We are living in very interesting and turbulent times, says Business Service Center Forum Vice Chair Ivan Tomko.
The sector of shared and business service centres has grown into the third-strongest pillar of the Slovak economy over the past 20-odd years. The development implies that the sector has shaken off certain myths, such as that the centres are just call centres.
“As this sector employs about 40,000 people, we actually have 40,000 ambassadors who tell their relatives and friends what these centres actually do – and that this is far more than just calling customers,” said Ivan Tomko, vice-chair of the Business Service Center Forum (BSCF) at the American Chamber of Commerce (AmCham), in an interview with The Slovak Spectator.
They provide professional services, like financial and IT, thus helping their parent companies to grow. The increase in managerial positions at such centres in Slovakia, from 9 to 11 percent during 2022, is proof that they are attracting more sophisticated jobs and competences.
“They are responsible not only for Slovakia, but for a larger region, and they are even taking on global roles,” said Tomko. He cites the simplified example of an accountant sitting in Slovakia, responsible for managing all the invoices of a given company totalling tens of millions of dollars around the world.
The Slovak Spectator talked with Tomko about the impacts of the Covid-19 pandemic, the new digitalisation and automation wave, as well as the possible usage of the ChatGPT chatbot in the real world of business.
What effect has the Covid-19 pandemic had on the shared service and business service centres sector in Slovakia?
The pandemic has had a minimal impact on the sector, while maintaining productivity and functionality. As we work in offices across the globe, we were able to switch to the home office model very smoothly. At the beginning, we looked for the best models to maintain the engagement of employees, but otherwise the pandemic and remote work had a rather positive effect on productivity. On the other hand, working from home had a negative impact on creativity and relationships. These are better built in the workplace where employees are physically present.
Have the impacts differed compared to abroad?
I don’t have any such information, but I don’t think that this sector behaved differently abroad. The foreign sister companies of our member organisations have not reported any differences either. Now that pandemic measures have been eased, individual organisations are taking different approaches to getting employees back into offices to maintain creativity and corporate culture.
Why is it such a challenge in your sector to get people back into the office?
It’s a general challenge; it doesn’t pertain just to our sector. Most important current legislation doesn’t recognise home office work, which causes a lot of issues for employers to be compliant and not expose their companies to risk. But if there is any sector able to smoothly switch to the home office model at almost 100 percent, then it is ours. And employees got used to it. Some of them terminated rentals and moved back to their families or somewhere else and re-established their daily routines. For example, somebody moving out of Bratislava to Rožňava, his or her children attending a kindergarten or school there, their life now adapted to new norms. Being physically five days a week in an office in Bratislava does not fit very much into their new lifestyle model anymore. On the other hand, when employees again spend time together in the office, more creative ideas arise and the work progresses better. This is a message that we try to pass on and inspire them to return to the office.
Don’t you have the power to order employees to return to the office?
Not yet. From the legislative point of view, there is still an extraodrinary situation (mimoriadna situácia) in effect. The government ordered employers to enable those employees to work from home. But even if we could, we don’t want to order people to return to their offices. We can function in a hybrid model that combines work in an office environment and working from home, and this is the path at least most companies in our sector want to follow. At the same time, when we manage to convince people to come again to the office, they very quickly discover the pleasure of being in physical contact with colleagues.
Under what model will the companies in your sector operate after the extraordinary situation is over?
I assume our sector will not return to 100-percent work in offices. We are expecting a flexible model, with shared days in the office and working remotely: for example, two days in the office and three days at home or vice versa. People will meet once or twice a week in the office, have team meetings and they will work on their projects remotely. The offices will not be designed for 100-percent attendance either. Their layout will be different. They will support collaboration and will not expect all employees to be in the office at the same time. We believe that this will be a win-win solution, as we can maintain the effectiveness of work and the satisfaction of employees under such a hybrid model.
Is the energy crisis affecting the BSC sector in Slovakia?
As we are not an energy-intensive sector, we just have office spaces that we need to heat and we need electricity to operate. The direct impact of the energy crisis on the sector is not so significant. Despite this, our member companies have introduced energy saving measures. For example, they limit heating during weekends. But the energy crisis may impact us indirectly via our clients. These are often companies hit by higher energy costs and they are economising their expenditures. This may mean that they will not buy so many services from our parent companies, and shared service centres could have, theoretically, less work. On the other hand, the current situation may push these companies to search for saving measures. This may be shifting operations onto our centres, because it’s more effective to have for example one financial department for the whole group and not one per organisation. But this is the basic reason why shared service and business centres have been created. This is not directly related to the energy crisis as such.
Companies like Amazon, Dell, IBM and others have announced a wave of layoffs. Do these also pertain to their shared service and business services in Slovakia?
I see these workforce planning moves as efforts by these companies to optimise their costs in order to stay competitive and survive economic recession and inflation. But our member companies have not reported any major changes in their workforce in the country. Slovakia is still perceived as a strategic location and even registers the arrivals of new companies and the extension of existing ones. This is also a signal that the sector as such is both stable and strategic in the long term and able to absorb new investments. Therefore, there is a theoretical chance that we will come out even better from this situation. Not right now, as most companies are rationing, but later this year.
Does Slovakia remain competitive?
Available data indicate this. For example, the number of employees has been increasing. Last year it increased by 4.3 percent. This is 1 percentage point less than the year before, but it does keep increasing. We have skilled, very well educated resources with excellent language capabilities here, even though there is a perception about lack of qualified people.
Does only Slovakia suffer from a lack of a qualified labour force?
What we have been hearing from our colleagues abroad is that this is a general phenomenon, especially in terms of IT and technical positions, Slovakia is not an isolated island in terms of this.
Could you name any new arrivals or expansions?
Several new companies arrived last year. One was Kyndryl and the second one is Freshfields, their main activities are in the field of law. Zurich Insurance opened a new centre in Košice in December. Takeda, which opened its Innovation Capability Center (ICC) in Bratislava last April, is already an established company with over 300 employees. In general, shared and business services centres in Slovakia are growing, with few exceptions. There are individual cases where some positions are being transferred away, either to a cheaper country or via automation. This is good news for Slovakia, because the jobs that remain or are created here are more sophisticated and with higher added value, not low-cost jobs in so-called administrative manufacturing. This even further anchors the companies in Slovakia, as the expertise and skills obtained make potential moves elsewhere more difficult.
What impact does automation and digitalisation have on the need for labour in shared service centres?
Digitalisation and automation are a clear trend now and I believe it will even accelerate. With the advent of more and more sophisticated artificial intelligence, we cannot imagine today how fast this process could be. In many things we are just at the beginning. ChatGPT, a publicly accessible tool developed by OpenAI and launched last year, indicates what will be possible to automate. This extends the pool of possibilities where AI could be used.
Could you imagine using ChatGPT in business?
Certainly yes, in almost every business process. This tool or similar tools are available. Today, it can even write a basic script for a computer programme. Of course, an expert still must look at it and say whether it’s correct and makes sense. But the initial job, i.e. writing the script, can already be performed by artificial intelligence. In accounting, it can help with billing an invoice – it will perform the job and an accountant will check whether it was done correctly. AI can also be used in the HR sector, where it can for example help to identify suitable candidates. We are living in a very interesting and turbulent time.
What do you envisage for the future development of the sector? What are the challenges it faces?
The BSCs sector is one of a few in Slovakia that did not ask for any assistance from the state, and operated without any serious interruptions or problems during lockdowns. Thus, I expect stability and possibly growth in the labour force and performance. In terms of challenges, a long-term problem is the lack of qualified labour. We have been constantly addressing state and governmental institutions about this. The BSCF’s member companies have also been giving a helping hand to schools in the form of various projects, dual education and so on. The second challenge is the predictability of state and governmental interventions as well as the legislative environment. The recent changes have not impacted the sector very well. For example, the increase in surcharges for overtime and night work is an intervention into the existing model that potentially reduces our competitiveness. When a parent company is deciding about granting a new mission to Slovakia as one of its affiliations, wage costs are one of the decisive factors. To be successful in the long term, we need to have some security and stability in the business environment.
FULL STORY: (Slovak Spectator)
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