Has the pandemic dealt a blow to the BSS, which before the outbreak was booming in the CEE region? Or will it emerge from it stronger, as it did in past crises? Quite possibly. and the switch to home office could – paradoxically – give it a further boost - says Elias van Herwaarden of Colliers.
The business services sector (BSS) first took root in Poland and the CEE region around 25 years ago, since when our part of Europe has firmly established itself as Europe’s go-to location for companies planning on outsourcing their operations. It may not rival in scale, say, India, where something like 2.7 mln people are employed in the sector (compared to 750,000 to a million in the CEE region), but Central Europe certainly beats it in terms of growth, having the advantages for Western companies of pools of talented and educated people with the required language skills, time-zone synchronicity and cultural affinity. According to the ‘Association of Business Service Leaders (ABSL), Poland, which last summer had around 338,000 people employed in more than 1,500 BPO, SSC /GBS, IT and R&D centres, has been experiencing annual growth in the range of 10–15 pct in terms of employment.

But the question that many people might be asking at this precise moment is whether the growth of the sector has been put in any kind of jeopardy by the pandemic-induced switch to remote working.
Bouncing back
In the opinion of Elias van Herwaarden, the EMEA head of location strategy for occupier services at Colliers, this is simply not the case, judging by how the sector emerged from previous crises, “During the SARS outbreak in 2002–4, many people thought we would all end up having to work exclusively remotely, but of course that didn’t happen. This time global BSCs got back to work very quickly – and CFOs even saw that the only part of their businesses that was working properly were the BSCs,” he points out. Similarly, BSS came out stronger from the global financial crisis, as companies chose to diversify their operations and build greater resilience into them by outsourcing. So what has the impact been this time? “When the first lockdown was announced in Poland last year, within a fortnight 70 pct of employees of business service centres in Poland had switched to remote working. But as we have found out, not everything can be done remotely. If you’re a bank, for example, you don’t want sensitive data to be handled over the kitchen table. Globally, the number of jobs created in this sector was 66 pct down last year – but this still meant that it was the same number as in 2016,” says Elias van Herwaarden.
Face-to-face with the new reality
Following the outbreak of the pandemic, obviously the sector wasn’t in an ideal situation, because centres had to adapt to the new way of working. There was something of a learning period that had to be gone through, but in fact most centres experienced an improvement in performance after switching to home office. However, security is clearly a major issue for some industries and businesses, since sensitive data cannot be processed securely at home. And, as people in the sector have discovered, face-to-face interactions are still necessary in many ways. “The kind of work done in centres is not static – it’s not like everyone in them is making Big Macs to the same recipe. There has to be standardisation and harmonisation between different centres. Brainstorming needs to happen. But these transitions have been slowed down by the pandemic. Be smarter, be faster, be better – is always the motto. But you need a group of people for brainstorming and this has always been traditionally done physically and is proving to be more difficult than pre-Covid. Operations have also been affected – those companies that set up centres during the pandemic have found that these things have been taking more time,” explains Elias van Herwaarden.
It seems, therefore, that the office is far from dead in this sector. Aggressive lease renegotiations have certainly not materialised. And even if the pandemic encourages companies to temporarily consider decreasing the size of their office space, such a trend could go into reverse once the economy recovers and the battle to attract the best talent resumes. But what we have discovered is that a lot of things can be done outside the office and so it is the way they are going to be used that will mainly have to change, and this will be true of the business services sector as much as it will be elsewhere. “I think the word ‘office’ has even become a bit of a misnomer. It will now become more like a social space for employees to innovate together and for team-building. So there will be less of an office feeling than in the past. But people do actually want to come back to the office. Maybe two or three times a week, but still so that you can be the boss of yourself. Firms need to understand this going forward, and use the office as a place to foster employee engagement, since one of the main problems with remote working is that employees feel less engaged with their companies. They might think to themselves: all I can see are faces on a screen – maybe I could work somewhere else,” adds Elias van Herwaarden.
Thus corporate culture along with the loyalty and engagement of employees are all put at risk by home working. But the more social way of looking at the office is nothing new this sector, where such features as ping pong tables etc. were introduced long before others, as Elias van Herwaarden explains: “For the BSS, therefore, things haven’t changed, but the lockdown has accelerated a few trends. Think of automation, which has extended the reach of BSC processes and the use of remote work. The future of real estate and the use of the office will be different. Some BSCs were already on that track and some are further down it than others.”
A problem shared
In his meetings with business services leaders where the topic of how to adjust to the new situation was discussed, a few perhaps surprising ideas have been floated. “One idea was the sharing of resources. Cherries and potatoes don’t need to be picked in the same season – so you don’t need two employees, just one very versatile one. Some have taken the idea of sharing of resources even further – why not share the real estate? If we need to cut costs, why not share the shareable? But isn’t sharing real estate impossible? No. Why should it be? We thought doing business over the kitchen table was impossible before the pandemic,” says Elias van Herwaarden.
Some other trends that predated the pandemic have been accelerated by Covid. One of these is the shift away from the main cities where the BSS has taken hold – in Poland: Kraków, Warsaw and Wrocław – into secondary and tertiary cities, in terms of new locations for centres. “The bulk of BSCs are still in tier-1 and -2 cities, which easily take up 60 pct of the new jobs created in the sector each year. But last year in Central Europe, the figures for tier-3 and -4 locations vastly outnumbered tier-1 and -2,” emphasises Elias van Herwaarden. The reason for this is the need to get nearer to the talent. “Coca Cola and Cargill, for instance, have centres in Sofia but also later opened locations in Varna, 450 km east of the Bulgarian capital, to tap into the local talent. Why just grow your centre in Kraków when you can also open a satellite centre in a tier-3 city? As an additional dual-hub example: BP opened its shared services centre in Budapest in 2009, and set up a secondary site in Szeged eight years later?” he adds. This is the ‘spoke’ approach, the multiple site/multiple country strategy that 22 companies in our region have now adopted. Also, for the employees, the question might arise: why rent a flat more expensively in Kraków, when you can rent an entire house in Rzeszów at the same cost. And there are certainly pools of educated and qualified talent in such places.
The drive towards the greater resilience that can be achieved by opening more than one centre elsewhere in the country or region has also been given a shot in the arm due to Covid. “The BSS did its own hunting for toilet paper after the outbreak of the pandemic, so to speak. So if – God forbid – lighting strikes twice and we have another calamity like the pandemic, the work can be moved around. So resilience is now being built into their footprint. Everyone was very happy when State Street opened a centre in Kraków ten years ago, but they’ve since also opened in the TriCity. Vodafone opened centre in Bucharest, but some of the processes they carried out there have now been moved out to other centres in places like Budapest, although their global centre of excellence for automation is still in Cairo. If one of our clients opens one centre here, there is a very good chance that they will open another somewhere else in the country and build a network of centres. Only the most mature companies do this. For example, PepsiCo, which opened five centres in a relatively short time span of two-to-three years. There are companies out there who feel they are ready to go full-BSC in this way, which makes this a very interesting sector for those who are looking to invest in this kind of real estate,” explains Elias van Herwaarden of Colliers.
Turbo charged for the future
In his view, just as with the SARS-1 epidemic and the global financial crash of 2008, the present crisis could even “turbo charge” the GBS, SSC and BPO scene. And, although this might seem paradoxical, despite the fact that Covid has proven that many things can be done from home. It was the so-called ‘death-of-distance’ that occurred in the 1980s and 1990s that gave birth to outsourcing and the business services sector in the first place – through the removal of trade barriers and increased globalisation. The advent of the internet and now the switch to the home office it has enabled have been dubbed the death-of-distance 2.0. More remoteness in work, though, only seems to energise this sector. Distance might be dead, but as we’ve established the office isn’t. It’s more the case that hybrid forms of offices that are more socially-oriented will be adopted. BSCs will continue to open – and given the projected growth figures for the sector in Poland and the CEE region, even with some post-pandemic revision, its future in our part of the world is still very promising indeed.

The joint Lithuanian and German digital innovation company NFQ Technologies, which currently has offices in Lithuania, Germany, Vietnam, and Singapore, starting this July will found a new company in Poland and plans to open a new office in Kraków. 
This year, NFQ plans to grow its team by 20 new colleagues from Poland, and then expand its Polish operations to 100 specialists across a number of fields over the next three years. The company aims to attract experienced JVM, C#/.NET, TypeScript, and PHP programmers, technology managers, IT project managers, business analysts, HR managers, data scientists, data engineers, and software infrastructure engineers interested in joining NFQ’s IT expert teams in Lithuania (Vilnius, Kaunas, and Šiauliai). The new team members will be responsible for delivering services to the company’s partners from around the world.
“In order to ensure that NFQ remains a key factor in our partners’ success, we are not only pursuing organic growth but are also taking active steps to accelerate the development of our partners’ businesses, as well as our own organization. To this end, we’ve already initiated a number of significant changes, including the establishment of a new office in Kraków, Poland – a city we’ve chosen because of its massive IT talent pool and close cultural fit to Lithuania. We plan to complete the first stage of this expansion by July 2021,” said NFQ’s CEO Paulius Insoda.
Poland was selected after several comprehensive analyses were conducted of the IT talent pool, universities, office space, and competitive environment, as well as comparisons of different locations across Europe. 
NFQ is currently developing IT solutions for companies oriented towards digitisation who see the adoption of the latest technologies as crucial to their development. This includes businesses in the e-commerce, omni-channel marketing, transport and logistics, sharing economy, travel, and finance sectors.
In Kraków, NFQ will seek to attract new talent for its partners, such as HomeToGo (the world’s largest search system for holiday rentals), HansNatur (one of Germany’s leading e-sellers of organic goods), Smarketer (a digital marketplace with over 20 million products, available in Germany, Belgium, and the Netherlands), Alaiko (a German digital logistics and storage management system), and Weezy (UK’s fast-growing instant delivery start-up for groceries).
According to Paulius Insoda, NFQ’s growth is unlikely to stop after Poland. The need for brick and mortar offices in different countries is dictated by the lack of IT talent in Lithuania and the need of international partners to work with technology service providers capable of quickly providing the flexible assistance required to ensure their clients’ growth, even in cases where doing so might be challenging due to prevailing market conditions.
“Thanks to our Work from Anywhere model, geography is no longer a barrier to success. Whoever has the best IT talent – not only IT solution implementers, but also designers, technology infrastructure developers, and visionaries – that’s where we want to be. As an organisation, we are flexible and ambitious when it comes to growth and development,” P. Insoda said.

Bulgaria-based investment fund BlackPeak Capital said that it successfully completed first closing at 68.5 million euro of its target 120 million euro BlackPeak Southeast Europe Growth Equity Fund - with a partial focus on business services.
"Southeast Europe (SEE) is already home to entrepreneurs who have built global or European leaders in specific niches and we are very excited about the opportunity to be able to partner with some of them and help them grow both organically and via add-on acquisitions," said Rossen Ivanov and Ivailo Gospodinov, co-founders of BlackPeak Capital.

The BlackPeak Southeast Europe Growth Equity Fund targets investments of 5-10 million euro in dynamic small and medium-sized enterprises (SMEs) in Romania, Bulgaria, Slovenia, Croatia, and Serbia. The fund has a generalist sector approach with strong preference for IT/software, niche manufacturing, business services, healthcare, and consumer sectors, according to the statement.

The investment fund will operate from offices in Sofia, Bucharest, Ljubljana, and Vienna.
Niklas Pichler, managing partner at BlackPeak Capital, noted that the fund provides investors with an opportunity to tap into a largely underserved market where demand for growth equity far outstrips available supply. "The regional economy has a combined gross domestic product of more than 420 billion euro, is likely to grow faster than the rest of the EU, is dominated by SMEs, and yet there are only a few private equity funds providing growth equity in our target ticket size,” Pichler noted.
BlackPeak Southeast Europe Growth Equity Fund is backed by the European Investment Fund under the COSME and JEREMIE programmes for small and medium-sized enterprises, the European Bank for Reconstruction and Development, the International Finance Corporation, and other European private institutional investors, according to the statement.

Consulting and processing services provider Accenture said that it has entered into an agreement to acquire IT services provider Trivadis operations in Romania, Switzerland, Germany, Austria and Denmark.

The completion of the acquisition is subject to customary closing conditions, the buyer said in a press release in early July. The financial terms of the deal were not disclosed.

More than 710 professionals employed by Trivadis in the five countries will join Accenture’s Data & AI team within the Accenture Cloud First group.
"Acquiring Trivadis will strengthen our ability to help clients blend data from different sources together in real-time, build agile reporting, and leverage analytics and AI to create broadly accessible customer, market and operational insights that deliver meaningful business outcomes," global lead for Accenture Cloud First Karthik Narain said.
Founded in 1994 in Switzerland, Trivadis has worked with clients across industries including the public sector, automotive and life science industries. Its Romanian subsidiary Trivadi Services SRL was established in 2019 in Bucharest.
Accenture is an Irish-domiciled multinational company that provides consulting and processing services which employs over 569,000 in more than 120 countries.
Accenture established its first operations centre in Romania in 2016 and currently employs over 3,000 in Bucharest, Cluj, Timisoara, Tirgu-Mures, Iasi, and Brasov, according to its website.

Genpact Czech was established 9 years ago in Prague. In December 2020 they started a new chapter by expanding our European footprint and setting up a new delivery center. Currently, Genpact Czech employs 170+ employees supporting the entire Europe region especially in Finance and Accounting services.

We strongly believe that Prague has a great strategic location in the hearth of Europe, adding to our large central European business landscape. In addition to the geographical advantage, building on a stable business ecosystem, access to a large pool of talented people and a high quality infrastructure, it’s what made Prague a preferred location to both Genpact and its clients’ businesses.
As part of our continuous transformation journey and combined with our intelligent operations strategy, our plans for 2021 include a further expansion of the service offerings along with the deployment of a wide range of digital tools, adding new scope to our business and further growth of our talent pool.

Envista is a major supplier of cutting-edge products, solutions and technologies for dentists and orthodontists. Envista selected Prague for its center of excellence because of its central location in Europe, thriving, metropolis city life, and cross-cultural inclusive nature.
The Prague Center was created to unite certain teams currently separated across European countries and regions to better serve customers. The employees at this site will be at the heart of the Envista European businesses; dedicated to partner with professionals to improve lives.
Our Prague based team members are helping us to achieve this goal. Diversity, inclusivity, and equality are at the core of what make our culture and teams so successful. Supported by our renowned business system, we are committed to developing world-class professionals at every level of the organization.
By equipping our employees with the best training, teams, and opportunities, we ensure they are empowered, equipped, and accountable for their commitments.

1) Hungary. HOA Summer Cheer-Up party, 22 July.
The HOA board is pleased to invite all members & friends of the Business Services Sector to the
HOA Summer Cheer-Up party on 22 July 2021 on the exclusive Ludwig boat on the Danube.

Meet again after a long break and enjoy the free moments and the new meeting in this beautiful place, on the banks of the Danube and cruising on the river. This is a cruise along the picturesque Danube, have a delicious barbecue dinner and a cocktail show with András Lajsz, followed by a ‘80s and ‘90s disco party with DJ László B Tóth. Guests will be top executives from HOA member companies, the largest Centres, outstanding industry professionals and representatives of the branches supporting the sector.

Participation fees:
CEO and partner of HOA member organisation - free of charge
Additional employees of HOA member organisations: 50% discount 9.000,-Ft + VAT / Head
For non-members: 18.000,-Ft + VAT / person

Programme:
17:30-23:00
BBQ party – Networking
Cocktail mixer show with András Lajsz
B. Tóth Disco

R.S.V.P.
Please indicate your intention to participate by filling in and submitting this form by Friday, 9 July 2021 at the latest.

2) SSC Directors VIP WineTastings. August. Warsaw, Gdansk, Krakow and Wroclaw.
For SSC Site Directors only. Registration here.

3) BSC Charity Beach Volleyball Tournaments, August. Warsaw, Gdansk, Krakow and Wroclaw.
Great team-building on sand volleyball courts across Poland. Limited to 12 teams per city. See full details here.

4) Poland: ABSL Poland's annual Summit. 14-15 September, Gdansk. See full details here.

5) Slovakia: 7th Annual Business Service Center Conference, 30 September, Bratislava
30 September will be the 7th Annual Business Service Center Conference. Business Service Center Forum represents the business service industry in Slovakia with over 37,000 employees from a wide range of services and locations across the country. We will be very excited to welcome leaders of the industry, members of academia and public officials at the Forum´s 7th annual event.

6) SSON: 25th North American Shared Services & Outsourcing Week. 20-23 September, Orlando, Florida. Full details here.

7) Czech Republic. ABSL Leader's Hybrid Conference, 10-11 November, Prague. Full details here.

After 3 years of operating in the Tricity, the management of QLOC decided to expand by almost 700 square metres and has further plans for another 700. Located on the top floor of Argon (Alchemia), QLOC wants to increase the number of FTEs and continues to expand its Quality Assurance (QA) and Development departments. 

QLOC cooperates with the largest studios and publishers in the video game industry, such as EA, Capcom, Warner Bros., CD PROJEKT RED, Activision, BANDAI NAMCO Entertainment and many others. The broad range of the company’s services covers development, testing and localisation. 

In 2018, the company decided to open its office in Gdansk as the first representative of the video game industry from Poland. The decision was made based on the attractive location of the Tricity and the qualifications of local specialists. Today, they choose to expand their operations for the same reasons.

– Video gaming industry continues to grow despite last year’s events, and so do we. The Gdańsk office is one of the pillars for our growth strategy for the upcoming years. – says Adam Piesiak, CEO of QLOC.

QLOC would like to continue increasing the number of Full-Time Employees and improve its brand visibility on the local talent market as the go-to company from the video gaming industry. 

– Invest in Pomerania is proud to fuel the growth of innovative businesses, and QLOC is definitely one of them. We are here to help them attract and retain top talents. – says Bartosz Wojtasiak, Project Manager at Invest in Pomerania.
– The recently opened space allows us to double the current number of employees. QLOC is a unique company, perfect for people who have never worked in the video game industry, as well as experienced developers who can work here with the best companies and technologies in the industry – says Adam Piesiak.
QLOC works on all the biggest gaming platforms, state-of-the-art technologies and games powered among others by Unreal Engine, Frostbite and REDengine. They have helped enhance and adapt such franchises as Devil May Cry, Dark Souls Remastered, Mortal Kombat, Cyberpunk 2077 (and many more) to new platforms, taking great joy in the process and sharing passion with gamers around the world.
According to the Game Industry of Poland 2020 report by the Polish Agency for Enterprise Development, QLOC is one of 7 Polish companies offering external development and top-quality services for the game industry worldwide. 

Chronosphere, a technology startup redefining monitoring for the cloud-native world, has announced plans to expand its engineering team in Vilnius. The company expects to double its employee count in Lithuania over the next three years.
At its heart, Chronosphere is a solution that provides deep insight into the operations of complex cloud-based applications. Company’s customers vary from emerging startups like Tecton to later-stage startups and well-known global brands including one of the largest delivery app companies as well as a multinational financial services company.
Founded in 2019 by Martin Mao and Rob Skillington, Chronosphere is built on the open-source M3 metrics engine, created by the founding team when working at Uber. Developing Uber’s cloud-native monitoring platform, the founders experienced first-hand the complexity and scale required to monitor cloud-native workloads.
Ingesting billions of Uber data points per second and serving hundreds of thousands of dashboards and alerts, M3 proved it can power large production monitoring cases and was adopted by other household brands such as Walmart, LinkedIn, and FedEx. Yet, the demands of large organisations and fast-growing tech companies soon outgrew the open-source project, and Chronosphere was born.
“Our next step was to build upon the production-tested technology and experience gained, and create the world’s most scalable, reliable, and customisable monitoring solution for the companies embarking on their cloud-native journeys,” says Mantas Klasavičius, Head of Chronosphere in Lithuania. ”Our goal is to enable organisations to operate reliably at scale and make precise, data-driven decisions.”
Over the course of 2020, Chronosphere nearly tripled its headcount and raised over 43 million dollars in funding to expand its operations. Currently, Chronosphere has over 60 employees worldwide, with the team distributed in major hubs in New York, Seattle, and Vilnius.