Bucharest – skyline transformation 2025: Romania and Bucharest in the top relocation options for global companies

24 decembrie 2020

4 minute citire

The business services industry has a history of over 20 years in Romania and 2020 has brought unprecedented challenges. Fortunately, this sector is perhaps the best prepared one for remote work. The very term outsourcing intrinsically says this.

In the medium and long term, revenues generated by the business services sector will increase. The pressure put on costs, globally, determines companies to rethink the cost structure, opting for the consolidation of services to economically attractive destinations and the quality of human resources. Romania is doing well in this regard, so the situation generated by the pandemic may be an advantage for this industry.

According to estimates from the recently launched ABSL Business Services Report, the revenues generated by the business services industry in 2020 are of 4.5 billion euros. The business services industry contributes with about 2-2.5% to the GDP, similar to industries such as wholesale, electricity and gas. The impact of the pandemic on the turnover achieved in 2020 is not expected to change (69% of the participants in the study). 17% of the respondent companies estimate a decrease in turnover ranging between 5% and 30% and 14% of the companies foresee a turnover increase between 5% and up to 50%. Among the effects of the pandemic from a business perspective, companies list the decrease in external demand (39%), the impact of the pandemic on customer operations (33%), the search for new business areas (33%), the increase in external demand (30%), global restructuring plans (27%), acquisitions (3%).[1] Working from home became the main option for companies in this period, but it also revealed its limitations in regard to face-to-face interaction, collaboration and socialization. Thus, 82% of the surveyed companies stated that they will keep their office space.

Published in an exclusive, investment destination – oriented, market tour: “Bucharest – the skyline transformation by 2025” – Read: here

“The current context is favorable for Romania and the business services industry. Globally, companies are rethinking their cost structure and rebuilding their outsourcing strategies, Romania being in the top of relocation options. In the medium term, the Romanian industry can see annual increases between 5-10%. Economically, the crisis caused by Covid-19 is the biggest challenge of the last 20 years. Most companies hope that the economy and their business will recover in 2021. Out of the surveyed companies, 19% believe that the industry will recover in the Q1 of 2021, 19% in Q2, 5% in Q3 and 5% in Q4. 37% of the surveyed companies cannot estimate when the industry or the economy will recover”, explains Ciprian Dan, President of ABSL.

The new reality?

The experience of the last months has shown that working from home 100%, as well as working from the office, have many drawbacks and no longer correspond to the current reality. Due to employee safety measures, companies cannot have large teams working from the office, so they have opted for a hybrid work system. 48% of the responding companies will consider a hybrid work system in 2021, 13% of the companies will continue in the telework system, while 39% of the companies consider that in the medium term telework is not a viable alternative.

“In the short term, companies in the industry will continue to migrate rapidly to the concept of “Flex Office” and will combine remote work with office work to streamline costs related to office space, but also to attract a diversified workforce, from a wider geographical area. Thus, the time spent in traffic will be able to be used in a productive way, and the workforce that could not be employed until now because of the distance from the office will become available. All these will contribute to increasing the efficiency and maintaining the appeal of Romania as a preferred destination for outsourcing”, says Cătălin Iorgulescu, representative of the ABSL Board of Directors.

In the medium and long term, 58% of companies estimate that the number of employees in the industry will increase, 22% believe that the number of employees will decrease, while 20% of companies believe that the number of employees will remain constant. In the context of the pandemic and of cost revaluation and automation, the surveyed companies estimate that the number of employees is likely to decrease by up to 4.5% by the end of June 2021. The estimated number of employees in the industry at this time is about 131,000.

„Before the pandemic, the biggest challenge for the companies in the industry was connected to a well-prepared workforce. All discussions related to the development of the industry focused on recruiting and retaining talent. The average rate of departures from the company was 22% for the period 2017-2019. Between January – July 2020, the average rate of departures from companies was 12%”, says Ciprian Dan, President of ABSL. Most employees with long-term contracts provide Customer Service (29%), IT and Software Development (28%), Financial Services (19%), HR (10%), Supply Chain Management (6%), Banking and Insurance (1%). The most important cities for the business services industry are Bucharest, Timisoara, Cluj, Iasi, Brasov, Sibiu.

Bucharest is the largest talent pool in the country due to the population and to nearly 130,000 students. Another key advantage that transformed the city in the center of the Romanian business services industry is the diversity of languages, skills and the level of expertise found here together with the substantial number of specialists. This industry creates high quality employment, delivers innovation and growth, and creates solutions that are of value to business services companies themselves, as well as their clients, customers and society as a whole.

83,840 Employees in the business services sector

118 Total number of companies (SSC, BPO, IT, R&D, etc.)

The Association of Business Service Leaders in Romania (ABSL) is the leading organization representing this sector, bringing together the most important market companies, major players operating in areas such as Shared Services Center (SSC), Business Process Outsourcing (BPO), Information Technology Outsourcing (ITO) and Research and Development (R&D). ABSL, as the voice of the business services industry, is supporting the member companies as well as the ones looking to settle their business in our country – the investors, with benchmarking data and first-hand information about the realities of the labour market and talent pool, legislative framework, office market as well as challenges and opportunities associated with those.