Albania, the Offshore Base

The business services sector is now a distinctive feature of Albania’s economic life. While many early entrants aimed purely at the domestic market, those that have been successful are now expanding into providing offshore support as a standard outsourced service. A 2005 survey of the 40 leading service sector firms identified 15 that are backed by foreign investment. It found that some firms, including domestic ones, are now developing the track record and strong reputation that is required to develop their international operations to the next level.

Early indications are that the early adopters have found that ‘the Albanian advantage’ is working for them. One company reports that its advanced data entry work achieves 70% of the productivity levels benchmarked in Western Europe for just 25% of the cost. Another is operating a 50-seat call centre servicing clients in Italy using internet telephony (VOIP).

Albania is making a strong claim to house customer support centres, which provide services for telemarketing and for the financial services and tourism sectors, and shared service centres handling data entry and administrative activities. The specific advantage for investors is that Albania is uniquely qualified to service both the Italian and Greek markets. Private sector telecommunications investments are regularly expanding the number of cost-effective ways in which these markets can be served from Albania by Albanian staff.

Five key features that make Albania a strong location for new offshore business processing ventures:

1) Multi-lingual workforce
The 2005 survey found that the 40 leading service sector firms’ claimed that in most business functions and technical areas more than 75% of their staff can work in Italian, the same percentage in English, and around one-third in Greek. Albanians generally learn either Italian or Greek from childhood, and are well able to perform customer-facing functions in these near-mother tongues. Young people in tertiary education learn English, which is rapidly becoming the primary foreign language taught in schools as well as in universities.

Albania is the only country that can deliver a mix of business services facing both Italy and Greece, and from a base that offers potential cost savings of up to 75% on other European locations.

2) Availability of skilled staff
Albania’s population of just over three million includes a working population of slightly under two million. The median age is young by European standards, just 29 years compared to 40 years in Italy. A high proportion of the under-40s speak two languages, many of them returning from working abroad. The current unemployment rate of 15% means there is no complacency in the job market while the numbers of students studying social science, business and law already tops one-third of all those in tertiary education.

3) Exceptional labour cost/productivity benefits
The average monthly gross salary in Albania is around €150, highly competitive on a global level. Wages in the service sector are higher than for the economy as a whole, but at around one-third to one-fifth the level of EU countries are still highly competitive.

Average gross salary costs range from € 315 per month for customer service employees to just over €415 for data entry/processing employees and €500 for accountants. The average gross salary for a manager is less than €1,000 per month. With service sector wages in Albania typically around one-fifth those in West European countries, incoming investors can make significant savings on wage costs compared to elsewhere in Eastern Europe. Staff in the Albanian business services’ sector deliver good productivity rates at low cost.

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