The Increasing Role of Central and Eastern Europe in the Global Services Offshoring Market: Evidence from Trade Statistics

Abstract

Many Central and Eastern European countries invigorated by EU enlargement became important locations for offshored service centres. Building on the region’s nearshoring advantages such as geographical-cultural proximity and on its multilingual graduate supply, CEE is likely to utilise more value added and quality-driven services. Trade statistics support the assumption that an expanding export in other business and ICT services has been associated with offshoring services in the six NMS analysed in detail in the paper. The service export data adopted from the Balance of Payments statistics gives a good approximation to indentify those sections of service trade, which can be regarded as offshorable. The paper summarises the additional factors favouring nearshoring (as in CEE locations) over offshoring (e.g. India) and lists several factors besides size why CEE countries cannot outpace India’s market potential.

Keywords: offshoring, nearshoring, service trade, balance of payments statistics, offshorable services, Central and Eastern Europe, new member states, India, offshoring advantages

JEL Classification: F16, F21, F23, L84, R12, L86