Shared Service Centers in CEE - How to find the right country?
Big companies and corporations often bundle standardized administrative activities, such as accounting, in shared service centers (SSC). This is because shared service centers have many advantages, e.g. processes can be simplified or specialists can be assigned where their potential is fully utilized.
The increasing demand for cost savings and the growing efficiency of the local workforce also support ongoing investments and the opening of SSCs in CEE.
But how do you find the right country for your shared service center in CEE?
We present some countries in this Executive Briefing.
The Czech Republic was one of the first (at that time) low-cost destinations for Western European companies. There are currently over 350 SSCs operating there with 145 thousand employees, mainly in the telecommunications sector. However, there are signs that the country has reached its full capacity. The main reason is market saturation and high wages - the average net salary of 1,425 EUR/month (2022) and is the highest in Central Eastern Europe.
Poland holds about 50% of SSC in the CEE region, which is due to its geographical and mental affinity to Western Europe, developed office infrastructure and language skills. The downside here as well - ongoing investments led to a significant wage increase of up to 12% year-on-year.
Serbia is already known as an industrial location, especially for companies in the automotive industry. Currently, there are less than 10 dedicated SSCs in Belgrade with about 4 thousand employees. Investor interest in this location is growing, as both labor costs are still relatively low here and a large number of experienced workers are available.
The Baltic countries, especially Lithuania, have focused heavily on the service sector as part of their FDI (Foreign Direct Investment) strategy. Reasons for SSC in the Baltic countries include solid education, language skills, and easy business operations.
Moldova currently has few SSCs, but as the lowest cost country in Eastern Europe (average net wage is less than EUR 400) and a substantial share of people with higher education (over 75%), it is becoming increasingly important.
Hungary and Slovakia are actively promoting manufacturing as well as service activities. And Bulgaria as well as Romania are also becoming important SSC hubs.
The decision for establishing a new SSC depends strongly on various factors: For non-labor-intensive offices with standard functions, countries with low maturity and growth potential are suitable. For unique services and strong quality demand, on the other hand, mature and thus saturated countries with higher wages might offer more advantages.
EAC International Consulting has over 30 years of experience in emerging markets and can assist you in selecting the right country for your SSC. Please contact us!