about us | newsletter | contact | archive | members area
Bogdan Nitulescu, Tremend
Cryptocurrencies volatility is a big problem»
  Features:      COUNTRY FOCUS   |   SECTOR ANALYSIS   |

SSC in Romania. Who takes the lion's share?

As the need for Shared Services Centres (SSCs) increases year-on-year globally, Romania holds the door open for investors and confidently invites them in. Alexandra Lopotaru talked to important players in the industry to find out why, how and where they took a seat

2015-04-03 21:48:30 - From the Print Edition

5 Photos
Romania is seen as a top destination for business services, as it offers on one plate a mix of competitive economic environment and a multilingual skilled workforce at low cost. Various studies place Romania ninth globally and second in CEE as a preferred destination for companies operating in the business service industry, one of the most dynamic sectors in the economy. Despite the economic crisis, average growth rate over the last few years has been over 20 per cent annually and a further growth of over 30 per cent is expected in the upcoming period.

Currently, the business services sector is estimated at 60,000 employees and 1.2 billion Euro, according to the leading organization of local industry ABSL (Association of Business Services Leaders), with half of the market being held by Share Service Centres (SSC). Last year the segment saw a lot of activity in terms of SSC players, both through the capacity expansion of existing companies and the entry of new investors. Kellogg′s, for example, the American food manufacturing giant, announced last summer that it would transfer jobs from the UK to Romania, in order to create a business services centre in Bucharest, generating jobs in different areas such as HR, IT, finance and distribution. The centre is designed to support Kellogg′s European divisions in over 20 countries, with 80 employees, according to local media.

Another important entry is Vodafone, launching in May last year a shared services centre in Bucharest, to provide IT and customer support services for Vodafone operations in the UK, Germany, Italy, Spain and Ireland. While last July it had a little over 100 employees, the centre is projected to reach more than 2,000 over the next three years. Furthermore, Germany's DB Schenker decided last year to develop a SSC for the financial departments of several subsidiaries; Deutsche Bank has invested ten million Euro in Romania in a technological centre that produces software for the bank; while German insurance group Allianz, leased in Bucharest's Floreasca Park office space, plans to develop a service centre.

The increase of the sector was seen at existing companies as well: Societe Generale European Business Services (SG EBS), opened in 2011 in Bucharest, doubled its headcount last year to 400 people, while Office Depot, Cluj-Napoca's first SSC opened in 2007, increased its workforce by eight per cent to 485 people. This year the trend continues with Huawei GSC hiring more than 200 people by the end of 2015, and with other players with equally-ambitious plans.
The Diplomat - Bucharest spoke with such major SSC players to analyse the way the Romanian services market plans to develop further, to stress the concerns and challenges they must face, as well as to highlight their business perspectives for the coming years.

Huawei plans to open a secondary centre when Bucharest's GSC exceeds 1,000 employees



Opened in 2012 in Bucharest after an initial investment of six million Euro, cumulative over ten million Euro, Huawei Global Service Centre (GSC) increased its headcount by 60 per cent last year, reaching 800 employees. As a development strategy the company plans to open a secondary centre - similar to its existing one - once the latter exceeds 1,000 employees. This could happen most likely in one year, according to Victor Stan, the general manager of Huawei GSC.

"We are planning to open a secondary centre when the first one will reach 1,000 people on the same platform [GSC] - and we are getting very close to it," Stan tells The Diplomat - Bucharest. "Since last year, we increased our staff by 300 employees, along with the necessary office space and associated investments. By next year, we believe we can reach 1,000 and a couple of hundred people in the best case scenario, while still more than 1,000 even in the worst case scenario. Nevertheless, once we will reach this figure, we will start the secondary centre initiative."

The investment in the new centre will be similar to the investment in the existing one, says the GM. In terms of potential places in which to develop the centre, Stan confesses that a final decision has not been taken yet. However, the company is looking for cities with German language speaking people, as some business prospects come from countries like Germany, Austria and Hungary. For these reasons, Timisoara, Cluj and Sibiu are on the short list of Huawei's future investment.

"Cost-wise, one of the best options for the secondary centre could be in Moldova - Iasi, but from the Germanic culture and language perspectives, Timisoara, Cluj or Sibiu seem better suited," says Stan. "Many incremental and new businesses could come to us from the German speaking world. Initially, we intended to go for Iasi, but, after a preliminary assessment, we have slightly changed our mind towards alternative options. It would be rather difficult to source or bring German language speakers in Moldova due to some economic setbacks since we are looking after several hundreds engineers, not just few tens. German language engineers are much easier to source near universities like the ones in Timisoara, Cluj or maybe Sibiu. We are also evaluating the opportunity to have another European centre even outside Romanian boundary if it is more suitable from the delivery languages perspective. If the market will require most of the delivery interactions to be performed by using a language difficult to adopt here in Bucharest, then we will need to choose a more suitable place from this perspective. Bucharest remains also an option for scalability, but many decisions depend on how new business develops further."

Chinese-based Huawei, one of the main networking, terminals, enterprise and telecommunications equipment and services suppliers in the world, opened its GSC in Bucharest to handle Huawei′s clients mostly at a pan-European level. GSC offers a wide range of services, including network operations, network performance management and optimization, planning and engineering, spare parts management, benchmark and service quality management, as well as third level technical support and help desk services. Currently, it is divided into three main pillars: GOS (Global Operations Centre), GSRC (Global Service Resource Centre) and GSDC (Global Service Delivery Centre), with more pillars under construction. Currently, the centre operates in English, Italian and Spanish.

HP GeBOC increases its complexity of services to support a global strategy



In order to support the Hewlett-Packard (HP) global strategy announced late last year - the splitting of the US entity into two companies - Romania′s local HP Global e-Business Operations Centre (GeBOC) had to stabilize and grow strategic business areas, to improve cost and capital structure and to emphasize on efficiency and process automation, according to Andrei Romanescu, the managing director of the centre.

"Locally, we've made significant progress in strengthening our portfolio of services, expanding our expertise towards Automation and Robotics, attracting the attention of more potential customers, and upholding employee engagement and satisfaction," Romanescu tells The Diplomat - Bucharest. "We are determined to do our utmost in ensuring that the next phase of HP turnaround and company split will be successful and with minimal disruption."

Asked what the main consequences of the global strategy on the local market are, Romanescu says that currently HP GeBOC is analysing all possibilities. "As we speak [early March], we are analysing all scenarios to see if the workload will increase and if we will need more people," says the managing director. "I don't want to make assumptions that are not based on statistics. There is a scenario where we will have to operate within two systems, and we will definitely hire new people. However, there is the possibility that, through this separation, we will become more efficient and we won't need extra employees."

Opened in 2005 with roughly 100 people, HP GeBOC is now the largest shared services centre in the country, with more than 3,000 employees, according to Romanescu. HP GeBOC offers a wide range of financial, logistics and administrative business processes to HP customers and partners in Europe, Middle East and Africa. Operating in more than 25 languages, the centre noticed last year a high demand of activities that optimize costs, reduce risks and improve the bottom-line. Moreover, in order to improve its competitiveness, HP GeBOC launched in 2013 a long term strategy - HP GeBOC 2016 - that shifts the centre's focus from headcount increase to service complexity.

"Between 2005 and 2012, we grew by 500 people every year, reaching 3,500 employees three years ago," says Romanescu. "Now, our focus is to provide a wide-ranging value added expertise that enables process optimization and revenue generation to support HP's global competitiveness. (…) However, Bucharest is perceived as a centre of excellence and will continue to be of strategic importance for the company," concludes Romanescu.

In 2013, HP GeBOC posted a 76.5 million-Euro turnover, while the 2014 figure is expected to be the same. Regarding the global strategy, starting November this year, HP divides into Hewlett-Packard Enterprise, a new company focusing on corporate hardware and services, and HP Inc., in charge of personal computer and printer operations.

SG EBS doubles its 2014 headcount to 400 people



Opened in 2011 in Bucharest, Societe Generale European Business Services (SG EBS) is the nearshore shared service centre supporting the activities of the Societe Generale Group European entities. Since its establishment, the entity has grown rapidly, last year doubling its headcount to around 400 employees, according to Philippe Garcet, CEO of Societe Generale European Business Services.

"2014 has been an outstanding year of growth and development for Societe Generale European Business Services, with teams more than doubling in one year," Garcet tells The Diplomat - Bucharest. "We took over regulatory reporting activities, full financial production and control for more than 300 entities, set up a centre of expertise on HR information systems for Europe. (…) Onboarding highly sensitive activities from our head office was a significant challenge that the teams have well managed, within the initial aggressive timeline and budget, while maintaining the level of quality which prevailed before the transfer."

Geographically, the centre focuses on Europe, with France representing 68 per cent, followed by Western Europe (24 per cent) and Romania (eight per cent). SG EBS's employees have an average age of 29, 85 per cent of staff being women and operating in English, French, Spanish and German. In addition, the centre's main activities concern Finance (accounting and financial services) and Human Resources (notably part of HR back office functions), with IT currently being developed.
"In late 2014, we also decided to expand our activities and set up an IT line of business to create an offering for development, maintenance and application support," says Garcet. "This service centre aims at providing top notch quality services and has become an enabler to optimize Societe Generale′s operating model."

Speaking about the main challenges of the local market, Garcet points out that Romania needs to keep its competitive advantages including workforce costs, infrastructure, proximity to multicultural environment and real-estate capacity, while developing new ones and focusing on quality improvement and process optimisation.

"As we all know, labour arbitrage and related costs are one of the most important factors for investing in Romanian market, but most of the multinational companies are thinking beyond those, to the quality of services and to new ways of optimising the centralised processes," says SG EBS's CEO. "Also, developing a partnership based on trust with the clients is crucial for the sector. If we look to the university environment, the business partners expect more and more flexibility and implication from its representatives so that the pool of young talent is kept for the future."

Furthermore, in order for secondary cities to become more visible to any foreign investor, Garcet suggests they maintain their low-cost workforce competitive advantage, as well as their cost-efficient real estate solutions. "They should also beef up their infrastructure to ensure better connection with main European cities," he says. "Furthermore, since we are mainly talking about major educational centres, key partnerships with local universities would ensure a low student mobility rate, thus covering the need for a young, skilled and adaptable workforce."

In the years to come, the CEO wants to continue to position SG EBS in the upper range of the process value chain, taking over end-to-end processes for complex activities. "We aim to grow as the centre of Excellence for Societe Generale European operations, to be the transformation agent of the Group and a top employer," he says. "In the next two to three years, we plan to continue our rapid development by expanding our footprint on existing lines of business and developing new ones," he concludes.

SSC Ariston's Vasilescu: "Government should improve state aid schemes to attract investors"



Present on the local market since 2006, SSC Ariston Romania delivers finance and accounting services for companies within Ariston Thermo Group, one of the main manufacturers of gas, solar and electric water heaters and condensing boilers worldwide. According to Simona Vasilescu, head of SSC Ariston Romania, the business service sector has experienced a strong growing pace in previous years and will keep up the trend in the coming period. However, in order to attract more investors, the Romanian Government should improve the state aid schemes, which offer non-reimbursable funds with the objective to support investment and jobs creation, she says.

"The market has evolved a lot and more and more players will enter the market this year, to consolidate Romania's position on the map of preferred service business destinations," Vasilescu tells The Diplomat - Bucharest. "However, the Romanian Government has to assume the key player role, proposing stimulus programmes that today are not a decisive factor for investors. They always have on their list several options in terms of destinations and in this sector there are strong competitors with longer traditions than us. A good example is Poland that, despite higher labour costs, still holds a high fascination for investors."

SSC Ariston Romania's manager goes on to say that Romania should emphasize several things to improve its business services picture, such as: infrastructure - that could help secondary cities to become more visible for investors; level of education - that could help the labour market increase its technical skills needed in the industry; and retention ratio of employees. "The labour force goes from one player to another very quickly these days and this becomes a problem," says Vasilescu. "The tendency is to create attractive jobs, to circulate tasks and eliminate repetitive and boring activities. Around 50 per cent of the employees are young graduates, so the motivation and retention measures are different than the ones applied to more experienced people, and this is a challenge."

Counting 50 employees who operate in six languages, the shared services centre focuses on the Western European markets. In terms of future plans, SSC Ariston Romania wants to increase its headcount by ten per cent and to grow along with the Group. "The company is committed to continuous growth on the mid-term, bringing new opportunities for our centre," says Vasilescu. "We plan to hire five or six people this year to keep up with the development pace of the Group. We are ready for new challenges, to leverage the expertise accumulated all these years and to support the company′s ambition of becoming a global player," she concludes.

Office Depot Service Centre wants to grow the headcount by six per cent this year



Office Depot, a US-based office supply company, was the first firm in the SSC business to open such a centre in Cluj-Napoca in 2007, in order to support the financial operations of Office Depot on a pan-European level. Operating in six languages and supporting the company offices in 11 countries, Office Depot Service Centre increased its headcount last year by eight per cent, reaching 485 people, and plans to hire 30 more this year. "2014 was a year of stabilisation and enlargement," Giulio Medda, the general manager of Office Depot Service Centre tells The Diplomat - Bucharest. "Once a company creates a Centre, the biggest investment is done. The secret to making it more and more effective is to increase its capacity to the maximum. (…) We increased our operations with new functions, while stabilising existing ones, and we expect 2015 will be the same. Thus, we expect an increase of around six per cent in our headcount, according to the business plans of our parent company."

Analysing the service sector in Romania, Medda confesses that the industry became more and more mature with companies expanding into new towns and delivering up to the expectations. According to him, Romania is no longer a new market, but already one of the biggest players in Europe, where, besides Bucharest, other cities like Cluj-Napoca, Sibiu and Timisoara are visible and continuously considered by old and new investors in the country.

"The main reason why investors decide to come into a country is always the return they expect from their investment," says Office Depot's Medda. "However, the financials are not the only driver, as companies need also security and political stability to mitigate their risk and look for areas with highly skilled people in their field of production/services."

Nevertheless, there are several challenges Romania needs to face nowadays, including the geopolitical context that affects political and economic stability, says Medda. Moreover, Romania needs to focus on its educational system as well, creating bespoke master's programs for the industry. "The problem with schools is the difficulty in embracing changes, very often they educate talents for jobs and ways of working which are obsolete or no longer exist," he says. "Companies and universities should cooperate and direct the education towards what is and will be needed, for instance by creating bespoke master's programs," Medda concludes. Office Depot Service Centre posted a turnover of around 9.1 million Euro in 2014.



COMMENTS
'.$nr_comm.' comment:
'; } else { echo 'There are '.$nr_comm.' comments:
'; } while ($row = mysqli_fetch_array($result, MYSQLI_ASSOC)) { echo '
'.$row['nume'].": on ".$row['data']."
"; //echo str_replace('\n','
',$row['comentariu']); echo nl2br($row['comentariu']); echo '
'; } ?>

0 Comments  |  7046 Views
Daily Info
Smart city is not a fad, it's a necessity

In June 2018, the ranking of the most "smart" cities in the world was published. In other words, the most advanced cities in terms of human capital, social cohesion, the econo...

Ondrej Safar, CEZ Group: "Romania can become a hub for international smart solutions providers"

"We are already in the digital age, so the upward trend of implementing smart solutions is inevitable in all areas," he tells The Diplomat-Bucharest. "Especially in terms of u...

Telekom Romania, a strong supporter of Smart City development in Romania

Just like many other countries in the world Romania is now facing an unprecedented growth of the urban population, which can be both beneficial and detrimental for the society...

In the industrial era, the fight was for finite material resources. Not anymore

Now organizations fight and develop themselves for and around their talent. In a nutshell, getting ahead in today's business world is all about attracting and inspiring an e...

Richard Sareczky, Mol Limo: "We look at expansion locations across CEE including Romania"

Consumer mobility behaviour is changing, leading to up to one out of ten cars sold in 2030 potentially being a shared vehicle and the subsequent rise of a market for fit-for-p...

 
 
   
advertising

advertising

advertising

More on Features
Romanian business - Flexibility and agility in a high-potential market

It's anniversary time, with Romania celebrating its national day at a time when its image is coming into serious question at an international level. This month is also an a...

1 Comment

Smart city is not a fad, it's a necessity

In June 2018, the ranking of the most "smart" cities in the world was published. In other words, the most advanced cities in terms of human capital, social cohesion, the ec...

1 Comment

Telekom Romania, a strong supporter of Smart City development in Romania

Just like many other countries in the world Romania is now facing an unprecedented growth of the urban population, which can be both beneficial and detrimental for the soci...

1 Comment

In the industrial era, the fight was for finite material resources. Not anymore

Now organizations fight and develop themselves for and around their talent. In a nutshell, getting ahead in today's business world is all about attracting and inspiring a...

1 Comment

True hospitality in Bucharest

Interview with Lior Bebera, General Manager InterContinental Bucharest

1 Comment

Richard Sareczky, Mol Limo: "We look at expansion locations across CEE including Romania"

Consumer mobility behaviour is changing, leading to up to one out of ten cars sold in 2030 potentially being a shared vehicle and the subsequent rise of a market for fit-fo...

1 Comment

Ondrej Safar, CEZ Group: "Romania can become a hub for international smart solutions providers"

"We are already in the digital age, so the upward trend of implementing smart solutions is inevitable in all areas," he tells The Diplomat-Bucharest. "Especially in terms o...

14 Comments