The business services industry has quickly adapted to the situation enforced by the Covid-19 context, by implementing telework. Even the outsourcing concept intrinsically is based on this. There are activities that are done by definition remotely.
Teleworking has been in recent years one of the most attractive benefits in this industry, granted to employees in Romania, before the Covid-19 pandemic. Thus, 71 percent of companies offered their employees the opportunity to work from home, at least one day a week. In the coming period, the employees of the companies in the industry will continue to work from home, while the office space will be reorganized in accordance with the rules of social distance, becoming more flexible and, at the same time, respecting all sanitary measures imposed by the authorities.
In Romania, the business services industry will record an accelerated growth in the medium and long term. The cost pressure that the global economy will experience is also financed by the savings that the outsourcing industry can produce.
”For this year, in an optimistic scenario, we estimate in Romania an increase between 0 and 5 percent of the business services sector. Most services will stagnate around the current level on the short term (e.g. financial-accounting services, HR or certain back-office services). On the short term, it is possible that the customer services for tourism and transportation will even register a steep increase in demand (due to the cancellation of reservations), and in the medium term they will experience a possible significant decrease. But this decline can be compensated by the increase in customer service and logistics services dedicated to e-commerce, for example. IT services can also grow, automation and development of artificial intelligence solutions, as well as integration solutions being accelerated by the context of the current crisis. For some HR services, a more difficult period may follow, because the training and, especially, the onboarding of new employees, are more difficult in the online environment and will probably have a lower demand. But companies could choose to reduce budgets in their countries of origin and provide certain activities in alternative locations, as cost/employee in Romania is still attractive compared to Western Europe and America. Thus, it is very possible that our sector will not be significantly affected by the current crisis, but there are also more pessimistic scenarios,” explains Catalin Iorgulescu, ABSL Vice President.
In the current context, the number of employees in the industry may increase this year by up to 5 percent, the biggest challenges of this period being related to remote management and to the fast allocation of the daily tasks. Companies are orienting to high value-added services, especially in the context of industry automation.
The role of Central and Eastern Europe in the business services sector is growing in a post-pandemic world. The business services sector continues to grow through companies in the market and through new projects.
The most recent study of the industry in EMEA shows that this year the industry will register a slight growth of 1 – 5 percent and in the in the medium term it will register an increase of up to 10 or even 15 percent. This situation also valid for the Romanian business industry services.
According to the report, Poland is the most developed market for the EMEA business services industry, with 1,400 companies in this field and 330,000 employees. The most important customers come from SUA (22 percent), the Nordic countries (10 percent) and the UK (7 percent). The most common services requested by customers are financial / accounting, software development and HR.
In Poland, the gross annual wage in euros for a junior in finance or accounting starts from EUR 9,000 per year, for a customer service specialist – from EUR 8,400 per year, for an IT specialist – from EUR 11,200 per year. Wages vary according to the experience and skills and can reach a higher level which varies between EUR 18,000 and 60,000 per year.
According to the study, the potential of the Polish market is 400,000 employees until 2022. From the point of view of the revenues generated by this sector, the Romanian market is on the second place in Europe. According to estimates, the business services industry generated, last year, a growing revenue, of over EUR 4.5 billion, thus reaching approximately 2 percent of Romania’s GDP.
The sector includes 280 companies and over 131,000 employees, i.e. approximately 2.4 percent of the total employees in the Romanian economy. 79 percent of the clients of these companies come from Europe and 14 percent from the USA.
The main services provided (their total exceeds 100 percent because most companies in the industry offer several services simultaneously):
- 80 percent of companies provide IT services;
- 66 percent offer financial – accounting services;
- 61 percent provide customer service operations;
- 50 percent provide HR services;
- 45 percent provide procurement services;
- 42 percent – project management services;
- 38 percent – business transformation services;
- 35 percent – document management services.
In Romania, the gross annual wage in euros for a junior in finance or accounting starts at EUR 7,700 per year, in customer service – at EUR 6,800 per year, for a junior in IT – at EUR 10,800 per year. Gross wages vary depending on experience and skills and can reach a higher level which varies between EUR 13,000 and 66,000 per year.
With 112,000 employees, the Czech Republic ranks the third place in the EMEA business services market. The main services provided are financial – accounting, HR and IT. Most customers come from the USA and Germany. The potential of the Czech market is 140,000 employees until 2022.
In the Czech Republic, the annual gross wages in euros for a junior in finance or accounting starts at EUR 11,700 per year, as well as for a junior in customer care or HR, while a junior in IT has a gross salary of EUR 14,000 per year. Gross wages vary depending on the experience and skills and can reach a higher level which varies from EUR 21,000 to 47,000 per year.
”Compared to Poland and other EMEA countries, Romania currently has advantages related to the labor force. We have the cost competitive advantage, employees speak Latin languages, but also Germans ones, and the market is not yet as congested as in Poland. These are the reasons why industry investors look at the Romanian market. One of the main objectives of ABSL is to promote cities from level 2 or 3. Many member companies of the association have their offices in Timisoara, Sibiu, Cluj, Brasov and Iasi. We would like to be able to expand this list in as many cities as possible, but we also need the involvement of local authorities to create a package that will attract potential investors,” says Dragoș Ștefan, President of ABSL.
The study puts for the first time on the map new industries and countries such as Bosnia and Herzegovina, Ukraine, Egypt or Tunisia.
”The advantages that these emerging markets can have in terms of labor costs and the relative availability of qualified human resources are offset by the fact that these countries are not members of the European Union or NATO. Imports of equipment are much harder to achieve, import duties are charged and, in most cases, the alignment procedure at fiscal/legislative level involves quite high costs. All this reduces the advantages of cost competitiveness,” considers Dragos Ștefan.
The EMEA report analyses 18 countries in terms of development potential and is facilitated by ABSL Poland in collaboration with local ABSL associations, including Romania.