The New Workforce: How Offshoring Changed the Way Europe Hires and Works

The term "offshoring" is sometimes used interchangeably with "outsourcing” or “Business Process Outsourcing” (BPO), although the two terms have slightly different meanings. While outsourcing refers to the practice of contracting out a specific business function to a third-party provider (which may or may not be in a different country), offshoring refers specifically to the relocation of business operations to another country. And for European firms, it had been a way to run business for centuries.

Offshoring, a Practice Born in Europe

Historically, the practice that we now call “offshoring” (literally “[to remove something to] the shores of a foreign country”) has been around for centuries, dating back to the era of European colonization in which production was “relocated” to conquered lands. In more recent decades, however, the rise of globalization and advancements in communication and transportation technology have made the modern model of “offshoring” a common practice for businesses around the world.

The Road Ahead

According to an analysis published in 2023, the European IT offshoring market is estimated to be worth over €100 billion, with countries such as Romania, Poland, Bulgaria, and the Czech Republic leading the pack as the most popular destinations for offshoring.

The document also reveals that offshoring had an over 50% share of the global IT services outsourcing market in 2020, with the trend likely to keep up in the following years.

Over the past two decades or so, Poland and Romania, in particular, have emerged as two of the fastest-growing destinations for offshoring in the European Union. This is partly due to their highly skilled and relatively low-cost labor pools but also because the two countries are seen as favorable business climates with unrestricted access to the wider EU market.

Without a doubt, offshoring has had a significant impact on hiring practices in Europe and thus contributing to the modern definition of a workforce. The trend towards offshoring has resulted in a shift in the labor market, with a growing number of workers in Europe becoming freelancers, independent contractors, or offshored employees of foreign firms.

The practice of offshoring (as well as the Covid-19 pandemic) has also led to an increase in remote work, as companies are able to access a larger pool of talent and reduce their overhead costs by hiring offshored employees who can work remotely, and it is likely that this trend will continue in the near future.