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KAUNAS REGION
Where Business Services come together
Welcome to Kaunas Region, Lithuania!
KAUNAS REGION
Where Business Services come together
LITHUANIA stats
Lithuania is at the center of three of large consumer
markets:
• Western Europe
• Baltic Sea Region
• Russia and former Soviet States (CIS)
Size
65,300 km2
Population
2.97 million
Capital
Vilnius
Official language
Lithuanian
Currency
Lithuanian Litas (LTL)
Pegged to Euro since 2002
1 Euro = 3.45 LTL
Real GDP growth
2013: 3.2%
2012: 3.7%
2011: 6.0%
FDI growth
8.1 %
Annual inflation
1.2%
KAUNAS REGION stats
Kaunas Region
Source: Statistics Lithuania, VRM, Invest Lithuania 2014
Regional capital
Kaunas City
Population
593,000
Labour pool
289,000
Unemployment
31,300 (10.1%)
FDI growth
11.4%
Lithuania, a gateway to the EU and CIS
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KAUNAS REGION
Where Business Services come together
Lithuania allows access to main
markets*:
–
Member of the European Union
–
Member of the Schengen Agreement
(free trade and travel)
–
Member of NATO
–
Member of the Nordic Investment
Bank, and part of Nordic-Baltic
cooperation of Northern European
countries
Lithuania is ranked 17th of the
world on the Ease of Doing
Business Index (higher than e.g.
Germany, Latvia or Poland) *
Lithuania is a low risk country in
the Central and Eastern Europe
region, making it an excellent
alternative for nearby high risk
countries as Russia or Belarus
European Union is
the largest single
market in the world
(almost double the
GDP of China) with
over 500 million
consumers
(source: IMF)
Risk rating of Lithuania compared to other countries
(100= most risky)
100
80
60
40
20
0
Lithuania
Poland
Hungary
Russia
Belarus
Source: * World Bank , Invest Lithuania 2014
Source: Economist Intelligence Unit Q2 2014
KAUNAS REGION
Business services sector Lithuania
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Where Business Services come together
Lithuania’s business services market has been thriving for years, becoming an acknowledged hot
spot for shared services centers (SSC) and Business Process Outsourcing (BPO)
With a cluster of multinationals providing services in the English, German, Russian, Polish and
Scandinavian languages for the entire European market, Lithuania has emerged as an attractive
and still not overheated location for shared services and outsourcing business developments
Market observers forecast a further rapid growth in the industry, whereas the Lithuanian
Government has set a strategic goal to be achieved by the country by the year 2015 – to become
the Northern Europe Service Hub
By 2015 the share of exports of services is expected to be 1/2 of Lithuania’s total exports
International rankings
Shared Service Centers and BPO in Lithuania
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Activity
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3rd in Europe and 14th in the world in ranking
of the best destinations for providing
outsourcing activities*
Vilnius a hotspot location with 82% growth for
SSC in the past 3 years **
The strong growth puts pressure on the Vilnius
labor market. Kaunas provides an excellent
alternative
Sources:
*A.T. Kearney’s Global Services Location Index 2011, Invest Lithuania
**Annual Shared Services and BPO Conference 2013, Deloitte, Invest Lithuania
Number
Jobs created
IT
16
2,550
Finance
10
870
Multifunction
10
3,530
Contact Center
8
3,330
Other
4
440
TOTAL
48
10,720
Source: Invest Lithuania 2013
Kaunas Region is next to the capital
Vilnius, Lithuania’s second city and an
important hub for business services
Omega
Greencarrier
Lintel
KAUNAS REGION
Where Business Services come together
BDC
Telia Sonera
Callcredit Information group
Dematic
Unicall
Runway
HP
Nielsen&Nielsen
Kaunas Region is proven to be an excellent
alternative for the crowded and more costly
Vilnius’ market
IBM
SEB
Nielsen
Atea
Barclays
COWI
Danske Bank
Matrix Software
Western union
Storebrand
Source: Invest Lithuania 2013
CSC
Transcom
Paroc
CITCO
INWINDO
CSC Telecom
Swedbank
Worldone
Mirror
The Kaunas Region provides an
unmatched mix of cost-effective talent
and high class infrastructure
KAUNAS REGION
Where Business Services come together
Highly educated and
multilingual talent
Cost attractiveness
• The right labor cost savings
• The right tax scheme
Real Estate availability
• The right offices
• The right cost advantages
• The right people
• The right education
• The right languages
In
KAUNAS REGION
it all comes
together
ICT infrastructure
• The right connectivity
• The right speed
International accessibility
• The right location
• The right direct flights
KAUNAS REGION
Highly educated and multilingual talent
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Where Business Services come together
Within Kaunas Region approximately 15,000 people are employed in the business services sector
The Kaunas region workforce is highly educated with 39% of workers having a third level diploma
(Lithuania: 34%; EU: 24%). Virtually all highly educated graduates speak English
Lithuania ranks 5th in EU for population speaking at least 1 foreign language (>90% of
population) and 7th in EU for 2 foreign languages (>50% of population)*
The study of foreign languages is widely practiced in Lithuania and Kaunas Region
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* Source: Invest Lithuania 2013
Languages studied
in Lithuania 2010
9%
3%
Current language
capabilities Lithuanians
Language
% of
Lithuanians
speak
Russian
90%
English
38%
Polish
19%
5%
10%
73%
English
French
Other Languages
Source: Eurostat, 2012,
German
Russian
German
14%
Contact centers in Kaunas region benefit
from multilingual capabilities - Unicall
KAUNAS REGION
Cost attractiveness
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Where Business Services come together
In general labour costs in Lithuania are less than half compared to Western European countries
and the USA
Kaunas is a very cost attractive location for BPO/call centers and shared services centers as
employers’ cost levels are 10-15% lower compared to Vilnius
Standard income tax rate is one of the lowest in Europe at 15%. If established in a Free Economic
Zone (FEZ), property and dividend tax is at 0% and income tax is at 0% for the first 6 years and
7.5% for the following 10 years*
*Source: Invest in Lithuania, FEZ Kaunas, Kėdainiai 2014
Full employers cost per person per year (Euro)
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Tax
Kosice - Sk Katowice - Gdansk - Pl Tallinn - Est Vilnius - Lith Kaunas Pl
Lith
Financial analyst
1
Tax rates
Call Center Agent
Employer cost are based on the following expenses: gross salary, social security, medical and pension costs in
addition to social security and performance bonuses
Source: National/Regional Statistical Offices, IMD, UBS, 2014
General
Free Economic Zone
0 % (first 6 years)
50% of the tax rate
(subsequent 10 years)
Income tax
15 %
Property tax
1%
0%
Dividend tax
15 %
0%
Source: Invest in Lithuania, FEZ Kaunas, FEZ Kėdainiai 2014
KAUNAS REGION
ICT infrastructure
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Where Business Services come together
The ICT infrastructure in Lithuania (and Kaunas Region) is the best in Europe with 33% of
homes/buildings directly connected to fiber
The most up-to-date ICT technologies are implemented and functioning in the entire country
(LTE technology, 3G mobile communications, infrastructure, mobile WiMAX 4G Internet etc.)*
Also on the achieved internet
speeds Lithuania scores very high at
7th globally
* Source: Invest Lithuania 2013
Countries with the highest penetration of
fiber-to-the-home / building
Lithuania
Lithuania ranked 7th globally on achieved
internet speeds (Mbps)
Sweden
Latvia
(blue) Fiber-tothe-Home
subscribers
Norway
80
70
60
50
40
30
20
10
0
Russia
Bulgaria
Slovakia
(grey) Fiber-tothe-Building +
LAN subscribers
Denmark
Portugal
Slovenia
Estonia
Finland
0%
Source: Speedtest.net, 2014
10%
20%
Source: FTTH Council Europe 2014
30%
40%
KAUNAS REGION
International accessibility
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Where Business Services come together
Kaunas Region is situated at the geographical centre of Lithuania and is further developing
and strengthening its transport infrastructure
Kaunas Region is well connected by road to Vilnius, Klaipeda, Riga and Poland.
Kaunas airport, which is the second largest airport in Lithuania, serves 8 international
destinations (incl. London, Birmingham, Dublin, Oslo and Frankfurt) throughout the year on a
weekly basis
Vilnius International Airport is located within a one hour drive providing 2-3 flights per hour
and more daily direct flights to major European capitals and cities
KAUNAS REGION
Availability of affordable real estate
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Kaunas Region provides affordable office
space which is 25% cheaper compared to
Vilnius
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Kaunas Free Economic Zone (FEZ)
provides opportunities for setting up an
office. The zone provides favourable and
lower taxes for investors investing at
least Euro 1 million
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Within the city of Kaunas, new high
quality developments are underway to
accommodate the business services
industry
Where Business Services come together
Average annual occupancy costs office (Euro/sqm)
180
160
140
120
100
80
60
40
20
0
Note: Cost for a Grade A office space, excluding average local rates and service charges
Source: CBRE, Jones Lang LaSalle, UBS, Ober-Haus, Colliers International ,2014
New office building Kaunas City
Source: Invest Lithuania, FEZ Kaunas, 2014
National incentives support program
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KAUNAS REGION
Where Business Services come together
Foreign investors interested in locating a business in Lithuania as well as foreign companies
already operating in the Lithuanian market but eager to further expand may apply for Invest in
Lithuania’s financial investment support of up to Euro 3.5 million per investment project
Invest in Lithuania provides financial support to cover personnel training costs (up to Euro 2
million) as well as eligible construction, infrastructure and salary costs (up to Euro 1.5 million),
incurred by foreign investors establishing a services business unit in Lithuania
The financial support tool is designed to support foreign businesses investing into the
production of export-oriented high-quality services as well as establishment of qualified jobs on
the market
Financial support available per FDI project in the
field of services
Construction, Infrastructure, Salary costs
Personnel training costs
Up to Euro 1.5 million
Up to Euro 2 million
Max. possible support
3.5 million Euro
Source: Invest Lithuania, 2014
Contact us
KAUNAS REGION
Where Business Services come together
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Information
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Analysis
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Guidance
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