Eastern Europe has solidified its position as a preferred destination for Global Capability Centers (GCC), Global Business Services (GBS), and shared service operations. Countries such as Poland, Romania, Hungary, the Czech Republic, and Bulgaria have become critical nodes in global corporate networks, offering specialized expertise, multilingual talent, and robust infrastructure. This article examines the factors driving growth, key industry trends, and the long-term strategic outlook for multinational enterprises operating in the region.

Evolution of GCC, GBS, and Shared Services in Eastern Europe

The GCC and GBS models have transitioned from cost-reduction mechanisms to high-value strategic units. These centers now handle advanced business functions, including data analytics, software development, risk management, and financial planning.

Several macroeconomic and structural factors have contributed to Eastern Europe’s emergence as a global business hub:

• Highly Educated Workforce: Countries in the region have strong academic institutions with a focus on STEM disciplines, producing a steady pipeline of skilled professionals. Poland alone graduates over 80,000 students annually in engineering and IT fields.
• Competitive Cost Structure: While wages are rising, Eastern Europe remains cost-competitive compared to Western Europe and North America. Romanian IT professionals, for instance, earn 40-50% less than their counterparts in Germany while maintaining comparable skill levels.
• Strategic Geographic Positioning: The region offers proximity to major Western European markets, enabling smooth operational integration and overlapping time zones for global teams.
• Government Incentives: Many governments have implemented tax relief programs, R&D grants, and workforce training subsidies to attract multinational investments. Hungary, for example, offers a 9% corporate tax rate—the lowest in the European Union.

Poland: Advanced GCC and GBS Capabilities Driving Regional Leadership

Poland has evolved into a key player in global business operations, particularly in IT services, finance, and customer experience management. With over 1,600 business services centers employing thousands of professionals, the country remains the region’s largest GCC and GBS hub. Poland’s strength lies in its ability to provide high-end financial, technology, and operations services to multinational corporations, making it one of the most sought-after destinations for establishing regional and global business centers.

Key industry developments:

• AI and Automation Investments: Leading multinational corporations are integrating AI-driven process automation within their Polish GCCs. Accenture and Capgemini have expanded their RPA (Robotic Process Automation) capabilities in Kraków and Wrocław.
• Financial Services Expertise: Major banks such as HSBC and Citi operate complex risk management and compliance centers in Poland, leveraging local expertise in financial modeling and regulatory reporting.
• Software Development and Cybersecurity: Poland is home to a growing number of cybersecurity and software engineering hubs, with companies like Google and Microsoft expanding their presence in Warsaw.

Romania: A Growing Technology and Business Process Hub

Romania has developed a strong reputation for IT and business process outsourcing (BPO), with an increasing focus on high-value digital services. The country has successfully moved up the value chain, transitioning from basic customer support and back-office operations to more sophisticated functions, including AI, cloud computing, and software development. Romanian service centers increasingly cater to high-tech industries, banking, and telecom sectors, offering expertise in automation and digital transformation.

Notable trends:

• Rapid Growth in Software Engineering: The Romanian IT industry generates approximately €6 billion annually, with leading firms such as Oracle, IBM, and UiPath establishing major operations in Bucharest and Cluj-Napoca.
• Multilingual Talent Pool: Romania boasts one of the highest percentages of multilingual professionals in the EU, making it a preferred location for customer support and back-office operations.
• Government-Supported Digital Transformation: The Romanian government has introduced tax incentives for IT professionals and digital infrastructure projects, positioning the country as an emerging leader in technology-driven GBS services.

Hungary: High-Value GBS and R&D Expansion

Hungary has emerged as a hub for high-value shared services, with a strong emphasis on research and development (R&D), financial analytics, and AI-driven solutions. Budapest, the capital, has become a magnet for multinational enterprises seeking a location that offers both affordability and deep technical expertise. Hungarian universities and research institutions play a crucial role in fostering innovation, particularly in fields such as automotive engineering, fintech, and AI-driven business services.

Key highlights:

• Low Corporate Tax Rate (9%): Hungary’s business-friendly tax environment has encouraged companies like Morgan Stanley and GE to establish financial service hubs in Budapest.
• Expansion of AI and Machine Learning Centers: Budapest hosts AI research labs from IBM and Bosch, supporting global product development efforts.
• Strategic Location for Automotive R&D: Major automotive firms, including BMW and Audi, leverage Hungarian shared service centers for vehicle design and software engineering.

Czech Republic: Knowledge-Intensive Business Services

The Czech Republic has positioned itself as a center for legal, financial, and engineering knowledge processes. Over the last decade, the country has transitioned from a manufacturing-focused economy to a knowledge-driven services hub. Prague and Brno have attracted a high concentration of GCCs specializing in IT, cybersecurity, and financial analytics. Companies increasingly rely on Czech service centers to provide specialized solutions in enterprise resource planning (ERP), digital commerce, and compliance management.

Significant developments:

• Engineering and Manufacturing Expertise: Czech shared services support global manufacturing firms, with companies such as Siemens and Honeywell investing in local R&D capabilities.
• Strong Financial Services Sector: Prague has become a regional hub for financial risk assessment and compliance, with firms like Société Générale operating complex analytical functions.
• Growing IT and Cloud Services Industry: The country has seen rapid growth in cloud computing and cybersecurity operations, supported by strong university partnerships.

Bulgaria: Cost-Competitive BPO and IT Services

Bulgaria continues to attract outsourcing operations due to its low labor costs and growing IT sector. The country has positioned itself as an alternative to higher-cost Central European nations, drawing investment from major technology firms and financial institutions. Sofia, the capital, is a leading hub for software development, digital marketing services, and business process outsourcing. The combination of strong technical education, EU membership, and a stable business environment makes Bulgaria a compelling choice for international investors.

Sector highlights:

• Lowest Operating Costs in the EU: Bulgarian labor costs are significantly lower than in other Eastern European nations, making it a preferred location for outsourcing.
• Strong ICT Industry: Bulgaria’s IT sector contributes nearly 8% of GDP, with firms such as SAP and HP maintaining large service centers in Sofia.
• Foreign Investment Incentives: The Bulgarian government offers tax reductions for foreign-owned technology firms to foster IT sector growth.

Eastern Europe’s shared services, GCC, and GBS centers are more than just cost-saving hubs—they are dynamic engines of innovation and strategic growth. With a combination of competitive advantages including a highly skilled workforce, supportive governmental policies, and a focus on digital transformation, countries like Poland and Romania are leading the way in shaping the future of global business operations.

Businesses that invest in these regions are not only optimizing their operations but also positioning themselves at the cutting edge of industry trends and technological advancements. As the landscape continues to evolve, staying informed and agile will be critical for leveraging the full potential of Eastern Europe’s operational excellence.