The rankings show which destinations are best positioned for AI-augmented outsourcing work, with Hungary in 4th place, Czechia in 7th, Bulgaria in 9th, Poland in 11th and Romania in 13th, out of a total of 25 countries surveyed.
The CEE region averaged 63.9 out of 100 in AI readiness across its five outsourcing destinations, ranking second among outsourcing regions behind only Southeast Asia (68.6), and ahead of Latin America (62.4), South Asia (48.1) and Africa (42.6). The spread across CEE’s five destinations was just 9.7 points, the tightest regional clustering of any outsourcing block.
“The typical outsourcing conversation centres on Asia [but] new data on AI readiness suggests the region building the deepest AI talent pipeline is somewhere else entirely,” says George Atuahene, founder of Ataraxis, referring to CEE.
Looking in more detail at Ataraxis’s findings, CEE led every outsourcing region on the AI education pipeline by a wide margin, suggesting it is ahead in producing the next generation of AI-capable workers. CEE’s average AI education pipeline score was 70.4, more than 16 points above the global destination average of 54.1. Two of the top five AI education pipeline scores among outsourcing destinations belong to CEE: Czechia ranked 3rd with 81, and Poland ranked 5th with 74.
CEE held the two highest population AI adoption scores of any outsourcing destination in the world. Hungary ranked 1st among outsourcing destinations on population AI adoption (86) and Bulgaria ranked 2nd (82). The region’s average of 71 led the global outsourcing destination average by 10.9 points, the region’s largest single advantage over the rest of the outsourcing world. Poland ranked 4th among the top 25 outsourcing destinations on workforce AI literacy (70).
Experts say such AI preparedness is crucial for the CEE region, whose countries were the major beneficiaries of offshoring and integration into Western European – particularly German – production networks, helping to reshape entire economies and provide one of CEE’s main engines of growth.
But AI is now impacting what customers expect from outsourcing and it is set to destroy the old model of outsourcing, “the one built on labour arbitrage, offshore scale, rate cards, and long-duration contracts measured largely by headcount and service levels”, according to Abhinav Agrawal, a partner and managing director in AlixPartners’s digital practice, writing in the Harvard Business Review.
“For more than three decades, outsourcing has rested on a simple economic idea: If work can be defined, standardized, monitored, and moved to a lower-cost labour market, someone else can often do it more cheaply. That idea no longer works,” Agrawal said.
As Ataraxis’ Atuahene explains to BIRN: “Being AI-prepared is what lets the region move up the value chain, from providing cost-effective labour to providing genuinely high-skill, AI-augmented work. The markets that get this right will be positioned to capture a large part of outsourcing demand. The ones that don’t risk being left behind.”
Reasons to be cheerful
One reason why CEE appears so AI-ready is the EU’s digital infrastructure, which provides these member states with foundations that some competing regions outside the bloc lack. For example, 11 EU countries have unveiled the CEE AI Action Plan. which is implementing a regional strategy that seeks to close the East-West innovation gap and unlock up to 100 billion euros in annual growth.
The region also has a deep, well-educated technical talent pool, strong STEM education, and a solid track record in IT and engineering services. On top of that, the region has spent two decades building outsourcing infrastructure and customer relationships with Western Europe and the US, which pushed it to stay current with technology to remain competitive.
“AI readiness didn’t appear overnight; it’s the product of that existing technical depth within a sector that has always had to keep up with what international customers are looking for,” says Atuahene.
At first glance, it might seem strange that Hungary, the Central European country whose economy has lost the most ground against its regional rivals over the past two decades, is leading in AI readiness in the region. Only India, Brazil and Malaysia ranked higher.
However, a June analysis by McKinsey Global Institute claimed that AI could become a powerful engine of growth for Hungary’s economy by helping to close some of the productivity gap that has opened up with its European neighbours. Increased deployment of AI, it predicted, could unlock 15 billion euros in productivity gains in Hungary by 2030.
Atuahene says Ataraxis research shows that Hungary has a strong technical and educational base along with momentum in AI adoption, which is exactly what his company’s index captures.
“What our data shows is that readiness for AI doesn’t always line up with a country’s overall economic trajectory. A market can be building strength in a specific, forward-looking capability like AI even while having broader economic challenges,” he points out.