Recent border skirmishes between Serbia and Kosovo have once again brought instability in the Balkan region to the forefront of the public discourse.  While tension between these two countries is nothing new, this latest flare-up has the potential to stir further uncertainty among prospective clients and potential outsourcing investors that are interested in Serbian business service opportunities. Combined with other challenging elements related to the BPO environment in the country, it will be incumbent upon the Serbian outsourcing ecosystem to ensure that the sector’s momentum is not lost.

No one should doubt the energy that outsourcing in Serbia has garnered in recent years.  Over the past decade, the location has arguably emerged as the premier destination for outsourced services in the former Yugoslavia.  In many ways, Serbia can be seen as a hidden gem in the context of European nearshore outsourcing.

Serbia enjoys a vibrant labor pool, with significant multilingual capabilities (this is especially notable in the context of English and German).  Not only has Serbia developed a dynamic series of locally owned BPO operators, it also has attracted some of the biggest names in CX services.  In the past few years, Romanian outsourcing powerhouse Valoris entered Serbia via a greenfield site, while M+ Grupa took a controlling stake in domestic Serbian operator Trizma.  Equally, Serbia’s growing accessibility from commercial destinations in Western Europe as well as North America should not be underestimated. Finally, it is an incredibly pleasant destination to visit for culture and nightlife, a factor of growing importance from the perspective of traveling executives.

And yet, when it comes to business service delivery, stability counts. Border clashes with Kosovo do nothing to help Serbia’s global BPO positioning.  This is highlighted in the most recent iteration of the Ryan Strategic Advisory Front Office CX Omnibus Survey, which sounded the views of nearly 700 enterprise contact center decision-makers.  In this study, stability-related factors were identified as among the paramount elements taken into consideration when choosing an offshore location to support end users.  Any type of border dispute erodes confidence around a prospective offshore or nearshore destination. This was acutely clear to the Polish BPO community when similar issues arose with Belarus in late 2021.  And, as reported in Emerging Europe, while tensions appear to have been de-escalated between Serbia and Kosovo, it is uncertain how long this cold peace will last.

Sadly, this is not the only headwind that Serbia’s outsourcing stakeholders face from the perspective of growing their business services sector.  Notably, in the Offshore BPO Confidence Index 2022 published jointly last month by Cognitive Copy and Ryan Strategic Advisory,  Serbia was ranked 14th out of 17 countries, faring poorly in nearly every assessment category.  This was especially acute in regard to commercial property availability/quality, the lack of a credible local BPO industry body, and worries about the responsiveness of Serbia’s lawmakers to the outsourcing industry’s needs.  Serbia was also classed very low among CX buyers in offshore destination favorability as per the previously-mentioned Front Office CX Omnibus Survey.

Then there is the Serbian government’s refusal to join the West in sanctions against Russia following the invasion of Ukraine  a position that could derail the Balkan state’s candidacy to join the European Union. And, while this scenario is unlikely, even its mere mention is likely to further erode foreign investor confidence.  In sum, a perfect storm may be brewing for the outsourcing sector in Serbia.

Still, Serbia’s business service space retains significant value that can help both domestic and global players thrive in their BPO endeavors.  But, concerns about this Balkan state’s operating environment and foreign policy orientation are real. Given the limited levels of favorability for Serbia among buyers in key demand markets, ongoing tensions with Kosovo cannot be ignored by that country’s BPO stakeholders; the country’s obvious commercial strengths need to be aggressively promoted to prospective clients and potential new business services entrants.  Otherwise, the outsourcing momentum that Serbia has built up over the past ten years will slow, or even stall.