HOA Supporting the Growth of the Business Services Sector

Interview

Hungary is a favored European destination for the business services sector, which provides support to businesses with the likes of foreign language technical helpdesks, office administration, hiring and placing of personnel, security services, and travel arrangements. The Budapest Business Journal speaks with Richard Ránki, director of the Hungarian Service and Outsourcing Association (HOA), about the sector in Hungary.

Richard Ránki

Budapest Business Journal: One of the most dynamically developing sectors domestically has been business service centers. How this process is shaping up in 2020?

Richard Ránki: The business services sector, as we call it nowadays, has been through constant growth since 2005, the year HOA was established. Earlier, the growth was considered a consequence of the steady increase in the number of service centers. This growth slowed down in terms of center numbers in the mid-2010s; over the last four or five years, since I have been working for HOA and managing the preparation and elaboration of our yearly Benchmark Survey and Report project (published since 2013), my team and I have observed that the growth can be attributed to the migration of the different service processes into business service centers (BSCs) in Hungary. During these years, 70-75% of the companies’ strategies focused on growth, and this growth mainly focused on the transfer and adoption of high value-added services and processes. Based on the study we are publishing for 2020 later this month, this rate is 72%, while 79% of the BSCs brought new services into their Hungarian units. So, I would say companies are optimistic and are developing their operations and are executing digital transformation projects, in parallel with these processes and service migration projects. Companies are widening their service portfolios both vertically and horizontally, putting productivity in the first place among their operational targets.

BBJ: Which cities are the biggest competitors in the CEE region and how do they compare this year?

RR: Hungary is a mature market, with 66% of the BSCs having 10 or more years of operations in the country. Our most important competitors are Poland and the Czech Republic, also with well-established, mature markets. But, as we see the regional data and information, Romania, Bulgaria and, most of all, the Baltic countries are investing in the sector and are successfully attracting companies that would like to establish BSCs, as their governments have realized that proper investment promotion programs are necessary to attract this fast-growing sector of the future.

BBJ: How hard did the first wave of COVID-19 and the related home office period hit the sector?

RR: Before the first quarter of 2020, the time of the COVID outbreak, BSCs had already been applying flexible work hours and home office (usually one or two days per week) in their modus operandi. Thanks to this advanced operational mode (and having experiences with home office), the centers could easily switch their operations to work from home (WFH). After conducting a quick study on the effects of the first wave, company responses showed that before the pandemic, the ratio of WFH constituted 22% in their total labor hours. The switch was considered successful, reaching a 94% rate. Based on their experiences, companies responded that they would like to raise this WFH level to 48% after the pandemic is over, as productivity remained at the same level (and even improved in the case of some BSCs). At the same time, companies reported that the situation gave them a boost regarding digital transformation (according to 60% of the respondents); 75% of these either have full budget (25%) or partial budget (50%) for their automation projects. I should also mention that, although the transition to a higher level of home office was successful for the majority of the centers, 35% plan to overhaul their company governance or operating model, while 23% want to make partial changes in the same. Now, the focus is on remote management of the workforce and this requires certain additional skills from the managers as well. It is very promising that 92% of the BSCs felt that they are prepared to properly handle the next wave(s) of the crisis and tackle further issues.

BBJ: What online events are held for member companies?

RR: We were among the first entities to adopt this new way of working and event execution. Before the outbreak, we had organized five HOA Community Meetings (our knowledge-sharing events for employees of all levels from our member companies) and an international conference that we moved to digital platforms (the former) or postponed (the latter).

We organized our Community Meeting sessions with a variety of topics focusing on COVID-19 and its implications and effects on our community. But we also kept up with general topics (in many cases supplemented with new knowledge) that help the operations and widen the knowledge-base of the members and the entire community. We started the preparation our traditional annual benchmark study and report during the summer and we will soon publish and share the information gathered and classified in the form of an online event, as our HOA Business Services Gala 2020 has been postponed to a later date. We will also organize a two-day HOA Intelligent Process Automation Conference (iPAC) for the third time this year on November 19-20, using an online platform, where international and Hungarian experts share their knowledge and best practices with the audience. I would like to mention that HOA was among the first in 2018 in organizing such a conference dedicated entirely to the new trends of automation and digital transformation.

BBJ: Who are your members and what are the fees?

RR: Our membership consists of business services and other companies that provide business services to these centers or other clients: consulting firms, HR and recruitment companies, HR professionals, IT consultants and platform providers, law firms, training and educational companies or institutions, development offices of local authorities (mainly Tier 2 cities), SMEs providing business services, or individual members. Currently, our membership fees cover five categories and range from HUF 30,000/year (for individual members) to HUF 590,000/year (the largest centers). The fees for companies are based on yearly income and/or number of employees.

We welcome all companies acting in our sector and offering business services, whether registered in Hungary or abroad. Over the last four years, we were able to increase our membership by 50% (starting at 71 at the end of 2016 and reaching 106 members in 2019, HOA’s most successful year over its 15-year existence) and doubled our budget. We will continue our journey on this path in the future and our vision is to be the first and number one official organization supporting and lobbying for the interest and development of the business services and outsourcing sector in Hungary.

Editorʼs note: This article was first published in the Budapest Business Journal print issue of November 13, 2020. Richard Ránki left his post as director of the Hungarian Service and Outsourcing Association on that day.

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