ilips Lighting today announced the creation of the Financial Services Center in Łódź. The center will employ 120 people and will be responsible for the accounting and financial processes of all European branches of the company. Philips Lighting, one of the service pioneers in Łódź, has already set up an operation in Lodz - a transaction center was acquired in 2007 by Infosys BPO Ltd.
After a thorough analysis of the remaining non-transactional financial-accounting operations, Philips Lighting has decided to improve business efficiency by consolidating all processes in one place in Europe. The city of Łódź was chosen because of the potential of its labor force,, good past experience, investment climate and the availability of high quality office space.
"Since our accounting and financial operations are geographically divided, we are keen to
centralized operations at the Financial Services Center. This will allow us to improve the quality and performance of our accounting and financial operations by further optimizing and standardizing and increasing the flow of knowledge", said Lion Paauwe, Center Director.
"Poland gives us fantastic opportunities to employ well qualified and experienced foreign language professionals and we, as Philips Lighting, have been operating in Poland for a long time," he added.
Paauwe adds that competence centers in F&A, offering comprehensive process management, service provider management, and decision-making processes are a unique opportunity for Lodz to further develop. Most of the common services industry is focused around transactional services. Recruitment of employees is already in progress. Philips Lighting is using Experis (ManpowerGroup).
Poland’s government expects JPMorgan Chase & Co. to open an operational center in Warsaw, swelling the ranks of banks attracted by Poland’s lower costs amid competition by European cities for jobs set to move away from London.
The U.S. bank, which is poised to hire “several thousand people,” according to Polish Deputy Prime Minister Mateusz Morawiecki, adds to list of foreign lenders that have been relocating some mid- and back-office positions to the formerly communist European Union member.
“The world’s largest bank will have a headquarters here and will hire several thousand people in management, risk management and logistics, which is good as these are well paid jobs,” Morawiecki told public radio Trojka on Friday. “The deal is done."
UBS Group AG has set up a global hub in Krakow, while Goldman Sachs, which is planning to halve its London staff to 3,000 workers, will expand in Warsaw to “several hundred” people over the next three years, Handelsblatt has reported. Morawiecki said this year that Brexit could bring as many as 30,000 business service-sector jobs to Poland.
Jennifer Zuccarelli, a spokeswoman at JPMorgan in London, declined to comment. A spokeswoman said in January that the bank was "always reviewing our options to improve our real estate strategy for back-office functions" and that the process had "nothing to do with" Brexit.
Business outsourcing centers opened by foreign corporates have added 198,000 jobs in Poland, including 32,000 in the 12 months to March, with many of them in the financial industry, according to the Association of Business Service Leaders in Poland. That compares with 275,000 people employed in the traditional financial sector as of the first quarter, according to the Central Statistical Office.
New positions in the banking industry in Warsaw offer salaries from $1,400 to $5,050 per month, according to ABSL. That compares with the average annual salary of about $62,000 in financial services in the U.K., according to job recruitment agency Reed.
Kraków’s emergence as a leading location for technology and business services has been confirmed by the city’s ranking in the 2017 edition of Tholons Services Globalisation Index. This news comes at a time when we are seeing a dramatic volatility in the ranking of cities following the introduction of a more robust methodology aimed at capturing the various impacts of digital disruption.
Kraków has climbed to 8th place globally in the 2017 Index. For the first time, the city has moved ahead of several established players in India and the Philippines. At the same time, Kraków along with Dublin continues to pull away from other cities in Europe.
The 2017 Index records a significant shift in the competitiveness of cities compared with previous years. For the first time since the inaugural report in 2006, Kraków has overtaken two of India’s major services locations, Chennai and Pune, as well as Cebu City in the Philippines. Some of the major climbers in the ranking are the South American cities, Sao Paulo, Buenos Aires, Santiago and Montevideo; as well as Toronto, Vancouver, San Antonio, Birmingham and Tel Aviv.
The dynamic change in the landscape is attributed to the impact of digital innovation and transformation, with industry leaders and established locations grappling to align their volume based business models to the new realities of mobile, analytics, cloud, social media, cyber security, digital marketing and automation, all of which factors have been given more weighting in the 2017 ranking. For the first time Tholons has introduced digital innovation as a prime gauge in ranking cities, assessing the number of start-ups, start-up diversity, start-up ecosystem, and business catalysts promoting entrepreneurship and collaboration.
The report is a mixed bag for other cities in CEE. Cluj-Napoca, which enters the ranking for the first time, and Sofia are the biggest climbers, whereas Bucharest, Brno, Bratislava and Wrocław have fallen back significantly. Warsaw, Prague and Budapest have consolidated their relatively high positions in the ranking.
TSGI 2017 is the 12th edition since 2006 and is based on Tholons location assessment framework which uses both primary and secondary research. Data is collected and validated from an extensive network of industry stakeholders including enterprise buyers, service providers, governments, trade bodies and associations. Innovation / Digital, Talent, Skills & Quality, Cost, Risk & Quality of Life, Business Catalyst and Infrastructure are the key metrics used to rate and rank cities.
At the 1st annual USA-Europe Shared Services Awards Gala – held 28th June in New York – 10 top American companies were distinguished for their operational excellence with Europe-based delivery centres.
Nearly 140 top executives from 79 companies attended, representing 16 countries. The VIP Jury voted to award 10 companies for their high-performance operating models and delivery excellence.
TOP US SSC INVESTOR IN POLAND – Winner: Cisco Global Services Center (Krakow)
Cisco Global Services Center (Krakow)
Citi Service Center Poland (Warsaw)
MoneyGram International (Warsaw)
Stanley Black & Decker (Warsaw)
State Street Bank Polska (Krakow and Gdansk)
TOP US SSC INVESTOR IN HUNGARY – Winner: Morgan Stanley
TOP US SSC INVESTOR IN CZECH OR SLOVAKIA – Winner: JNJ Global Business Services
Adient (formerly Johnson Controls)
JNJ Global Business Services
Mondelez European GBS
TOP US SSC INVESTOR IN BALTICS – Winner: Western Union Processing Lithuania
Western Union Processing Lithuania
TOP US SSC INVESTOR IN ROMANIA – Winner: Bombardier Transportation GBS
Bombardier Transportation GBS
TOP US ITO/BPO INVESTOR IN POLAND – Winner: Accenture
TOP US ITO/BPO INVESTOR IN CZECH / SLOVAKIA – Winner: Accenture
TOP US ITO/BPO INVESTOR IN HUNGARY – Winner: EPAM Systems
TOP US ITO/BPO INVESTOR IN ROMANIA – Winner: Accenture
TOP US ITO/BPO INVESTOR IN BULGARIA, SERBIA, BELARUS OR UKRAINE – Winner: EPAM Systems
COMPANIES ATTENDING INCLUDED:
Johnson&Johnson, Western Union, Flowserve, Brown Brothers Harriman, Lexmark, State Street, NASDAQ, Cisco, Citi, Morgan Stanley, Capita, BD (Becton Dickinson), Mylan, PWC, Eaton, Xceedance, Zitec, Okin BPS, EY, Dana Holding, MacDermid Performance Solutions, ToysRUs, StanleyBlack&Decker, American Institure of CPAs, Latvia Investment Agency, Slovakia Investment Agency, City of Krakow, City of Poznan, Region of Pomerania (Gdansk, Gdynia), City of Bydgoszcz, City of Lublin, Bulgaria Outsourcing Association, Bulpros, Garitage Investment Management (Bulgaria), SSC Heroes (Hungary and Poland), Embassy of Hungary, Transparent Solutions, Boyden Executive Search, HCL, Zitec (Romania), EPAM, Capita, Raffles Fund, Onwelo, NASSCOM Foundation, HP, Gavs Technology, Skanska, Vistra, Screaming Box, CushmanWakefield, Process Solutions, Great Connections, KPMG, Polish-American Business Club, World Bank, Kryon Systems, Voxy, Inc., New York Business Consultants, Citigroup Inc., Monarch Holdings, Pacific Crest, ThoughtFocus, Merrill Lynch, American Stock Transfer and Trust LLC, Temple University, KeyBank, MUFG Union Bank, Time, Inc., and more...
Background on USA-Europe Shared Services Summit and Awards:
“We organize this annual event as a platform to match US mid-cap companies with their American peers who have already established shared service operations in Central Eastern Europe,” said CEE Business Media CEO Thom Barnhardt.
Short-listed companies are best-in-class in optimizing their business models, and are building highly-efficient captive operations on a global scale. Others are tapping into ITO or BPO service providers to dramatically lower their cost structure and streamline select business processes.
“A typical mid-market US company can bring $3- to $5-million in savings to the bottom line in year one,” said Barnhardt. This allows fast-moving US companies to shift capital and resources toward opportunities like innovation, sales, new products, and new hires.
At the 1st annual USA-Europe Shared Services Summit, attendees included more than 25 global directors of US-based companies which are operating shared service centers (SSCs) in Central Eastern Europe. American companies now account for 50 percent of the investment in shared service centers in the region of Central Eastern Europe.
ABOUT CEE BUSINESS MEDIA:
In addition to this New York City event, CEE Business Media operates the annual CEE Shared Services Awards in Poland (www.CeeOutsourcingAwards.com - now in its sixth year). This American-owned company also publishes the annual CEE Shared Services Directory and operates the SSC Heroes community portal. With 25 years of operating experience in Central Eastern Europe, CEE Business Media is focused on providing information and the right connections to global businesses expanding in the CEE region.
Mondelēz International today inaugurated its newest global Technical Center in Wroclaw, Poland. This state-of-the-art facility will support new products and technologies for many of the company's iconic Power Brands, including Milka and Cadbury Dairy Milk chocolate as well as Oreo, belVita and Barni biscuits.
The Wroclaw Technical Center is part of the company's previously announced $65 million investment in nine large R&D hubs, strategically positioned around the globe. These centers will enable Mondelēz International to better recruit, retain and develop talent across a range of science and technical disciplines while accelerating the company's growth and innovation.
"With these advantaged Technical Centers, we're focusing our investment in research, equipment and capabilities, driving innovation to support our growth strategy, margin and quality platforms," said Rob Hargrove, Executive Vice President, Research, Development, Quality and Innovation. "These R&D hubs will improve speed, efficiency and effectiveness, while increased scale will enable us to more quickly address evolving consumer needs."
Hargrove continued, "Poland is one of our most important markets in Central Europe, and Wroclaw is a modern city that's open to investment. Embedding one of our largest Technical Centers here clearly signals the importance of Poland and Europe within our global R&D network."
The Wroclaw Technical Center will be home to nearly 250 experts — scientists, engineers and other specialists from all over the world. The site is equipped with innovation labs, a large pilot plant and a "collaboration kitchen" — a creative space of 9,500 square meters for new ideas and experimentation. The Wroclaw Technical Center will closely collaborate on innovations with more than 40 sites in our manufacturing network across Europe.
The Wroclaw hub joins four other Mondelēz International Technical Centers — East Hanover, New Jersey, in the United States; Curitiba in Brazil; as well as Bournville and Reading, both in the UK — that are already in full operation. The remainder of the company's network of redesigned Technical Centers — in India, Singapore, Mexico and China — are expected to open in the second half of 2017 and in 2018.
According to consultancy Deloitte, more than 80 percent the Fortune 500 have integrated shared services with their US operations (PDF: “Shared Services Handbook”). These companies are high profile organizations: their investors expect forward momentum on a quarterly basis and their competitors are looking for ways to beat them on a daily basis.
What Do Shared Services Look Like?
Following along the well-worn path pioneered by the Fortune 500, the US middle market is now moving in large measure into the intelligent use of shared services solutions. They, too, seek the operational flexibility and reduction in cost which the Fortune 500 have seen over the last couple of years. For example: State Street is headquartered in Boston, but its next-largest office, with 4,000 employees, is in Poland.
Definitions of the US middle market vary, but the benefits of a thoughtful approach to shared services truly shine for those US companies in the $100-million to $900-million (annual revenue) range. Even for those middle market companies that operate solely within the United States, there is an increasingly global influence to the nature of their customers and vendors, and to the development of products and services.
For best results, shared services are not shared with other companies; they are captive. That is to say: the US employer owns its shared service center (SSC) in full, whether the SSC is located in the US or abroad. The SSC typically delivers back-office solutions in finance, administration, human resources or some combination of these. And the “clients” for these solutions are the US company headquarters as well as any other offices operated by the US company -- whether these other offices are in the US or abroad.
Furthermore, while US companies may have first entered into shared services for reasons of cost reduction, these companies have, over time, discovered that shared services are inherently of tremendous operational influence. Nowadays, shared services are a strategic decision which helps companies to do more and better -- often with greater levels of speed and innovation.
Looking back on the experiences of the Fortune 500 and the early adopters within the US middle market, there is now a sense of maturation that allows managers to assess the “first wave” of lessons learned in the use of shared services. This act of reflection is giving rise to a reconsideration of what shared services should look like and how they are best designed and deployed.
Three Key Reasons
Here we list three key reasons why American companies may reconsider their current deployments in shared services and what they expect, from strategic and operational points of view, going forward.
1. Greater Value
For both large and middle-market US companies, there has been onshoring -- that is, shared services which are based in the United States. There are obvious benefits to onshoring (geographical proximity, cultural alignment, financial and operational rollup, etc.), but as the market for shared services is increasingly global, there are notable benefits to the offshoring of SSCs.
The next wave of opportunity in shared services is likely to be in the form of value for money. It is no longer sufficient to look for reductions in cost; US companies also want a bump in value added. Many are finding such benefits in Europe where executives, managers, and day-to-day employees and specialists are highly educated and simultaneously available at rates that compare favorably with the US and the greater OECD.
In particular, European Union countries such as Poland, the Czech Republic, and Hungary offer exceptional value for US companies looking to base SSCs in secure and stable locations. Today 50 percent of all investment in SSCs in Central Eastern Europe is from US-based companies.
2. Greater Quality
Some US companies began by locating SSCs in Asia and, in particular, in India. Again, as with US-based SSCs, there are notable benefits to locating an SSC in India. There are also opportunities for improvement, and this is where many US companies find greater opportunity in a shift from India to Europe.
For example, SSCs in leading European Union markets such as Poland, the Czech Republic and Hungary are able to field tens of thousands of employees who speak English as well as a dozen other languages while working to US standards of office culture, financial regulation, engineering codes, customer service standards and more.
These Central Eastern Europe countries are in the same time zone as the rest of the European Union and only one hour different to the United Kingdom. Their work day overlaps the US eastern time zone by four hours or more. For US companies with European operations, or even just a single Europe-based sales office, having an SSC in Central Eastern Europe is a welcome boon to synergy as well as an opportunity to raise the bar in terms of quality of operations.
3. Greater Opportunity
A decision to implement shared services operations is more than a line item in the C-suite agenda. Time and again we see that shared services actually bring about strategic change -- and improvements in business model definition as well as market opportunity identification.
It’s interesting that shared services are not an end in themselves. They are not, as some people misunderstand, simply about reducing cost. With an intelligent approach to shared services, American companies are becoming more focused on their core value-adding processes. They become more capable of staying on top of, as well as ahead of, their markets.
So our third reason is opportunity. Even for companies that already deploy shared services centers, there is a desire to evaluate these and to optimize them for strategic advantage. What are the newest methods, technologies, and locations for the operation and integration of shared service centers?
We are far from finding a mature market in shared services. Forward-thinking and fast-moving companies recognize that shared services are an ongoing commitment -- a matter of company culture as much as about process.
The race for talent includes a number of impressive displays of investment, not least with the pending decision by J.P. Morgan to locate a back-office function in Central Eastern Europe.
Approximately 2,500 positions will be hired and, at the moment, it appears that Warsaw is gaining the lead over Budapest. Both are fantastic markets with exceptional talent. And both markets continue to attract not only major investment banks, but also other forward-looking companies.
Interest comes from large US corporates as well as mid-market US companies looking to dramatically reduce costs and increase flexibility and control over their business models. US startups, as well, are now entering the market. Startups are looking to reduce burn rates and to extend runways as they iterate and improve their operations and their go-to-market strategies.
Do you have a hot news tip for us? Write to our CEO, Thom Barnhardt, on tb (at) SharedServicesEurope.com
The rise of shared services has coincided with exciting and forward-thinking changes to company business models. While much attention has been focused on finance, IT, and administration, we are finding that the promise of shared services is no less empowering to individual employees, themselves.
Thanks to an intelligent rethink of the human resources (HR) function, the marketplace of ideas is now bringing about a strategic shift in HR -- from an HR department focus to an individual employee focus. Frank Roebroek covers this in his examination of trends in HR Shared Services.
More than impressive. BlackRock is the world's largest asset manager with $5.4 trillion in assets under management. Now this US-based company intends to open an innovation center in Budapest, Hungary, "to deal with product development and the management of client data."
The Hungarian government has also offered BlackRock approximately $1-million in funds for employee training. According to Patrick Olson of BlackRock, the company chose Budapest, the capital city of Hungary, because of "its education system, quality of infrastructure, security, and quality of life."
Budapest is one of the major flagship cities in the region of Central & Eastern Europe, and stories like this are a win-win for everybody -- on both sides of the Atlantic.
Be sure to see the full article at Hungary Today, here.
Boston, Massachusetts and Krakow, Poland are well connected according to this article from Insurance Journal. Xceedance, the Beantown-based provider of technology and analytics to the insurance industry, has opened a shared services operations center in Krakow.
This city is ideal for the multi-country needs of Xceedance. According to the company, the Krakow location helps Xceedance "to optimize abilities to meet the strategic and multilingual needs of our clients."
We've seen this time and again: shared services delivery in Central & Eastern Europe allows US companies to tap a highly-educated workforce with extraordinary skills in commerce, technology, and languages.
Xceedance CEO Arun Balakrishnan is also quoted. We are proud to say that he will be speaking at our event on June 28, 2017 in New York.
News and commentary from the team at CEE Business Media. We are the organizer of the USA-Europe Shared Services & IT Outsourcing Summit and Awards Gala to be held at the New York Athletic Club on June 28, 2017.