As a business grows and becomes more complex, sooner or later, it will begin to encounter many challenges to managing and controlling its operations and costs and maintaining efficiencies. For this reason an increasing number of global businesses have decided to transfer a portion of their business activities to a shared service centre (SSC) and to implement a new operating model within their organisations.
Gerard Murray, Deloitte CE CFO, and Deloitte CE Business Services Centre Sponsoring Partner, talks about the development of the sector, the opportunities offered by the city of Rzeszów, where Deloitte has opened a shared services centre for Central Europe in 2016, as well as about the Polish companies benefitting from outsourcing.
How has the Polish business services sector developed in the last few years?
The first pillar in the development of shared services is based around simple and straightforward tasks, carried out in shared service centres. Over time, once these centres became more established and reliable, they became more specialised in specific more complex process areas such as building digital technologies and value-added competencies areas such as business reporting and taxation.
Now, many centres have become very mature and are being trusted, increasingly, with various management activities and with driving new projects and change in their overall organisations. The Polish shared services market has reported the highest growth in Central Europe. This is no surprise considering the work culture, quality and ethical standards that are present in the Polish market and the rich supply of well-educated and enthusiastic Polish graduates.
Poland offers advantages over the some of the more competitive market leaders such as India. When looking at the map, Poland’s near-shore location, common time zone and easy accessibility via various transport links provides many advantages to businesses elsewhere in Europe who are considering going down the route of setting up shared service centres. It also means that the centres in Poland can be more easily supervised and integrated into the mainstream business activities in the home country.
For many young Poles, working in a SSCs is highly attractive, because it offers the opportunity to learn new competencies and skills which have been developed in a global company over many years. It is a tremendous advantage, especially at an early stage of one’s career, to have exposure to such an environment and to work with colleagues all over the world – this is especially the case for those coming to work in the new Deloitte Central Europe Centres in Rzeszów.
Obviously, it does not mean that there are no challenges in the sector. One of the key issues to be addressed on an ongoing basis is the delivery of quality of service to the end user at a competitive price, while at the same time ensuring that employees continue to grow and develop within the organisation.
Apart from cost of work, what were the key reasons for creating SSCs? What is the impact of digitalisation on the development of the BPO sector?
Clearly, one of the key drivers and what is ultimately the biggest benefit of the creation of a SSC is the consolidation, streamlining and standardisation of various business processes. In nearly all cases this can only happen with the help of technology, which facilitates real-time communication and enables persons from all over the world to participate in complex processes.
Nowadays, many of the more mundane, manual tasks which existed in the past can be completely automated along with defined policies and standards. Technology also facilitates the implementation of greater controls within an organisation, as deviations from the standard operating procedure are not possible.
Kraków is a flagship SSC location. What is your experience after a year of SSC operations in Rzeszów?
Our experience in Rzeszów has been very positive, from day one, and our centre has grown much faster and been more successful than we originally thought possible, in such a short period of time. We were very pleasantly surprised by the volume and quality of skills of the people who applied for positions in our new centre.
Prior to coming here, we knew that Rzeszów had the highest percentage of students (per 1,000 citizens) in the entire European Union and that more than a half of its population is younger than 33 years old with the average age being only 39! It is a young, vigorous, electrifying city with efficient local authorities who understand investors’ needs and who have been very welcoming to us, as we went about setting up our centre. The size of the city is its biggest advantage, as one can get to any place in Rzeszów within 15 minutes.
Moreover, the capital of the Sub Carpathian region ensures comfortable and modern transportation facilities and infrastructure, such as the airport and the motorway, as well as efficient public transport. This meant that it was easier for us to transfer people from elsewhere in our organisation to Rzeszów, as the quality of life is much better than some other, more congested cities.
How do internal business services centres drive business growth?
Well, centres drive growth in the mainstream business in a number of different ways. More competitive internal business operations mean that a business can afford to invest more in new service lines and products, which adds to the range they offer to clients. At the same time, if the ultimate client is more satisfied with the quality of our services, at a competitive price point, this will also lead to a more enduring relationship between the organisation and the client which leads to increased business activity, over time.
Increasingly, SSCs are moving up the value chain and are dealing with the end client or customer more frequently, so it is important that they are well-run and that their interactions are professional and reflect the brand as well as meeting client expectations.
How is outsourcing used by Polish businesses? Have they already learned how to apply this business model?
Outsourcing and shared services are usually applied by ambitious organisations that have a clear vision and who have aspirations to compete with the top players. The model can provide enormous benefits and facilitate the growth prospects of any company, including for medium-sized enterprises, if it is managed and implemented carefully. However, not all organisations are willing to follow this strategy as the risks are high, including such things as disruption to the business and the fear of dramatic change.
The development of business service centres requires specialist knowledge; if this is missing it has to be acquired and this creates a challenge within the organisation as to whether it can cope. Furthermore, companies who decide to develop centres independently incur considerable risks with a high chance of business interruption and damage to the business.
The second reason is of a more social and political nature, if the change requires the need to move workplaces, relocation, changing career paths and losing some capabilities in the core organisation. This process requires a close focus on people and open communication which, if done properly, will enhance reputation, improve the situation in the organisation and encourage social dialogue.
Which Polish regions have responded appropriately to market needs, providing an attractive offer for the BPO/SSC sector?
It is hard for me to say because Rzeszów has been the focus of our efforts, over the last 18 months, as we worked to set up the Deloitte Business Services Centre. We know that there are other cities in Poland, apart from the larger cities such as Kraków and Wrocław, there are also smaller ones: Kielce, Elbląg, Opole and Legnica. We are very comfortable with the decision we made to locate our centre in Rzeszów where we have over 150 professionals working for us, after our first year of operations, and we have plans to expand further, to over 300, in the coming years.
As our centre matures we will add more value added services and offer more rewarding and challenging careers to those who come to work for us together with the excitement of working for one of the biggest professional services firms in the world.
Have any models of business-education partnerships been successfully implemented in Poland?
In Rzeszów, we have already forged very good and mutually beneficial relationships with all the local universities and third level education institutions. We plan to enrich and deepen these relationships, in the future. This enrichment is not just in the education sector but we also want to be responsible citizens in Rzeszów, in a way that reflects who we are at Deloitte; our values and our brand. I know that this is already happening and there are many examples of our staff being active in the community on their own initiative, and of their helping those who are less fortunate. We believe in our mission statement which is to “make an impact that matters”.
What are the prospects for growth of the Polish BPO market?
The current double-digit rates of investment and employment growth in the Polish BPO market should continue and the future outlook for the sector is still quite optimistic. However, to secure the future and the investments already made, it is important that the business environment in Poland remains competitive, business friendly and open to inward investment. Additionally the centres that are already in existence must continue to move up the value chain and to enhance their service offerings, perhaps through greater innovation by developing and adopting new technologies.
Unfortunately, the economic prospects in Western Europe are still rather weak for the foreseeable future and these countries will also still struggle with the generation gap and the increasing cost of workers. Hence, the pressure to cut costs in these countries will intensify.
The competitive advantage of our region of Central Europe is based, not only on the lower cost of workers, but also on higher quality and more skills. Less developed CE countries may also benefit from the technology driven process consolidation and transfer. Consequently, the demand will grow for smaller more innovative and flexible centres, that offer value-added services, and not just for the larger entities. Poland is rich in IT professionals; hence IT innovation combined with a predictable and stable work culture provides a promising strategy for growth.
The interview is an edited version of the original piece published by Outsourcing&More.