by Svetozara Davidkova

SOFIA (Bulgaria), November 16 (SeeNews) - Bulgaria could boost its outsourcing  sector by finding segments where it has competitive potential and by doing a better marketing job, a senior partner from global management consulting firm McKinsey&Company said.

The only choice Bulgaria has in developing its outsourcing sector is a niche strategy, which in Business terminology means Bulgaria needs to find “sweet spots”, and become competitive in them, director at McKinsey&Company Detlev Hoch told SeeNews in an interview on the sidelines of the "Realising the Potential - Bulgaria on the outsourcing and Off-shoring Map" conference held in Sofia last week.

SeeNews was a media partner of the event.

“Examples of such a niche focus areas could be in very select segments of IT and engineering services - ship design in 3-D CAD technology, embedded systems development in mechatronics (a blend between mechanical engineering and electronics), green sensoring and monitoring technology, etc. These are small pockets of most valuable expertise and the world needs that kind of know-how and it needs to know that it does exist in Bulgaria,” Hoch said.

Hoch sees insufficient marketing as a major obstacle for the development of the outsourcing sector in Bulgaria.

“Bulgaria is not marketed enough. One has to fly to Varna or to Sofia to find out about such opportunities, and that is not how modern marketing works.”

Hoch also sees room for improvement in the country's legal system.

“Research McKinsey put together for the World Economic Forum shows that the legislation in Bulgaria should be improved, for example, with respect to intellectual property protection. If a company wants to set up shop in a technical discipline and if they want to patent something here, they want to be sure that their intellectual property rights will be as highly respected as if they were to patent it somewhere else in the EU,” Hoch said.

Marketing and legislation are key components of the „business environment“ enabler of an overall framework consisting of a total of five enablers in which Bulgaria has to improve in order to develop its outsourcing industry: infrastructure, financial capital, human capital, demand and Business environment.

“Overall Bulgaria ranks below average in most components of these five enablers,” Hoch said, referring to the findings of a McKinsey survey that benchmarked 139 countries worldwide.

“I understand a lot of these issues are addressed by Bulgaria’s government as we speak. Some government representatives have made quite promising statements at the event and the public should hold them liable to deliver on these promises.”

Hoch sees Bulgaria’s human capital as the country’s strongest potential source of competitive advantage, and believes the number of qualified suitable professionals in engineering and IT services should increase.

“Bulgaria could increase the level of graduates in engineering or computer science or any sort of technical discipline as opposed to liberal sciences, like Business administration or legal studies. And this way you could go back to what used to be a historic intellectual asset in this country,” Hoch said.

Currently, “only” some 2,000 out of approximately 50,000 graduates in Bulgaria each year are suitable for the international IT and engineering industry, yet, Bulgaria could increase that number to some 10,000 graduates by attracting 40% instead of 14% of all graduates to study engineering-related disciplines and doubling the suitability for international work from 25% to 50%. This could attract over five times more outsourcing demand, as all multinational companies struggle with scarcity of skilled engineering talent, the official said.

Hoch recommended that the government carry out competitions for engineering accomplishments with sizable material prizes in order to encourage young people to study these disciplines. In his view, it could be beneficial for Bulgaria if large international companies, which already operate in the country, establish local partnerships with select international customers and thus increase their local outsourcing activities.

“What I hope to see coming out of today is a set of real initiatives. Eventually we stop talking and debating and start doing something. Putting Bulgaria on the global outsourcing and offshoring map means taking real action by the government and the businesses and of course making it visible to the rest of the world,” Hoch said.