SSCs would deserve more recognition, as they have created thousands of new jobs and attracted high-value added projects to Hungary. More importantly, most of the existing centres are planning further growth in the near future – according to the recently published survey by PwC Hungary and AmCham (American Chamber of Commerce in Hungary).
The report, Stepping up to the next level, confirms that SSC leaders are pleased with the operation of their centres: the initial targets have been met and setting up the centre in Hungary proved to be the right decision. If the participating companies had to decide now they would establish their SSC in Hungary again.
Since SSCs typically employ highly skilled white collar individuals, often fresh graduates from the universities, with salaries higher than the national average, and in a transparent and legal way, they generate significant tax income and contribute to increased employment rates in Hungary. Despite all of these great achievements the sector remained relatively unrecognised by the general public. This is largely due to the nature of their activity: SSCs are often an isolated world and in most cases only the customers are fully aware of the range, complexity and quality of the services provided.
The competition in this industry is global: not only continents, regions and countries are competing intensively for new centres, but there is often a contest within the same organisation, as a multinational group may have several own SSCs around the world. The past view that SSCs mainly provide simple and standardised low value, transactional level services is no longer true for Central and Eastern European (CEE) countries like Hungary. The centres, which used to offer mainly relatively simple financial services, such as accounts payable and general ledger accounting, now manage many complex processes such as group treasury, external reporting, IT, HR, financial modelling functions.
„Regarding skilled workforce, the country is still among the best in the region and IT, telecommunication, logistics and transport infrastructure is excellent,” said András Loós, Director at PwC Hungary. „We see a clear tendency that quality improvement became almost as important objective as maintaining cost for the SSCs. Therefore labour cost and the availability of workforce with the right skills will determine the future of the sector. While Hungary can still offer excellent opportunities, both for setting up new centres and for further growth of existing SSCs, the country has to find a way to better position itself within the region and identify how to become distinctive in the CEE.”
Human resource management was the evaluation criterion in which the participating centres performed the best thanks to their efforts in this area which include a variety of trainings provided to their staff (including professional, soft-skill and customer-oriented courses), the systematic use of employee development plans and regularly performed employee satisfaction surveys. The high level of staff satisfaction rates reported by the SSC leaders is also positive but fluctuation of staff remains a challenge.
Another area in which the companies performed really well was the criterion continuous improvement.
The vast majority of the SSCs are continuously seeking potential optimisation for processes that are the responsibility of the centre, and even for those processes that are not. All survey participants noted at least some or even major improvements for cost, quality and time regarding in-scope functions.
Business processes are one of the areas with the highest optimisation potential for existing Hungarian SSCs. SSC leaders expect further process standardisation and automation in the near future especially for upstream and downstream processes outside of the centres’ responsibility.
Customer relations achieved relatively low results, however there is an increase of using customer relationship management (CRM) tools and customer help desk. Only 20% of the SSCs reached the highest maturity level for this criterion. Increased and consistent use of sophisticated CRM tools and strengthening the service culture and client orientation across the organisation can help the SSCs to further improve and increase customer satisfaction.
Based on the survey results, none of the SSCs performed on the highest maturity level for criterion organisations, governance and compliance, which is very similar to the global results. The SSCs tend to stick to the cost centre concept, although the profit centre concept can provide some potential benefits. Moving from the multiple process owner concept to having single end-to-end process owner structure (42% of the local companies surveyed) offers the possibility to achieve high levels in standardisation, automation and quality improvements for all countries or parties serviced by the SSC.
The survey results show that companies are largely satisfied with the SSC concept. More than 60% of the Hungarian participants have implemented new or additional SSCs, an additional 6% are currently in the implementation phase, which is very impressive. The Hungarian SSC leaders were asked to identify the three most important challenges in the next two years for their centre: keeping their centre competitive from a cost perspective; finding, retaining, motivating and developing their people, especially key talents; and volatile business environment, including future government decisions impacting the education system and foreign language skills.
According to András Loós it is reassuring that none of the participating centres are planning to relocate their operation to another country at the moment and most participating centres are planning further growth and are very much focused on further improving their delivery: process and documentation improvements, further increase of quality and productivity.
The development of the SSC industry in Hungary is still an “untold success story”.
Improved visibility of the current market players, their challenges and success stories and improved transparency of Hungary’s competitive position in the sector would benefit all parties in the industry and also the Hungarian economy.
Notes to editors
About the survey:
PwC’s new survey about the Hungarian SSC industry ran parallel with the global one between April and October 2013 . 17 Hungarian SSCs representing more than 11,000 employee from wide range of industries answered the detailed questionnaire that assessed the centres’ operation based on 8 evaluation criteria. The survey was conducted in Hungary in 2010 as well. The survey classifies the participating SSCs in 4 different maturity levels: Start-up, Growth, Expansion and the most developed “2nd Generation SSC”. The majority of the Hungarian survey participants were already in the more developed phases both in 2010 and 2013 –but by now there is significant reallocation between the ‘Expansion’ and the ’2nd Generation SSC’ categories in the favour of the latter.
Over the period between April and October 2013, PwC Hungary and AmCham (American Chamber of Commerce in Hungary) sent out a standardised online questionnaire to companies in Hungary that have implemented at least one shared service centre. The responses we have received cover roughly a third of the SSC population in Hungary, not just according to the number of SSCs but also to the number of their employees. The distribution of the centres that responded is in line with the estimated real distribution in size and industry profile. In our fieldwork and analysis, we followed the method of PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprufungsgesellschaft. In our fieldwork, we used a questionnaire consisting of 72 questions that explored, apart from general information, the objectives for implementing the SSC, strategy, organisation, improvement processes, business processes, customer relations, human resources management, technology, performance data and future outlook of the respondents’ organizations. In our maturity analysis, we followed the methodology of PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprufungsgesellschaft.
The publication of the survey is available by clicking on the following link: SSC Survey 2013.
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