Located in the north-west Mediterranean, the metropolitan region of Barcelona enjoys ideal conditions for economic activity. It is a magnet for tourism, has a vibrant labour market and boasts an enviable quality of life. As the capital of Catalonia, it leads an emerging economy driven by 17 million inhabitants stretching from the Balearic Islands, Valencia and Aragon to the south-east of France.

The city is recognised internationally as one of Europe’s busiest maritime ports running key maritime traffic particularly between Singapore, Hong Kong and Japan. Since 2000, Catalans have invested more than five times what was ploughed into Barcelona’s hosting of the 1992 Olympics. Investment has gone into infrastructure, including doubling the capacity of the city’s airport, rail network and shipping channels. In the north-east of the city, the Sagrera railway station will service the high-speed rail link due to connect Barcelona to Paris and Madrid. To the west, the city is also undertaking an ambitious project to become southern Europe’s principal logistics and distribution zone, especially for goods coming from South America and China. The so-called Delta Plan is a 568-acre project involving the enlargement of Barcelona Airport so it can deal with 40 million passengers a year and much more cargo, and a huge extension of the specialist ZAL logistics zone.

It therefore comes as no surprise that Barcelona won top European City of the Future in fDi’s 2004/5 awards which judges the most attractive locations for inward investment using 33 individual investment criteria. The European Cities Monitor also ranked Barcelona number one for employee lifestyle in 2003 and 2004.

Service-led economy

Barcelona’s economy is now service-led, with 82% of the employed population now working in this sector. Metropolitan Barcelona has become Europe’s fifth-largest industrial base and its businesses are the most productive in Iberia. The Catalan capital represents 27% of all Spanish exports and 23% of all its FDI, yet its population makes up just 3.7% of Spain. The figures speak for themselves.

Demographically, the city of Barcelona is increasingly culturally diverse: a stroll down Las Ramblas reveals the multicultural atmosphere, the hallmark of a truly cosmopolitan city. In fact the number of resident nationalities has jumped from 126 in 1996 to 154 in 2004. With a much younger age structure and a higher birth rate, new arrivals have significantly shrunk the age pyramid in Barcelona as well as increasing the under-40 working population by at least 100,000. The result is a more balanced demographic distribution by age groups and an increase in productivity.

One of Barcelona’s most important service industries is call centres. In 1999, there were 12,750 call centres in Europe, a figure that is expected to reach 28,000 by 2006. The city is considered to be one of the top emerging markets for the European call centre industry due in part to the pools of skilled foreign language workers and lower labour costs.

SSCs flourishing

Excellent communications networks and high quality of life are some of the key assets that have transformed the Catalonia region into a hot spot for locating European and Europe, Middle East and Africa (EMEA) shared services centres. There are more than 20 foreign-owned shared service centres (SSCs) currently operating in Barcelona, providing services for Europe and the Middle East, as well as some Latin American countries. Blue chip company SSC operations setting up in Barcelona in 2005 include Sanofi-Aventis’ headquarters and SSC for EMEA; Hewlett Packard’s SSC for outsourcing services EMEA; and Computer Associates’ SSC for Europe.

According to Jordi Portabella, deputy mayor and councillor for economic promotion at Barcelona city council: “Barcelona offers the key success factors for shared services centre operations. It enjoys prime multilingual human resources at competitive workforce costs, a complementary educational infrastructure, available and accessible office space, communications and ICT [resources], and of course the best quality of life to attract and retain professionals. This is a unique combination that differentiates Barcelona.”

The number of workers employed in Barcelona’s service centres doubled between 1999 and 2005 to reach 15,000. Rapid growth in the number of service centres is expected to expand the sector by 30% over the next four years.

Head of HP’s Barcelona SSC for EMEA, Fernando Llombart, says: “At the executive level, here at HP Barcelona, we have always worked closely with the local and regional administrations to forge synergies and help develop our company in the wider community. We have maintained a very fluid, trustful, and open relationship.”

In 2002, Hewlett Packard located its first worldwide R&D centre for large format printers near Barcelona – the company soon opened an SSC offering accounting and financing services for the EMEA region (except northern Europe). In 2004, HP extended its SSC offering to include IT support for internal and external customers in the EMEA region (except the UK and Ireland). Both centres employ about 300 people.

Mr Llombart sees a bright future for his business: “These are very exciting times for the shared services industry and I think the future of our HP business process outsourcing operations in Barcelona, in balance with other HP operations centres, is very bright – a win-win relationship for all parties. One of the key issues in this business is to be able to attract the right profile of staff. In this case, Barcelona isn’t bogged down in excessive red tape and it is a magnet for highly educated multilingual workers. The wider environment offers the right mix of infrastructures, colleges, international universities, security, and attractive lifestyle and quality of life.”

Barcelona’s deputy mayor, Mr Portabella says that the quality of life in the city attracts workers. The sentiment is echoed by Silvia Romito, 27, who moved to Barcelona in 2005 and found work at contact centre AVIS, which is located in the World Trade Centre. Originally from Florence, Italy, she had lived in London for six years before heading to Barcelona. She chose the city because she was looking for a new lifestyle in a Mediterranean metropolis. Her colleague Linda van Delft, 26, was born in Holland but travelled to the Barcelona in 2003, also finding work in AVIS. She decided to stay because she enjoyed the city’s cosmopolitan way of life.

Not only does Barcelona offer an amazing lifestyle for young, culturally savvy Europeans, it is also considered to be a hotbed of innovation, design and creativity. The city’s blend of the ultra-modern and the traditional inspires businesses and their employees. Barcelona is a melting pot of ideas and peoples, the essence of quality urban living. The brightest young minds want to live in and experience Barcelona. All this helps to create the right sort of environment for knowledge transfer, which is the basis of today’s knowledge societies.

Quality of life

According to capital markets group Cushman & Wakefield Healey & Baker, Barcelona enjoys the best quality of life in Europe. It is a magnet for businesses and individuals because of its climate, stimulating cultural, leisure, entertainment and gastronomic environment, international schools, varied and competitive housing supply and a public health service that is modern and available to all – adding up to a quality lifestyle at an affordable cost.

Reno Cardiff, a partner at Cushman & Wakefield is seeing a new trend in the booming property market: “Businesses are moving en masse from Barcelona’s city centre to brand new zoned, knowledge-based, commercial sites such as the mega 22@ which has transformed the inner-city Poblenou area.”

Designed to lure multinationals and blue chip R&D companies, the 490-acre site is also making room for 40,000 residential properties fed by the service sector and a brand new university. Just a 10-minute bike ride from the city beaches and the heart of town, this once-thriving 1860’s brownfield site was once dubbed “Catalonia’s Manchester”. Today, it resembles Silicon Valley, as it regenerates into distinct industrial zones for media, marketing and other service-related activities such as SSCs. The site has traded its steam engines for fibre optic technology and state of the art energy, waste management, transport and communications.

22@ exemplifies Barcelona’s long-term investment potential. Although only half way to full capacity, it has already attracted over 120 businesses of all kinds, investing a total of €4bn in 2004/2005. Firms include Microsoft, McDonalds, Alstom, Calvin Klein, City Group and DiamondCluster International. A typical example of recent investors include Credit Suisse Asset Management, which in December 2004 invested €60m-€70m in 18,000 square metres of off-plan office space for long term leasing in partnership with a local developer.

The signs, according to Reno Cardiff, are very positive – his business saw gross takings at record levels in 2004, although the property market is not considered to be a particularly liquid one at present. Mr Cardiff recalls, the nose dive the property market took following the 1992 Olympics and the contrast today when investor confidence is stronger than ever. “Significant competition is leading many investors into paying a premium, often for off-plan properties, in order to get long-term returns on the leasing of commercial space,” he says

R&D taking off

Barcelona is high on the list for many site selectors in the research and development sector as it has both highly qualified human resources in the scientific field, as well as a high-quality research network in both the public and private sectors. The Catalan government is making a great effort to invest in R&D, in line with the European policy, which has set an R&D investment target of 3% of GDP by 2010.

The region is set to easily reach the EU’s target as it has shown a rapid investment growth in recent years. Total R&D expenditure rose at a 6% rate between 1998-2004, thanks to a strong budgetary increase from the Public Administrations. The number of jobs in R&D has increased sharply and is 80% higher in 2004 than it was in 1990 – this figure is also strengthened by a far higher percentage of researchers among its new R&D staff than the rest of Europe. The R&D side of the ITER nuclear fusion particle accelerator project in France chose to locate within the energy park on the 22@ site bringing with it 150 of Europe’s top nuclear researchers.

Barcelona now accounts for more than 21% of total R&D expenses and more than 60% of all Spanish pharmaceutical production with a concentration of 50% of all of Spain’s laboratories. In fact, the region attracted more than half of foreign direct investment in Spain related to R&D activities in 2004. Seven of the top 10 pharmaceutical companies in the world now have operations in and around Barcelona. Newcomer investors include Sanofi-Aventis, Actelion, Amgen, Cytyc, Invitrogen, Innogenetics and Gebro Pharma. Also, investment opportunities have been spurred on by the fact that four of the largest pharmaceutical companies in Spain are headquartered in Barcelona: Esteve, Almirall Prodesfarma, Uriach, and Ferrer. The regional government has boosted the creation of almost 20 new biotech start-ups in the last two years such as Oryzon Genomics, Advancell and Crystax through its Entrepreneurship Program.

FDI on the rise

In recent decades, Barcelona has been one of the main recipients of FDI in Europe. EU nations represent the greatest amount of investment – lead by the Netherlands, Germany, France and the UK – followed by the US and Japan.

“We want to establish a centre of engineering in Barcelona to define and create projects for the world market,” says Ruben Berumen, world chairman of the General Electric Power Controls division. He adds that one of the factors that influenced the choice of Barcelona for the future centre was the ease of finding staff with so many people moving to the city.

He says: “Barcelona is an ideal place to compete globally. Innovation is crucial for our company and we invest 10% of sales in it.”