Grzegorz Micek

Abstract

The emergence of foreign software development centres (SDCs) in Central and Eastern Europehas led to some debate over the reasons and consequences of location decisions. This paper analysesthose factors that infl uence location and also the consequences of foreign direct investment in softwaredevelopment centres in Bulgaria, Estonia and Poland. Foreign companies are compared and contrastedwith the indigenous SDCs which are subcontractors for foreign companies or export to foreign markets.This paper questions the degree to which cost-related considerations infl uence location decisions,contrasting their signifi cance with ‘return migration’ and the search for highly qualifi ed graduates. Toward off growing wage pressure, SDCs provide more value-added services. Foreign SDCs move up thevalue chain, acquiring new competences. It may be argued that an increasing shift can be observed froma dependent mode based on a dependency on a foreign headquarters to a developmental type characterisedby growing freedom. The local embededdness of foreign SDCs in the analysed countries is usuallylimited. However, ‘backshoring’ will not occur in the near future due to their high quality of work andimproved effi ciency.

Keywords: software development centres (SDCs), offshoring, foreign direct investment, return migration, Central and Eastern Europe (CEE).

Grzegorz Micek, Institute of Geography and Spatial Management, Jagiellonian University Gronostajowa 7, 30-387 Kraków, Poland