Financial crisis spells difficulty for foreign language centers

Training budgets are often the first to go in a recession. On the end of this are private centers that teach foreign languages. Many have seen demand for their courses decline across both sectors: corporate and residential. It seems that individual clients have been the worst hit, which has meant a shift in strategy and increased focus on attracting companies. Some complain about fiscal constraints while others are looking on the bright side, saying it is now easier to recruit personnel. 

Otilia Haraga

 “As is the case across the entire training industry, the recession has affected all types of clients, but particularly the retail sector, or individual clients. Companies have also significantly slashed their budget compared to 2007-2008, and gone back to a similar level to 2006,” Mihai Ganj, managing director of International House, tells Business Review.

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Bell Bucharest has also suffered. There has been a 20 percent decrease on the corporate side, while business from individual clients is down 10 percent, Carmen Olariu, GM of Bell Bucharest, tells Business Review.

Problems go beyond falling demand. Smaranda Elian, manager of FIDES, tells BR that the economic crisis has not hit demand, since people still need foreign languages at their workplace, in order to emigrate or study abroad. “However, we’re feeling the crisis at the level of the central budget due to the VAT increase, and we will feel it dramatically if the fiscal regime of collaboration contracts is changed,” she says. 

Other firms are expressing hope. “Unfortunately, during this period of economic instability, various forms of training are let go, but still some companies – those with vision! – do not neglect training in foreign languages,” Aura Ipate, general manager of A_BEST center, tells Business Review.

With individual clients cost cutting, the center has shifted its attention to the corporate sector since the second half of 2009. Recruitment and selection are the silver lining, allowing the firm to recruit very good personnel.

Ipate says that for a newer company like A_BEST, the crisis has been a blessing in disguise, because the firm was given room for development. “Since 2008, when companies axed their training budgets, they have also become more flexible and willing to give a chance to newcomers on the market. In this way, we managed to build a rich portfolio in a very short time and gained the confidence of our clients,” says Ipate.

The recession has also had another effect: some employees now choose to pay for their own training either entirely or partially, while the company covers part of the fee and offers the space so employees do not waste time crossing the city, she says.

The HR departments of the companies that still budget for foreign language skills are generally in one of two situations: they employ young graduates with fairly good language skills, but not good enough to meet the requirements of efficient interaction with international partners.

“With the exception of graduates who studied foreign languages and those who followed courses that were taught in English or French, in most cases the level of knowledge is rather low in comparison with the real needs and requirements of the employer,” says Ipate.

The second case scenario is that the company in question has excellent managers who speak a foreign language but due to lack of practice are rusty, which may be exposed right in the middle of important negotiations with the foreign counterpart. 

Among individual customers, many medics are interested in attending English for Medicine classes in order to leave to work abroad. But they are on a rather limited budget, Ipate says.

Trainers at A_BEST must have a certain profile: they have to be graduates of the Faculty of Foreign Languages, with international certification, and most of them have graduated from the course Train the Trainer. Also, some of these trainers have worked in the university environment before.

Languages like English and German are most in demand. But interest is on the rise for others as well. “We have noticed that during the last year, apart from English and German, the languages most in demand are Dutch and Russian,” says Elian (FIDES).

FIDES

Founded in 1991.

Teaches: English, French, German, Italian, Spanish, Portuguese, Swedish, Arabic, Greek. Other languages on demand.

Turnover: not disclosed

Trainers: at the moment, FIDES has a teaching staff of over 100 collaborators.

Corporate clients: last year, FIDES signed 150 contracts with companies. So far this year, the figure is 80.

Location: FIDES center or the client’s headquarters.

Groups: There are on average 22 groups per day. Over the course of a year, FIDES has eight training series, and the number of trainees per each series varies between 300 and 800. This year the center has had around 3,000 trainees so far while last year the total number of trainees who learned foreign languages at FIDES was 5,000.

Open Bell

Founded in 2005 under the name Euro Training and Education Center. Since 2008 it has been a franchise of Bell International and operates under the brand Bell Bucharest. Apart from the HQ in Bucharest, Bell Bucharest also has a branch in Ploiesti.

Turnover: EUR 1 million in 2009, profit of 10 percent. EUR 500,000 turnover in the first half of 2010.

Trainers: at the moment, Bell Bucharest has 90 trainers.

Individual clients: 100 individual clients last year, 50 so far this year

Corporate clients: 52 companies trained their employees with Bell Bucharest last year. So far this year, 31 have taken out these services.

Location: classes take place either at the centre or client’s HQ but Bell also organizes classes in schools and kindergartens. Also, courses for corporate clients can be organized anywhere in Romania.

Groups: Bell Bucharest has 70 groups a day, 490 people per day.

A_BEST

Founded in 2008.

Teaches: English, French, German, Italian, Spanish, Portuguese, Russians, Bulgarian, Greek and Hungarian.  

Turnover: not disclosed.

Trainers: 15 trainers who teach English, 7 trainers who teach German, 3 who teach Italian, 2 who teach Portuguese, 3 who teach Spanish, 3 who teach French, 2 who teach Russian, and 1 who teaches Greek.

Location: both at the center (only English and German) but mostly at the HQ of the companies. Classes are also scheduled for Saturday. 

International House

Founded in 2002, specializes in English. It is part of the International House network based in London. It also provides Romanian training to foreign managers who work here, including Jonathan Scheele, former head of the Delegation of the European Commission in Romania, and Robin Barnett, former ambassador of Great Britain.

Turnover: in 2009, International House had a turnover of EUR 850,000, and a profit of 10 percent. In the first half of 2010, the turnover was EUR 400,000. “In the first half of this year, due to legal changes, profitability has fallen below the level

during the same period of last year. However, there are good signs this fall and we anticipate that by the end of the year we will reach the same

profitability level as last year,” says Ganj.

Trainers: over 50, currently. 

Corporate clients: More than 100 companies last year, and this year goes along the same lines. “One of our strong points is the degree of retention of corporate clients, which exceeds 90 percent from one year to the next,” says Ganj. Clients such as: Coca Cola HBC (since 2003), BCR (since 2005) and Petrom (since 2006).

Groups: approximately 300 ongoing groups, 80 percent for business English.

Location: classes take place either

at the school headquarters or at the headquarters of the client, both

during the week and during the weekend.