Regional earthquake
The wave of investment in business services has reshaped the economic landscape in Poland’s secondary cities
For years after Poland’s economic transition, Warsaw was far and away the Polish city that attracted the most attention from foreign investors. Major multinationals would establish their Polish headquarters in Warsaw, which would absorb the investment and gain the new workplaces. That picture, however, has changed dramatically: Poland’s secondary cities are now the beneficiaries of a wave of foreign investment, mainly from the business services industry. The sector has become one of the country’s largest employers, putting around 160,000 people to work. “This is a very large segment of the workforce that did not exist eight to 10 years ago,” said Wojciech Bogdan, partner at McKinsey & Company, a consulting firm.
An increasing number of cities are becoming desirable locations for services centres. “The first wave was Kraków, Warsaw and Wrocław,” said Bogdan. “Over time a second wave came with Poznań, Łódź, Katowice and Tri-City. Now we already see the third wave with cities such as Bydgoszcz, Toruń, Szczecin, Lublin, Rzeszów and Białystok.” Further locations may come as business services providers move into smaller Polish cities. “This sector is poised to be well established in all agglomerations in Poland within 10 years, and it has the potential to be one of the largest sectors in the country,” Bogdan added. Among the cities most affected by the influx are Kraków and Łódź. Poland Today took a deeper look at the change in these two cities’ economies, specifically.
Kraków: Poland’s business services capital
One of the biggest beneficiaries of the wave of business services investment is Kraków, the country’s second largest city. Known mostly for its rich history, the city now boasts more inhabitants employed in the business services industry than any other in Poland. In the most recent edition of Tholons’ Top 100 Outsourcing Destinations ranking, Kraków came ninth worldwide and first in Europe. The next highest ranked Polish city, Warsaw, came 30th, while Wrocław ranked 62nd. According to Małopolska Regional Development Agency data, the business services sector in the Małopolskie voivodship includes 103 companies and employs some 37,000-40,000 people – mostly in the region’s capital, Kraków.
The investment from the sector has led to other benefits. “For every 1,000 workplaces in Kraków’s service centres, 267 jobs are created in the local economy,” said Beata Górska-Nieć from the Business in Małopolska Centre. The city has also seen growing demand for high quality goods and services, as well as greater interest in services such as catering, healthcare and education, she added. Kraków now has one of the lowest unemployment rates in Poland, at around 5.3%. The Małopolskie voivodship has an unemployment rate of 10.1%, while for the country overall it is 11.2%.
Companies in the sector also offer competitive remuneration. “Salaries in the business services sector stand at about 80-90% of the Polish average for the lower and medium-ranked employees group. There are only higher [salaries] in Silesia and in Warsaw,” Górska-Nieć said. With a major contribution from the business services sector (which now occupies some 627,500 sqm in the city), Kraków has also become an increasingly important location for commercial real estate. According to Górska-Nieć, developers deliver some 70,000 sqm of modern office space annually.
Łódź: services in a post-industrial landscape
Łódź, located about 130 kilometres south-west of Warsaw, is a post-industrial city that saw intense development in the late 19th and early 20th centuries with the growth of the textile industry. But after the collapse of communism its economy was never able to fully recover. Now, however, the business services sector has entered and changed the landscape.
“At the moment some 15,000 qualified employees work in 60 companies in the business services sector in Łódź. They specialize in IT, financial services, accounting and customer service, with the use of more than 21 languages,” said Marcin Masłowski, spokesperson for Łódź City Hall. “Over the past few years, shared service centres have become some of the most attractive employers in terms of salary levels, not to mention non-wage benefits, such as healthcare packages and fitness offers,” he added. Companies from the sector are also active locally, and some have engaged in cooperation with the city’s main university in educating future employees.
Like Kraków, Łódź has also observed a revival of its real estate market. “New investments in the business services sector translate into higher demand for office space in our city,” Masłowski said. “As a result we see the construction of new, high-standard office buildings.” Developers are working on projects that will add some 40,000 sqm of office space in Łódź.

New awakening
Polish regional cities have awakened to the opportunities from the boom in business services. “Almost every large agglomeration today has a specialized department or person who is the first line of contact for potential partners interested in locating their business services activities there,” said McKinsey’s Bogdan. “Cities learn from each other but they also compete for new jobs and investments.”
The Business in Małopolska Centre pays special attention to the business services sector in its promotional activity. “The presentation of local potential, including higher education, language skills, the quality of life, the real estate offer and infrastructure development are a regular part of the business promotion activities of city and regional units,” Górska-Nieć said.
Łódź, for its part, focuses largely on cooperation between academia and business. It devised a programme called Młodzi w Łodzi (The Young in Łódź) that, among other things, encourages the youth of the city to take part in companies’ recruitment processes.
“First and second wave cities are already moving towards locating more advanced business processes and hence even further creating very attractive growth opportunities for young talents in the country,” Bogdan said.
This is true of Kraków, which is especially interested in attracting IT companies and R&D centres. Regional authorities have earmarked a pool of funds for supporting such investment from the new EU -funded regional operational programme.
“McKinsey forecasts that by 2025 Poland’s business services sector will have some 450,000-600,000 employees and an additional 90-150,000 jobs will be created in cooperating adjacent services sectors,” Bogdan said. That rapid growth will undoubtedly contribute to the further economic development of many Polish regional cities.
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