Shared services centers and business process outsourcing, now often referred to as the business services sector, have become one of the major industries in Hungary and one of the main drivers of success for Hungarian and Central European office markets.
The first SSCs came to Hungary in the 1990s and the industry has expanded rapidly over the last two decades, creating employment opportunities and enabling high quality office complexes to be developed, which in turn upgrades the infrastructure and attracts investors.
Central European governmental agencies such as the Hungarian Investment Promotion Agency have successfully been promoting their respective countries as quality but cost-effective SSC destinations, and there are now around 120 such centers operating in Hungary according to KPMG.
SSCs are increasingly undertaking increasingly complex functions beyond a merely administrative role such as R&D. Tenants therefore require more sophisticated specifications and higher sustainability accreditations, thus companies are looking to source centers at offices at the very top end of the market.
The ratio of SSCs/BPOs in the total take up of the Budapest Office Market in 2019 was 25% according to Nikolett Püschl, leasing and development manager at Atenor Hungary.
Thom Barnhardt, organizer of the annual “CEE Business Services Summit & Awards” in Warsaw, estimates that, based on various research reports from organizations such as the European Business Services Association and the Hungarian Outsourcing Association, as well as real estate agencies, 40-50% of Central Europe and Hungary office demand/take up is from SSCs/BPOs.
“The SSC sector is a key component of demand in the office sector and a vehicle for inward investment across CEE,” he comments.
From a demand perspective, SSCs and BPOs are widely regarded as one of the major components of demand in the Budapest office market.
“The profundity of talent base and affordability of labor are key drivers. The amount of competent human resources obviously correlates with the size of the destination country and the actual city,” says Balázs Simonyi, leasing director at CPI Hungary.
“On the other hand, smaller countries with a centralized geographical location and easy accessibility, like Hungary, can become a kind of regional hub of talents by being attractive enough to temporarily relocate to,” he adds.
Full Story at BBJ.HU: https://bbj.hu/special-report/sscs-operating-at-top-end-of-office-market_191771