Shared service centers offer great possibilities for Hungary
The following interview is with Andor Faragó, General Manager European Regional Operations Center at BT Hungary.
How does the SSC sector contributes to the Hungarian economy?
Shared services is definitely one of the booming sectors in Hungary, which attracts significant foreign investment, and generates the most jobs in the country. Therefore, it is also one of the strategic sectors of the Hungarian economy. Finding a job in the sector is an excellent opportunity for Hungarian graduates and junior professionals who speak foreign languages – i.e. English plus another language. They can gain experience about working in a multinational and multicultural environment, with various hard skill and soft skill trainings offered by the companies they can continuously learn and develop. Talents can climb up the career ladder relatively fast in an SSC environment – especially those who gain experience in multiple roles and activity areas. The knowledge Hungarian young professionals can gain in an SSC, makes them attractive and valuable in the labour market not just in Hungary but probably at a global scale.
Why Hungary is an attractive location for shared services?
There are a lot of advantages Hungary can offer to shared service centres. An obvious benefit, but still probably the most important one, is its EU membership. Harmonised European legal and regulatory environment, the stable economy and the European culture are crucial decision making criteria for investors. I could also mention the accessible tax benefits for investments or government incentives for creating jobs, for training, etc. However the key decision point, and from my point of view the most important factor is people: the quality of education, the availability of language skills, the mentality and attitude to work, etc. This inevitably puts Hungary in the top three shared service locations in the EU.
How do you see the development of the SSC sector in Hungary? What are the success criteria / areas for improvement for the future?
The trend is very clear: the scope as well as the complexity of the activities increasing, and the focus is moving from cost benefits towards sustainable added value – e.g. end-to-end process ownership. In the past ten years the Hungarian SSC sector has gone through a tangible and very well visible development. Today the simple, transactional, monotonous work represents an insignificant proportion of the activities in scope. There are other geographies where such tasks can be carried out more cost effectively. SSCs in Hungary rather recruit graduated, multi-lingual, highly qualified, ambitious and creative people who are obviously capable for not just doing the job but moving activities and processes up on the value chain – e.g. identify and solve problems, take initiatives for improvement, simplify things, etc. This is what makes shared services a long-term sustainable business in Hungary.
Considering the mid-term future SSCs will continue growing, creating jobs, attracting investments to the country and remain one of the leading sectors of the Hungarian economy. Longer term, the future of the sector is very much dependent on whether Hungary can stay competitive in terms of education in Europe. High-quality education is indispensable for meeting the demands of the modern labour market. Lots of changes have been going through in the education system of Hungary in the past years, however it still does not look promising in terms of improving foreign language skills. Extending multi-lingual capabilities and increase the level of language proficiency would be essential to maintain the competitive advantage of the country – in particular in the SSC sector.
Global companies like BT invest a lot in further training and continuous development of Hungarian young professionals in every conceivable field (computer skills, communication skills, presentation skills, project management, time management, leadership, etc.) however fluent language skills take years to pick up – therefore, evidently, they have to be supplied by the educational system. A setback in this area would hit the competitiveness of the country as well as the attractiveness of Hungary for foreign investments quite heavily. I am absolutely convinced that the Hungarian government is aware of that and we can expect positive and forward-looking solutions in this area in the near future.
Who are the main competitors of Hungary? Can Hungary be competitive with India?
The countries in Central Eastern Europe obviously has a very similar root and conditions in terms of their history, social and economic development, living standards, education, EU membership, etc. - and these immediately determine that there is competition for foreign investments between the countries of the region. In the shared services industry I can see Hungary and Poland being a bit ahead of other countries in CEE, but also the Czech Republic and Romania are catching up quite fast.
Globally the number one location for shared service centres is India. The leading position is mainly driven by cost advantages. Initially India used to be considered predominantly for back-office type, non-customer-facing activities. Although the CEE region remains the preferred location of investors for multi-lingual capabilities and more complex activities within Europe, we also need to realise that the original presumption that India can only carry out simpler and very transactional activities, is already a thing of the past. Thanks to the investments by the government in this sector India has been developing significantly and very fast. It has state-of-the-art infrastructure and also the skillset of people are very much comparable to Europe – while the cost of employment remains significantly below the Central European average. The European time zone and the availability of European language skills are probably the only tangible advantages Hungary can still offer compared to India, Malaysia or the Philippines.
Why are SSCs attractive for employees? What does BT do to be competitive in the market?
There are lot of challenges for employers in this sector, but one of them is the strong focus on retention. SSCs usually spend a lot of money for finding and recruiting the right people in the market. Even after the initial training for the job companies keep investing in their training and development. For this obvious reason employees become a more and more valuable assets for companies. SSC companies therefore make a lot of efforts to attract employees and keep them long-term.
Let me take BT as an example: We have a young and dynamic community - the average age is below 30 – where colleagues become friends and often socialise together even outside working hours. We offer attractive wages and a wide range of non-financial benefits to our employees. There are a wide range of employee and family-friendly initiatives, talent development programmes, team events, and not least excellent career opportunities. There are 17 different activities in our service portfolio, which provides exceptional opportunities for our employees to do career moves or change roles both vertically and horizontally within the company. All these said naturally make BT a very attractive place to work. At both locations, Budapest and Debrecen, we are considered to be one of the best employers. We are continuously looking for talents but it is not easy to become a BT employee. Our selection process is quite challenging, but those who succeed enjoy working for BT and usually stay with us long term.
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