Nordics Centers Migrating South
Posted by firstname.lastname@example.org on September 23, 2016
Still growing, but moving
The most significant shared services trend across the Nordic region is that of continued growth in absolute numbers, driven predominantly by local small and medium-sized enterprises launching shared services.
Sweden tops the list for hosting the greatest number of shared services (1/3 of all SSCs across this region), followed closely by Denmark and then Norway. What is notable is that in every country, the capital city is the most popular location, confirming that cost is not a key driver in choosing locations. In fact, other than Norway, Sweden has the highest salary index across the entire region. (By comparison, Poland’s salary index is less than half that of Sweden, and other East European countries are even cheaper: Lithuania and Romania’s salary indices are half that of Poland.)
The big migration
To date, one out of five Nordic shared services has moved south – the vast majority (nearly 2/3) over the course of the last three years. So, what characterizes these SSCs? Where are they going? And what's been driving this move? The data tells us that nearly 3/4 of the Shared Services Centers in the Nordics are multinational corporations – and that 100% of the migrated centers are multinational too, the majority Nordic-headquartered.
We also see that certain Nordic countries are favoring specific CCE countries: Norwegian SSCs, for example, are moving primarily to Lithuania, while Swedish SSCs are moving mainly to Poland. Taken overall, the largest segment by far of migrating Shared Services Centers chose Poland (42% compared to the second most popular locations, with 7.3%). One possible reason for this preference is that Poland offers multiple tier 1 and tier 2 cities – far more than other countries across the CEE. This additional choice, along with low-cost, skilled talent, is a persuasive factor in evaluating SSC locations outside a home country.
Poland: a key attraction
Although Romania offers the cheapest cost of living across Central and Eastern Europe, there are a number of factors that explain Poland's popularity, primarily salary and availability of graduates. Compared with Sweden, for example, the starting salary of accounting graduates in Poland, at just over U$17,000, is less than half of Sweden’s. But where Poland truly stands out in in the number of business and legal graduates it produces every year: 250,000 – vastly more than all the Nordic countries put together. In addition, Poland is perceived as relatively safe and offers one of the lowest costs across Central and Eastern Europe (only Bulgaria and Romania are cheaper, by a fraction).
What will be interesting to see is whether Poland can maintain its pole position for Nordic SSC migrations. Compared to other countries across Central and Eastern Europe, its salaries are the highest. And while the Czech Republic, Hungary, and even Estonia all share similar salary levels, Bulgaria, Latvia, Lithuania, and Romania offer significant opportunities for wage arbitrage. These topics will be under discussion in November, at the Nordic Shared Services, BPO and GBS Summit in Stockholm.
Key requirement: language
Given the need for multiple languages to serve the Nordics, a key factor in determining a cost advantage is the cost of hiring technical skills in a given language. For example, the relative cost of an accountant in Warsaw, Poland is significantly higher for Finnish language than it is for Danish, Swedish, or Norwegian (English language is roughly 25% cheaper than the latter three, and nearly half as expensive to recruit as Finnish]. What's even more interesting is when we compare the relative cost of hiring a Finnish speaking accountant in Poland to an equivalent employee in Finland itself: the advantage in wage savings is then only 8%. On the other hand, the wage arbitrage for a Swedish speaking account in Poland versus a similar employee in Sweden offers savings of nearly 50% in terms of wage.
See the full interactive report for free here.
- How Philippine Delivery Centers are Deploying Success Levers in the Year Ahead
- ESTABLISHING A CENTER OF EXCELLENCE (COE) IN AUTOMATION – 4 Critical Ingredients
- Dummy Blog
- Dummy Blog
- Data readiness – a precursor to realising the true potential of automation
- 3 Trends Confirmed at SSON’s European Flagship Event
- Top 3 Trends in European Shared Services in 2019: How are scope, outsourcing and automation strategies adapting – and why?
- Higher Education Institutions must look beyond implementation challenges of Shared Services
- What’s driving successful Business Transformation in the Nordics right now?
- What does good really look like? Benchmark your SSO against 2 different benchmarking datasets
- Business Continuity Plan alert: Q3 2018 Earthquakes now at a record high
- Shared Services in Deutschland: Fokus auf Produktivität und Working Capital
- German Shared Services Focused on Productivity and Working Capital
- Open for Business: Consistent figures for 2018 US Shared Services jobs market
- How to succeed with Intelligent Automation: what our surveys tell us
- Is "gender" impacting shared services careers?
- Chief of Payroll, UNICEF Global Shared Services Centre
- Is a profitable business necessarily a prosperous one?
- Accounts Payable: the case for automation and offshoring
- Taking your First Baby Steps into Robotic Automation?
- Agile-lite in HR
- Is it really worth shifting work offshore? Get the real decision drivers from City Cube
- Are your staff constantly pushing for increases? How does your team's cost stack up regionally?
For media enquiries relating to SSON Analytics or any of our data, please contact Sian Jenkins.
Tel: +65 6722 9361
"Despite having the highest risk of windstorm and flood as well as a high earthquake threat, Manila has the largest SSC concentration in APAC"
Data from 'Evaluating Risk in Asia Pacific Shared Services Hotspots' - Analytics Workbook - SSON Analytics
"We have found the Enterprise Dashboard and the SSC Metric Checker particularly insightful, as both are developed on factual analysis based on quantitative measures such as cost, cycle time, FTE effort, use of shared services, and application complexity."
Paul Bartley - Director, Global Shared Services - BD
"By utilizing SSON Analytics’ data tools/analytics reports BD has been able to benchmark and assess how the company is positioned against world-class performers. Knowing that what we are reading has been provided by practitioners makes it a very trustworthy source of information."
Paul Bartley - Director, Global Shared Services - BD
"SSON Analytics have been a really useful resource in providing Market Intelligence and insight into the shared services industry, giving me new perspectives into the strategic positioning within cities, countries and beyond. I am also encouraged to see incremental improvement to its offerings over time, and the engagements with the analysts and management have been more than pleasant! Excellent overall!"
SSON Analytics subscriber - Research Manager - leading chemical company
"As we measure our operations, we are tapping into the comprehensive metrics in SSONA’s City Cube to benchmark what our peers in the same region and industry are able to achieve. This helps us to identify opportunities to drive continuous improvements."
Thomas Hung - Vice President, Group Finance Shared Services - Shangri-La Group