Embed Size (px)
Citation preview
LITHUANIA’S BUSINESS SERVICES
Report 2016
investlithuania.com
CONTACT US:
Laisvis MakulisTeam Lead | Business Services T: +370 (5) 219 4313 | +370 630 09197E: [email protected]
2
This report has been prepared by Invest Lithuania.
The findings are based on data gathered from 38 companies, all of whom export 60% or more of their services.
The survey was conducted in April-May 2016.
Contents
I. Foreword
II. Industry overview
III. Survey findings
1) About the survey
2) Industry highlights
3) Markets covered & functions
4) Languages
5) Wages & wage growth
6) Recruitment timescales & attrition
7) Education
8) Language training
9) Other training
10) Benefits
11) Cooperation with universities
12) CSR
5
6
12
13
14
16
17
18
19
20
21
22
23
25
Business ServicesReport 2016
Industry overview 1
5
Foreword
Lithuania. A prime destination for quality business services.
This has always been our goal and it is now a reality. With a clear strategic vision that has prioritized quality and sustainability over project quantity, we have steadily been able to build a sector that is today home to some of the world’s largest businesses, and still has ample room for growth.
By embracing challenge, and increasingly attracting centers which perform more complex processes, and therefore demand more specialized competences, we are staking a claim for the future.
And, in spite of our strong results, we will continue to strive. We are determined to provide the best investment climate possible, and this survey is evidence of this commitment.
We are sure that the insights contained in this report will prove to be of great use to all of our current and future investors.
Mantas Katinas Managing director
6
Industry OverviewThe Business Services Sector at a Glance
Source 1: Invest Lithuania, 2016Source 2: Lithuania's Business Services Report, 2016
11,100
34
50
275
7
91%
12%
46%
EMPLOYED IN THE BUSINESS SERVICES INDUSTRY1
THE LARGEST NUMBER OF LANGUAGES USED IN ONE CENTER1
BUSINESS SERVICES CENTERS1
AVG. NUMBER OF EMPLOYEES IN A CENTER2
NEW CENTERS OPENED IN 20151
OF EMPLOYEES HAVE TERTIARY EDUCATION2
SECTOR GROWTH IN TERMS OF EMPLOYEES1
OF CENTERS HAVE ANNUAL EMPLOYEE ATTRITION OF 10% OR LESS2
For companies like us that develop advanced solutions, Lithuania provides the perfect mix of exceptional infrastructure and exceptional talent.Arminta SaladzieneHead of Nasdaq Baltic
8
Industry OverviewFrom Upstart Outsider to the Place to Be
Although still relatively young, the Lithuanian Business Services Sector has been on the rise for the past 5 years and has already attracted a number of well known international corporations. 50 companies, employing over 11,100 young, multilingual and well educated specialists have so far chosen to call Lithuania their home. And the scope of services offered is certainly diverse: covering, in more than 30 languages, everything from financial operations and IT to money laundering prevention and big data analytics.
EMBRACING COMPLEXITY WHILE OFFERING PLENTY OF ROOM FOR GROWTH
As the sector has grown in size, scope and complexity, a specialized talent pool has developed to meet its every need. This talent pool is still growing and is significantly less saturated than other prominent locations for business services in the CEE region.
Source 1: Invest LithuaniaSource 2: Invest Lithuania, ABSL, 2015
GROWTH OF THE BUSINESS SERVICES INDUSTRY OVER THE LAST DECADE, NUMBER OF CENTERS1
2005
63
50
38
25
13
02006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Krakow
Wroclaw
Prague
Vilnius
Warsaw
Kaunas
PEOPLE EMPLOYED IN BUSINESS SERVICE CENTERS, PER 1,000 RESIDENTS2
47
37.6
25.2
16.6
15.6
4.3
9
Industry OverviewStrong Nordic Presence Across a Range of Industries
CENTERS BY HQ LOCATION
More than 50% of business services centers are run by investors from Nordic countries. Companies from Denmark, Norway, Sweden and Finland have to date established 26 centers in Lithuania. And the reasons for this: Lithuania’s multilingual talent, Nordic work culture, and can-do attitude.
CENTERS BY THE INDUSTRY OF THE PARENT COMPANY
Lithuania has been the destination of choice for companies from a wide range of sectors: from finance to engineering to even the public sector. Banking, insurance, and financial services providers, however, are most dominant. Their share of the industry has grown from 27% in 2012 to 36% at the beginning of 2016. As a close second, IT companies comprise 24% of the sector.
Source 1: Invest Lithuania, 2016
USA
Denmark
Norway
UK
Sweden
Finland
Luxembourg
Other
SHARE OF CENTERS BY HQ COUNTRY1
18%
18%
14%
12%
12%
8%
4%
14%
Canada France Germany Italy Netherlands Poland Switzerland
SHARE OF CENTERS BY INDUSTRY OF THE PARENT COMPANY1
Banking, Insurance and financial services
IT
Industrial / consumer goods manufacturing and logistics
Customer contact services
Engineering and energy sector services
Market research, data management and consultancy services
Foreign government organizations
36%
24%
14%
10%
8%
6%
2%
10
Industry OverviewThe Growth of a Renowned Business Services Hub
With a city to city network forged through great connectivity, mutual support and close co-operation with academic institutions, Lithuania can offer investors a real hub for Business Services.
An hour’s drive from one another, Kaunas and Vilnius are able to provide businesses with a combined pool of top technical and social sciences talent.
VILNIUS
Vilnius remains the main business services location in the country with 84% of centers operating in the Lithuanian capital. One of Europe’s youngest capitals, it continues to attract global giants by offering truly multilingual and experienced talent.
KAUNAS
Recently named the best emerging city for SSC in the CEE region, Kaunas, Lithuania’s second largest city, is fast becoming the region’s rising star. The city’s 8 business service centers now employ around 2,000 specialists. The main drivers for this growth are its low talent pool saturation, progressive university community, and improving office real estate market.
#1VILNIUS – THE BEST LOCATION
KAUNAS – THE BEST EMERGING CITY
for shared service and outsourcing in CEE in 2014 and 2015
for shared service and outsourcing in CEE in 2015
Labour pool:
Lithuania – 1.5 million
Vilnius and Kaunas – 730,000
Number of students:
Lithuania – 160,000
Vilnius and Kaunas – 107,000
BELARUS
KAUNAS
VILNIUS
POLAND
LATVIA
BALTICSEA
RUSSIA
TOTAL POPULATION2.9 MILLION
POPULATION1.39 MILLION
100 km60 mi.
Business ServicesReport 2016
Survey findings 2
12
We, at Invest Lithuania, are proud to present our second annual report on the Business Services sector in Lithuania. This year, with the aim of providing a more comprehensive picture of the sector, we have not only expanded the number of respondents, but most importantly the depth of the survey itself. We have asked more questions, delved into more topics, and looked into not only the current situation, but also the future. The result, this study, is at present the most complete view of the sector currently available.
Why did we conduct this survey? The reasons are threefold: it helps us to understand how the business services industry is developing, it reveals what factors are shaping its growth, and it identifies what challenges are yet to be tackled. This information allows us to provide the best service possible to our clients, whether they be potential or existing investors.
I hope you too will find some insights into why Lithuania truly is the regional home for Business Services.
Laisvis Makulis Team Lead, Business Services
THE SURVEY FINDINGS ARE BASED ON DATA GATHERED FROM
About the Survey
• Survey conducted in April – May 2016
• We have focused on foreign owned centers exporting over 60% of their services
• The pool of respondents very closely resembles the structure of the industry itself, both in terms of countries of origin and sectors represented
38centers exporting more than 60% of their services
employing
of total centers in sector covered by this survey
of total specialists employed in the sector covered by this survey
76%
95%10,432
13
Whatever size of Business Services operation a company is after, Lithuania can provide the perfect fit. From large scale, multi-function SSCs, to smaller niche providers of complex services the country has the people, experience and ambition to deliver growth and results. This diversity also attracts talent, and Lithuania is able to lure top employees from overseas, and also deliver home grown talent with international experience. And it’s clear that investors trust our local talent - 4 out of 5 centers are managed by a Lithuanian.
Survey FindingsMain Industry Highlights
LARGEST SHARE OF REPATRIATES EMPLOYED BY A CENTER
47%
30%
LARGEST SHARE OF FOREIGNERS EMPLOYED BY A CENTER
SIZE OF THE CENTERS IN LITHUANIA BY NUMBER OF EMPLOYEES
1,510LARGEST AVERAGE SMALLEST
275 10
29 years
AVERAGE AGE OF AN EMPLOYEESHARE OF CENTERS BY MANAGER‘S NATIONALITY
79% 21%
LITHUANIANS EXPATRIATES
14
MARKETS COVERED
Europe is the main market served by business centers in Lithuania, with all but one center delivering services to other company units in the continent or serving clients there. Half of all centers reported some coverage of the Americas. The USA is the primary market covered, but a significant number of centers also provide services to clients in other countries in the Americas, such as Canada, Brazil, Mexico and Argentina. Singapore, Malaysia, the Philippines, Hong Kong, South Korea, and China are the primary Asian markets covered.
FUNCTIONS
Lithuania's Business Services industry has expanded significantly not only in size, but most importantly in the scope of the functions performed. Centers that previously delivered single service lines have added new, more complex services. 87% of business services centers are now multifunctional and 42% perform at least 5 different types of operations.
Survey FindingsMarkets Covered & Functions
REGIONS COVERED BY BUSINESS SERVICES CENTERS IN LITHUANIA, SHARE OF CENTERS
Europe
Americas
Asia
CIS and Ukraine
Australia
MEA
REG
ION
S
OF CENTERS ARE GLOBAL, PROVIDING SERVICES IN
3 OR MORE REGIONS
45%
97%
50%
37%
32%
24%
16%
NUMBER OF FUNCTIONS PERFORMED, SHARE OF CENTERS
1
2-4
5-7
8 or more
NU
MB
ER
OF
FUN
CTI
ON
S 87%
OF CENTERS ARE MULTIFUNCTIONAL, PERFORMING 2 OR MORE FUNCTIONS
13%
45%
26%
16%
15
Survey FindingsMarkets Covered & Functions
*Other functions: Robotics, Automation solutions, Securities operations, QA verification, InfoSecurity, Advisory, Corporate solutions, Product development
SHARE OF CENTERS PERFORMING FUNCTION, %
F&A - Accounts payable
F&A - Accounts Receivable
F&A - General Ledger & Reporting
F&A - Travel & Expenses
F&A - Business Controlling
F&A - Master Data Management
F&A - Treasury
Procurement
Banking
Insurance
Anti-Money Laundering (AML)
IT - IT Service Desk
IT - Infrastructure Management
IT - Incident Management
IT - Business Intelligence
IT - Application Lifecycle Management
IT - Problem Management
IT - Request Fulfillment
IT - Access Management
HR - HR Administration & Reporting
HR - Payroll
HR - Recruitment
HR - Compensation & Benefit
CC - Customer Helpdesk (Back office operations)
CC - Sales & Account Management Support
Analytics
Engineering
Business Transformation
R&D
Document Management
Marketing
Knowledge Management
Legal Processes
Supply Chain Management
Other*
53%
42%
37%
37%
34%
29%
16%
26%
16%
16%
8%
42%
39%
39%
39%
37%
37%
34%
34%
34%
26%
24%
21%
29%
29%
45%
26%
16%
16%
13%
11%
11%
8%
5%
32%
16
Survey FindingsLanguages
Language abilities are a perfect indicator of the potential scope that a sector has to offer. And despite its size, Lithuania is truly global in this respect. The largest center serves clients in 34 languages, while the vast majority of centers provide services in 3 or more foreign languages.
NUMBER OF LANGUAGES SPOKEN IN CENTERS, %
1 language
2 languages
3 languages
4 languages
5 languages
6 or more languages
32%
5%
13%
8%
10%
32%
SHARE OF CENTERS BY LANGUAGE SPOKEN
English
Norwegian
German
Swedish
Danish
French
Finnish
Spanish
Russian
Italian
Polish
Other
97%
42%
39%
39%
34%
34%
32%
26%
24%
21%
12%
29%
One center is serving exclusively in Swedish
Czech, Slovak, Romanian, Hungarian, Latvian,
Estonian, Portuguese and others
LARGEST NUMBER OF FOREIGN LANGUAGES SPOKEN AT A CENTER
34languages
AVERAGE NUMBER OF LANGUAGES SPOKEN AT A CENTER
5languages
17
Survey FindingsWages & Wage Growth
WAGES
Average gross monthly wages in the business services industry vary notably depending on the position, years of experience, language requirements, center location and a number of other factors. Salaries for positions requiring IT skills have a significantly wider range compared to non-IT positions. In general, IT competences come in at 35-60% extra depending on the level of seniority.
WAGE GROWTH
Wages in the business services industry have grown by 5.8% in 2015 for non-IT positions, which is very close to the country’s average of 5.4%. Business services managers anticipate wages for non-IT positions to increase at a similar pace in 2016.
The rapid expansion of the IT industry in Lithuania has somewhat intensified competition for top IT talent. This has resulted in slightly higher wage growth compared to the rest of the business services sector. Managers expect this trend to continue in 2016.
PROJECTED WAGE GROWTH IN LITHUANIA LOWER THAN COMPETITORS FOR THE NEXT 5 YEARS
Despite a significant increase in wages by Western European standards, Lithuania’s wage growth remains sustainable and competitive compared to most of its Eastern European peers, as well as other established SSC/BPO locations.
Source 1: fDi Intelligence based on Economist Intelligence Unit (March 2016)
AVERAGE MONTHLY GROSS WAGE, EUR
JuniorSpecialist
Non IT
JuniorSpecialist
IT
SeniorSpecialist
Non IT
SeniorSpecialist
IT
958
1,29
0
1,55
5
2,48
8
AVERAGE GROSS WAGE GROWTH IN THE INDUSTRY, %
5.8
6.2
7
7.4
2015, Non IT
2016, Non IT(projected)
2015, IT
2016, IT(projected)
AVERAGE NATIONAL WAGE GROWTH, 2016 - 20201
India
Bulgaria
Romania
Hungary
Poland
Lithuania
10.3%
6.4%
6.1%
5.3%
5.1%
4.5%
AD
DIT
ION
AL
INF
OR
MAT
ION
18
Survey FindingsRecruitment Timescales & Attrition Rate
RECRUITMENT TIMESCALES
According to survey respondents, the average time required to hire junior staff with HR, F&A or customer service skills is around one month. On average an additional 1-2 weeks are required for the hiring of a senior specialist in the same field. To recruit a position requiring IT skills, meanwhile, takes 1.5-2 months.
ATTRITION
Compared with other established SSC/BPO locations, Lithuania has low rates of attrition. For example, centers with attrition rates at 10% or below account for less than a third of all centers in Poland1, while in Lithuania almost 1 in 2 centers report having employee attrition of 10% or less.
In line with findings from the last survey, centers whose spectrum of functions is more heavily weighted toward customer service experience higher rates of employee attrition.
*Some engineering centers’ data has been excluded from the average as outliers as they reported significantly longer hiring terms than other centers due to the very specific set of competences needed. Source 1: Antal and ABSL Attrition Report, January 2016
IT skills* HR skills F&A skills Customerserviceskills
IT skills* HR skills F&A skills Customerserviceskills
WEEKS TO HIRE, JUNIOR POSITION WEEKS TO HIRE, SENIOR POSITION
6.3
4.7
4.3
4.4
7.2 6.9
6.3
5.6
SHARE OF CENTERS BY ATTRITION RATE
ATTR
ITIO
N R
ATE
5% and less
6-10%
11-15%
16-20%
more than 20%
32%
14%
17%
20%
17%
19
Survey FindingsEducation
Ranking as one of Europe’s most educated nations, it‘s unsurprising that 9 in 10 specialists working in business centers in Lithuania have tertiary education. It is not only undergraduates fresh from university who enter the sector, however. 1 in 4 employees have a Master's or higher diploma, giving the sector an added edge of competence and experience.
SHARE OF EMPLOYEES BY THE HIGHEST LEVEL OF EDUCATION
Secondary school
Bachelor’s degree
Master’s degree
Doctoral degree 1%
27%
63%
9%
OF BUSINESS SERVICES EMPLOYEES IN LITHUANIA
HAVE TERTIARY EDUCATION
91%
20
Survey FindingsLanguage Training
89% of centers provide their employees with language training. The respondents noted that in most cases their employees are able to reach the required language level relatively quickly. For example, Cognizant (formerly Storebrand) has an internal Norwegian language school for their employees, where it takes students with no prior knowledge of the language 22 weeks full time to reach B1+.
SHARE OF CENTERS BY LANGUAGE TRAINING PROVIDED
SHARE OF CENTERS PROVIDING LANGUAGE TRAINING FOR THEIR EMPLOYEES
TYPE OF LANGUAGE TRAINING PROVIDED:
English
Swedish
Norwegian
German
Danish
French
Spanish
Finnish
Dutch
Only external
Only internal
Both
42%
24%
13%
13%
13%
8%
5%
60%
11%
29%
3%
3%
89%
21
Survey FindingsOther Training
To guarantee service delivery of the highest quality, a number of centers provide their staff with additional training. Alongside the value of enhancing an employee’s professional skillset, such training acts as a strong motivational tool.
As most of the centers are multifunctional, the types of training on offer varies depending on what skill or function requires improvement.
A number of center managers drew attention to the fact that they found that Lithuanians were easy to train, and that this was an essential factor when securing a quick and soft landing for their center in Lithuania.
TRAINING PROVIDED BY CENTERS,% OF CENTERS
Managerial coaching
Soft skills incl. social communication, emotional intelligence
Language training (with certification)
Computer and internet technology e.g. CISA, ITIL
Project management e.g. PMP, Agile, Scrum
Language training (without certification)
Business analysis e.g. 6 Sigma, CBAP
Financial e.g. CIMA, CIA, ACCA, CFA
Marketing e.g. CIM
Supply chain e.g. APICS, CIPS
Other (please specify)
82%
76%
61%
61%
58%
50%
42%
26%
8%
3%
32%
Other training courses mentioned: Workforce management;Lean; SAP;GAAP and other F&A related training;Customer service training;A set of soft skills training: leadership, stress management, and others.
22
Survey FindingsBenefits
With an average age of 29, most employees in Lithuania's Business Services sector belong to Generation Y. This means that, in the main, they prioritize job culture, working environment and other benefits above considerations of salary. These priorities are reflected quite closely in the benefits that the respondent companies offer.
BENEFITS PROVIDED BY CENTERS, % OF CENTERS
Private health insurance or medical package
Sports/Entertainment
Subsidized language training
Subsidized studies or other professional courses
Life insurance
Private pension schemes
Preferential share purchase options
Child/infant care subsidies, kindergarten
Other benefits
79%
74%
68%
61%
58%39%
13%
11%
32%
3%
Other mentioned gains: Flexible working hours;Working from home;Extra vacation days;Free parking;Partly or fully covered meals and snacks.
23
Survey FindingsCo-operation with Universities
KTU – Kaunas University of TechnologyVU – Vilnius UniversityVGTU – Vilnius Gediminas Technical University
ISM – ISM University of Management and EconomicsVMU – Vytautas Magnus UniversityLUHS – Lithuanian University of Health Sciences
84% of business services centers reported that they are involved in some level of university co-operation. Scouting for potential employees among graduating students was the most common form of university - SSC/BPO industry co-operation. Kaunas University of Technology, Vilnius University and Vilnius Gediminas Technical University were clear leaders with around 2 out of 3 centers choosing the aforementioned education institutions for some type of joint activity.
SHARE OF CENTERS COOPERATING WITH UNIVERSITIES IN DIFFERENT FIELDS
SHARE OF CENTERS COOPERATING WITH UNIVERSITIES
Recruiting future employees
Training, courses
Education projects
Conferences
Joint studies
Research projects
KTU
VU
VGTU
ISM
VMU
LUHS
SHARE OF CENTERS COOPERATING WITH
UNIVERSITIES, %
84%
81%
56%
53%
50%
69%
66%
63%
47%
38%
6%
25%
16%
Centers have also reportedly cooperated with:• Lithuanian University of Educational Sciences• Mykolas Romeris University• Vilnius College
24
AD
DIT
ION
AL
INF
OR
MAT
ION
Survey FindingsBusiness - University Collaboration: Best Practises
Intermedix is working together with Kaunas University of Technology (KTU) and the Lithuanian University of Health Sciences (LUHS).
• Joint study program Health Informatics with KTU and LUHS, where KTU is responsible for informatics curriculum, LUHS for healthcare curriculum and Intermedix for practical training
• Intermedix invested in the creation of Innovation and Creativity Laboratories to boost the educational potential of their future employees
• Scholarships for the best informatics students and graduates of KTU
Barclays is working together with a number of educational institutions in Lithuania to introduce new programs to help grow the talent they need. Some of the studies programs Barclays have created with universities include:
• Mainframe programs at Vilnius University and Kaunas University of Technology faculties of Informatics
• Project Management program at Mykolas Romeris University
CSC has a number of initiatives with different education institutions:
• Graduates program – CSC has a program aimed at hiring recent graduates that are then nurtured and developed at CSC
• CSC creates lounge zones at most of the main higher education institutions to introduce students to their activities and brand
• Provides scholarships for the best thesis at the main Lithuanian universities
KAUNAS UNIVERSITY OF TECHNOLOGY (KTU)
Amendments made to degree programs at KTU Informatics department:
• Up to 20% of degree program’s curriculum changed in order to meet companies’ requirements and recommendations
• Current course curriculum amended• New courses/topics included in all graduate programs (e.g. management of IT products
and services)• New elective courses introduced• Further amendments in the pipeline• Selected lectures delivered by company representatives• 2-hour introductory course delivered by company representatives to all newly enrolled
students (~400) every autumn• Practical training, theses and coursework in cooperation with employers
25
Survey FindingsCorporate Social Responsibility
68% of companies reported that they are giving back to society in a number of different ways. Most of the companies are combining a number of different CSR activities, as well as charitable causes. Most of the companies adopt their corporate policies, combining them with activities focused on the local market.
WU created a Western Union Foundation which is dedicated to manage all CSR activities. In 2015 WU gave back to society ~150k EUR to 5 NGOs.
Barclays has resources dedicated to run different CSR activities from blood donations, to community events, to different sponsorships.
Danske Bank also brought their global CSR policy to Lithuania, here they are also sponsoring Danske Bank Marathon – a city wide event for community. Danske Bank is also growing forestry where they plant 4,000 trees/yr. Danske Bank employees, as in many other centers, individually run and coordinate a number of goodwill initiatives (fund raising, volunteering, etc.).
CSC contributes to the society in a number of CSR activities which are structured in four main pillars – community (be part of society and give back – e.g. educational activities and STEM), employees – supporting healthcare safety and environmental activities – ergonomic workspaces, Pink Ribbon and Movember days, environmental sustainability (proactively encouraging organization and participation at number of inside and our side events e.g. recycling, day without car, European Mobility day and etc.) and charitable activities (CSC is running few activities with Save The Children, e.g. mentorship program for orphanages).
Cognizant brought its global CSR policy in Lithuania as well. It covers 4 different areas (people development, environmental, social, etc.). For CSR activities company has the employee-run committee which is strongly supported by company’s management.
At Transcom, Corporate Social Responsibility means that company always does its utmost to do the right thing by the clients, people and communities. This ambition is encapsulated in Transcom Cares, an overarching CSR governance program. Three prioritized focus areas make up the core of the Transcom Cares program: people development, equality & diversity, and community engagement.
68% SHARE OF CENTERS WITH ACTIVE CSR POLICIES, %
26
Notes
Invest LithuaniaBusiness Services Team
Laisvis Makulis
Team [email protected] +370 (5) 2194313
Invest LithuaniaJogailos st. 4 Vilnius, Lithuania
[email protected] +370 (5) 262 7438investlithuania.com
Ignas Kropas
Senior Investment [email protected] +370 (5) 2047832
Laura Balsiuke
Investment [email protected] +370 (5) 2120874
Ruta Labalaukyte
Investment [email protected] +370 (5) 2047801
Lukas Inokaitis
Investment [email protected] +370 (5) 2047809
