In recent years, the Business Services industry has undergone a major transformation, with traditional Shared Services Centres (SSC) evolving from providers of transactional activities into Global Business Services (GBS).
According to Deloitte’s 2019 Global Shared Services Survey Report, Shared Services Centres (SSC) are “shifting from a transaction provider role to one in which they generate tangible business value, especially as SSCs are increasingly providing more strategic and interaction-heavy functions, such as customer services, sales and marketing support, and procurement.”
This report indicates that most of the existing SSCs are multifunctional, performing two or more functions in the organisation. Accounting is still the primary function (94%), followed by HR (60%), Treasury and Cash Management (58%), IT (44%), Procurement (44%), Controlling (42%) and Sales (27%).
As the scope of the services provided by SSCs continues to expand, whilst simultaneously undergoing digitalisation, the number of complex and knowledge-based processes is increasing accordingly. According to PwC’s 2019 Global Survey “Shared Services – Digitalise your services”, “the activities carried out by SSCs will continue to grow in scope and complexity. Thanks to the use of new technologies such as RPA (Robot Process Automation) and AI (Artificial Intelligence), many of these centres will become more and more sophisticated, and will continue to move away from transactional tasks towards innovation management and competence centres, providing more complex services for all HQ functions.”
Both studies show that companies are increasingly choosing to implement on/near-shore models, with centres located closer to the HQ. When evaluating location decisions, the Deloitte survey indicates a significant increase in respondents considering “labour quality” as a key metric. PwC’s survey also highlights the increasing tendency to opt for high labour cost locations, as more complex activities require more skilled people.
Business Services Centres in Portugal have experienced impressive growth in recent years. According to AICEP, the Portuguese Global Trade & Investment Agency, the number of sites grew by around 70% between 2015 and 2020, reaching up to 158. In addition to Shared Services Centres and Business Process Outsourcing Centres, Global Business Service Centres, Excellence Centres, and Competence Centres are opening across the country.
AICEP has made a significant effort in recent years to attract foreign direct investment to this market. This has been facilitated by the international reach of Portuguese companies such as Unbabel, Talkdesk, Uniplaces and Codacy, and the annual Web Summit held in Lisbon – the largest tech event in the world. Likewise, the number of start-ups has grown by 30% over the last 5 years, twice the European average.
Portugal is becoming increasingly attractive for multinational companies. According to the EY Attractiveness Survey Portugal 2020, factors such as quality of life, stability of the social climate and telecommunications infrastructure are among the main factors attracting Portugal’s foreign investors. Moreover, the Expat Insider 2021 survey ranked Portugal as the 3rd best country in the world for quality of life, after Taiwan and Austria. The expats in the survey describe Portugal as safe and peaceful, and particularly appreciate the socialising and leisure opportunities.
Portugal also obtains fairly good scores in several international indexes, including 34th in the Global Competitiveness index 4.0 2019 (published by the World Economic Forum) and 32nd in the Global Innovation Index 2019. Moreover, Portugal is the 2nd country in the European Union to take up ultrafast broadband, and is ranked 8th in the Digitalisation Index 2020 conducted by the European Investment Bank.
The companies that we have consulted agree that the main reasons to choose Portugal as a location for a Business Services Centre are a competitive talent pool (meaning the existence of qualified talent at competitive costs), and geographical proximity. They also recognise other advantages such as good infrastructure, political stability, labour flexibility, ability to attract people of many nationalities, open culture, and good climate.
“We believe that Portugal is an ideal location for setting up multilingual BPO hubs due to several factors, but mainly because we find in our country a diversity of bilingual and multilingual people of fluent or native level, something essential for our activity. When we are not able to hire the desired profile locally, we have the ease of being an extremely attractive country for people of other nationalities”.
Lina Jesus, Human Resources Director, Webhelp Portugal
In terms of costs, the companies cite cost-benefit factors. They are able to hire highly qualified talent at lower costs compared to other European countries. The average monthly base salary in Portugal was €1,314 in 2020 (INE – National Statistical Institute). The average hourly labour cost was €15.70, ranking 15th among the 28 countries of the EU, where the average labour cost was €28.70 (Eurostat).
When it comes to talent, Portugal appears in good shape. The country is ranked 23rd in the World Talent Report 2020 published by IMD, ahead of countries such as France, Spain, and Italy in Western Europe, and Lithuania, Slovenia, Latvia, Poland, and the Czech Republic in Central/Eastern Europe. According to a Swiss institution, the national talent pool ranks high when it comes to language skills (7th), management education (12th), university education (14th), and science graduates (15th). Moreover, Portugal’s capacity to attract and retain talented migrants is growing stronger, as revealed by the OECD Indicators of Talent Attractiveness. The country ranks 21st in its ability to attract highly educated workers (i.e. those with master’s and doctoral degrees) and 16th in its ability to attract university students.
Companies also highlight Portugal’s geographical location and convenient time zone, with a maximum four-hour flight time to the main European cities. Portugal’s proximity to North and South America is also good for centres providing services to Latin America, such as Grunenthal, Solvay and Nestle’s respective BSCs.
Lisbon and Porto host the majority of BSCs, followed by Aveiro and Braga. Outside these four cities, centres are also located in the north (Vila Nova de Cerveira and Ponte de Lima), centre (Viseu, Tomar and Santarém) and south (Beja, Évora and Loulé).
Aveiro and Braga, in the centre and north of the country respectively, have undergone an important transformation in recent years, and boast two of the top universities in the country, The University of Aveiro and the University of Minho. Aveiro was recently honoured with the Harvard University “Innovation Award in Community Involvement” for its Aveiro Tech City project aimed at stimulating innovation in the city. Companies such as Nokia Networks, Siemens, and Bosch have opened development centres in Aveiro, and the French automotive industry supplier Faurecia has a Global Business Services centre there. Likewise, companies as Webhelp, Bosch, Concentrix, Fujitsu, and Accenture have chosen to locate their Business Services Centres in Braga.
Several types of Business Services Centres are found in Portugal: Business Process Outsourcing Centres (BPOs), Shared Service Centres (SSCs), Global Business Services Centres (GBSs), and Centres of Excellence (COEs).
BPOs specialise in providing (external) services to other companies within the areas of Finance, HR, Customer Experience, or IT. Teleperformance, Conectys, Connecta Group, Majorel, Webhelp, Konecta, and Sitel are examples of companies that provide these services.
In SSC, GBS, and COE centres, multinational companies internally centralise certain operations, clustering similar resources that serve multiple organisational areas, increasing productivity and service levels. Such centres may have different levels of maturity; they can be basic and tactical, or more specialised and strategic, depending on whether their mission is to run, grow, or transform the business.
SCCs focus on enterprise efficiency and driving bottom-line impact, while GBSs focus on pursuing effectiveness and making productivity improvements. COEs and Innovation Centres, for their part, aim for transformation through the innovation and creation of new strategic capabilities, markets, products, and/or business models. There are several COE centres in Portugal such as the ZF Group and Vestas R&D centres in the north (Ponte de Lima and Porto); the Bosch Technology Centre (Braga) and Hitachi Vantara’s COE (Lisbon), both in the field of mobility; NEC Corporation COE in Airport Technologies (Lisbon); Softinsa’s Innovation Centres (Tomar, Viseu and Portalegre) and Gfi’s Competence Centre based in Audax; and finally, the Entrepreneurship and Innovation Centre of ISCTE University in Lisbon.
Most companies with BSCs in Portugal are headquartered in Europe (76%), mainly in countries such as Germany (21%) and France (18%). Manufacturing (especially automotive) and IT are the most highly-represented sectors, followed by professional services.
In terms of geographical coverage, 53% of the centres have global reach, 24% have a multi-regional reach and only 23% are regional. Most centres (85%) have operations in more than one language, with an average of five languages being used.
IT and software development are the most representative functions performed by the services centres surveyed, at 27%. This is followed by finance & accounting at 22%, and other functions at 20%, including actuarial services, factory operations, order to cash processing, communication, robotics, and sustainability. Other functions performed are customer care, user support, infrastructure management, R&D, procurement, HR, data analytics, supply chain, marketing and sales, tax, legal and compliance, and real estate.
There are almost 60,000 people working in Business Services Centres in Portugal. The main employers in the industry are Teleperformance, with 11,000 employees, and BNP Paribas with more than 8,000 employees.
85% of the employees have higher education. The country has a growing pool of highly-qualified human capital thanks to a high-quality STEM higher education sector. Portuguese universities are more and more able to attract international students, with 58,000 international students enrolled in 2019. Foreign employees represent 8% of the workforce in this industry, and their presence is very important in terms of language skills. Teleperformance employs the most foreigners, with 97 nationalities and 37 languages spoken.
In terms of gender equality, the teams are quite balanced, with 43% female employees on average, and more than 60% in some centres. 58% of workers are under 35, and 38% between 36 and 50. IT and Financial profiles are the most sought-after, with popular IT roles including software engineers (front-end, back-end, and full stack engineers), UX/UI designers, Scrum Masters, DevOps engineers, QA engineers, network engineers and IT & Support engineers. Data scientists and digital analysts are also in demand. According to the bank BNP Paribas, the most in-demand financial profiles are financial and management accountants, compliance officers, risk management officers and risk controllers. Moreover, data specialists such as data scientists, artificial intelligence specialists, and quantitative research analysts represent about 10% of the workforce of BNP Paribas in Portugal.
BSCs also need HR professionals and talent acquisition specialists, along with operations management profiles such as operations managers, team leaders, project managers, team managers and training specialists. Business Process Outsourcing centres, for their part, seek customer and technical support assistants.
Regarding management roles, we find mainly Portuguese executives in the industry. Usually, companies that are already present in Portugal select people from their Portuguese subsidiary to integrate the new centre. As a result, many of the professionals in Business Services Centre management positions came up from the organisation, and did not have previous experience in this type of facility.
Nonetheless, a few organisations prefer to bring over people from abroad to fill these positions. Companies such as Bosch, Natixis and HB Fuller are led by professionals with several years of experience managing Shared Services Centres in other countries. Likewise, companies such as BNP Paribas, Cisco, Thales and Willis Tower Watson bring in professionals from HQ or other locations who are experts in certain operations, mostly in Finance and HR.
As more of the centres begin to perform an increasing number of knowledge-based tasks in addition to their transactional activities and become GBS centres, companies increasingly need professionals with skills involving strategic thinking and analysis, data analysis and modelling, and people management. Talent management is crucial for the success of these structures; the challenge is to simultaneously hire the right people, upskill the existing talent and retain critical profiles. Consequently, in addition to having a good understanding of the business and its strategic goals, GBS professionals must have experience in areas such as strategic workforce planning, management and leadership development, and employee learning and development.
Currently, we cannot yet talk of a market for GBS professionals in Portugal. Today, there are only a few executives with experience acquired in business services centres from multiple different organisations; companies still put their trust in people with many years of internal career experience to perform these roles. It is true that when dealing with the highest positions and the more mature GBS centres, internal profiles are likely to be the preferred choice in many cases. However, in centres which are less mature, we might start to see a greater rotation of GBS professionals with experience in improving, standardising, and harmonising processes, and in implementing automation and digitalisation tools.
We recommend that companies intending to open a business services centre in Portugal should bear in mind that although there is a good talent pool in Portugal, searches for certain positions must be international from the beginning. The country is starting to create a pool of high-talent international profiles, consisting of Portuguese professionals who pursue an international career and then return home, expats who have decided to stay, and a growing number of foreign executives wishing to relocate to Portugal for various reasons. However, our experience shows us that this growing talent pool is not enough when it comes to recruiting for management roles that demand a previous international background acquired in corporate roles in large organisations.
Due to the boom in the opening and expansion of centres in recent years, some companies recognise that they are already beginning to encounter a lot of competition, and face problems in recruiting. These centres acknowledge that they need to conduct more active searches, mainly for profiles with rare languages or technological roles, especially software engineers (front-end, back-end, and full stack), data scientists, and cyber security specialists.
However, other companies seem to have no problems attracting talent. This is the case for the Belgian multinational Solvay, which was a pioneer when it opened a centre in 2005.
“Solvay has no difficulties in finding the right talent. The employer brand helps. In the last 2 years, we have evolved to being a GBS and the level of expertise is completely different. We do not do just transactional processes; we optimise and integrate processes and apply RPA and AI to automate them. The roles are more qualified, and the salaries are higher than when we were just a SCC”.
Joana Adriano, EMEA & LAM Talent, Solvay
According to many companies, cooperation with universities is crucial for recruiting talent. The centres also use social media and job search websites, as well as recruitment firms. Some of them recruit abroad and offer relocation packages. Teleperformance, for example, attracts foreign talent by reimbursing the initial flight costs and one annual complementary return flight.
Collaboration with universities is done in different ways. Organisations usually establish long-term partnerships with them, participating in campus recruitment and organising summer internships. Técnico, with the largest school of Architecture, Engineering, Science and Technology in Portugal, comprising a community of over 10,000 people, has a partner network composed of 15 members, including owners of business centres such as Cisco, BNP Paribas, Everis, Thales, Vodafone, and Cap Gemini.
Some companies collaborate in teaching programs, as Solvay does with the ISEG School of Economics & Management. Other firms choose to strengthen their relationships with the universities by means of physical proximity, locating their offices at sites such as UPTEC, the Science and Technology Park established on the campus of the University of Porto. Following this trend, the Nova School of Science and Technology and several private investors have joined together to create the Innovation District in Lisbon. The €800 million project will expand the current campus, and incorporate companies to create several innovation and science clusters.
BNP Paribas has established several partnerships and initiatives with Portuguese universities. It works closely with Nova SBE, supports the scholarship program for CEMS students, collaborates in senior management training and exchanges speakers at events for both organisations. BNP Paribas also collaborates with ISCTE Business School, guaranteeing a job interview to all final-year students of the degree courses in Management, Economics, Finance and Accounting who specialise in Capital Markets and Securities Operations. Furthermore, the financial group organises a course in Information and Communication Technologies for Banking Services, in partnership with the NOVA Information Management School and the technology company Syone. This course offers the first on-the-job academic training in Portugal, combining classes and paid work in equal amounts.
Natixis, the international corporate, investment, insurance and financial services arm of the French BPCE Group, also has an innovation hub in Porto with more than 1,000 employees working in IT and back-office operations. The bank maintains partnerships with ten higher education institutions, and has recently joined up with Porto Business School to launch an executive program to train professionals in financial market and risk analysis.
The German multinational Siemens houses a Tech Hub in Lisbon with more than 1,000 IT experts, and organises the Cloud Academy Internship. The program is for recent graduates in the fields of Engineering (Information Technology, Biomedical, Electrotechnics, or Telecommunications), Mathematics and Information Management. Last year, it had an 80% retention rate, and the trainees formed the Software Development, DevOps, Infrastructure, Data Analytics and Cyber Security teams of the company. Siemens also has a Finance Trainee Program, a paid internship program for recent graduates in finance, management, economics and accounting. It allows the company to recruit people for its Lisbon GBS centre, which provides financial services and has over 800 employees.
Bosch Group and the University of Minho (Braga) have had an innovation partnership since 2013. This has involved an investment of €76 million, and is bringing revolutionary technologies to the mobility market. Bosch engineers, in partnership with UMinho researchers, have developed an innovative vehicle-to-vehicle communication technology for autonomous driving, which will be tested in a partnership between Bosch and a European automobile manufacturer.
Best practices for talent retention
After the boom of Business Services Centres in the country, talent retention has become the main challenge for the industry, especially for technological profiles. Competition and job rotation between companies continues to increase, and as a result, most companies try to offer attractive compensation packages to retain their employees. Some of them decide to opt for smaller cities with higher retention rates.
Regarding salaries, a recent survey of companies with Business Service Centres in Portugal, conducted by AICEP, IDC and Nova University, indicates a 3% average annual increase in the last three years. This is in line with the market average for most companies in Portugal. According to the same survey, 69% of the positions at service centres are entry-level and junior positions with salary levels between €15,000 and €21,000 per year; followed by 22% of team leaders earning between €25,000 and €35,000 per year, and 9% of managers and executives, receiving between €42,000 to €72,000 per year.
In addition to the salary, most companies offer health insurance and many pay performance bonuses. Other benefits include flexible hours, mobile phone, life insurance, parking spaces, transport allowances and meal vouchers. Training initiatives and career paths are also offered.
“Internal mobility and a diversified career path (locally or internationally) are some of BNP Paribas’s main assets to retain talents”.
Hervé Reynaud, Head of Human Resources at BNP Paribas Portugal
Lately, the BSCs have started to introduce initiatives to promote the health and well-being of their employees. Some companies organise group sport activities and partnerships with gyms. Grunenthal, for example, offers psychological support because insurance does not cover it, while Siemens has a medical centre in the facilities.
Prior to the pandemic, many firms also offered the possibility of remote working one day per week. We have talked to several companies that intend to implement it to a greater extent, including GKN Automotive, which plans to implement teleworking two days per week, and Grunenthal, which intends to expand it to three days per week following the motto “whatever works for you, works for us”. The pharmaceutical company will allow its staff to work wherever they want, as long as they have the conditions to do so.
Nestlé, likewise, wants to maintain the possibility of working from home for all collaborators of NBS Lisbon, guaranteeing prior accommodation between teams and their respective managers. The company began gradually implementing teleworking in 2019, and managed to have 100% of its employees working from home efficiently during the pandemic, with good results. BNP Paribas launched remote working as a “proof of concept” prior to the pandemic, and will embed it in its Employee Value Proposition as soon as the pandemic is over for most activities (approximately 90% of the workforce will be eligible for remote working). In Faurecia, teleworking was already allowed for some roles; now the French company needs to create the technical conditions to fully implement it. Many centres help their employees to equip their home office; Siemens, for instance, provides a €250 voucher to purchase office supplies and IT equipment.
BPO centres nevertheless need to accommodate each client that they serve. For this reason, companies such as Webhelp are currently analysing different models for each project, together with their clients. Some projects require 100% of the work to be carried out in the office for security reasons; others allow a hybrid model with team rotation; a third model has projects being conducted entirely by telework.
The future of the industry
Everything indicates that the Business Services industry in Portugal will continue to grow in the coming years. Many GBS centres are expanding as their ability to adapt and be agile during the pandemic showed how they could be agents for change and secure operational continuity in even very demanding circumstances. Some centres with which we have talked claim to have suffered no impact on their growth in 2020, and even have plans to expand in the short term. Webhelp, for instance, is getting ready to open two more sites for new projects won in 2020 and 2021, after seeing its business grow in recent years. Nokia is currently reinforcing its presence in the country with a new GBS centre that will employ around 300 professionals by the end of the year. Likewise, companies as Natixis, Critical Techworks and Mercedes Benz.Io are also reinforcing their teams.
Other companies acknowledge that they have suffered a delay in their projects and/or growth initiatives. GKN Automotive, for instance, which opened its GBS centre in January 2020, had planned to have transferred its country services by the end of 2021, but because of the pandemic, is only planning full implementation in 2022. Faurecia is talking about delaying planned projects due to the impossibility of traveling and working as a team at GBS facilities.
It seems that there are many projects in the pipeline, and the prospects for the national Business Services industry are good. The EY European Investment Monitor 2021 ranks Portugal in its Top 10 countries, with the highest number of FDI projects in Europe – 154 last year. The report also highlights that Portugal is the 6th largest destination for software and IT services, which represents more than a third of the total number of projects. The latest openings include technology companies such as the German companies Teamviewer and NFON, which opened two R&D hubs in Porto this year. Moreover, Finastra, one of the largest FinTech companies in the world, has recently landed in Portugal to open its Digital Sales Hub in Lisbon.
Among future openings, we should highlight the GBS centre of the US-based biotechnology group Amgen which will open in Lisbon, creating approximately 300 highly-skilled jobs in the next two years. In addition, Munich-based cloud provider Retarus will open a new software development centre in Lisbon, and the Brazilian e-commerce platform VTEX will inaugurate its first technology hub in Portugal.
With so many new projects in the country, and several players willing to expand their existing sites, Business Services Centres in Portugal could start to face challenges in terms of recruitment, especially for technological talent and certain linguistic profiles. The industry, however, seems to trust in the capacity of its higher education system to provide the necessary talent, and in its ability to attract foreign talent to complete the national workforce. There are currently more than 50,000 foreign students in the Portuguese universities, and hopefully, some of them will become part of the pool of future candidates for these centres.
The reskilling and upskilling initiatives included in the Recovery and Resilience plan approved by the Portuguese Government could also be helpful for the industry. The Portuguese Government, in partnership with the APDC (Portuguese Association for the Development of Communications), the Polytechnic Institutes and the IEFP (Institute for Employment and Vocational Training), has launched the UPskill Program. This is a nationwide initiative aimed at strengthening skills and increasing the supply of professionals in the areas of Information Technology and Communication. The program aims to train 3,000 people in the ICT area over three years, through courses in programming, configuration of environments (Cloud/ERP/CRM) and networks, followed by a three-month internship at a participating company, with a strong possibility of subsequent entry into its staff. Among the companies involved are some business services players such as Accenture, Altran, Deloitte, Gfi, Microsoft or Softinsa.
In conclusion, Business Services Centres are becoming increasingly digital, and we can now start to speak of the next generation of Digital Global Service Centres. These centres will play an important role in the digitalisation process of companies delivering innovation, process automation and new ways of working. We are sure that Portugal’s business community is ready to take on this challenge!