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  • Writer's pictureNeil Mathieson

Brexit: GBS Opportunity for the Baltic States

Updated: May 6

For two years we have blogged that Brexit presents an opportunity for Estonia, Latvia and Lithuania to help UK companies retain EU access AND improve competitiveness.

Many UK service providers benefit from such a delivery model already: Playtech, Transferwise and Call Credit to name a few.


On 12th July our hypothesis became more pertinent when the UK government prioritised goods over services in its vision for future UK-EU relations. The EU’s subsequent rebuttal suggests the UK proposal is not workable.

Either way, the competitiveness of the UK as a location for delivering EU services is declining and with just months until Brexit crystalizes business leaders must act now.


The UK is a services powerhouse, in 2017 the sector accounted for £1.4 trillion or 79% of UK gross value added.

Total UK exports to the EU in 2017 were £274bn, of which services accounted for 32% or £88bn. The UK was a net exporter of Services to the EU with an £28bn surplus.

Looking over a longer period, 2007 and 2017, the share of UK services exports to the EU has grown but slower than to other regions but nonetheless the opportunity is huge.

Whilst there is a tendency to focus on financial services the UK also has global leadership positions in business services such as captive delivery centres, IT outsourcing and professional services such as legal and accounting.

UK and EU providers will not have current levels of access to each other's markets


Despite not providing specifics the UK government strategy is now clear, it seeks "regulatory flexibility" out of the EU services single market. “Supplemental provisions” will be sought but to the effect that UK and EU providers will “not have current levels of access to each other’s markets”.

This has negative implications, from the validity of professional qualifications to talent mobility and regulatory compliance. All aspects of service delivery can be affected, from processes to technology and data management. Complexity and cost will rise, outsourcing in particular can be badly affected.

The UK has certain durable strengths including a large market and IT skills, currency weakness makes it more cost effective, however it is now clear that UK-EU service delivery will become less competitive.

The UK might yet compromise to be considered ‘equivalent’ but with months to go until Brexit crystalises business leaders can no longer defer investments or risk service interruption.


Estonia, Latvia and Lithuania are established locations for GBS, hosting over 170 shared services, BPO and ITO centres employing approx. 30,000 people.

The industry has grown strongly in size and scope over the past decade and multi-functional, multi-lingual centres with European or global remits become the norm.

The Baltics are also a growing location for Digital Transformation, with RPA, Cloud, A.I. and Data Analytics solutions developed, applied and managed from here.

Proof of concept is demonstrated by high rankings in global indices, regular industry awards and a high-quality investor base including ABB, Microsoft, the EU, Western Union, Accenture and Cognizant.

UK companies servicing the UK and global clients in English from the region include IPF, PlayTech, Transferwise, Barclays and Call Credit.


As compact countries it is easy to access decision makers and make things happen, businesses can be operational in months. Policy making is innovative, including Lithuania’s fast-track EU passport for FinTech businesses.

Costs are rising but remain lower than the UK, providing immediate bottom line benefits. Estonia, the most expensive of the three countries, has an average monthly gross salary of EUR 1,221.

The ROI you receive is exceptional, all three countries consistently score highly on human capital, infrastructure, business environment and country risk measures. Estonia ranks #1 in Europe for entrepreneurial employee activity and competitiveness.

If further incentive were needed it is the platform of Digital skills, infrastructure and legislation which exists. Estonia is a world leader in cyber security, Lithuania have over 10% of GVA from IT, Latvia is a growing ITO hub. Many businesses already drive digitalisation or create valuable IP from the region, UK businesses can do likewise.


In terms of functions the Baltics have established credentials in Customer Service, Finance and IT. In the future we expect Supply Chain and Analytics to emerge strongly.

Financial Services, Industrial and IT are well represented industries in the region. We expect these to further uptier to include fund management, treasury, R&D, etc and for GBS to become more significant.

In terms of size it varies with location however centres of 10-100 FTE can be easily lifted and shifted. After stabilisation businesses can chose to scale or run flexible, high value COEs.

In order to execute quickly and professionally we recommend contact with the respective investment promotion agencies, with validation by local experts and a regional tour.

The speed and scale of change today is huge, Brexit is but one example. All businesses need to constantly review their priorities, resources and service delivery model.

Brexit need not be a zero-sum game, UK business can retain certain activities domestically while moving appropriate services to the Baltics to deliver continuity and cost effectiveness immediately and new capabilities over time.

With just months to go time is of the essence, if you would like to know more about GBS in the Baltic States please contact us today.

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