, which is expected to bring many new investments.
Last month it became clear that Germany keeps its cautious position over the Schengen Bid of Bulgaria and Romania. The German Chancellor Angela Merkel and the president of Romania met in Berlin to discuss the accession of Romania into the Schengen zone. Mekrel said that Romania is making progress towards entering the Schengen Zone, yet there is still no clearance when the accession in Schengen will happen.
Currently both Romania and Bulgaria are on hold as far as Schengen zone is concerned. Both countries are part of the European Union since 2007. The main reasons for postponing the accession include corruption, lack of political willingness, organized crime, lack of transparency on the different policies.
According to the Bulgarian Foreign Minister Bulgaria needs to be given a political signal, as well as a little confidence that the country is on the right path of Schengen accession. Minister Daniel Mitov further said that coordination is required between Bulgaria, Romania and Greece for all European Union regional projects. The Bulgarian Foreign Minister believes that Bulgaria will join the Schengen Area as that is the base for fighting against the threats and the terrorism. The politician said once again that Bulgaria has already implemented all technical measures that are needed for the Schengen membership and has done almost no mistakes as an external border of the European Union.
The real estate agents have recently stated that the rental levels of the Sofia Offices are among the lowest in the European Union. At the same time, the number of the available luxurious offices is strongly reduced. The main demand for offices of the highest class A in Sofia comes from the outsourcing companies. That is so as almost all prime office buildings in Sofia are almost 100 % occupied.
Since the beginning of 2015 there is almost no offices available in business buildings of class A, placed in good locations. The international companies are willing to relocate to Sofia city to make business thanks to many reasons. Among these reasons are the low costs for offices and the highly-qualified professionals that can work in the IT and in the outsourcing sphere.
In the entire European Union Bulgaria seems to be the most affordable office destination. That is so as the available offices of class A in Sofia could be rented between 13-15 Euro/sq.m. In case the demand for such offices increases, that will lead to increase in the rental levels, which however will not be significant. Currently, the number of the available high-quality office premises in Sofia is not sufficient for all the international companies that are willing to relocate their business to Bulgaria.
In a meeting with journalists, the Bulgarian Minister of Foreign Affairs Daniel Mitov said that Bulgaria and Romania have agreed to coordinate their positions as far as an accession in the Schengen area is concerned. By having unified position, the two countries are expected to be accepted more seriously and their achievements in meeting the technical criteria are expected to be accepted.
Several weeks ago Minister Mitov met with his Romanian counterpart Bogdan Aurescu, during a meeting between the presidents of Romania and Bulgaria. The politicians discussed the fact that the two countries are already acting as member states of the Schengen zone. Based on that Romania and Bulgaria will insist on clarification over the accession of the two countries in the border-free area of Schengen. Both countries do meet all the technical requirements, they have modern equipment and good control on the borders.
The number of the completed Sofia Offices for year 2014 has significantly decreased compared to the year before that. The share of the vacant office premises has fallen to 15 %, according to a report issued by MBL CBRE. In 2014 only 36 000 sq.m of office premises in Sofia have received permissions for usage. This is almost half the number of the completed office sq.m for 2013.
The decline was a result from the several years of crisis, when the demand for offices for rent has seriously reduced and the number of investments in the segment has been low. In the past two years however, there is a steady growth in demand for prime offices in Sofia. That is so, as many companies are now either expanding or entering the Sofia office market. These companies come mainly from the IT industry and the outsourcing sector.
According to the analysis of MBL CBRE, the office market in Sofia resulted in 88 000 sq.m of rented new office premises. The share of the vacant offices in 2014 has dropped with 33 000 sq.m and now they are approximately 250 000 sq.m. In other words, at the end of 2014, the available offices of class A and B in the capital Sofia were 15.4%.
Currently the most sought after are the business buildings in Sofia that come with open floor plan, high class equipment, quality construction and good location outside the central city areas. The driving force of the office market continues to be the large companies from the IT and the outsourcing sector. The rental levels of the Sofia offices from class A vary from 10.5 to 13.5 Euro per sq.m.
The Deputy Prime Minister Meglena Kuneva took part in the General Affairs Council in Brussels in the middle of February. During the meeting she insisted that the usage of the Schengen accession in order to pressure Bulgaria into fulfilling the EU obligations it has in the spheres of home affairs and justice is not productive.
Meglena Kuneva stated that the European Union border countries, which are located near turbulent regions should not be deprived from the security measures offered by the Schengen Area. The Deputy Prime Minister informed the participants in the General Affairs Council in Brussels that Bulgaria is implementing the EU commitments it made, adopting the judicial reform strategy, preparing the administrative reform plan at the Interior Ministry and also drafting the anti-corruption plan.
According to Meglena Kuneva, the accession of Bulgaria to the Schengen Area would be very beneficial to the overall security of the EU. The Deputy Prime Minister stated that the country has met the criteria of Schengen and is supposed to take advantage of the benefits that the membership in Schengen provides in terms of security.
Bulgaria has already taken all measures for strengthening the EU framework in order to combat terrorism including exchange of information with Europol, adopting the EU Directive on airline passenger data, as well as preventing the illegal arms traffic, etc.
Those companies that are looking for offices in Sofia are now more interested in the offices that are outside the city center. In fact, the real estate agents are talking about migration from the center of Sofia city to the new office buildings in the districts near the ring road of the Bulgarian capital. According to the experts that is a tendency in the Sofia office market that has started in 2014 and is expected to continue in 2015. It seems that the outsourcing companies that are moving to Sofia plan to stay away from the center noise and busy traffic, the expensive parking in the blue and green zones, etc.
Several office buildings in Sofia are planned for completion soon, all located outside the city center. The office premises that are available there are offered at 12 Euro/sq.m. These are offices of the highest class A, characterized by comfort, convenience and numerous amenities and extras. The main companies that are looking for such premises are coming from the IT and the outsourcing industries. These companies are interested in the Sofia office centers Q-center, Imperia Online, Infinity Towers, Mega Park, Serdika Offices, etc. The rental levels that are valid are around 12 Euro/sq.m.
In the beginning of last month Latvia announced that it will support Romania and Bulgaria in their efforts to enter the Schengen zone. Ilgvars Klava, the Latvian Ambassador presented the priorities of the Latvian Presidency of the Council of the European Union. That happened in front of the National Assembly's Foreign Policy and European Affairs, as well as in front of the European Funds Control committees.
According to the Latvian Ambassador, the priorities of the Latvian Presidency include competitive, digital and engaged Europe. During the Latvian Presidency of the Council of the European Union will be organized more than 200 events including high-level political meetings, Eastern Partnership Summit and various related meetings. In addition will be organized 10 informal meetings of EU Ministers and the Asia-Europe Meeting (ASEM) of Ministers for Education. There are also plans for the organization of a Social Partners Forum, a Digital Agenda Assembly, an European Conference on Standardisation, an eHealth Week and so on.
According to the National Assembly Chair of Bulgaria there are three important points for Bulgaria – Latvia's support for Bulgaria's accession to the Schengen area, the focus on the improvement of the EU competitiveness aiming to achieve an economic growth and the fact that the Latvian Presidency supports the establishment of an European Energy Union.
The consulting company Cushman & Wakefield had recently presented a detailed global report discussing the most popular outsourcing destinations in the world. The report named “Where in the World? Business Process Outsourcing (BPO) & Shared Service Location Index” evaluates factors that are supposed to effect the successful operations of the different companies around the globe.
The report
The Cushman & Wakefield report ranks the best outsourcing locations around the world, assessing the risks, the costs, and the operating conditions. The report covers 36 markets all over world and is based on companies from the business process outsourcing services. According to that report Bulgaria makes it to the top place as the best outsourcing destination in Europe and reaches the third place on the global scale right after Vietnam and the Philippines. Compared to the report from last year, Bulgaria has made a record leap going 11 positions up the outsourcing ladder. The country is followed by Romania.
Risk, cost and conditions are the main key factors to be considered when ranking countries.
The key factors mentioned by the consultants when evaluating Bulgaria were the low taxes and the availability of affordable and highly-qualified workforce for the needs of the outsourcing companies. Annually in Bulgaria graduate around 60 000 graduates and in half of the cases the graduates have the necessary major and knowledge that is suitable for the sector services. Another key skill for the outsourcing business is the excellent knowledge of foreign languages. In fact 98 % of all students in Bulgaria who are enrolled in secondary school study a foreign language and 73 % study at least two foreign languages.
The rented Sofia offices
During the last few years, all markets around the world had gone through economic turbulence and many companies had to experience challenging situations. The global recession, followed by the debt crisis concerns in the Eurozone, as well as the unstable political situation brought many risks to all business sectors. Well-established within the outsourcing market, Bulgaria enjoyed an upward trend in the office rental market thanks to the outsourcing companies moving to Bulgaria and particularly to the capital Sofia. In 2014 the office space in Sofia that was rented reached 154 000 sq.m. These results have been valid on the office market in Sofia back in 2007, in the pre-crisis period.
Last year 49% of the rental market deals in the capital of Bulgaria – Sofia, have been signed with growing eco-companies from the outsourcing and from the IT sectors. According to the prognosis of the real estate agents, that growth will continue and will further be transferred outside the borders of Sofia. The realtors expect strong demand for suitable office space in other large cities of the country such as Plovdiv, Bourgas and Varna.
The Employees
Currently more than 25 000 people work in the outsourcing sphere in Bulgaria. The starting salary in the sector is around 1500 BGN, yet the experienced professionals get a monthly paycheck of 4 000 BGN. Since there is a demand for young and talented people, the outsourcing companies are even eager to pay bonuses of 250 BGN to their employees who bring new people in the office. Most often the companies that are outsourcing their business to Bulgaria work in the sphere of maintenance, programming, optimization of business processes, high technology.
Europe vs Asia
Resulting from the stagnant economies and labor markets in Europe, the difference between Europe and Asia as outsourcing destinations is melting. At the same time there are fears that some large Asian markets such as China and India, will soon overheat and start asking for a high cost of labor.
Despite all that however, the largest market worldwide for outsourcing services is still India even if it remains at 20th position in the ranking.
The Global Trends for the Outsourcing Sphere for 2015
• Costs: Rising inflation, labor and property costs in established outsourcing destinations (China and India) add to the attractiveness of the emerging locations.
• Value creation: The outsourcing providers start looking beyond the cost reduction and focus on customer care optimization and innovations.
• Outsourcing service provisions: The companies offering outsourcing services are now providing a combination of vertical solutions (such as health payer business processing, claims processing, and loan portfolio management) with horizontal solutions (such as HR, payroll, and supply chain management) in order to provide effective BPO strategies.
• Language proficiency: Very important aspect of the outsourcing destinations. Companies are looking for outsourcing countries where the employers are well educated and have multiple language skills.
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