hoa ssc
survey
2013
Introduction

Methodology

This survey had been initiated
by the Hungarian Services and
Outsourcing As...
1. General findings
24 major Hungarian outsourcing companies have
completed the survey. Seven industries were represented
...
Who are the customers?
Fifty percent of the SSCs provide
services for internal clients only,
while others serve exclusivel...
8
6
4
2
0
What services the SSCs purchase
from local subcontractors

HR services

42% of Hungarian SSCs don’t
use local co...
8%
4%

0%

10%

2. Benchmarks in SSC sector

20%

30%

40%

70%

60%
50%
E-invoice coverage of participants
40%

Finance a...
Engagement ratio result among
the participants

People

‚ 60-70%

The annual voluntary attrition
rate is continuously impr...
4%

10%

3,10%
40
3,00%

0%

2,90%
20
0%

10%

20%

100%
70%

40%
30%
20%
20%
10%
0%
0%

100
100%

3,40%
Job sharing
3,30%...
About HOA
The Association’s mission is to promote the country’s
economic development by supporting the business
services s...
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HOA SSC Survey 2013

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The 1st Hungarian SSC industry benchmarking survey by HOA.

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HOA SSC Survey 2013

  1. 1. hoa ssc survey 2013 Introduction Methodology This survey had been initiated by the Hungarian Services and Outsourcing Association in order to have an overview about one of the most dynamically growing sector of the Hungarian economy. HOA intends to repeat this survey on a yearly basis to provide reliable, comparable industry measures to its members and the investors considering entering the market. As the intention of the HOA benchmarking survey was to get an overall picture about the whole sector. The questionnaire covers 3 major areas: services, people and technology. One of the most important goals of the survey is to provide benchmarking data for industry members about the Hungarian SSC market. The survey has been focused on the key information and data required for a comprehensive analysis of the market and its trends. Processes Locations The survey targeted all currently active shared services centers in Hungary irrespective of their HOA membership. Data has been collected from an online questionnaire in June-August 2013. People Technology Process Questions are divided into two types. In case of one question group the companies had to choose the appropriate answer with ticking the box, and in case of the other type of questions a direct answer was required in numbers or percentages. The individual requests of the market players have been taken into consideration in regards of questions and topics by maintaining relevance level for the entire SSC sector. The online benchmarking tool will be available to all survey participants allowing access to the benchmark results by locating the own companies personalized performance compared to the relevant market result.
  2. 2. 1. General findings 24 major Hungarian outsourcing companies have completed the survey. Seven industries were represented in the survey of which Services, Industrial production and Telecom took the biggest stake. Participants employ more than 14.000 people in seven cities. The participating companies in this survey represent at least half of the total Hungarian SCC market. According to the latest measures the estimated size of the Hungarian SCC market employs approximately 25,000 employees. Comparing Budapest and other locations, 83% of the headcount works in Budapest. Among other locations Debrecen is the most popular, employing more than the total of the other locations in the countryside. Headcount breakdown by location ‚ Budapest 460 ‚ Debrecen 1 735 ‚ Székesfehérvár 250 ‚ Other locations Respondents of the survey employ 600 person in average, which indicates the bigger SSCs were over-represented in the survey. 11 793 Number of participants 12 10 8 6 4 2 0 0-200 201-500 501-1000 Categories by headcount 1001 38% 29% 25% 13% 8% 4% 2 hoa ssc survey survey |e 2013 hoa ssc | Fi rst di t ion, 2 013 0% 10% 20% 30% 40%
  3. 3. Who are the customers? Fifty percent of the SSCs provide services for internal clients only, while others serve exclusively external customers. Less than ten percent of the companies work for both internal and external clients. 8% 42% ‚ Internal ‚ External ‚ Both 50% International companies prefer to establish a separate legal entity for their shared service operations as more than 70% answered, that their SSC operates in a separate legal entity. We also need to consider that some Hungarian SSC simply don’t have any other operations in Hungary. The cost-based concept of settlement seems typical in the Hungarian SCC industry, 83% answered, that they run the business on a cost-based concept. Considering that 50% of SSCs provide services to external customers as well, it has to be pointed out that bigger stake of Hungarian SSC market provide services directly to external companies, while the income comes from the mother company based on cost. Subsidies in the indrustry With regards of subsidies only 54% of the respondents have demanded any kind of subsidies either from Hungarian government or from EU sources. Since the bigger companies are over-represented, it is assumed that in the total industry the subsidy portion is below 50%. 45% 17% 38% ‚ GOP fund ‚ EKD fund ‚ No subsidy hoa ssc survey | 2013 3
  4. 4. 8 6 4 2 0 What services the SSCs purchase from local subcontractors HR services 42% of Hungarian SSCs don’t use local contractors at all. The most commonly used services provided by Hungarian service providers are HR, Finance and IT services. 38% Finance services 29% IT 25% Logistics 13% Purchasing 12 8% Operational excellence 10 4% Treasury 8 Customer service 6 0% 4 70% 2 60% 10% 20% 30% 40% ¢ What services the SSCs purchase from local subcontractors 0 50% Country advantages and competitiveness factors have 40% also been examined in the survey. The participants 30% pointed out four major risks, ranked in the following 20% order: labor arbitrage, language capability, skill arbitrage, 10% and country risk. 38% of the participants mentioned 13% country risk among the biggest threats of the industry, 0% 8% which seems to be a major risk considering the SSCs 4% provide their services mainly offshore. 38% 29% 25% 100% 80% 0% Country risk 10% 20% 30% 40% 60% 70% 60% 40% 50% 20% 40% 0% 30% 20% ¢ Biggest threats in the SSC sector 10% 100 0% e ity d ge ral 90 ility lity 80trag abi Proxim arbitra ogy an Cultu y stab bi l l r ar ge cap o l ntr ou Ski Techn Cou Lab angua L 100% 60 40 80% How frequently the 45 threat was mentioned 20 60% 14 In the SSC market the IT sector is the0 leading employer. 40% More than 27% of all SSC jobs are offered in IT, 25% of 20% the total SSC headcount works in Finance/Controlling SSCs. The third biggest SSC employer is Customer Services 0% (16%), while the fourth one is HR representing 5%. 100 4 hoa ssc survey survey |e 2013 hoa ssc | Fi rst di t ion, 2 013 80 90
  5. 5. 8% 4% 0% 10% 2. Benchmarks in SSC sector 20% 30% 40% 70% 60% 50% E-invoice coverage of participants 40% Finance and controlling ‚ 0-25% 27% Almost 40% of the invoices are electronically issued. The purchase order coverage is almost 67%; the first-time hit rate in purchase orders is exactly 50%. The compliance of harmonized payment terms is near to 90%. 77% of the companies use one chart of accounts globally. 30% ‚ 25-50% 20% ‚ 50-75% 10% ‚ above 75% 0% 100% 9% 80% 46% 60% 18% 40% 20% Average recruitment leadtime (days) 0% HR The average recruitment leadtime is 45 calendar days. Shared Services Centers provide high level training sessions to their employees, according to the survey in average 8.5 working days are provided for training purposes in each year. Majority, 70% of the companies use e-learning platform in their training programs. ¢ Average recruitment leadtime (days) 100 90 80 60 40 45 20 14 0 Minimum Avarage Maximum On-time resolution of tickets as per SLA (%) 100% 12 10 8 6 4 2 Customer service 80% In average 415 tickets per month are handled by one employee. One-third of customer services SSCs works non-stop (24/7), two-third works in normal business hours. 60% 40% 20% 0% 0 38% 29% 25% 13% 100 hoa ssc survey | 2013 80 5
  6. 6. Engagement ratio result among the participants People ‚ 60-70% The annual voluntary attrition rate is continuously improving at SSC companies – current average is at 13%. Job grading system is provided by 95% of the SSCs. Also 95% of the participants implemented employee satisfaction survey processes resulting in an average of 71% engagement ratio. 12 10 8 6 4 ‚ 50-60% 9% ‚ 70-80% 25% ‚ above 80% 100% 80% 33% 60% 33% 40% 20% 2 0% 0 13% 8% 4% 0% 10% Less than 9% of the total number of employees are non-Hungarian citizens. 87% of the total number of 38% employees has a university or college degree, the SSC 100 sector29%still one of the biggest employer of employees is 25% a higher education among non-public industries with 80 offering jobs for more than 20.000 people. 85% of the SSCs support the education programs by offering 60 educational contribution to their employees. Trade 40 union is very rare among the SSCs; only 10% of the companies have trade unions within the company. 20 20% 30% 40% 0 70% Yearly average salary increase 60% 3,50% 50% 3,40% 40% Salary competitiveness had also been examined. The average salary increase in the SSC sector was 3.1% in 2011, 3.0% in 2012 and 3.4% in 2013. 30% 20% 10% 0% 3,30% 3,20% 3,10% 3,00% 2,90% 2,80% 100% 2011 2012 2013 ¢ Yearly average salary increase 80% 60% 40% 20% 0% 100 80 6 hoa ssc survey survey |e 2013 hoa ssc | Fi rst di t ion, 2 013 0 90 20 40 60 80
  7. 7. 4% 10% 3,10% 40 3,00% 0% 2,90% 20 0% 10% 20% 100% 70% 40% 30% 20% 20% 10% 0% 0% 100 100% 3,40% Job sharing 3,30% Flexible working hours 3,20% 3,10% Part-time work 3,00% 2,90% Home working 2,80% 0 90 60 60% 40 60 80 ¢ Flexible employment types in SSC sector 14 23 languages are 45 services centers. languages are in frequency order: English, German, 50% Italian, French, Hungarian, Spanish, Dutch and 40% Portuguese. These languages are supported in more than 30% 20% 50% of the companies. 10% 0% 100 90 Supported 80 60 40 0 20 40 60 80 languages 100% 90% 80% 70% 60% 45 20 14 — Supported languages 50% 40% 30% 20% 10% 0% English German Italian French Hungary Spanish Dutch Portuguese Swedish Polish Russian Slovak Finnish Czech Danish Turkish Arabic Croat Norwegian Serbian Japanese 0 20 100% 90% supported from Hungarian shared 80% 70% The most commonly supported 60% 40 40% 0 0% 2,80% 0 3,50% The flexible employment types are surprisingly popular in the sector. 63% of the companies offer flexible working hours, part time work is available at 58% and home-office is also available at 54% of the participants. 80 80% 20 20% 40% Flexible employment types in SSC sector 80% 60% 50% 60% 40% 30% Potential growth of the industry has also been evaluated. The average estimated increase is more than 16%, which converts to more than 2.300 new jobs in the industry in the forthcoming two years, not-considering any new SSCs to be established in this period. One of the participants reported to increase its headcount by 500 FTEs. hoa ssc survey | 2013 7
  8. 8. About HOA The Association’s mission is to promote the country’s economic development by supporting the business services sector, through spreading opportunities to increase efficiency offered by organizational innovation and in particular through uptaking the concept of outsourcing. HOA is an open, independent, professional organization. It’s common organizing principle is to participate in service activities provided to the stakeholders of the economic and public sector. We act in the interest of the outsourcing sector and our Members. www.hoa.hu Hungarian Outsourcing Association H-1061 Budapest, Andrássy út 17. Phone: +36 (1) 205 3317 E-mail: info@hoa.hu Copyright HOA, 2013 This document is protected by copyright. Any part of this document may be used for non-commercial purposes with referencing the source for free of charge. The prior written permission of HOA is required to any other use of the document.

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