ABSL presents EMEA's Business Services Landscape report.

May 19, 2020 Tania De Decker

The EMEA region role in the business services sector is increasing in a post-pandemic world. The business services sector continues to thrive expanding the scope by existing investors and new projects. According to the report costs differential among destinations is eroding and country level-cost comparison is insufficient. Investors must consider broader business imperatives. 

A difficult test that the sector has passed

The business services sector in the EMEA region was well prepared to reorganize work due to the COVID-19. The new reality has significantly changed the business environment and in the future, we can expect running shared services centers closer to where the business is created. In the long term, also the business patterns in the sector will be redefined. Two groups of factors will be critical – hard and soft ones. In terms of hard factors one can expect the decrease of m2 per employee in the offices, new social distancing policies, increased demand for flexible offices, data centers and requirements for broadband technology. On the other hand, the soft factors fueling the new reality will include measures for contagion containment, safety of employees as well as compliance with local regulations. One can expect more space for people in physical offices, contactless infrastructure and the subsequent reorganization of offices habits. Moreover, business centers will be able to tap into a deeper pool of talent available on the job market. Experts underline that the success will depend on business adaptability, more streamlined processes and data driven approach in office management.

The handbook for global investors 

The Association of Business Service Leaders (ABSL) is a leading international non-profit organization connects global and local companies that set up their global service centers in CEE (BPO |SSC |IT | R&D |GBS). The report is a snapshot of 18 countries in the region and covers the most-up-to-date location metrics. – We decided to provide our stakeholders including potential investors with critical information needed to support decisions about new or further investments – say Wojciech Popławski, Vice-President Business Intelligence & Thought Leadership, ABSL Poland - In our report, investors will find out what are the key factors behind the growth of the business services sector in the EMEA region. This is a set of figures that show how the sector is growing year by year and what new destinations become more attractive to invest - added. 

The report covers country snapshots with key macroeconomic indicators, human resources landscapes, payroll costs and key labor code characteristics. Office market commentary shows the potential of cities in particular countries in attracting the investors. – Our goal is to provide potential investors with a handbook allowing a quick and comparable assessment of all locations in the region. This is extremely important as we see several of specialized or industry-focused business service centers or divisions thereof emerging, for example among pharmaceutical and life science companies. 

The insatiable appetite for technology skills 

The most evident trend is the ever-increasing importance of information technology. Tech majors start-ups aside, pharmaceutical companies, retailers, industrial and consumer goods producers, professional services firms are all vying for digital talent.   

From year to year, the business services sector is growing by depending on region 7 and 18 percent. However, seeing the potential of the market, other countries are starting to outdo each other in offering amenities and benefits to attract talents. The salary is not the only indicator of taking up work in a given place. 

The real estate market is important in the context of the rapid growth of the modern business service sector. It is no longer seen solely through the prism of available square meters, but primarily as a flexible tool to meet changing needs and ensure the achievement of business goals. We are talking here about both flexible office spaces, for which demand will grow dynamically, and the need to adapt existing, rented spaces to new challenges. Post-Covid reality will require from employers to guarantee even higher standards - primarily adopting security measures in compliance with local regulations, and the expansion of contactless infrastructure - adds Rafał Szajewski - Business Location Consulting Director, JLL.

Rafał Szajewski adds that during the crisis the EMEA region proved to be a safe haven again, offering investors the ability to adapt on many levels. Recent weeks confirmed that most companies were able to switch to the remote work model. Appropriate technological facilities, competences and work culture allowed to maintain business continuity, thanks to which our region gained an advantage over some Asian countries.

 
EMEA has a potential to grow faster

Smart digitization will overpass labor arbitrage in 1-3 years. More strategic focus on driving end to end process ownership, smart transformation and right sourcing model (in-house, outsourced or hybrid) can change the game in the global sourcing landscape. However it depends on appetite of the existing heads of EMEA service centers to become the change agents and better use their centers  and outsourcing partners in driving structured and strategic transformation.

What is important on the map of the EMEA region we see new destinations for business services – says Olaf Babinet, Director, Deloitte Consulting – Global Location Strategy. These could be Tier-2 and Tier-3 cities in developed business services countries, such as Debrecen in Hungary, Kosice in Slovakia, Klaipeda in Lithuania, Varna in Bulgaria, Lublin in Poland or Sibiu in Romania; emerging destinations in the immediate vicinity of the EU, such as Belgrade in Serbia or Lviv in Ukraine; or a relative latecomer to the business services scene in Europe – Riga in Latvia.

Hence, we see a number of specialized or industry-focused business service centers or divisions thereof emerging, for example among pharmaceutical and life sciences companies. Typically, these operations require not only general financial or business knowledge, but also a specific industry background and education – medical, maritime, logistics, etc. This second trend has led to a resurgence of some of the well-established business services destinations such as Barcelona, Lisboa, Warsaw, Bucharest and Budapest – underlines Olaf Babinet, Director, Deloitte Consulting – Global Location Strategy.

The appealing locations to attract talent and investors

Among key competitive advantages for business services destinations in the fight for tech investors are the city’s attractiveness which translates into the ability to lure international talent. 

"If businesses want to develop smaller urban centers, attract quality investments and locate modern service centers within them, those companies will need to provide the inhabitants with infrastructure that creates attractive living conditions. Talent will not only value their salaries, but will also care about efficient and quick administration, air quality, and access to kindergartens and schools, for example. Employees can choose where they want to live, and cities must take care of them," stresses Tania De Decker, Managing Director of Enterprise Clients and the Company, Randstad Enterprise Group.   

Get your copy of ABSL's EMEA Business Services Landscape report.

About the Author

Tania  De Decker

As managing director of global strategic accounts for Randstad Enterprise Group, Tania works with Fortune 500 companies to develop and implement processes that improve and drive recruitment and retention solutions. Furthermore she is responsible for design and implementing customer strategies on a global level and liaise with all local operating companies belonging to the Randstad Group.

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