Countryside Case Study: BP in Szeged

Viktor Knezevics

“When we saw the constant development at the Budapest center, we started to think about where to continue,” Viktor Knezevics, head of BP’s Business Service Center at Szeged tells the Budapest Business Journal.  

“We assumed that this way [looking at a secondary city] we could reach a wider pool of talents. Coming from a countryside city, I am aware that many people move to the capital because they have no other choice. Would there be such a choice, many would stay,” he explains.  

Following an analysis, the Hungarian management together with BP’s global business services unit, shortlisted three countryside cities and visited each. Based on the availability of labor force and universities, transportation and the real estate landscape, they picked Szeged.  

“We did our research and found that the university’s output of potential professionals with skills we need (not only fresh graduates, but also those already on the job market) seemed satisfying,” Knezevics explains.  

On September 26, 2016 the company and Minister of Foreign Affairs and Trade Péter Szijjártó made a joint announcement of the investment. Exactly one year later, the Szeged center was opened. By then, the company has recruited approximately 200 employees, who were temporarily located at other offices and at university lecture halls until the refurbishment of an old office building could be finished.   

Why not Budapest?

Among the options BP had considered were opening a new center in Budapest, moving to another capital city elsewhere in the region, or finding a location in the Hungarian country.

Establishing a new unit abroad would have offered no real competitive advantage; despite the 170 km distance between Szeged and Budapest, they are treated as one unit, the director says.  

Budapest was off the list because the market was already very saturated. “Even in the countryside, we have been able to create an enterprise at this scale that covers a wide spectrum,” Knezevics says.

Although he says the Szeged center is not short of skilled professionals, there were signs of acute nation-wide labor shortage visible from the beginning.  

“Still, we have been able to reduce staff fluctuation below 10%, well below the sector average which stands at 20-25%”, the director says. “We agreed to increase headcount to 500 by end of this year; we reached this figure more than a month sooner.”  

Most employees come from the immediate region, or have moved back from Budapest, but there are also a few employees from the ethnic Hungarian populations in Transylvania (Romania) and Vojvodina (Serbia). Some 10 employees were moved temporarily from the Budapest center to support BP’s activities in Szeged in the beginning. Five of them decided to stay for a longer term, Knezevics notes.  

When it comes to recruitment, the management has no difficulty filling a more general position (for example, an English-speaking accountant). Finding professionals for more special combinations, such as a German-speaker well-versed in IFRS, is more of a challenge. In Budapest, there may be a wider selection, Knezevics admits.  

In terms of the activities the Szeged center deals with all mayor SSC/BSC roles, from finances through procurement to customer service. There are a couple of activities, like the intercompany hub or Air BP, which were moved to Szeged to give the center its own identity, the director says.  

University Collaboration

To ensure that the pool does not dry up, BP remains in close cooperation with the University of Szeged, which was already running a course on SSC skills before BP moved to the city. Since then, the two parties have been crafting the curriculum together: Many of the lectures are held at BP’s center to make it more tangible for students exactly what is going on in a BSC and to enable students to learn about functional processes.

Salary levels in general are on average 10-15% lower than in the capital city; at lower levels it is more marked, while in the upper level positions, it is fading. But wages will catch up across the board in the long run, Knezevics notes. The language command of employees and student is good enough for them to communicate effectively during work. “It is more important that we have sufficient, capable and qualified workforce.”

The one real downside of countryside locations is real estate: finding category “A” office buildings is difficult. Large property developers in Budapest are reluctant to take risks, while countryside firms may lack the resources to launch develop, Knezevics says.  

“Companies with the intention of setting up shared services don’t have two or three years to wait. We were lucky to have found an old factory building that we renovated and converted into an office. Should BP need another office at a countryside location, we would have a hard time finding a quality office building,” he says.  

BP in Hungary

BP, one of the world’s leading integrated oil and gas companies, established its GBS center in Budapest in 2009. Its centers in Budapest and now in Szeged provide a wide range of services in 13 different languages for all of BP’s businesses and customers. The activity managed from BP’s Global Business Services organization in Hungary (which comprises both the offices in Budapest and Szeged) includes finance and accounting, procurement, tax, HR, trading and customer services as well as settlement support for BP’s trading business. Some 85% of BP’s employees in Hungary hold advanced degrees, their average age is 32 and more than half speak two or more languages fluently.