In an exclusive interview, the p resident of the Hungarian Service and Outsourcing Association (HOA), Balázs G. Nagy, talks to the Budapest Business Journal about the challenges facing the sector, and his hopes for the future.
BBJ: How has the sector’s weight changed in the Hungarian economy in the past few years?
Balázs G. Nagy: The importance of the sector has been growing constantly. According to the data of the Hungarian Investment Promotion Agency, it is the second fastest-growing sector in Hungary. The number of those working in SSCs is around 55,000-60,000, and those (indirectly) employed in the sector is estimated at around 165,000. Compared to other sectors, the average salary is higher and since people are employed [not freelance], the tax contribution is also high. The ratio of women, including in management positions, is around 50%. Hungarian centers tend to deal less with customer service and more with more value-added areas such as finance and HR, or IT services.
BBJ: What has HOA done to support this growth?
BGN: Last year we submitted a statement/resolution to the Ministry for National Economy [now renamed the Ministry of Finance] on the status of the sector. We defined three focus areas. The first is branding, so people know more about the status and potential in the sector. The second is education. In order to maintain the current growth rate of about 8-10% per year and recruit roughly 10,000 people, we need to invest in education. The needs of this sector are different from, say, those of car manufacturing. The drivers of growth here are the people. The third focus area is robotization. Centers possess an enormous amount of data – robots can help turn that into useful information. They can also be used for dealing with repetitive tasks, requiring little input, as well as standardization and optimization processes. Turning Hungary into an SSC robotization center could be a stepping stone for the Hungarian economy. No one in the region has done that so far.
BBJ: A few years ago, one could hear centers constantly complaining about the limited skills, for example language command, of the Hungarian workforce. Has the situation improved?
BGN: The situation is more nuanced. I have no knowledge of any center having brought its operation here and failed to find workforce. Finding people is never easy, mostly because of the collision of interests: companies want to find the best available workforce at the lowest possible rate. But it is more than just salary levels; what they are looking for is the best price-to value ratio. Some established firms such as BP or IT Systems can price workforce quite precisely. They also have centers in the countryside where there are a lot of potential [candidates]. This sector is still a bit spoilt, companies have had some freedom when it comes to wages, [which are still low] compared to the levels in Western Europe.
BBJ: Does the country have sufficiently skilled workforce to achieve this goal of becoming a robotization center?
BGN: I am very optimistic about that. Hungarian experts have a very good reputation. I can hardly name any sector where a Hungarian manager was appointed as the head of a foreign outlet which happened to xy. Usually it is the other way around. Robotization can be a stepping stone as no other country from the region has “jumped on” that opportunity.
To help achieve these goals, we have created working committees. The head of National Business Services (NÜSZ Zrt.), Zsuzsanna Gombkötő, leads the robotization working group, the aim of which is to organize conferences, run pilots, etc. Both the Ministry of Finance and HIPA have delegated members to this committee, which shows the importance of the field. Together with McKinsey, we are going to organize a workshop for managers, as there is so much interest in this area. The bottom-up approach, if met with government commitment, can help reach this goal.
Companies can run pilots here, for instance, on how to introduce automation in credit control, and can then sell it worldwide. Automation will enhance the quality/level of human workforce as well, as it allows people to devote more time to more complex tasks and relieves them of the dull, repetitive ones.
BBJ: What are the goals of the committees?
BGN: The main aim of the branding working group is to make the sector more visible so that people know about the opportunities in working here, or the Central Statistical Office (KSH) devotes a separate section to SSCs. The group cooperates with big cities in the countryside: most recently Debrecen held a conference for companies interested in opening centers there.
The education committee tries to bring institutes and companies closer to each other. We have entered into a partnership with the Corvinus University of Budapest. The work is led by a professor who tries to further cooperation between those intending to provide specific training to [future] SSCs employees.
The robotization group is looking at ways that would help the country become a robotization center in the region. It also studies the effects of robotization on the labor market. In this field, people are less concerned about robotization than in other sectors. The group is also working on several pilot programs and our members can volunteer to “host” such pilots. They gain access to new technologies for free and share their experience with all the other members in return.
The government’s involvement and the level of co-operation makes me really optimistic about the future of the sector. When commitment was there earlier in car or electronics manufacturing, the cooperation between industry players and the sector bred some real results. I am expecting the same to happen in this field in the coming years.