BizPoland Magazine, December 2016

December 2016

vol. 8 no. 5(54) Price: 20 zł

Soaring Profits in Booming Gaming Industry Kraków:

SSC:

FDI:

the world’s SSC Super-Location

Public Sector in Focus in Bydgoszcz

EU grants Euro 150 million to Gdańsk Port

CEE Shared Services & Outsourcing Awards Gala 2 February 2017

At the 4th annual CEE Shared Services and Outsourcing Awards, held on 4 February 2016 at Warsaw’s Hotel Intercontinental, 26 companies, cities and individuals were distinguished for their exceptional performance. More than 280 guests from 21 countries – including Mayors and Vice-Mayors – attended the Awards Gala and Forum, which singled out Winners from 136 nominations.

Companies that attended included:

ACCA, Accent Business Training, Accent for Professionals, Adaptive Solutions, Adecco, Advisory Group Test HR, AIG, AIG Lincoln, Alliance for Recruitment, Allianz, ANIS Romania, ASPIRE, AVON, Barclays Group Ops Lithuania, Barclays Tech Ctr Lithuania, Bard SSC, Barona ICT Services Poland, BiznesPolska, Black&Decker, BNP Paribas Sec. Services, Bonnier Business, BP BSC Kft (GBS Europe), BPCC, BPH TFI, Bulgarian Outsourcing Assoc, Buma, Capgemini Polska, Capita, Capita Poland, CBRE, CBRE Corporate Outsourcing, CenturyLink Poland, CFA, CFA Society, CFA Society Poland, CH2M, Ciklum, Ciklum Poland, Cisco Systems Poland, Citibank, Citibank Europe plc, City of Ketrzyn, City of Lublin, City of Poznan, City of Vilnius, Coca-Cola, Colliers, Coloplast Business Centre, Conectys, CPL Integrated Solutions, CPL Krakow, Credit Suisse, CSC, Cushman&Wakefield, CzechInvest, Danske Bank Global Services Lithuania, Danske Bank Group Services, Danske Bank Group Services Lithuania , Danske Group IT Lithuania, Deloitte, DELTA Capital Group, Deutsche Services, DHL, Dixons Carphone, Electrolux Poland, Enterprise Lithuania, Europaproperty, Finelia- FORUM ONLY, Genpact Romania, Germany Trade (GTAI), Global Remote Services, Goldman Sachs, Grafton, GSK Services, GTC, HB Reavis, HCL, HCL Poland, Hungarian Outsourcing Assoc, Intermedix, Invest Lithuania, JLL, Kinnarps, KMD, Latvia (LIAA), Lexmark, MANN+HUMMEL SERVICE, s.r.o., MAYOR - VILNIUS, Mazars, Mettler-Toledo Sp, MoneyGram, NASDAQ, Newsec, NGA Human Resources, NOA (UK), Nowy Styl, Olivia Business Centre, PAIZ, Philips, PM Group, PM Group-FORUM ONLY, Proservartner, PWC, PWC Shared Delivery Centre Katowice, PWCIB, Randstad, RBS, Reed Hungary, SARIO, Schneider, Siemens, Skanska, Softserve, SSC Exec, SSC Heroes, State Street, Stefanini, Strategic Staffing - Lithuania, Sutherland, Tate & Lyle Global Shared Services, TCS, Tele2 Shared Service Center, Transparent, Trellis (Denmark), Turbine Analytics S.A., UCMS, UM Bydgoszcz, UM Lublin, UM Opole, UPS Global Business Services, Urzad Komisji Nadzoru Finansowy , Vastint, Verita HR, Viessman R&D Wroclaw, WBJ, Western Union, WNS

www.ceeOutsourcingAwards.com

Final Winners 2016 :

Best CSR initiative of the Year Credit Suisse partnership with Wroclaw Children’s Hospice Foundation

Best Executive Search Firm of the Year Hays Executive

Best Recruitment Firm of the Best University-Business coopera- Year tion of the Year Randstad Polska Sp. z o.o.

District Authority of Ketrzyn and Shared Services Center for Ketrzyn Best General Advisory Firm of the Year District PwC Poland, SSC/BPO CoE Team Best Public Sector Project of the Best Business Centre Manager of Year the Year – BPO Cisco Engineer Incubator Program Agnieszka Zygner, Capita Poland Emerging City of the Year – CEE General Manager Kaunas (Lithuania) Best Business Centre Manager of Emerging City of the Year – Pothe Year – Shared Services land Terri Gerosa, CSC Poland Head, Citi Bydgoszcz Service Center Poland Most Dynamically Developing City – CEE Vilnius (Lithuania)

Best Employer of the Year – BPO CPL Integrated Services - Budapest, Hungary

Most Dynamically Developing City – Poland Tri City

Best Employer of the Year – Shared Services – CEE Danske Bank Group IT Lithuania (DGITL) (Vilnius, Lithuania)

• Best Real Estate Advisory Firm of the Year JLL Best New Office Development for SSC/BPO Sectors Olivia Six (Gdansk)

Best Employer of the Year – Shared Services – Poland Credit Suisse Center of Excellence Wroclaw

Best New-entrant SSC of the Year NASDAQ Vilnius Services Most Unique Services Provider – Poland “ Capita Polska (Kraków / Łódz, Poland) Most Unique Services Provider – CEE Nasdaq Vilnius Services (Vilnius, Lithuania) Best IT Services Firm of the Year – CEE SoftServe Best IT Services Firm of the Year – Poland Sii Sp. z o.o.

Best BPO Firm of the Year – Poland Capita Polska (Kraków / Łódz, Poland) Best BPO Firm of the Year – CEE Conectys (Romania) Best Shared Services Firm of the Year – CEE BT Regional Operations Centre (Hungary) Best Shared Services Firm of the Year – Poland State Street Bank Poland

Premier Sponsors:

Associate Sponsors:

www.ceeOutsourcingAwards.com

Cover Story 6

December 2016 vol. 8 no. 5(54)

Published by: CEE Business Media sp.z o.o. ul. Długa 44/50, bud. D, lok 704, 00-241 Warszawa tel.: 022 831 7062 General Manager and Editor: Thom Barnhardt (tb@biznespolska.pl) Editorial staff, contributors and columnists: Preston Smith, Steven Foster, Marek Matraszek, Christian Schnell, multiple Chambers of Commerce, more than 10 Polish cities and Special Economic Zones, PAIZ Maria Ponomareva (maria@biznespolska.pl) Armine Starowicz (armine@biznespolska.pl) Advertising Sales: Magdalena Jakubowska (mjakubowska@biznespolska.pl) Graphic Design: Sławek Parfianowicz (sparfianowicz.wordpress.com) Distribution of BizPoland Magazine: Direct, controlled distribution via post to international investors in Poland - members of major foreign Chambers of Commerce: United States (AmCham) • Canada (PCCC) • Ireland (IPCC) • Netherlands • Scandinavia (SPCC) • United Kingdom (BPCC) • France • Spain • Portugal • Switzerland

Soaring Profits in Booming Gaming Industry

Shared Services Centers 10

Kraków: The world’s SSC super-location

FDI News

(12) Loving Vincent sold to over 100 countries worldwide (15) Poland’s investment declines at fastest pace in 6 years; Deutsche Bank pulls out of Brokerage business in Poland (18) US deploying tanks, troops to Eastern Europe; Hanwha Techwin strikes $237 mn deal to ship K9 hulls to Poland’s HSW (19) Lufthansa Technik and GE chose Poland for their new investment (20) Fish processor plans huge expansion; Rolls-Royce to boost presence in Poland; Discovery invests in Poland (21) Sino-CEEF Holding Company officially founded

SSC News

(22) CEE’S Contribution to EMEA Outsourcing Income is substantial and increasing (23) Dentons launches new shared services hub, will lay off about 25 in UK ;Work Service reports 20% revenue growth (24) Xceedance Launches Insurance Operations Centre in Kraków

EU grants €140 million for Gdansk port projects

Interview 26

Von der Heyden Group of companies moves operations to Malta

Shared Services Centers in Public Sector 28

Public Sector Shared Services conference draws interest of City Treasurers

Subscribe to BizPoland Magazine Annual subscribers to BizPoland Magazine (500 PLN) receive our monthly magazine, as well as all our business supplements for free: CEE Shared Services & Outsourcing, CEE Clean Energy Directory,

Details at subs@bizpoland.pl or call +48-22-831-7062

MIPIM Special Focus

Top 101

Investment Projects Poland

March 2017

Cover Story

Soaring Profits in Booming Gaming Industry Poland’s new $20 million R&D fund’s goal: breed a game-development juggernaut

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Poland is the second-largest game market in Eastern Europe behind its neighbor and traditional rival, Russia. Research firm Newzoo reported the nation was a $408 million market in 2015, a 4.7 percent increase. It has more than 2,000 people working in game development in an industry that didn’t exist here just 10 years ago.

And the Polish government has helped shepherd this progress. In 2011, then-Polish prime minister, Donald Tusk, presented President Barack Obama with a video game on his visit to the country, which is the 19th largest game market in the world.

In late April, Poland launched a pilot program for another 18 million euro investment fund for game studios. The country’s largest and most successful studio, thanks to the success of The Witcher role-playing series, CD Projekt Red worked with the government to set up this fund. “Any Poland-based company is eligible if only it has an innovative project to pitch, which fits within designated program parameters,” studio R&D manager Stan Just said in an email interview with GamesBeat.

This what a studio needs to qualify, Just said: • Developers must have a budget of 500,000 Polish zloty to 20 million zloty.

• A project timeline of up to three years.

• “Consists of industrial research and experimental development or experimental development only.”

• Contractors may only make up 60 percent of eligible costs.

• Work done in Poland.

Just breaks down the program further, explaining it’s neither a game-incubation effort or a package of tax credits, as other nations (and even some states in the U.S.) hand out to game developers. It’s all about

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making game studios stronger in Poland — and sharing knowledge that comes from investment in R&D. “This is a program aimed at increasing the competitiveness of the Polish gaming sector through R&D,” Just said. “We want to stimulate innovation in companies that already have experience in pursuing such a path, as well as encourage new companies to start embarking on more innovative projects.

As for the form of this support, it is a non-refundable grant. Its intensity ranges from 40 percent to 80 percent of eligible costs and depends on the size of the company, type of conducted research, and optional bonus, e.g., for spreading the knowledge on conferences and/or science magazines.”

This all came about as part of a process that CD Projekt and several other Polish game studios started in a couple of years ago.

“In 2014, together with several of the biggest and most [renowned] Polish game developing companies like Techland, CI Games, 11 bit

studios, CD Projekt formed the ‘Polish Games Treaty,’” Just said.

“This initiative was the starting point of our common effort to achieve better economical conditions enabling the local industry to make higher quality games. We wanted to catch up with booming gaming markets in [the U.S.] or Canada, which are offering a wide range of financial support instruments to nurture the sector.”

In 2015, this “treaty” morphed into what Just said was a formal group: the Polish Games Association, which later did a feasibility study and pitched the R&D fund to the government. While it modeled this on the best practices of other funds in other nations, Just said that his group wasn’t modeling it after any particular program. And since European nations support their native game industries in a variety of ways, while this is a big investment this year, it’s not in league with what others do to help studios.

“We definitely know that it’s one of the biggest grant programs

December 2016

Cover Story

in Europe dedicated to games this year,” Just said. “However, we are still far from the support available in France or U.K.” You could argue that CD Projekt could be setting up the system in which it creates its own competitors. Techland, a company that has worked with the studio, is becoming another strong studio in Poland, announcing last week that it was building on the success of zombie game Dying Light to enter the publishing business.

But that’s not the case here.

“We all need to realize that the game development market does not constitute a big portion of Polish GDP. Some estimations talk about 0.5 percent in 2015,” Just said.

“But on the other hand, about 95 percent of game production income is coming from abroad. Those are the best games in the world — e.g., The Witcher 3: Wild Hunt gathered the highest amount of Game of the Year awards in the history of video games — and this is a modern, innovative market that has huge potential to grow rapidly in the years to come. I think that those reasons are understood by the Polish government, and that will enable all of us to work together towards making a good use of this potential in Poland.”

It’s not about building competitors. It’s about building the next game industry juggernaut.

Witcher 3 and constantly working to improve the increasingly popular DRM-free platform known as GOG, the company is also finding some time to support fellow Polish studios on the side. CD Projekt Red is reportedly chipping in for a $20 million fund aimed at financing upcoming games developed by emerging Polish studios.

According to a Reddit thread (via IGN Poland), the project is a direct collaboration between the Polish government and a number of well-known local studios, including CD Projekt Red, Techland (Call of Juarez, Dying Light), 11 Bit Studios (Anomaly, This War of Mine), and a number of other companies that are part of the Polish Games Association. The purpose of the project is to increase competitiveness in the Polish market and help support

talented studios via direct funding, though there are some prerequisites.

Specifically, the initiative will be able to fund anywhere between 40% and 80% of the total sum needed for the project depending on whether or not applicants are willing to share their development techniques and knowledge with the rest of the gaming industry. In addition, the companies can chip in between $120,000 and $4.7 million for an individual project, however, applying studios must finish the development of their game within 3 years or less.

“This is a program designed to increase the competitiveness of the Polish video game sector using R&D,” said Stan Just, head of R & D at CD Projekt Red. “We want to stimulate innovation in studios, which already have some experience, and encourage new companies to start working on more innovative projects.”

G2A sponsors Rzeszow Congress & Exhibition Center – G2A Arena G2A.COM is clearly not your typical gaming company. G2A has recently become the title sponsor of a brand new, modern, and striking congress and exhibition center named G2A Arena.

G2A’s newest venture is sponsoring a brand new, and spectacular congress and exhibition center aptly named G2A Arena. The center, on which construction was completed June 2016, houses an open and beautiful glass dome, and a

CD Projekt Red, Techland, 11 Bit Studios team up to help support fellow Polish developers Between developing one of the best games of all time in the form of the

2016 December

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Cover Story

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multitude of other spaces. If you take a look at the past few years, it is clear that G2A’s ambitions go far beyond being your typical gaming marketplace. This is simply the latest step in its quest to branch out into many disciplines, including financial technology through its payment solution G2A Pay and the world of 3D printing with its all-inone printing solution G2A 3D Plus.

G2A Arena is the newest exhibition center in southeastern Poland.

It is located right next to Jasionka International Airport and aims to bring new business and opportunities to Rzeszów, Poland and the surrounding area. So far, the center has hosted events with guests ranging from the President of Poland, Andrej Duda, and the Prime Minister, Beata Szydlo, to Iron Maiden vocalist Bruce Dickinson. G2A is anticipating that many such events, and even larger ones, will be slated for the future.

Why sponsor a congress center in Rzeszów you ask? Well, you may know G2A as a global digital gaming marketplace, but did you know the company itself was founded in and still has deep roots in its hometown of Rzeszów? Although worldwide success is the goal of almost every company, it is still important to remember where you came from.

As such, G2A aims to create an environment in Rzeszów which will allow other companies to succeed in the same place that has been so kind to them: right at home. This was exactly the thinking behind the newly named G2A Arena, “we want to proudly show this center around the entire world, not just

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in Poland,” says G2A CEO Bartosz Skwarczek, “we believe this venture will bring great potential to the area, both from abroad and from home”.

The Witcher Just Received A Major Honor In Poland In Poland, The Witcher is somewhat of a national icon. The book series

by Andrzej Sapkowski has been around since the 1990s but it wasn’t until the game series by CD Projekt Red did Geralt get catapulted into mainstream, so much so that he just received a major honor in Poland.

Yes, Geralt, from The Witcher, will now be on a Polish stamp.

This was posted up recently on Damien Monnier’s Twitter account, who is working as the lead designer on the upcoming Gwent standalone game based on the mini-game from The Witcher 3.

It must be a cool honor to see The Witcher being recognized on such a national level as receiving a stamp.

There’s obviously going to be a lot of normal guys who don’t know who Geralt is or why a man with a scarred up face, long flowing white hair and enough swords strapped to him to start up his own independent butcher shop is on a stamp, but they’ll get used to it in no time.

The Witcher came onto the scene and took the gaming world by storm back in 2007 when the Polish studio, CD Projekt, adapted Sapkowski’s novels into a game. The game first released on PC to startling acclaim but tempered sales. It was the first time a medieval, high-fantasy game was so... mature. The subject matter and combat were unlike a lot of other games on the market

at the time, and while most gamers were still used to stuff like Everquest and Diablo, CD Projekt came onto the scene and tipped the whole genre on its head.

Keep in mind, though, The Witcher was not an instant success at first. There were issues with piracy that saw CD Projekt dumping a lot of resources into trying to combat it, even going as far as to attempt to sue the pirates. At the time, junk stats were circulating that PC gamers were made up of 95% of pirates thanks to misinformation spread by Ubisoft. Companies like CD Projekt acted on it after seeing some pirated copies of The Witcher circulated.

However, common sense and facts eventually prevailed, where the steady growth of Steam revealed that piracy on PC was not as high as some publishers made it seem, and that sales growth on PC was an ample avenue worth pursuing.

CD Projekt changed up their tactics, focused more on delivering great content at a great value, and ended up garnering great success with The Witcher 2. They later ported the second game to the Xbox 360, giving console gamers a taste of the action for the very first time after it originally released on PC back in 2011.

By the time The Witcher 3 was being announced, the series -- and the new pro-consumer stance CD Projekt had take on -- had become widespread throughout the industry.

While the first game took some time to gain a steady foothold in sales, the second game moved at a much faster pace on the market, and the third game managed more than 6 million in sales according to GamersNexus.

Geralt went from a niche, adult-themed action-RPG hero to a national icon over the course of nearly 10 years (and even longer if you count the novel series).

While it appears as if CD Projekt has wrapped up The Witcher series in the world of gaming, it’s cool see the legacy of a gaming icon make his way onto a national stamp. iFun4All S.A. and Serial Cleaner aim to make games fun again! iFun4All S.A., a game development studio from Krakow presents a brand new Serial Cleaner trailer, called “It’s time to clean up!”

December 2016

Cover Story iFun4All is an indie video games development studio, founded in 2009. Since 2014 the studio creates mid-core games. The company specializes in creating games, which use Real-World Data technology - real-world information, influencing the gameplay. The studio’s last two games, Red Game Without a Great Name and Green Game: TimeSwapper, have been globally appreciated.

Game developers at iFun4All S.A. are working on Serial Cleaner, a story-driven, fast-paced stealth/ action game, characterized by a 1970s theme and aesthetics. The gamer is a professional cleaner - your job is to clean up murder scenes by disposing bodies, covering up blood stains and hiding murder weapons and other incriminating evidence.

Serial Cleaner is a “what you see is what you get” kind of game. It’s fast but stealthy. Addictive, yet perfect for short sessions. Beautiful and unique in terms of the art style, with an original, atmospheric soundtrack, composed specifically for this game.

Vivid partners with Romania developer to publish endless runner Road Survivor Polish based Vivid Games will be adding a second third-party independent mobile game to its publishing portfolio for release in 2016.

Road Survivor, by Romanian based studio Art Dynasty, is an endless arcade title that will see you negotiate road obstacles by jumping and trying to keep a small squad of players alive. The game, which will be available on the Apple App Store

2016 December

and Google Play, will be the second game this year to be published

by Vivid Games who originally planned only one release in 2016.

The company has grown its portfolio to publish more games this year, with Heroes of Nox: Galactic Clash due to come within Q4 2016, another seven in 2017 instead of the previously planned five.

“We constantly observe and analyze the mobile games market and we can see how important it is for a game to have an interesting concept,” said Vivid Games CEO Remi Koscielny. “Road Survivor is the first casual game in our publishing portfolio, making it even more diverse.”

Road Survivor joins an existing lineup including Prime Time Rush by Invictus Games and Vivid Games’ Metal Fist: Urban Domination, which are projected to be released before the end of 2017.

Whilst the game by Art Dynasty isn’t in keeping with a lot of the Vivid portfolio, it does hold a lot of the quality that Vivid is looking for, according to Chris Kusak, Vivid’s business development manager, who said, “Its main strength is the compelling and addictive gameplay.

That is exactly why although it appeals to a different audience than the other games from our portfolio, we have still decided to publish it.”

Vivid plans to launch Invictus Games’ Prime Time Rush, its own IP Metal Fist: Urban Domination and other unannounced titles by the end of 2017.

“We constantly observe and analyse the mobile games market and we can see how important it

is for a game to have an interesting concept,” said Vivid Games CEO Remi Koscielny.

“You can be successful both with a robust, complex title for core gamers and also with a compelling, smaller title which appeals to a wide audience. Road Survivor is the first casual game in our publishing portfolio, making it even more diverse.”

Vivid has previously worked on titles such as Heroes of Nox: Galactic Clash and Real Boxing 2 Rocky.

This War of Mine Creators 11 Bit Studios Announce New Game 11 Bit Studios, creators of the unrelentingly harrowing war game This War of Mine, have announced their next project, Frostpunk.

Set in a world totally covered in ice and snow, steam-powered technologies are used to keep humanity going. In a more typical developer’s hands, a snowy, steampunk world could provide a backdrop for a fun sci-fi adventure, but 11 Bit Studios aren’t planning on doing things the typical way. The game’s website gives little information other than the following description: Society in its current form becomes ineffective and it has to change in order to survive. What does this change mean? What is culture when morality stands in the way of existence? Think about how survival may, in the end, leave us different beings. Whether worse, better, stronger, weaker or, last but not least, more or less humane – that is debatable.

Besides the fact that it’ll force us to question society, morality and our very humanity, we don’t know much else about the game. Based on its lofty description and its trailer, it seems to be following in the footsteps of This War of Mine.

The trailer ends with “To be continued … “ so maybe this is only a sneak peak at a longer trailer 11 Bit Studios is waiting to drop. The website promises more info to come soon and Frostpunk is planned for a 2017 release.

The company recently released its financial results, reaching 5.2 million pln in Q3 (up from 3.7 million pln a year earlier), and profit of 1.3 million pln (versus 1.6 m pln one year ago). n

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Shared Services Centers

Kraków: The world’s SSC super-location

fot. Paweł Krawczyk

Kraków has become a super-location for the SSC sector. The city has a dynamically evolving ecosystem which serves the business-and-technology services sector.

“Krakow is one of the most economically attractive cities of Eastern Europe, which affects the amount of FDI and the development of local entrepreneurship. Krakow together with its facilities and academic research is an extremely attractive place for business. Our city has 23 universities, 12,000 researchers, nearly 200,000 students and more than 100 scientific research units and institutes. This potential undoubtedly attracts like a magnet both large and small businesses. They invest in our financial institutions, global brands, allow the city to explore new, previously fledgling development areas. Over the last several years, the

fot. W. Majka

number of investors in Krakow is steadily growing. It is also a result of the consequences of our actions in the economic development of the city. “

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Prezydent Miasta Krakowa Jacek Majchrowski

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December 2016

Shared Services Centers “Connectivity” is key In this context, one important factor is that Kraków Airport’s significant investments in the airport infrastructure means that it has become the hub for the south of Poland. This is more important than one might imagine in the SSC industry, where although services are being delivered virtually, the industry also depends on high touch. There is the other dimension of Kraków being extremely compact, well designed, giving you the feeling that everything radiates from the market centre. The city’s financial and technology centres are scattered around the city, however, one is never more than 20 minutes or so from the city centre. Kraków has become part of

are helping global global companies to transform Talent and knowledge based in Kraków are available to help transform global companies, and this is indeed a unique asset of the city.

Core technologies and new ways of delivering processes are being imagined and created in Kraków every day – across a range of industries (creative, IT/Tech, gaming) that inevitably feed the SSC sector.

The following top global companies have set up their SSC operation in Krakow during just the last 18 months: Ailleron +, Software Mind, Aptean, Architech, Azimo, GlobalLogic, Grape UP, Guidewire, IG Group, Pearson, Red Stack Tech,

Kraków from the start; in the past they tended to establish a singlefunction centre and expanded scope over time. Kraków now has increasingly specialised or niche service providers, recruiters, training providers, advisors in process improvement and robotics and so on. The city also has developing professional networks, for instance in data science and quantitative development and analysis.

It’s all to do with the scale and dynamics of the market. This ecosystem is a ‘real’ market, where people and organisations strive to create and capture opportunity.

the global city networks of major industries, such as financial services and IT, sitting alongside cities such Boston, London, Frankfurt, Dublin and Bangalore. This is a very positive kind of connectivity going forward.

Symphony, 3di, Airhelp, Arrow Electronics, Cathay Pacific, Ericsson, N-iX, QVC, Red Flag, Syntel, Uber, William Hill, Wilson HCG, Zurich Insurance n

fot. W. Majka

The scale and maturity of the industry in Kraków, the fact that it already employs 55,000 people, recording consistent 20% growth year on year, the value it delivers to the local economy per annum to the tune of 2 billion dollars – all these factors make the city uniquely placed for further growth.

This diversity is what makes the Kraków market so robust and the scale and maturity of the market means that Kraków can be seen now as more of a destination than simply a location now. It has a constantly growing ability to attract talent from across the world.

Companies now look at setting up multifunctional centres in

2016 December

One of the world’s top cities in terms of life-style and quality of life.

Everyone who comes to visit simply loves the city at once. It feels both large enough and intimate enough – truly, a rare combination.

Kraków is the “tail wagging the dog” - Kraków’s SSC centres

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FDI News

Loving Vincent sold to over 100 countries worldwide Loving Vincent, a fully painted animation feature about Van Gogh, directed

by Dorota Kobiela, has been sold to over 100 countries worldwide.

Loving Vincent is an investigation delving into the life and controversial death of Vincent Van Gogh, one of the world’s most beloved painters, as told through his paintings and by the characters that inhabit them. The intrigue unfolds through interviews with the characters closest to Vincent and through dramatic reconstructions of the events leading up to his death.

With production in Gdansk,the film is produced by Breakthru Films and Trademark Films with a budget of 20 m USD with 2 m PLN financing from the Polish Film Institiute. The film also received support from CETA, Odra Film, Silver Reel, Cinema and Management Group, European Capital of Culture Wrocław 2016 and MEDIA. The first fully painted feature film in the world was directed by Polish painter and director Kobiela and Hugh Welchman, an Oscar winner for BreakThru Film’s first major production, Peter and the Wolf. Loving Vincent is composed of over 100 Van Gogh paintings brought to life and fashioned into a story. The Polish Film Institute told FNE that the film was sold to territories including France, China, Italy, Denmark, Finland, Norway, Sweden, Greece, Portugal, Japan, Thailand, Colombia, India, Russia and Brazil.

Vincent aims to break the $100 million box-office barrier It all started with a girl in a London bar. That’s when American Sean Bobbitt bumped into, by chance, a Polish director who was working on an animated film that would go on to win an Oscar. Fastforward seven plus years and this team, led by cutting-edge director Hugh Welchman, is on the cusp of

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producing a megahit - with a twist - that aims to break the $100 million global box-office earnings.

But it all really started back in 1992, when Bobbitt, fresh out of the University of Virginia landed in a small village in southeast Poland to teach English as part of the Peace Corps.

As the only foreigner in the town, he went on to master the Polish language – a feat rarely achieved by expats in Poland.

After his stint with the Peace Corps he ended up in Warsaw, briefly working as a journalist at the Warsaw Business Journal, where one of his stories was to interview two other American expatriates who launched the first modern multiplex movie theatre in Poland – Silver Screen. Bobbitt was soon hired to help out at the company, and after the downturn of 2001, which decimated many business models, Sean became “prezes” of Silver Screen, which had been bought by New Yorkbased private equity fund Apollo.

Apollo went on to build several Silver Screens in Poland, led by Bobbitt, who honed his financial and operational skills with the backing of Apollo. At a screening at Silver Screen, he met Welchman, which a decade later would prove to a fateful meeting. In 2008, Multikino bought out Apollo and the Silver Screen muliplexes, yielding a not-insignficant capital gain to Bobbitt, who left the operation in 2009.

A couple of years later (June 2012), Bobbitt started with BreakThru Films, and as CEO, has been the driving force behind the operational and financial backbone of the production of Loving Vincent. continued on page 14

December 2016

FDI News and Portugal. The film’s debut in France has been set for 14th December 2016. Major markets that are currently being negotiated include the United States, England, Netherlands and Australia.

Social media response suggests BreakThru Films indeed has a break-thru film at hand.

Earlier this year, when an unofficial trailer was leaked on Facebook, it was shared by two million people in 24 hours. Within a few weeks, the trailer had been watched 150 million times.

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And while the creative innovation of the film has been applauded (and more on that in the side-story below), another innovation is the business model behind the film. Like many other successful businesses in Poland (manufacturing, outsourcing), the producers of Loving Vincent have based their costs in CEE, with their main clients based in western Europe and US. With a budget of 22 million pln, a pittance next to computeranimated films (Disney’s Frozen had a buget of $200 million), the producers and investors in Loving Vincent believe the animated film (in fact, it defies definition, and is in a category of its own – let’s call it animated painting) will have global appeal. While the early days of raising financing to fund the monthly costs were at times bleak, Bobbitt has successfully tapped multiple sources of financing to fund the film. After raising about 58000 GBP via a Kickstarter campaign, subsequent financing came from the Pomeranian Development Agency, then later a Wroclaw and Lower Silesia film fund (350,000pln; one reason that some of the work is being done from Wroclaw), and still later a bigger grant of 1 million pln (combined with a 1 million pln loan) from the Polish Film Institute. Sponsors such as

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Unibail-Rodamco are backing the film. And as the project built momentum and proved that it was likely to be completed, more investors have come on board, including RBF Production, a top exec from Oracle, and the most recent round from SilverReel, one of the world’s leading film finance firms.

The money’s been needed to grow the team of artists – originally just 45, now 85 painters, mostly based in Gdansk but also

“Loving Vincent is composed of over 100 Van Gogh paintings brought to life and fashioned into a story.” in Wroclaw and Greece. The artists have come from all corners of the globe including Ukraine, Japan, Canada, Italy, Ireland and of course Poland. They are painting – at a snail’s pace – more than 52,400 frames that are then photographed individually.

A major task of any film producer is selling the distribution rights.

As of June, Bobbitt said they have near-global distribution planned, with deals already done covering Scandinavia, Latin America, China, Japan, Hong Kong, Italy

Russian and Latin American rights sold Cinema Management Group (CMG) has announced further key deals on the animated feature Loving Vincent after concluding talks prior to the market. CD Land has picked up Russian rights and Swen has acquired pan-Latin pay-TV including Brazil in addition to more than 20 previously announced sales.

CMG chief Edward Noeltner and vice-president of sales and operations Dené Anderberg are showing new footage on the fully painted animation about the life and death of Vincent van Gogh as told through his paintings and the characters that inhabit them.

The cast includes Douglas Booth, Jerome Flynn, Chris O’Dowd, Saoirse Ronan and Eleanor Tomlinson.

Based on meticulous research and drawing from more than 800 of van Gogh’s letters, Loving Vincent is rendered in the style of the Dutch Master’s and comprises more than 62,000 oil-painted canvases. The producers anticipate a worldwide 2017 launch.

“It’s truly gratifying that the internet buzz on Loving Vincent translated into a recent sold-out ‘making of’ presentation at The National Gallery in London last week,” said Noeltner, who added that since March a teaser trailer has generated more than 130 million views.

“The van Gogh Museum in Amsterdam is hosted a ‘making of’ event on November 25th as a leadup to the film’s completion, which is attracting a lot of attention on their website.” n

December 2016

FDI News

Poland’s investment declines at fastest pace in 6 years Poland suffered its biggest contraction in investment for more than six years in the third quarter, data showed on Wednesday, as reduced inflows of European Union aid and political uncertainty discouraged firms from spending. Despite the drop in investment, the data confirmed that the economy had grown by 2.5 percent year-on-year thanks to a 3.9 annual rise in household consumption supported by a generous child benefit programme launched in April. The Polish economy grew by 3.1 percent in the second quarter. A breakdown of third-quarter growth published for the first time on Wednesday showed total consumption added 3.1 percentage points to the annual growth rate. Investment subtracted 1.4 percentage points and foreign trade shaved off a further 0.3 percentage points, while inventories added a 1.1 percentage point.

Investment fell by 7.7 percent on an

annual basis – its largest decline since the start of 2010, versus a 5 percent decline in the previous quarter, the data showed. The decline will disappoint Poland’s ruling conservative, eurosceptic Law and Justice Party (PiS), which promised in last year’s parliamentary election campaign to boost investment and push economic growth towards 5 percent.

Uncertainty “Companies are withholding investment due to the surrounding uncertainty, both domestic and external,” said Monika Kurtek, chief economist at Bank Pocztowy. Export growth slowed to an annual 6.8 percent in the three months to September from 11.4 percent in the second quarter, reflecting weaker global trade following, among other factors, Britain’s decision in June to exit the European Union. “One cannot expect that investment will turn positive in the

fourth quarter … but consumption may accelerate further,” Kurtek said. Economists have said reduced inflows of EU funds are one of the main reasons for a slowdown in investment across central and eastern Europe. Economists have also said that increased uncertainty over policy in Poland has aggravated the decline in investment here. Since coming to power last year, PiS has been embroiled in a conflict with the constitutional court, introduced a new tax on bank assets and enacted a cut in the retirement age that was sharply criticised by economists.

On Tuesday, Finance Minister Mateusz Morawiecki said Poland’s $430 billion economy will likely grow by 2.5 percent to 3 percent this year, revising downward a previous forecast of 3.4 percent. The government initially forecast that Poland’s economy would grow by 3.8 percent this year. n

Deutsche Bank pulls out of Brokerage business in Poland Germany’s biggest bank, Deutsche Bank AG, is reportedly contemplating selling its brokerage arm in Poland, operating as DB Securities S.A, due to weak performance of the nation’s stock market and as the banking giant is streamlining its operations to boost capital position.

The news was reported by Reuters, citing four banking industry sources familiar with the matter.

The report stated that Deutsche Bank might face difficulty as it must coordinate the process with the Polish Financial Supervision Authority (KNF), since it has to seek a buyer to acquire its clients book.

As part of chief executive John Cryan’s overhaul of the group, Deutsche Bank has announced several initiatives to revamp its global footprint through shedding non-core assets and unprofitable businesses. It

2016 December

has entered into agreements to sell a string of its smaller overseas operations in a bid to boost capital and to simplify the bank’s business model.

The potential sale of DB Securities also comes amid poor performance for the domestic stock market which dropped 6 percent in 2016, after an almost 20 percent loss in 2015. In addition, the equities turnover went down to $39 billion YTD relative to $55 billion in the year earlier.

Deutsche Bank is not the only foreign entity mulling an exit from Poland. Should the sale go ahead the German lender would join Austria’s Raiffeisen and Italy’s UniCredit banks which sold their local units amid efforts by the Polish government to get hold of a larger stake in the nation’s banking sector and reduce foreign ownership. n

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FDI News

US deploying tanks, troops to Eastern Europe The United States is deploying troops to Poland, the Baltic states and Romania in January as part of raising the security of the region, Polish and U.S. defense officials said.

Polish Defense Minister Antoni Macierewicz made the announcement following talks with the commander of U.S. land troops in Europe, Lt. Gen. Ben Hodges, in Zagan, western Poland. An Armored Brigade Combat Team from Fort Carson, Colorado will be deployed there early next month, while another U.S. force, a battalion, will be deployed April 1 to Orzysz, in the northeast.

Macierewicz said he was “very happy that a decision has been taken by the U.S. side for an earlier deployment.” But the U.S. Army told The Associated Press that the deployment was not accelerated and is taking place as had always been scheduled.

Hodges said the troops will arrive in the German port of Bremerhaven on Jan. 6 and will be immediately deployed to Poland, the Baltic states and Romania.

Their transfer will be timed and treated as a test of “how fast the force can move from port to field,” he said. “I’m confident in the very powerful signal, the message it will send (that) the United States, along with the rest of NATO, is committed to deterrence,” Hodges said. He said the armored brigade

has already moved out of its Colorado base and is loading on ships. “I’m excited about what my country is doing and I’m excited about continuing to work with our ally, Poland,” Hodges said.

In a separate decision, the members of NATO at a July summit in Warsaw approved the deployment of four multinational battalions to Poland and the Baltic states to deter Russia.

Germany will lead a multinational battalion in Lithuania, with similar battalions to be led by the

United States in Poland, Britain in Estonia and Canada in Latvia.

Poland and the Baltic nations have been uneasy about increased Russian military operations in the region, especially after Russia’s 2014 annexation of Crimea from Ukraine, and have requested U.S. and NATO troops on their soil as a deterrent. The alliance and the U.S. insist the troop presence is not aimed against anyone, but Russia has threatened measures in response.

n

Hanwha Techwin strikes $237 mn deal to ship K9 hulls to Poland’s HSW

18

Hanwha Techwin Co., the defense and aircraft engine making unit of Hanwha Group, signed a $237 million deal to supply the hulls of self-propelled howitzer K9 to Poland’s defense contractor Huta Stalow Wola S.A. (HSW) by 2023, the company said.

Winning the latest order follows its other big deal won to deliver aircraft engine parts to Rolls Royce by 2031, allowing the Korean defense firm to amass about 650 billion won from orders obtained

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in two straight days. A day before, it signed the contract to deliver 11 items of three types of engine parts to the British jet engine maker’s manufacturing plants in the U.K. and Singapore from 2017 to 2031.

A series of orders Hanwha Technwin has recently won underscore Hanwha Group’s attempt to cultivate engine business as the group’s core growth engine. As part of efforts, the Korean engine parts manufacturer opened a new facility to mass produce aircraft

engine parts in Changwon, South Gyeongsang Province last month.

The new factory in Changwon will manufacture aircraft engine parts to be shipped to the global top three engine makers GE, Rolls-Royce and P&W, along with engine rotors and highpressure compressor turbine blades for the engine majors.

The company is considering acquiring foreign engine makers to expand its presence in the global engine industry. n

December 2016

FDI News

Lufthansa Technik and GE chose Poland for their new investment The facility announced today will create hundreds of technical and high-level jobs for in Poland in a further evolving aviation industry.

Said Bernhard Krueger-Sprengel, Senior Vice President Engine Services at Lufthansa Technik: “For decades, Lufthansa Technik has been known for top quality in the maintenance, repair, and overhaul business of engines, as well as aircraft structures and components. The establishment of the XEOS engine shop with our partner GE is a major milestone in LHT’s growth strategy. According to Bill Millhaem, Senior Executive at GE Aviation: “We and the support of the Polish government and local authorities are delighted to announce our latest investment in Poland. The facility is designed to be a world-class aircraft engine service centre focused on the maintenance, repair and overhaul of GE’s technologically advanced nextgeneration engines. We look forward to the investment and contributing to the economic development in the region and the entire country.”

The memorandum of understanding regarding the construction of a new, state-of-the-art engine overhaul facility for GE engines operated by Lufthansa and other airline and cargo carriers was signed during the Paris Air Show in June 2015 by the representatives of both companies: GE Aviation President and Chief Executive Officer David Joyce and Lufthansa Technik AG CEO Dr. Johannes Bussmann.

The next step was to find the best location for this technologically advanced project. Various locations in many countries across a few continents were rigorously analyzed in a lengthy and intensive selection process. In the end, the Legnica Special Economic Zone (LSEZ) was selected thanks to its development potential, economic competitiveness and government support. Moreover, the availability of a highly-skilled workforce was a key factor in that decision. Polish specialists thrive on professional challenges, are open to new technologies, flexible in the dynamic labour market and ready to build up their skills.

2016 December

Having developed a businessfriendly environment for new investments over last several years, Poland has built its competitive edge and proved to be the best location for this project specifically compared to an alternative location outside the EU. The LSEZ was in particular put forward as the most suitable region by virtue of both its highly-skilled and versatile workforce and its infrastructure.

That includes a favorable location and well-developed road network that result in the investment becoming operational faster. Thus, it will bring tangible benefits to the stakeholders sooner. Poland also has a connection to the project due to the fact that the core of the engines to be serviced in the factory was designed by Polish engineers at the Engineering Design Center (EDC) in Warsaw.

Thanks to an effective cooperation between business, the government and the local authorities, the construction of a modern service centre in the Legnica Special Economic Zone has been announced today. Upon finalizing certain agreements between Lufthansa Technik and GE, which the parties expect to complete during the first quarter of 2017, the cornerstone in expected to be laid in March 2017, with the factory becoming operational in September 2018. The project will bring long-term development perspectives. An intensive cooperation is planned with the Wroclaw Institute of Technology and the local technical schools to educate a new generation of brilliant specialists.

Servicing the latest aircraft engines The centre will mainly service GEnx2B engines and will be capable of servicing the new GE9X model, which is currently in development, by 2021.

Close to 500 GEnx-2B engines are in service with 18 operators around the world and the fleet has accumulated 5 million flight hourswith outstanding performance. Compared to GE’sCF6 engine, the GEnx engine offers up to 15 percent better fuel consumption, which translates to 15 percent less CO2.

GE9X engines, expected to enter service in 2020, are the most technologically advanced aircraft engines in their class. Although the engine certification is scheduled for 2018, almost 700 GE9X engines have been ordered by customers around the world. GE9X engines are the next step on the way to improved efficiency, lower fuel consumption and lower greenhouse gas emissions.

The complex will be built in two phases. The first two years will mainly see the construction of office, service and operational buildings. The framework will emerge relatively quickly, followed by more time-consuming internal and finishing works. Over 200 people, ranging from engineers to clerical staff and labourers, will be employed at the start of the operation.

Depending on the future business development a further expansion is planned including the possible construction of a cutting-edge test chamber for aircraft engines. After the realization of this expansion stage XEOS will offer up to 500 jobs.

An opportunity for local communities The development of such a large and technologically advanced investment will bring a range of opportunities to the local communities in the LSEZ. Not only will the project bring jobs for around 500 people, but it will also act as a catalyst to associated businesses. The capital invested in the service centre will find its way to both household and community budgets and from there to new cultural and other public facilities, recreational grounds and the local infrastructure.

Environmental protection issues are of the top priority across Europe, and the new investment in LSEZ has been planned and developed in compliance with this approach. The investors have gone to great lengths to ensure the designed solutions meet all environmental standards.

The technologies used are a prime example of 21st century infrastructure: quiet, low emissions, environmentally friendly and safe for the local communities. Today, business means more than return on investment. It’s also the concern about the welfare and health of the future generations. n

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FDI News

Fish processor plans huge expansion

Polish fish processor Graal S.A. is on fast track to expand its revenues to some PLN 1 billion this year, an increase of 7.5 per cent compared with a year earlier, and is planning to double its sales within the next three to five years, according to senior company representatives.

“Our aim, in particular after we delisted the company from the Warsaw stock exchange, is to

continue our dynamic growth,” Boguslaw Kowalski, the chief executive and founder of Graal, told local news site Portalspozywczy.pl.

“In the next three to five years, we want to significantly increase our sales revenues. What I have in mind is an expansion of at least 100 per cent.” As part of its planned expansion, Graal is reportedly aiming to acquire Western European

salmon aquaculture facilities with the aim to secure the supply for its fish processing facilities in Poland.

Earlier this year, Graal secured Greenwich Investments, a subsidiary of Polish investment fund Abris Capital, as its strategic investor. Commenting on the deal, the company’s chief executive said that the foreign expansion plans are the key reason behind Graal’s decision to establish a partnership with a new investor.

“A fund which, on the one hand, has the necessary capital, and, on the other, the required experience in these key areas is an optimal solution for us,” Kowalski said.

Last year, the Polish fish processor reported revenues of some PLN 930 million. Set up in 1990, Graal is headquartered in Wejherowo, on the Baltic Sea shore. The company sells its output under the Graal, SuperFish, SuperFish Prestige, Koral, Kuchnia Staropolska Traditional Polish Cuisine and Gaster brands, according to data from the fish processor. Graal’s range consists of various processed salmon, trout, tuna, herring, sardine and sprat products. n

Rolls-Royce to boost presence in Poland Rolls-Royce is to increase its presence in Poland following the signing of a partnership agreement with Polish defence industrial conglomerate PGZ on 28 November. According to the partnership agreement, PGZ and Rolls-Royce will undertake co-operation on the design, supply,

maintenance, and servicing and repair of power systems for use in civil and military systems. This includes maritime, aviation, drive systems, and energy sector product lines.

A statement by PGZ identified Poznan-based land systems overhaul specialist Wojskowe

Zaklady Motoryzacyjne (WZM) and Gdansk’s Nauta Shiprepair Yard as being two companies to benefit from the collaboration.

WZM is involved in modernisation and repair of armoured fighting vehicles, including the Leopard 2A4 and 2A5, and BWP-1 Puma. n

Discovery invests in Poland

20

Discovery Polska has signed an investment agreement with the Polish media company Agora in order to develop a new TV channel named Metro.

The latter is operated by Agora’s Green Content and was launched on December 2. In its first week of operation, it obtained

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the highest ratings among the channels carried by the newly launched DTT multiplex MUX-8.

Under the terms of the agreement, Discovery Polska has secured a 49% stake in Green Content. According to Wirtualne Media, it has invested PLN 14 million with a view to

becoming the company’s sole owner by the end of 2017.

It adds that the start-up costs of Metro were PLN1 0 million and up to PLN 30 million could eventually be invested in the channel’s content. Reaching its breakeven point of 1% of the Polish TV market should take 4-5 years. n

December 2016

FDI News

Sino-CEEF Holding Company officially founded

The Sino-CEEF Holding Company officially started in November, according to the Industrial and Commercial Bank of China (ICBC), the country’s biggest lender.

The Sino-CEEF Holding Company is a new platform for economic cooperation between China and Central and Eastern European (CEE) nations and is invested in solely by ICBC Asia, a subsidiary of ICBC.

The new company will initiate a Sino-CEE fund, which will focus on investment cooperation in infrastructure, high-tech manufacturing and mass consumption industries, said Jiang Jianqing, head of the Sino-CEEF Holding Company.

Several CEE countries, companies and financial organizations have shown interest in investing in the fund, Jiang said, adding that the size of the fund is expected to reach 10 billion euros.

Economic and trade ties between China and the CEE region have deepened in recent years.

The fund will provide financial services for the two sides, seeking to strengthen industrial capacity cooperation, Jiang said.

Chinese Premier Li Keqiang and Latvian Prime Minister Maris Kucinskis attended an unveiling ceremony for Sino-CEEF Holding Company Limited in Riga, Latvia on November 5, 2016. n

Henry Schein completes investment in Polish distributor

Henry Schein has closed on its acquisition of an 80% stake in Polish dental distributor Marrodent, marking the company’s entry into the Polish dental market.

Marrodent distributes dental consumables and equipment, as well as dental laboratory supplies and equipment, and had sales of approximately $32 million in 2015, according to Henry Schein. The company serves approximately 10,000 dental practitioners in Poland and has a sales force of close to 60 people and a call center.

With this acquisition, Henry Schein now operates in 27 countries. The company had global dental sales of $5.3 billion in 2015. n

21 2016 December

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SSC News

22

Kuehne + Nagel Logistics Partner for Michelin Kuehne + Nagel Poland signed an agreement with Michelin, one of the largest tire manufacturers in the world, to manage Michelin’s warehouse activities in Poland. It is the first new business under a global master agreement for contract logistics which the Kuehne + Nagel Group and Michelin recently have signed.

In the scope of the local contract Kuehne + Nagel will be responsible for the management of warehousing activities in Poland. Operations started November 16 in the Michelin owned logistics center in the Warsaw area. Kuehne + Nagel will be responsible for the facility maintenance, administrative operations and the handling services. The activities range from receipt of Michelin products from manufacture, quality control, stock management to final order picking. The site acts as a distribution centere delivering products to Michelin’s customers in Poland and other countries.

Kuehne + Nagel will implement a new warehouse management system provided by Michelin.

“Contract logistics for the automotive industry is globally a strategic focus area for Kuehne + Nagel,” said Gianfranco Sgro, member of the management board of Kuehne + Nagel International AG responsible for contract logistics.. “We therefore highly appreciate the trust Michelin has put into our company. The new outsourcing project confirms our strategic focus and capability to provide highly specialized and industry-specific solutions for the automotive industry. It additionally fosters the global partnership with Michelin.”

Kuehne + Nagel has 69,000 employees at more than 1,200 locations in over 100 countries.

The Kuehne + Nagel Group operates in seafreight, airfreight, contract logistics, and overland transportation, with a clear focus on providing IT-based integrated logistics solutions. n

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CEE’S Contribution to EMEA Outsourcing Income is substantial and increasing The latest ISG Index revealed that the European, Middle Eastern and African (EMEA) market saw solid regional growth in Q3 2016, with increases in both the value and volume of contracts.

Globally, results have echoed the gains seen in EMEA, where all subregions saw double digit growth year on year. This growth was fuelled by steady gains in traditional sourcing and record high values in the fast growing as-a-service segment which, propelled by the movement of traditional services to the cloud, jumped 20 per cent in the third quarter and 41 per cent in the year to date.

These results led ISG to revise its forecast for the full year and rather than anticipating a flat market for 2016, we now anticipate gains and a potential record performance for the global as-a“It is interesting service market. While the DACH that Poland, countries’ (Germany, Austria and while by no Switzerland) stand-out performance means the and renewed activity in France and the Nordic countries were particulargest of the larly positive, it is useful to take a CEE countries look at the emerging markets. geographiWe can identify how these cally, enjoys countries have contributed to the growth of EMEA as a whole, total contract by examining the contracts that values of almost have been awarded in Central and twice that of Eastern Europe (CEE) over the last three years, as well as the particuits next nearest lar sectors within the region that competitor.” are driving markets forward.

In keeping with a global trend, this region is seeing a move towards a higher number of lower-value contracts. Whilst a total of 580 contracts were signed between 2014-16 (an increase of over a third on the prior three-year period when 358 contracts were signed), the increase in value over this time was just over a tenth (from $7.3 billion to $8.2).

The industry group with by far the highest levels of sourcing was the public sector-central, which accounted more than half (57 per cent) of the CEE region’s total contracting value. This is a significant difference from the established order in continental Europe, where sourcing activity is strongly driven by the commercial sectors. Other sectors that experienced a degree of growth in the three-year period

were travel & transport (which accounted for 13 per cent of values) and media & telecoms (10 per cent).

It is interesting that Poland, while by no means the largest of the CEE countries geographically, enjoys total contract values of almost twice that of its next nearest competitor — Russia. Whilst Poland accounted for 28 per cent of the regional total contract value from 2014 – 2016, Russia made up 16 per cent.

It is interesting to note, however, that while Poland’s share of the market has remained relatively consistent since 2008, Russia’s market share has more than doubled (from 7.5 per cent) and is continuing to grow. The strength of these markets appears to be linked to the expertise of the providers that are based there.

As an example Kapsch, which posted the second largest contract values in the three year period, is centred in Poland and is a known leader in the transportation sector. Similarly, Maykor, the leading service provider in the region, is based in Russia and is a leader in the government sector.

More broadly, outsourcing is thriving and growing across the entire CEE. Although some sectors have dropped somewhat (such as financial services, which was down from just over $1 billion to $450 million, and retail — down from $138 million to under $40 million), by and large the range of sectors that are enjoying growth is reassuring: from business services and energy to manufacturing and healthcare. By country: whilst Poland storms ahead of its neighbours, beyond Russia; both the Czech Republic and Slovakia posted gains in contract values of over $800 million each. Romania, Hungary, Bulgaria, Slovenia, Estonia and Croatia also saw the total contract value boosts of between $200 million and $500 million.

Overall, it is clear that the role of CEE as a contributor to EMEA’s outsourcing is increasingly lively, diverse and on a positive growth trajectory. n

December 2016

SSC News

Dentons launches new shared services hub, will lay off about 25 in UK Dentons will eliminate approximately 25 jobs in the United Kingdom in preparation for the opening of its new shared-services hub in Warsaw, Poland. The hub, which officially launched in November, will cover the United Kingdom, the Middle East and Africa and Europe.

The firm announced that its new Warsaw operation would called the Dentons Business Services EMEA, and that it would handle IT, finance, business development, human resources and marketing.

In preparation for the launch, the firm had previously announced it would eliminate 50 jobs in the UK. However, according to Legal Business, the firm will keep around half of those jobs now.

“The launch of DBSE marks the beginning of our global

shared services strategy—a key integration initiative that aims to improve the quality of business services provided to lawyers across the firm,” said Dentons Global Chairman Joe Andrew.

Dentons Global CEO Elliot Portnoy added, “This represents a major step forward toward achieving our goal of offering clients the highest quality of legal work better,

faster and more economically than any of our competitors.”

The opening of the new Warsaw hub caps a busy week for Dentons. Also in November, the firm entered Central America by combining with Costa Ricabased firm Muñoz Global.

Meanwhile, Warsaw has proven to be a popular location for large law firms looking to set up shared services hubs. In November 2015, DLA Piper opened a back office in the city to handle administrative, financial, human resources, marketing and IT tasks. In 2014, Linklaters established a low-cost center in Warsaw after taking its previously outsourced employees back under its umbrella. Linklaters then added to their Warsaw hub, increasing the office by 50 percent after moving into a larger space in October. n

Work Service reports 20% revenue growth

Work Service the Polish staffing, RPO, and outsourcing company reported revenue of PLN 616 million (€139.3 million) for the third quarter of 2016 ending 30 September 2016. This was an increase of 12.2% compared with PLN 548.7 million (€129.8 million) during the same period last year.

Gross profit grew less strongly at just over 1% and net profit was 22% lower than the prior year

2016 December

which the company attributed to consolidating their business structures and executing operational restructuring plans in order to support growth markets.

Work Service also provided revenue for the nine months ended 30 September of PLN 1, 819 million (€411.3 million), which represents an increase of 19.22% in comparison with the corresponding period in 2015.

“Solid business foundation and good economic conditions on the labour market allowed us to achieve solid financial results and maintain developmental dynamics,” Maciej Witucki, President of the Management Board of Work Service S.A., said. “The group’s 9-month revenues increase by nearly 20%, while the sales profit by over 23% year by year. This is reflected in the strengthening of our position in the entire CEE region as well as in particular countries.”

“Currently we are number one not only in the region but also in

Poland and in Hungary, where we have 25.8% and 21.7% market share in the personnel services market respectively,” said Maciej Witucki. “We operate in a very dynamic and prospective market. The forecasts show that by 2019 the value of the personnel services sector in Poland, Czech Republic, Slovakia and in Hungary will have increased by more than half, reaching the level of €4 billion. These are the countries that we currently operate in and would like to further develop. For that purpose for many months we have been undertaking restructuring activities within the group in order to better prepare ourselves for the upcoming challenges. We are consolidating our business structures and executing operational restructuring plans, which has an impact on generating additional costs that burden the operational results. The cumulated effects of the aforesaid undertakings will be seen already in 2017.” n

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SSC News

Xceedance Launches Insurance Operations Centre in Kraków

Xceedance, a global provider of property/casualty insurance technology, analytics and consulting services, announced the launch of an operations centre in Krakow. The centre will provide services and support to Xceedance clients for underwriting, policy and claims management, credit control, and finance and accounting.

Xceedance also announced the appointment of Marek Kaszczyc as vice president, country manager – Poland.

“This facility reflects the growth and business expectations of our global client community,” said Arun Balakrishnan, CEO, Xceedance. “We are very excited to add the eminent talent and experience of Marek Kaszczyc as the leader of our Poland operations. With his vast industry, technology and management expertise, Marek augments our managed services capabilities, focused exclusively on the insurance ecosystem.”

The new operations centre is the latest in a series of international expansion steps, enabling Xceedance to capitalise on new business opportunities in Europe. The company recently established its North America headquarters in Boston, and last month opened an office in London to serve the Europe, Middle East and Africa (EMEA) market.

“Increasingly, clients rely on Xceedance to fortify their expanding business objectives in Europe and across the globe,” said Manish Khetan, executive vice president at Xceedance. “A European service centre optimises our abilities to meet the strategic and multilingual needs of our clients. Krakow’s proximity to European and U.S. clients also allows Xceedance to achieve service continuity.”

As the second largest city in Poland, Krakow features a well-developed economy with substantial growth in the last decade. Xceedance selected Krakow because the region has deep experience in shared services, including advanced business, financial and IT talent available to major insurance and financial services organisations.

Marek Kaszczyc will lead a multifaceted Xceedance service team

in Krakow, and support European expansion by key Xceedance clients.

He brings 17 years of experience in IT operations and leadership, most recently serving as head of the Aon Business Centre in Krakow, a campus housing 1200+ colleagues.

Kaszczyc was responsible for setting the Aon Centre’s strategic direction and enabling the stable growth of Aon in Krakow. He led teams through a major consolidation project, while defining the vision and setting the direction for a strategic transformation program.

Kaszczyc also served on the board of directors of Aon Hewitt Sp. z o.o.

“A core emphasis for our operations centre in Krakow is to uphold a highly responsive service approach for clients, mirroring the industry-dedicated environment and constructive culture our teams embrace across the Xceedance organisation,” Kaszczyc said. “We are assembling an insurance-knowledgeable workforce that broadens the company’s capabilities and adds tangible value to client operations on four continents. I am excited to join Xceedance, and proud to lead the company’s efforts as we create an exceptional, vibrant workplace in Krakow to serve our global client community.” n

EU grants €140 million for Gdansk port projects

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The EU has awarded grants to the Port of Gdansk in Poland totalling more than €140 million for three major projects at the port. Two of these projects are to improve road and rail transport links but the third will be a major upgrading of the Inner Port including deepening of the fairway and quay upgrades.

The port upgrading is the largest of these projects amounting to €110 million. This has been divided into five tasks with the deepening and widening of the main fairway the first, to be followed by upgrading work at four of the major quays in the port.

The dredging work will see the width of the fairway increased to

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90 metres and its depth increased to 12 metres over the section from the entry breakwater heads to the Chemikow Quay. Further upstream the width will be increased to 75 metres and the depth to 10.8 metres in the Przemyslowe Quay area It is estimated that a total of 1.5 million cubic metres will need to be dredged to achieve these new widths and depths. Included in the dredging works will be increases in the sizes of the turning areas of the Inner Port including the turning area right at the entry to the port canal located near the duty free zone. In this area the turning circle will be enlarged from 170 to 180m and in the Gorniczy Basin area it

will be increased from 180 to 200m.

The largest turning area in this part of the port, near Ostrow Island will be increased from 300 to 315m.

The profile of the fairway will also be modified as part of this work and where possible, turns will become more gentle, which will improve the navigating conditions for vessels moving along the fairway. Dredging work will also be directly related to the improvement of the condition of the quays located along the fairway, allowing deeper depths directly by the quay walls and changing the nature of some of them, including turning scarped quays into parking and handling ones. n

December 2016

Interview

Von der Heyden Group of companies moves operations to Malta The Von der Heyden Group of companies was founded in 1989. Earlier this year, the hotel management company IBB Hotel Collection in which the Group has majority shareholding, moved its operations to Malta.

The Von der Heyden Group also concentrates on the renovation and reconstruction of historical buildings, such as old city houses turning them into superior boutique hotels with their first hotel in Malta situated in Valletta’s Pjazza Merkanti.

Group chairman Sven von der Heyden and IBB Hotel Collection’s managing director Vladimir Saal, spoke to The Malta Business Weekly.

Q: The VDG Group is relatively unknown in Malta: could you outline its principal areas of activity?

SvdH: The Von der Heyden Group is principally a developer of high quality office buildings. We are not known for being the biggest, but we are considered as a highquality niche player. The group is also the majority shareholder in a hotel management company called IBB Hotel Collection which, earlier this year, moved its operations to Malta.

Q: Your group is currently involved in developing or acquiring properties worth some €200 million in Europe. You are presumably up-beat about medium to long term prospects in the region then?

SvdH: With ever falling interest rates, real estate markets offer an above average return on investment. Identifying the appropriate sites, and timing our entry in individual markets correctly, have been two of our major strengths over the last decades, enabling us to generate very attractive returns on our selected real estate projects. We are bullish for Germany and Malta, while Poland has changed from an emerging market into a stable economy where we have been active for over 25 years.

26

Q: Which cities does your group currently operate in?

SvdH: We have offices in various cities, sometimes only small

BiznesPolska.pl/EN

ones, including Warsaw, Poznan, Munich and Malta. We are building a beautiful 90-room hotel in the Baltic city of Gdansk in Poland and are now looking forward to our first presence in Valletta next year. In Munich, we are developing and building our biggest project ever called Bavaria Towers.

Q: You are not currently active in Malta, so why have a head office location here?

SvdH: Definitely not because of taxation. Rather, it was for cost efficiency, and to benefit from professionalism and good governance which I admire in Malta, when comparing it to the usual countries for holding companies such as Luxembourg or the Netherlands. In addition, after thorough market research, we concluded that Malta also offered the most competitive and attractive environment. At the end of 2013, we decided to relocate from Amsterdam to Malta, and are very satisfied with this move. We are spreading our operations here with both expanding our hotel portfolio and intend to develop a top-spec office building to meet the needs of quality at a reasonable and sustainable price. We are in the process of securing certain locations, sometimes on our own, or with hand-picked Maltese partners whom we trust and want to do business with on long-term basis.

Q: You stated that the medium level hospitality sector is one of your key areas of business; surely the three and four star categories are highly competitive and crowded: what inspires you to forge ahead in this sector?

SvdH: Rockefeller once said and I love to quote him: “you either make money with the poor or the rich, but not with the middleclass”. In a way it might sound paradoxical, but we only believe

in this when it comes to office real estate development, despite the fact that even middle-class office buildings have their rental income and profits. When it comes to hotel business though, it is difficult to make money in the luxury segment unless one has economies of scale, a prime location and high occupancy rates; small properties mostly are no more than a hobby of the owner. Real budget and cheap hotels are not close to our heart as they do not match up with our quality driven approach.

Hence, what is left, is the superior 3-4 star segment which has growth potential as, these days, it reflects the needs of the vast majority of travelers.

Q: Your type of activity entails, by its very nature, substantial capital resources; how is the group financed, is it heavily leveraged?

SvdH: Real estate is very capital intensive, as you quite rightly point out. Our average project costs around €20-30 million to develop, although currently we have a project of €150 million as it is the case with Bavaria Towers in Munich. Successful real estate investment consists in getting a sound financing structure in place, and it depends on a smart way of arranging the overall project financing. Our group is going for an average leverage on project level that never exceeds 75%; the historic average is rather 65%. Most importantly though, our holding company in Malta never guarantees any real loans or liabilities to banks which grant financing to our subsidiaries - this is a golden rule for us. Throughout our group’s history, we have always stood by all our companies, subsidiaries and projects, always safeguarding the interest of third parties even when there were unforeseen obstacles. And this is what I am very proud of. n

December 2016

Shared Services Centers in Public Sector

Public Sector Shared Services conference draws interest of City Treasurers The first annual “Shared Services in the Public Sector in Poland” conference was hosted in late November by the City of Bydgoszcz and Bydgoska Agencja Rozwoju Regionalnego (BARR), and organized by BiznesPolska media group.

While the private-sector Shared Services industry in Poland has developed very quickly over the last 5- 7 years with now more than 200,000 people employed, the public sector has only recently recognized the financial benefits of re-organizing their back offices operations (like Finance and Accounting). Several cities in Poland are pioneers, including the city of Bydgoszcz, which hosted this CUW in Public Sector conference.

The Forum was opened by Deputy Mayor of Bydgoszcz Ms. Maria Wasiak. Other officials from the City of Bydgoszcz/BARR included Treasurer of Bydgoszcz, Mr. Piotr Tomaszewski, and Edyta Wiwatowska, Prezes Zarządu BARR, and private and public-sector managers.

The Treasurer of Bydgoszcz, Mr. Piotr Tomaszewski, was the keynote speaker, and presented the results of Bydgoszcz’s recent CUW initiative, which will have substantial costs savings by consolidating and re-organizing

Piotr Tomaszewski, Treasurer of Bydgoszcz; Ryszard Niedziółka, Starosta (Head of county administration) of Kętrzyn county; Marek Wojcik from ZMP

finance processes occurring in the city’s educational units. The BBFO will provide centralized services for all city dependent schools and education institutions tackling issues related to the different finance systems and policies. The BBFO was created in July 2016, and will reach its full operational

“The City of Bydgoszcz created Bydgoskie Biuro Finansów Oświaty (BBFO) to streamline and standardize the finance processes occurring in the city’s educational units.”

28

back-office/finance operations, as well as by consolidating purchasing operations.

The City of Bydgoszcz decided to create Bydgoszcz Education Finance Biuro (Bydgoskie Biuro Finansów Oświaty BBFO) to streamline and standardize the

BiznesPolska.pl/EN

potential by January 2017.

The BBFO will provide services to 119 educational units around the City of Bydgoszcz. The expected employment will reach 250 FTE. The BBFO will ensure the employment and transfer of finance, administration, and

educational personnel to the new structure with no job losses.

Each employee transferred to the new unit will maintain their current financial terms and conditions. The scale of operation of BBFO will cover payroll management, finance & accounting, and administration including legal services and IT support.

The creation of the BBFO will ensure security and accuracy of the tax calculation, finance administration, accountancy procedures, and improve quality of the finance and accounting records. The BBFO operation will be based on the common procedures to ensure the effectiveness and quality of services delivered. In this respect it will reflect the private sector approach. It will operate on a centralized software allowing for integration of different databases.

The moderator was Krystian Bestry, Prezes Zarządu of Adaptive SAG, an advisory group to Shared Services companies.

He commented on the “fantastic

December 2016

Shared Services Centers in Public Sector panelists” and the “fantastic initiative of the City of Bydgoszcz” to host such an event. “The public sector is set for rapid growth, and will follow the lead of the private sector in Poland”, he said.

Agnieszka Zygner, managing director of Capita Polska, spoke about her international experiences in the public sector. As the UK’s leading provider of business process management and service solutions, Capita employs 75,000 people in the UK, Europe, South Africa and India – with large offices in both Krakow and Lodz.

Capita is the UK’s largest publicsector outsourcing firm, and clients include local government, central government, educational, transport, and health services/ hospitals. Zygner said that Poland’s public sector can greatly improve its efficiency by consolidating back-office operations in such areas as accounting, purchasing and IT. She believes that public school systems have a lot to gain, as well as public hospitals, universities, and government-owned companies. She also suggested that the public sector has a great opportunity in Poland to learn from the private sector Shared Services companies, which are the strongest across all of Europe.

Maria Wasiak, Deputy Mayor of Bydgoszcz

Piotr Adamczewski, Prezes Zarządu, Centrum Operacyjne; Mirena Masłowska,PZU

Agnieszka Zygner, MD, Capita Polska

Barbara Sajnaj, Treasurer of City of Poznań; Barbara Holec-Wachowiec, City of Poznań

Zarządu, Centrum Operacyjne (Grupa Banku Pocztowego).

Additional comments came from Ryszard Niedziółka, Starosta (Head of county administration)

“This Public Sector CUW event was a great idea and success, and I expect it to develop further in the future”, Marek Wojcik from Zwiazek Miast Polskich Other panelists included Michal Hermanowski from Atos Polska, Marek Wojcik from ZMP, Sławomir Lustyk of Macrologic, and Radosław Szewczak and Dominika Duziak from Citibank, and Piotr Adamczewski, Prezes

of Kętrzyn county, who emphasized that his town of only 65,000 population has also set up a Shared Services centre, consolidating services in the areas of Finance and Accounting, HR, IT, fixed asset management, and purchasing

activities. Among the more interesting steps, Kętrzyn also has centralized the purchase of electricity and some other services like catering and telecommunications – with expected savings reaching nearly 700,000pln per year.

Marek Wojcik from ZMP: “This Public Sector CUW event was a great idea and success, and I expect it to develop further in the future.”

Edyta Wiwatowska, Prezes Zarządu, BARR: “The conference highlighted the advantages for the public sector of optimizing processes, and boosting efficiency and automation”.

A select group of guests, limited to 15, were given the opportunity of a Site Tour at Centrum Operacyjne (Grupa Banku Pocztowego), led by Prezes Zarządu Piotr Adamczewski. n

Partnerzy

29 2016 December

BiznesPolska.pl/EN

USA–Europe Shared Services Awards and Gala 28 June 2017, New York City USA–Europe Shared Services

organizer

in collaboration with

Awards and Gala

Distinguishing Top Shared Service Centres and IT Outsourcing Leaders in Central-Eastern Europe Overview CEE Business Media is proud to host the first annual USA-Europe SSO/ITO Awards and Summit, a conference and evening dedicated to recognizing excellence among US Corporate Investors in the SSC/ITO sectors in central eastern Europe. This celebration will take place in New York at the New York Athletic Club (NYAC) on 28 June 2017.

*** Central and Eastern Europe (CEE) is well-established as a world-class destination for Shared Services centres and global source of IT outsourcing. With Poland the strongest location in all of Europe, other countries such as Hungary, Czech Republic, Romania, and Lithuania are important investment destinations for American firms. Global shared services firms, business services projects and sector professionals will be presented with awards of acknowledgment - by an independent jury from the industry - for their contribution to the development of the business services sector in CEE for 2016.

At this inaugural Awards Gala, we expect 100+ guests with more than 40 being American firms interested in setting up or expanding their existing business services centres in central Europe. The Awards Gala will be preceded by a half-day Summit of discussion panels covering the shared services and IT outsourcing sector.

The organizer is CEE Business Media operates the annual CEE Shared Services Awards (5th year) in Warsaw, publishes the annual CEE Shared Services Directory, operates the SSC Heroes Poland community portal, and organizes the annual Romania-BulgariaSerbia SSC Roadshow.

USA-Europe Shared Services Summit 1:30pm–2pm Registration 2pm–2:05pm Welcoming Comments 2:05pm–3:00pm Case Studies and Lessons Learned from the “front line” Panelists: 4 American corporations who have invested in Poland and have a significant SSC footprint there.

3:00pm–3:45pm Beyond simple shared services; the rise of sophisticated service centres and the strengths of CEE locations.

Panelists: 4 American corporations explain why they are in CEE and how their SSCs have developed differently than expected.

3:45pm–4:15pm Coffee Break 4:15–5:00pm Unsung IT Outsourcing havens: Romania, Bulgaria and… Belarus Panelists: 5 American high-tech/IT firms who have a significant ITO footprint in CEE explain what goes right, what can do wrong, and how to make it work.

5:00–5:45pm Global Process Owners on the importance of European languages, education and culture to their COE/GBS. Panelists: 4 American corporations that deliver their global services from CEE.

Awards Gala 6pm – Opening Cocktails and Networking 7pm–9pm – Seated Dinner and USA – Europe SSC Awards 9pm–11:30pm – Awards Celebrations, networking, wine tasting of top wines from Central Eastern Europe, and live music.

The Jury The jury is made up of international and domestic institutional investors from North America.In late April, the Jury will receive all nominations, for each category, to compile a short list of nominees. Our independent Jury will review all the nominations, then vote on a “Short List” that will be will be published on 1st May 2017.

At the Jury Breakfast, the Jury will meet for the final vote on the “Short-List” and jury dinner. The winners will be announced and awards presented at the USA-Europe SSO/ ITO Awards and Summit dinner on June 28, 2017, to be held at the NYAC, New York City.

Jury (to be finalized by 28th February 2017) Associate Partners

Contact: CEE Business Media sp. z o.o. • ul. Długa 44/50, bud. “D,” lok 704, 00-241 Warszawa • tel.: + 48 22 831 7062 Thom Barnhardt

mobile: +48 508 143 963 barnhardt@biznespolska.pl

Magdalena Jakubowska

mobile: +48 536 540 009 mjakubowska@biznespolska.pl

Salil Mohan

World BPO/ITO Forum 1-512-917-1169 salil@worldbpoforum.com

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