SSCs Evolve Alongside Hungary’s Economy

Analysis

Photo by Jirsak / Shutterstock.com

No one should doubt the importance of the shared service center to the Hungarian economy. In its way, the evolution of the sector (how its name has changed, even the battle to get potential employees to understand what it does) is a metaphor for the development of Hungary’s own economy.

There was a time when it was all about cost. SSCs began to appear here because multinationals realized it was cheaper to employ someone to answer a simple question or perform a basic function in Budapest than in most Western European capitals. Those same multinationals had to be careful about how excited they were to announce 50 jobs in Budapest because it usually meant 50 jobs had been axed back home.

They came to Budapest because its bright lights have always been a giant magnet, drawing talent to it. That answers a riddle I struggled with when I first came here. Hungarians, traditionally, have not scored well in terms of the foreign languages they speak, yet the managers of the SSCs I spoke with unfailingly said one of the attractions of Budapest was the availability of young graduates with good language skills. The young are generally better than the old regarding languages, and Budapest could effectively recruit from across the country.

But just as Hungary has purposefully moved away from a “Made in Hungary” mentality to “Invented in Hungary,” what the government calls a paradigm shift from manufacturing jobs to value-added roles, so those services centers have morphed from a workbench setting to something intellectually more challenging.

It started with myth-busting. Sector players realized they had to convince people that an SSC was not synonymous with a call center. They started reaching out to ever younger year groups at school to explain what they did and what they could offer. They were even prepared to band together to evangelize: think of AmCham Hungary and its BSS Hungary Working Group. BSS, standing for the business services sector, became part of the evolution, too, the new name aiming to reflect a fresh reality but also cement a different reputation.

The government has been a willing partner in this, realizing the SSCs, BSCs, Global Business Centers, and Centers of Excellence offer it the possibility of reversing the brain drain by demonstrating that exciting career opportunities and reasonable pay levels can be found here, just as easily as abroad. And with good universities scattered around the country, there are inducements it can offer to set up a center in Debrecen or Szeged, for example, and spread those roles across the regions.

Those multinationals who have been here the longest talk of earning the trust of home boards, of proving they have the talents and skills and disciplines to do more varied work here, to run end-to-end processes, to trouble-shoot, to handle research and design, of creating a virtuous circle where the better they perform, the more complex the roles they can attract. There is a balance point here. I am told that Hungary still offers a cost advantage, but the whole concept of convergence, of the country inching towards parity with the EU average, must eventually bring that into question. Then it will be a case of who can do the best job. Then Hungary, which has always prided itself on its brain power, will genuinely be standing on its own feet.

Robin Marshall

Editor-in-chief

This article was first published in the Budapest Business Journal print issue of November 18, 2022.

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