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BUDAPEST

BUSINESS JOURNAL

VOL. 25. NUMBER 12

JUNE 16 – JUNE 29, 2017

SPECIAL REPORT

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Complex Olaszrizling with a Lakeside View Lake Balaton is brimming with more than its fair share of distinctively delicious wine thanks to its range of climate, soils, grape varieties and talented winemakers. Csopak, on the lake’s northern shore, is notable for its outstanding Olaszrizling. 21

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Arjen Sader, executive director of EY SSC Advisory, Róbert Ésik, president of HIPA and Zsolt Kelliár, managing director of SSC Heroes.

Together they plan an in-depth BUSINESS study of Hungary's Cycling Tourism Needs SSC market11 to Find a Higher Gear NEWS Lack of proper information on cycling routes, regions and services is one main hindrance to Hungary becoming a genuine cycling tourist destination, experts say. It's time for Hungary to get on its bike.6

Economy Shifts up, Industry Slows Slightly In the first quarter of the year, the Hungarian economy performed even better than first estimated, although industrial production data for April was somewhat disappointing.

Growth forecasts for the full year remain unchanged, however. 3

2017. 06. 14. 18:02

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Budapest Business Journal | June 16 – June 29, 2017

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall NEWS EDITOR: Christian Keszthelyi EDITORIAL STAFF: Zsófia Czifra, David Holzer,

Levente Hörömpöli-Tóth, Gary J. Morrell, Claudia Patricolo, Rob Smyth, Noémi Titz, Ágnes Vinkovits.

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SSC SUCCESS GOOD NEWS ALL ROUND

T

he success of Hungary’s shared services sector is not just good news for the estimated 42,000 people it employs, as Deloitte estimates in its survey of the sector (see page 18). Nor is it just good news for the state in terms of the revenues and taxes it brings in today.

There is long-term benefit here too, especially if the SSCs can continue to transition from routine jobs to higher valueadded roles. In the not too distant future, just about the only area to see meaningful jobs growth will be services (not manufacturing, the other Hungarian success story when you look at the automotive industry here). Indeed, as we have argued before in this column, and as Annemarie Muntz, president of the World Employment Confederation so powerfully articulated when she visited here back in May, the near future will see a “service-orientated economy in Europe”.

And here is yet one more piece of good news. Provided Hungary’s provincial universities, many of which now run SSC Basics courses, can continue to produce capable, welleducated graduates in sufficient numbers, then there is a real chance some of Hungary’s labor mismatch can be overcome.

If a sizeable chunk of the population is unwilling to travel to find work (Zsuzsa Gombkötő, of a state-owned shared services provider, states on page 16 that people in the countryside will not travel more than 30 km), then take the jobs to them. It makes good business sense, too. A well-trained accountant working in Budapest can earn almost double what a similarly well-trained peer can expect to command in one of the secondary cities, Gombkötő estimates.

Global investment management company BlackRock may be developing its 500-person SSC in Budapest, drawn by its “strong talent in technology, data science, finance and language” (see page 14), but Germany’s Viessmann is

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targeting Pécs, down in the south for an SSC offering customer support and after-sales. Pécs is, without question, a beautiful city, but the real attraction in this case is its 22,000-strong student population, and the fact that German is widely spoken in the region.

Szeged, another university town, hosts what will be British multinational oil and gas company BP’s 500-person SSC, as announced by the Budapest Business Journal in the fall (it already has a Budapest center employing 1,500). IT Services Hungary is another to have an operation in the southern cathedral city. Perhaps not surprisingly, the city has a dedicated SSC Szeged Project which exists to promote the place as an SSC destination.

And then there is Debrecen, in the east, awarded the title “Emerging City of the Year” at the CEE Outsourcing Awards in February. (For more on this, see page 17.) Again, one of the main attractions is lower rents and wages costs.

Perhaps the one worrying factor among all this positivity is the availability of suitable office space. As our report on page 12 makes clear, Hungary is unusually capital-centric.

Budapest has a population of about 1.8 million. Debrecen, the second city, struggles to reach 210,000. Nowhere else comes even close. That means property developers have been unwilling to target Hungary’s countryside cities: Smaller populations mean fewer businesses; it also means a lack of liquidity to fund an eventual exit.

It is a game of chicken and egg, and one the municipality of Debrecen has realized it has to intervene in. It has just launched the country’s first speculative office development outside Budapest, and the target is squarely SSCs. It is a bold move, and the city elders should be congratulated.

MTI / Zoltán Máthé

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Nohab-Gm Foundation, set up by in 1999 enthusiasts of the Swedish M61 class or railway engine, organized a trip on June 10 on an M61-010 to the basalt mine of Uzsa, a village in Veszprém County, a little inland from the northern shore of Lake Balaton. The M61s were officially withdrawn from service

by Hungarian State Railways MÁV in late December 2000, but the foundation has since preserved several examples of the highly-esteemed engines. The black and white picture shows a M61-015, taken at Nyugati pályaudvar (Western Railway Station) in Budapest in 1968.

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Economy Shifts up, Industry Slows Slightly

In the first quarter of the year, the Hungarian economy performed even better than first estimated, although industrial production data for April was somewhat disappointing.

Growth forecasts for the full year remain unchanged, however.

ZSÓFIA CZIFRA

The volume of gross domestic product was

4.2% higher in the first quarter of 2017 than in the same period of the previous year, the second reading by the Central Statistical Office (KSH) shows, exceeding the first estimate by 0.1 of a percentage point. According to seasonally and calendar adjusted and reconciled data, the performance of the economy was up by 3.8% compared to the corresponding quarter of the previous year, and by 1.3% compared to the previous quarter.

The updated first quarter GDP data put Hungary in sixth place on the European Union’s growth list, an improvement from where the last quarter data of 2016 had placed the country. At a regional level, according to seasonally and calendar adjusted data, Hungary performed similarly to Poland, but Romania and Slovenia recorded higher growth. The average economic growth in the EU was 2.1%.

The primary contributors to the growth were market-based services and industry. As

Numbers to Watch in the Coming Weeks The macro calendar for the next two weeks is not very crowded.

KSH will release earnings statistics for the January-April period on June 21, to be followed by the second estimates of retail trade figures two days later.

Employment and unemployment data will be published for the March-May period on June 28.

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for the latter, the value added by it grew 6.8%, within which manufacturing produced the highest increase, 7.8%, from the same period of last year. Within industry the growth of the performance of non-industrial activities exceeded that of industrial production. The performance of construction rose by 25%, while agriculture decreased by 6.3%. The gross value added of services was up by 3% in total. Altogether, services contributed 1.7 pp, industry 1.6 pp and construction 0.4 pp to the Q1 growth.

On the expenditure side, the actual final consumption of households increased by 2.5% compared to the same period of the previous year. Household final consumption expenditure, representing the largest proportion of the components of the actual final consumption of households, grew by 3.5%. The actual final consumption of the government was up by 6.2%. As a result of the above trends, actual final consumption rose by 1.2%.

Upward Revision Most analysts have kept their forecasts for the full year GDP growth at around 4%, some even corrected after the second estimates were released. In its latest “Economic Outlook” publication, the OECD revised its GDP forecast for Hungary to 3.8% for 2017, up from its fall forecast of 2.5%.

“Economic activity slowed temporarily in

2016, but has since rebounded, fueled by public investment as the disbursement of EU structural funds resumed,” the organization wrote of Hungary in its latest forecast, emphasizing that economic activity will continue to be driven by domestic demand, with improving employment and wage trends supporting it.

The Hungarian government’s view on Hungary’s economic outlook is similar, but it anticipates even better macro-economic indicators than the OECD, László Balogh, deputy state secretary for financial policy said in a statement. Among the Visegrad Four, Hungary’s economic growth rate may be the highest in 2017, he stressed.

While GDP data gives all the more reason for optimism, industrial output figures for April somewhat spoil the picture. In April 2017, the volume of industrial output declined by 3% year-on-year, the second estimates confirmed the preliminary figures.

Based on working-day adjusted data, production grew by 2.5%. The significant difference between raw and adjusted data is mainly due to the fact that there were three fewer working days in April 2017 than a year earlier. In the first four months of 2017, production increased by 4.9%.

According to the seasonally and workingday adjusted index, industrial output was below the level of the previous month by 0.8%. Production, which represents 96% of the output, declined by 3.4% in

manufacturing. Production grew by 23% in mining and quarrying (which have little weight) and by 1.8% in energy industry, including electricity, gas, steam and airconditioning supply.

Expansion Expected In spite of the disappointing data, analysts expect that industrial output will expand between 4% and 6% in 2017.

The low base effect and new capacities in the tire and food industries might result in a

6%

industrial output acceleration by the end of the year, Takarékbank analyst Gergely Suppan said.

He expects a higher growth rate in 2018, with the deployment of new capacities in the automotive industry.

April’s figures were significantly lower than expected, however, the outlook for this year is still positive, noted Péter Virovácz, head analyst of ING Bank, predicting an average of 4% growth rate for the full year.

Dávid Németh, of K&H Bank, questioned whether the nearly 8% year-on-year growth the industry reached in the first quarter of 2017 can be maintained. Given the latest data, the increase for the full year will be lower; Németh put it at around 5-6%. He expects an upturn in May.

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REAL ESTATE NEWS

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Budapest Business Journal | June 16 – June 29, 2017

First Speculative Class ‘A’ Office Project Underway in Debrecen The 22,000 sqm Class “A” Forest Offices in Debrecen will be the first speculative office building outside of the capital; the municipal authority of Hungary’s second city has launched the project, which it sees as a “trend setter” in the Hungarian office market.

GARY J. MORRELL

“The planned project demonstrates that in addition to Budapest as the main location, the countryʼs major cities are playing an increasing role when international companies expand their locations,” comment the developers, Főnix Office Building, established by the Debrecen municipality. “The city of Debrecen – due to the availability of high quality labor paired with excellent value for money – offers a perfect location for companies with an international background, primarily in

200 parking

Artist’s rendering of Forest Offices Debrecen.

the SSC/BPO sector,” Főnix added.

The developer says that the project is the first speculative class “A” office of more than 10,000 sqm outside of the capital.

“We are experiencing an increase in the interest of new SSCs/BPOs, however the lack of proper infrastructure (immediately available office space which meets international standards) has become more of an issue,” the developers say.

“As BTS/pre-lease development does not meet the time frame of this sector – and as private developers require a prelease to launch a new development in a premature market – the city of Debrecen decided to launch its own project on a speculative basis,” Főnix adds.

“There is growing interest in Debrecen in the SSC market. In February 2017, Debrecen won the title of “Best Emerging City of the Year”, awarded in Warsaw,” says László Papp, Mayor of Debrecen. “Winning this prize obliges us to create the best possible conditions for companies choosing Debrecen.

Forest Offices Debrecen will help to achieve this objective.”

Sustainable Solutions According to the development plans, Forest Offices Debrecen, designed by Bord Architectural Studio, consists of three separate wings on five floors, served by

spaces. The complex has been designed using sustainable solutions, bright interiors and a green roof, in line with LEED “Gold” certification. The project is located around ten minutes from the city center in a green area.

“We are proud to participate in the implementation of this speculative office development – so far unique in secondary cities – and to cooperate with the city of Debrecen,” says Miklós Ecsődi, associate director of occupier services at Colliers International Hungary.

“A regional trend has been observed in which international service providers no longer plan to place their centers only in capital cities. The effect of this trend is increasing in Hungary, and that is why we believe in the success of the project.”

The commercial class “A” office market in Hungary has to date been almost entirely capital-centric. This is in contrast to, for example, Poland, where there are established class “A” office markets in regional cities such as Katowice, Wroclaw, Krakow, Poznan and Lodz, where developers such as Skanska have developed, leased and sold office projects to investors.

Demolition work on the Forest Offices site has already been completed and a valid building permit is expected in the coming weeks. Handover is planned for the third-quarter of 2018.

Váci 1 Wins International Award

Váci 1, the Neo-Classicist UNESCO World Heritage Listed building refurbished and restored by Horizon Development, has been awarded a World Gold Best Heritage Restoration prize and a World Silver (Best in Europe) Retail Development award at the 2017 FIABCI Prix d’Excellence awards.

GARY J. MORRELL

The complex is a rare class “A” office and retail development in the historic center of Budapest’s District V. Horizon Development has successfully redeveloped the classical Central European heritage building into

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13,700 sqm of office, retail, and service space. Subsequently purchased by the Munich-based GLL, the design, project management and design consultancy was undertaken by DVM Group. BREEAM “In-Use” certification has been applied for.

“It is a tremendous honor for our company to have both our value preservation and commercial value creation potential recognized at such a high level by the professional jury consisting of 63 experts from 32 countries,” commented Attila Kovács, managing partner of the developer.

“Horizon Development is dedicated to reconnecting the heritage buildings of downtown Budapest into the urban fabric of the city. We are extremely pleased that our project is the first Hungarian development ever to receive awards in multiple categories, having competed against an international pool of high caliber projects,” he added.

Projects such as Váci 1 are regarded as a way of preserving and maintaining classical buildings in the historic center of Budapest while at the same time providing them with

Váci 1 interior.

a value-add use. This has also become a trend in the center of other major cities such as Prague and Berlin.

Development Strategy “The Heritage Restoration Prize is for any building, identified for heritage construction or preservation by the relevant authority, and which is restored to its original condition as best as possible. The building after restoration can be for any usage depending on the owner,” said FIABCI,

the Kuala Lumpur-based International Real Estate Federation. Its awards aim to recognize the projects that best embody excellence in all real estate disciplines.

Váci 1 is a good example of Horizon’s current development strategy. “With our proven track record of premium CBD developments – Eiffel Square, Eiffel Palace, Váci 1 – we are almost obliged to continue our development activity in downtown Budapest,” added Kovács.

The company is now developing the speculative 25,000 sqm Promenade Gardens on Váci út in partnership with the investor, Erste Open-ended Real Estate Fund. The project has been awarded both LEED “Gold” and BREEAM “Very Good” accreditation for the speculative project.

Horizon is also developing the mixeduse, 15,000 sqm, office, residential and retail Szervita Square complex in District V. The LEED “Platinum” accredited project is due to be completed in 2019.

The developer has also moved into the residential sector with the development of the 350-apartment Buda Gardens in District IX.

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Budapest Business Journal | June 16 – June 29, 2017

Hungarian Tourism Sector: Record Figures, Record Funding

The competitiveness of the Hungarian tourism sector is set to improve thanks to an unprecedented amount of funding earmarked in the next year’s budget and favorable market conditions.

LEVENTE HÖRÖMPÖLI-TÓTH

Tourism makes up some 10% of Hungary’s GDP at the moment, but if it continues to grow at current rates, that ratio is bound to spike very soon. After the recordbreaking year of 2017, the statistics of the January-April 2017 period suggest an even rosier outlook.

Overall figures look especially strong since both domestic and foreign guests have contributed to the excellent results greatly. Accommodations registered 11.8% more guest nights in the first four months of this year compared to data of one year earlier. Revenues accelerated at

MTÜ hopes even more tourists will check out Hungary’s sites next year.

an even higher speed. Money spent on accommodation increased by 18%.

April as such did exceptionally well.

Hungarians shelled out 23.4% more than the year before which outstanding figure is clearly connected to the impact of Easter. “Next year, in turn, there will be nine long weekends, and it might beef up the performance of the entire sector by 10-15%,” Zoltán Guller, CEO of the Hungarian Tourism Agency (MTÜ), said in a press conference. “This has the potential to add 1% to the country’s GDP.”

The year 2018 looks very promising for other reasons as well. In case the relevant proposal is adopted by Parliament, funding of HUF 53.5 billion will be available for tourism in next year’s budget which is twice as much as the 2017 figure and a seven-fold increase vis-á-vis 2010.

“The biggest and most comprehensive tourism development program is to be launched as a result,” Guller added.

In Budapest the reconstruction of the Buda Castle will continue, the zoo should become the most attractive one in Europe,

whereas the full rehabilitation of the City Park is to serve families and tourists alike.

The countryside will get extra attention too. So far three strategic regions have been designated with Sopron, Balaton and Tokaj, but soon new ones will follow suit.

Apart from targeted government funds other measures will also help achieve the ambitious goal of pushing the GDP ratio of tourism up to 16% just like it is the case in Austria. For one, more tax cuts are scheduled to come: after decreasing the VAT rate of on-the-spot dining from 27% to 18%, a further decrease to 5% will take place in 2018. Széchenyi Card vouchers providing tax-free spending for workers for certain purposes are also expected to boost the sector. Last year alone some HUF 95 bln poured into tourism by using those vouchers.

“We would like to encourage that ever more service providers should be family-friendly,” Guller noted. “To that end a new certification scheme is under preparation.”

High-profile international sports events such as the FINA World Aquatics Championships or the Formula 1 Grand Prix will further add to growth.

And efforts to improve country image worldwide are recognized on a different front as well: Budapest has been proposed as the host country to celebrate next year’s World Tourism Day organized by the United Nations World Tourism Organization (UNWTO).

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An old companion for the long run

2017.04.10. 14:09:37

2017. 06. 14. 18:02

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Business

Business

Cycling Tourism Needs to Find a Higher Gear Lack of proper information on cycling routes, regions and services is one main hindrance to Hungary becoming a genuine cycling tourist destination, experts say.

CYCLING TOURISM IN HUNGARY P HUF 80-100 BILLION FOR CYCLING INFRASTRUCTURE DEVELOPMENT IN NEXT 5-6 YEARS

BBJ STAFF

Though it offers more for cyclists than one might expect, Hungary’s cycling tourism potential remains hidden for most due to the lack of up-to-date information. The country has roughly 3,000 kilometers of cycle routes, a large portion of which is unknown even to locals as there is no information available online.

One example of this is the UpperTisza area; a 200-kilometer-long chunk that would make a wonderful bike tour destination, said Miklós Berencsi, head of the Cycling Coordination Department in the Ministry of National Development (NFM) at a conference held about cycling tourism in Hungary in early June. Yet you will not find a map/route of it online, he added.

There is not a central (online) platform or app showing all the existing bike routes in Hungary. Nor is there one on related services or accommodation.

This may cause a headache for families trying to plan a biking vacation but is more harmful from an economic viewpoint. “In the absence of data, how could we support with facts that Hungary needs cycling tourism?” asks Balázs Környey of the non-profit Hungarian Cycling Tourism Association (MAKETUSZ). “How can we ask for funds if we cannot calculate the efficiency, the return on investment?”

Economic Benefits The economic benefits of cycling are indisputable. In Europe, the total cycling industry adds approximately

EURto200 billion the economy

every year, said Ádám Bodor, head of EuroVelo, a Brussels-based NGO and a network of 15 long distance cycle routes connecting countries in Europe. This is a

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3,000 KM

HUF 2 BILLION

OF CYCLE ROUTES

TO BE SPENT IN 2017 ON SIGNAGE AND MAINTENANCE OF 1,000 KM OF ROUTES

SOURCE: NFM

conservative estimate; benefits can reach up to EUR 500 bln annually. Cycling tourism alone contributes EUR 44 bln euros to the European economy, Bodor said; slightly more than cruising which brings EUR 39.4 billion to the table.

While cruisers are owned, and operated by non-European entities and often employ non-European staff, cycling tourism rely on regional resources, Bodor says. One-day trips are most frequent: The EU calculates there are 2-3 billion such trips per year across the continent. Yet it is the multi-day outings, around 20 million per year, that translate into spending and can serve as a basis for politicians and lobbyists, Bodor adds. They may also use the results of two surveys (one representative, the other more thorough and analytical) that are expected to be published this fall, Környey told the Budapest Business Journal.

These are conducted with the aim of finding out what regions to prioritize when it comes to development and to test how the government’s development plans (currently under preparation) match long-term sustainability goals, Környey said. They will also consider features like cycling tourists’ spending, guest nights, and tourist habits.

Funding itself is not necessarily a problem.

Hungary used the highest ratio of available EU-funds for cycling development between 2007 and 2014 per population and per capita, says Máriusz Révész, commissioner for cycling and active relaxation. The

government plans to spend around HUF 80-100 billion for cycling infrastructure development in the next five-to-six years, which would add roughly 1,000 km to the existing network, Révész told the BBJ.

Ambitious Plans There are always ambitious plans landing on the desk of the governmental commissioner, lobbyist who promise to work magic in a certain region out of HUF 2-3 bln investment, but they fail to prove the need, says Berencsi. Most of the time, there is no need for large investments to improve a region’s cycling tourism. “Our goals should be realistic. Why invest millions in building a service center for bikers in regions or larger cities where everything is already available?” he asked. The expert would rather see the existing facilities add specialist cyclist services to their repertoire. Bodor suggests training for hoteliers and restaurateurs to avoid mistakes in the past.

Better signage and maintenance of the routes is also crucial to attract tourists, the speakers at the conference agreed.

To improve the latter, NFM has assigned Magyar Közút Nonprofit Zrt. with the operation and maintenance of approximately

1,000 km of routes

with a budget of HUF 2 bln for 2017.

Signage is ongoing, such lower-cost projects are financed from multiple sources including the Economic Development and Innovation Operative Program (GINOP).

Road transport should also better serve cyclists, Bodor noted. Trains have some space for storing and transporting bikes, but long-distance buses have no such service in Hungary yet. Related services, for example, the ability to book a space for you and your bike on a train should also be introduced.

These measures are essential just to get on the bike tourism map of Europe. To become competitive, even more is needed.

The most attractive features should be heavily promoted, said Zsóka Abelovszky of the commissioner’s office, who talked at the conference about development. She proposed the creation of thematic routes for cyclists, such as wine or sausages.

The existing bike routes often pass by tourist attractions, but do not lead to or connect with them, something that ought to be fixed, too. (This is the result of the previous seven-year funding cycle when many cities applied for and developed nontouristic cycling networks).

People need to understand that there is often more than one option to get to a destination, and that it is not only separated bike lanes that are safe to use, she added. To explore what options they have, a concise map of networks should be created in the first place, experts agreed.

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Budapest Business Journal | June 16 – June 29, 2017

Business

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Blending Budapest and Damascus the space without closing-off areas entirely, beautifully painted ceilings, and cool marble display islands, rather than counters, around which customers can wander. It will be replicated in all the other boutiques, with slight variations to account for local character and space restrictions.

From an exquisitelydesigned store diagonally opposite the Opera House, an international Syrian chocolatier is seeking to resurrect itself and reconquer the world, one bite of luxury chocolate at a time.

Unique Praline

ROBIN MARSHALL

The Ghraoui merchant family’s business roots go back to 1805, when, according to Rania Ismail, the director of communications at Ghraoui Csokoládé Manufaktúra (GCM) Zrt. and the wife of the current head of the family, it “started the dried fruit business and sold it to the world”. By the 1930s, the fourth generation of the family were introducing the Levant to chocolate.

The business was nationalized twice, and was built up again, only for the still unfolding tragedy of the Syrian civil war to intervene. The family’s plant in Damascus was closed in 2012. That they would relocate and seek to start again (Ismail says they feel a duty to the family name that they cannot ignore) might not be a huge surprise, but why Hungary?

“The beauty of our investment in Hungary is that our business is an exportoriented, high value-added operation; just like our mission statement says, we are creating value and growth, led by innovation,” explains Bassam Ghraoui.

The Syrian-Hungarian businessman, and head of the fifth generation of the Ghraoui family, has been doing business with Hungarian companies for many years in various fields, and was awarded the Hungarian Order of Merit in 2008.

“I am particularly happy about the commitment and skills of Hungarian workers I have experienced in the past 25 years, which played a key role in the choice of location for the investment, in addition to its perfect geographical location in the heart of Europe and the friendly investment environment.”

One Boutique per Capital The geography is important because part of the business plan involves a boutique in each of the major capitals as the sole Ghraoui chocolate outlet for that country, with the supply coming from Hungary: Andrássy út 31 will be the flagship. A firm opening date has yet to be fixed, Ismail says; right now, the final additions to the store, the training of the sales staff, and the fine tuning of the individual chocolate recipes are the priority. Everything should, however, be in place by the end of August. “September is the beginning of the season for chocolate, as August’s

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temperatures are the enemy of real chocolate,” she says with a laugh.

A factory in Csepel is already gearing up to serve immediate needs, and the target is to open five boutiques this year, with Paris, Dubai and Berlin already decided upon. But the final stage of the process will be a 12,000 sqm factory in Hatvan (about 67 km northeast of Budapest) . “We are a group of international and Hungarian investors

absorbing the milieu of Budapest and talking to the Ghraouis about what the family name, chocolate, and their culture all mean to them. The result is a mix of decorative Damascene grills that divide kempi-BBJ-124x158-201705:Layout 1

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Local character also plays into the individual chocolate pieces. Each has its own story. The “Heart of Budapest” has been four months in the making, and features a unique praline cream.

“We are trying to find a taste that fits my feelings for my new home. I think we are 80% there; there are two or three elements we are still working on,” Ismail says. “Château d’amour” is inspired

by Ferenc Liszt’s one-act opera Don Sanche. But not everything has Budapest roots. “Damascus of Yesterday” comes in a foil wrapper, and features a dried apricot (Ismail says Damascus used to be surrounded by the fruit trees), pistachio and “a very old, very special family recipe, which we consider our signature product”.

Does she miss her old hometown? “I carry Damascus in my heart. But I have a new home here in Budapest, and the feelings are assimilated, not separated.

You know, Hungary has had a difficult story too, and yet come out beautiful and strong. I feel like we belong here.”

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“I carry Damascus in my heart.

But I have a new home here in Budapest, and the feelings are assimilated, not separated.

You know, Hungary has had a difficult story too, and yet come out beautiful and strong.

I feel like we belong here.” aiming to produce high quality chocolate with a special focus on export markets: 95% of final production will go to export and marking the footprint of Hungary in this high value-added industry,” says Ghraoui.

“The investment is scheduled for construction in 2017 and will be operating by the end of 2018; it will directly create around 540 new jobs over six years, most of which require a particular knowhow and special training that GCM Zrt. will provide to its employees. We will be focusing short-term on the European and Middle-East export markets, with a wider objective of exporting to Asia too,” Ghraoui adds.

The design of the Andrássy út boutique is the work of Bruno Moinard and Claire Bétaille, of 4BI & Associés (responsible for all 350 boutiques for Maison Cartier).

Ismail explains that Moinard spent time

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Mastercard Hungary Names new Managers Three members of the Hungarian Mastercard team, Szabolcs Kovács, István Maklári and Ádám Szőnyi, have been appointed to bear responsibility in their own fields for activities across the whole CEE region, while Szabolcs Szendrei will be responsible for activities in the entire European region.

Szabolcs Szendrei has been appointed to a new position by Mastercard Europe. From this spring, he becomes director responsible for the European Credit Cards Team. The Hungarian expert will be responsible for the execution of the European credit card product strategy and for future value propositions of credit cards. His top priority will be to implement the new global Mastercard Instalments service in European countries. Szendrei has been working at the Budapest regional office of Mastercard since 2010. Most recently, he was in charge of Product Sales Management. During this time, he handled the Hungarian implementation of Mastercard Priceless Specials, and also had an important role in the launch of credit card and prepaid programs in this region.

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István Maklári is promoted to leader of the Mastercard Advisors Regional Consultant Team (CEE Delivery Lead). He takes over the management of a team of 18 in seven offices (Warsaw, Prague, Vienna, Budapest, Bucharest, Belgrade and Tel Aviv).

Maklári joined Mastercard Advisors as a Project Manager in July 2013. He gained outstanding expertise in the fields of mobile payment and digital banking.

From September 2015, he acted as senior project manager and was responsible for more than 50 projects. He has a degree in economics and an MBA, and previously worked at consulting firm A.T. Kearney and the Boston Consulting Group. Ádám Szőnyi has acted as regional business development leader for Mastercard Advisors since February 2016. He and his four-member team (in Vienna, Warsaw, Prague and Budapest) handle Consulting Sales and Business Development projects in 16 countries in the region. With a background in

consulting, Szőnyi has been a member of the Budapest team for five years. From December 2013, he was responsible for activities in five countries and, from February 2016, for the whole CEE region.

Szőnyi previously worked at A.T. Kearney, and prior to that in managerial and analytical positions at Budapest Bank and at GE in the United Kingdom, Spain, the Netherlands and Hungary.

Szabolcs Kovács is regional product leader for the CEE region, responsible for the execution of credit card and debit card strategies in the 16 countries of the region.

Kovács has been working at the Budapest regional office of Mastercard since February 2009. Until his most recent promotion, he was a senior account manager. In 2015, Kovács worked for several months in the Mastercard Johannesburg office, where he contributed to the creation of the South African contactless strategy. He holds a degree in economics. Previously he was a leader of the real estate division of DBG Group, a company which primarily allocates Dutch working capital and which also specializes in SME counselling and property management. Prior to that, he was the chief manager of Regus Hungary for two years.

Celanese BBSC Promotes Senior Director István Katona has been promoted to senior director of the Celanese Budapest Business Services Center, taking effect on June 1. Katona will succeed Mike Jackson, former senior director of the Budapest site. Katona has been with Celanese, a global technology and specialty materials company, since 2011, most recently as director of accounting for Europe, and has also been leading local finance organizations in the region.

Prior to joining Celanese, he gained experience in the fields of accountancy, controlling and project management at multinational and Hungarian companies.

His commitment to revive the shared services sector in Hungary was one of the main reasons for his decision to become part of the Celanese team. “I’m honored to be the first Hungarian senior director of Celanese Budapest Business Services Center,” said Katona. “The tendencies of the last few years prove that the shared services sector is continuously developing in the region, and that Hungary is indeed playing an influential role in this development. We are really proud of the achievements the Budapest site accomplished in the past ten years, and together with my colleagues, we are dedicated to continue this success story in the future, with my leadership.” The Celanese Budapest Business Services Center has been responsible for the financial, logistics and customer service processes of

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Celanese’s North American, West European and Asian business lines for ten years. A workforce of almost 350 is employed at the SSC in the heart of Budapest.

CMS Budapest Welcomes Senior Associate György Bálint joined the employment team of law firm CMS Budapest as a senior associate on June 1, after spending 13 years at CHSH Budapest.

Bálint is an experienced labor law specialist, who has been advising several market leading companies from the automotive, pharmaceutical, manufacturing, construction and TMC sectors, CMS Budapest says. He is also an experienced corporate law and litigation lawyer. “I’m very excited to join the employment team at CMS, which is widely known as one of the best practices on the market with an impressive clientele. I am happy to bring in my experience and certain that together we will further enhance the practice area’s ongoing robust development,” said Bálint. “We are delighted to have György in our employment team. His expertise and know-how in labor law will definitely add a new dimension to our current capabilities,” said CMS Budapest Managing Partner Gabriella Ormai.

DVM Group Appoints Group Sales Director Tamás Sellyey has been appointed Group Sales Director at real estate firm DVM Group, with the primary tasks of business development and professional sales.

Sellyey has been a key figure on the Hungarian property scene since 1998, gaining expertise in the fields of consultancy, investment and real estate development, DVM group says. His previous employers include Gordon & Webster (deputy CEO), DTZ Hungary (head of investment), Indotek Group (sales and marketing director) and DBH Group (managing director). He also proved his leadership skills as country representative of Philips Hungary and CEO of Philips Lighting. Beyond his work commitments, Sellyey, an economist by education, also takes on an active role in various professional, business and social associations. “Our company has reached a point in corporate evolution when the coordination of inter-division sales initiatives requires a highly qualified, experienced expert. We are confident that Tamás Sellyey’s leadership will lead to new connections and synergies, and generate new business opportunities for the real estate development, design, project management, environmental consultancy and general construction divisions of DVM group,” said Attila Kovács, founder and managing partner of DVM group.

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Lifelong Learning at Britannica International School The secondary department at Britannica International School in Budapest is long standing and has experienced much success over the years.

Zsófia Alibaux-Jakab was appointed to be the Head of Secondary in 2012 and works alongside the Principal, Head of Primary and Business Manager as the school’s senior leadership team.

The school has been through various changes and improvements in the past years – can you specify these?

How are gifted and talented students supported?

We very much value our Gifted and Talented students and we aim to develop provision for them even more. One of our main goals is to make sure that we facilitate individual learning paths for these students. We try, as best as we can, to tailor our tuition around the personal plans and career goals of these talented students and we endeavor to stretch them wherever possible.

In terms of academic competitions, we have hosted the International History Bee and Bowl competition (first ever regional round in Europe) and our students qualified for the European Championships in Rome, Italy.

Britannica is the only school in Hungary offering AS/A levels – How do A levels help students get into the best universities in the world?

Zsófia Alibaux-Jakab, Head of Secondary.

In terms of academics, we have been accredited by the Council of International Schools. Accreditation ensures that the school meets strict criteria and standards in all areas of the school life.

In secondary schools on TV there is always bullying – and it seems to be a major problem for many schools in reality as well. How does Britannica handle bullying in the school?

Our admissions process has been tightened and applicants need to go through thorough testing before they are admitted to Secondary. Our newest addition to staff is the Learning Support Coordinator who also acts as a counsellor, as she is a trained psychologist.

We have an anti-bullying policy, of course, which has been recently reviewed by parents, staff and students. Form Tutors

Following the move to the current building in 2010, the facility has been through continuous improvement – the latest addition is an outdoor covered and heated sports area. This year, our ICT suite has been completely refreshed with state-ofthe-art touch screen high performance computers.

Moving up to secondary school is always a worrying prospect for the 11-yearolds. What does the school do in order to relieve the stress of this transition?

Experience shows it is more a worrying prospect for parents! Children adapt very well. At our school, the advantage is that children don’t have to move buildings and some specialist teachers have taught them also in Primary, so the change is not that harsh. Nevertheless, we have various transition meetings and events with parents and students coming up towards the end of the school year. Year 6 students are also invited to Secondary Science and Maths lessons from May onwards so they get a taste of what they will learn in Secondary school.

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keeps developing. We have done really well at the Bratislava Mathematics Olympiad, establishing ourselves as the strongest school in the area. We are also continuously developing technology and embedding it into our teaching with plans to extend our BYOD (Bring Your Own Device) scheme.

For the first time, some of our students entered a robotics competition and we

“We encourage students and staff to use technology and embed it into lessons to prepare them for 21st century workplaces. In a rapidly evolving world, it is vital that our staff and students are digitally savvy and that they can confidently use technology.” also monitor their classes and will handle any issues that arise. Our Secondary Learning Support Coordinator is involved in mediating and will work on group cohesion and social interactions with classes. We are fostering a culture of mutual respect and an aggressionfree environment where students feel safe.

What is the major selling point of the secondary school?

Academically, we have a strong Mathematics and ICT department which

also won First Place in the Region on the Cyberpatriot competition organized by the U.S. Department of Defense. The MIT department also participated in a STEM project. Right now, our ICT teacher, Mr. Mallord, is running a 3-D printing project with our KS3 classes and we have many more projects coming up.

This year, the Science department has organized Science Days again and students competed in the BioArts competition, where they had to make scientific drawings.

AS/A levels are strong diplomas to have.

Our courses allow students to specialize in subjects which are truly relevant to their university studies. It is possible, for example, for a student to study only sciences, if they are interested in medical school, or only humanities if that is their path. Such specialized learning in the last two years is a solid foundation for the best university courses. We also have a strong and steadily developing careers counseling service, which starts as early as Year 9.

We encourage students and staff to use technology and embed it into lessons to prepare them for 21st century workplaces.

In a rapidly evolving world, it is vital that our staff and students are digitally savvy and that they can confidently use technology.

We are currently the only school offering Computer Science AS/A level in the area.

Our virtual learning environment, Edmodo, also allows parents, staff and students to extend learning beyond the classroom.

Field trips are something that students get very excited about – what do you offer?

We offer various trips, ranging from day trips in Form groups or residential trips, both abroad and in Hungary. Some examples include trips to competitions, residential trips abroad, Careers trips and other trips to museums. At the end of June, we have a trips week where all KS3 students travel to Lake Balaton and other classes go to a range of destinations.

What factors are to be considered when parents are picking a secondary school for their children?

I would advise to visit the school personally if possible and to ask all relevant questions in person of our Admissions Office or a senior member of staff who are always available.

It is very important to find out about the school’s curriculum and the examinations on offer. Britannica places great emphasis on providing quality pastoral care in a nurturing learning environment where all students are individuals. We take pride of the fact that we are not a “diploma factory”, but instead an innovative institute where lifelong learning occurs and students become responsible global citizens.

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Special Report Shared Services Centers Shared Services Centers Dominate Office Demand12 SSC Openings Underline Immense Growth Potential14 Debrecen: SSC hub of the Hungarian East 17 SSCs eye Expansion in Hungary 18

Shared services continue to be an important, and growing, contributor to Hungarian GDP. We take a closer look.

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Special Report | 11

HIPA Launches SSC Survey

“We truly believe that the more we know about the [SSC] industry, and the more we learn from each other, the better we can develop the business environment in order to unleash the full potential of the services industry in Hungary.”

The Hungarian Investment Promotion Agency (HIPA), along with its professional partners EY and GWS Hub (the recruiter and owner of the SSC Heroes brand), are to prepare a detailed market analysis of the Hungarian shared services sector.

“More and more companies are entering the countr yside and target cities as Pécs, Debrecen, Szeged, or even Székesfehér vár, where universities have a lot of educated, graduate, multi-lingual young people.

Also, the cities are ver y open to the companies and they help them in ever ything,” HIPA said.

“Hungary is aiming to build up the most competitive business environment of the CEE region. In order to reach that, we initiated lot of changes in terms of HIPA support in favor of investment promotion, taxation but also subsidy matters” HIPA said in its statement to the BBJ. “We are focusing on those industries which bring high added value type of activities into the country, just as the business service industry does, because it is one of the most dynamically developing industries in Hungary, which employs roughly

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Called “Hungarian Shared Services and Outsourcing Insights”, the organizers say the study will be a unique 360-degree view of the sector because it will include not only answers from company executives, but will also feature opinions from employees working in shared service centers (SSCs).

“In line with our strategy to increase high value-added activities in Hungary, we highly concentrate on developing the shared services industry and on encouraging all stakeholders to participate in this journey together with us,” said Róbert Ésik, the president of HIPA. “Our purpose is to create an environment in which it is worth to operate, to invest and to work as well. We truly believe that the more we know about the industry, and the more we learn from each other, the better we can develop the business environment in order to unleash the full potential of the services industry in Hungary.”

The goal of the survey is to have the largest possible coverage of the Hungarian shared services industry, to try and ensure the collated information is as accurate as possible. Thus, any company operating in the sector (including outsourcing companies) can fill out the survey. Moreover, HIPA says it is keen to receive opinions regarding life in an SSC, by asking employees about their experiences separately.

Open and Honest To this end, it will ask a few information specifics to each employee for validation purposes, but promises it will not give out or use any personally identifiable information and will only process information in bulk. “So, feel free to be open and honest not just about the negatives, but about the positives, too,” HIPA said in a statement sent to the Budapest Business Journal.

Given all of the above, the organizers have created two sub-surveys: one

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42,000 educated

people with language knowledge, mostly belonging to Generation Y. The situation of this industry is somehow the basis for our future.”

Róbert Ésik, president of HIPA. general, the other more specialized.

The “SSC Company Survey” asks about overall company specifics that typically only the leadership of each center will know about. It has a limited number of focused questions for the senior executives of SSC companies in Hungary. The “SSC Employee Survey”, on the other hand, is available for everyone currently working in captive or outsourced shared services. This survey covers a wider variety of questions from every aspect of a shared service organization.

The overall survey will be connected to a Shared Services Gala planned for this fall, where awards will be decided based on the results of the “Shared Services and Outsourcing Insights”.

Key Role in Hungary The SSC sector plays a primary role in promoting foreign investments in Hungary, and therefore imparts a highly significant contribution to the success of the Hungarian economy, HIPA says in its statement.

Based on the sectoral breakdown of the number of newly-created jobs (which the government agency puts at 8,000 in the last three years), the SSC sector ranks second in the country. “Also, it

is important to mention that the SSC sector counts as an area of high added value, where employees are offered promising career opportunities and excellent prospects for professional development.”

According to HIPA’s figures, more than 100 companies operate around

110 regional

service centers in Hungary, many of which are planning further expansion in the country. “The SSC sector has become a success story in the Hungarian economy; the centers are locating ever more complex and high-added value services based on the high qualified workforce offered by Budapest and cities in the countryside,” HIPA says.

Spreading the Benefits SSC development has typically centered on Budapest, with its many universities (Wikipedia puts the number at 22) offering a good supply of welleducated workforce. Increasingly, cities in the countryside are also playing a prominent role, and they have been continuously developing in the competition for investments over the last years.

The Hungarian Investment Promotion Agency is the professional government organization tasked with promoting investment in Hungary.

The agency is actively involved in the preparation of government support of investments, and says all previous records for Hungary were broken in 2016: Positive decisions were made on 71 investment projects with the support of HIPA. As a result, the agency says foreign direct investment worth more than EUR 3.243 billion came into Hungary and 17,647 new jobs will be created.

A favorable trend within this is that the proportion of reinvestments has continued to increase, suggesting that companies already here in Hungary are comfortable with the environment and the benefits it has to offer. The shared service sector continues to be a strong player within the overall investment picture with 12 projects and nearly 2,500 new, high-added value jobs created last year.

For more on the SSC survey, see: sscinsights.hipa.hu

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Shared Services Centers Dominate Office Demand

Shared services centers (SSCs) and Business Process Outsourcing (BPOs) are widely regarded as major component sof Budapest office demand and take-up, with developers actively targeting SSCs as potential tenants.

GARY J. MORRELL

Agora Budapest.

Cushman & Wakefield estimates that, over a typical year, anything up to 35-45% of all its transactions in terms of square meters involves SSCs. According to Kata Mazsaroff, director of occupier services at Colliers International Hungary,

almost

30%

of the 2016 take-up in Budapest came from the SSC sector, which resulted in slightly more than 100,000 sqm in lettings; a similar result for 2017 is expected. Colliers, for example, has represented IT services company T-Systems, which has decided to consolidate its operation in a new 17,300 sqm center at Skanska’s Mill Park development. The SSC/BPO sector has essentially become a significant industry in Hungary (and CEE) in its own right.

“SSCs and BPOs have become the most active businesses in the Hungarian service sector and therefore we also focus on finding them appropriate office solutions,” said Norbert Schőmer, deputy CEO for office developments at Wing. “There are tenants in our portfolio that provide SSC services as a core activity, but also tenants who don’t necessarily work in the SSC business sector, however they do follow SSC requirements, due to their important back-office departments.”

He added: “Our two large pre-lease agreements were concluded with the hightech IT companies, Ericsson and Telekom, who looked for efficient HQ buildings.

Nevertheless, these buildings – due to their high specification and flexibility – can partially or entirely accommodate SSC requirements as well. It was the parties’ goal to develop office buildings that would support general and HQ structure requirements, but can be converted to SSC office requirements as well.”

Exact definitions of what constitutes an SSC vary. However, it is widely defined as the entity in an organization responsible for the execution and the handling of specific operational tasks, such as: accounting, human resources, IT, legal, compliance, purchasing and security.

Cost Sensitive Essentially it is the practice of corporate services to separate operational tasks from the corporate headquarters. The process is seen as cost sensitive in terms of head count, labor costs and local selection criteria. With regard to BPOs, a third party provides specific services to a company on a contract basis.

According to the website SSC Heroes, the difference between BPOs and SSCs

is mainly the question of for whom the services are provided. “The spread of global communication has led to the creation of aggregated back-office functions in the form of SSCs; these are not third-party service providers but service providers to their mother companies.”

Multinational companies and organizations are seeking to off-shore the operational elements of companies to countries such as Hungary, which are able to provide modern class “A” office accommodation, a skilled labor force and good business infrastructure (including IT, telecommunication and transport infrastructure) at a price significantly lower than, for example, Western Europe.

Hungary, Czech Republic, Poland, Slovakia and Romania are all successfully promoting themselves as advanced but cost-effective SSC business destinations.

Furthermore, in the CEE region SSCs have started to become more than a backoffice division as they have extended their portfolio to add more complex customerfacing roles, and also to the core activities of the mother companies.

When it comes to location, companies look for the best buildings available as landmark and visibility both matter for them.“Central locations are preferred and easy public transport (metro access) is key – and more important than parking ratio.

Air quality is crucial, due to a relatively high number of employees per sqm, as is proximity to an education center to meet the need for an educated labor force,” said Gábor Borbély, head of research and consultancy at CBRE Hungary.

SSC companies usually have an office requirement of 6-10 sqm per employee, which is less than the average requirement from tenants. On the other hand, more space is provided for social and informal activities like larger catering and social areas to compensate for the direct dense working environment.

Efficient Layout Mill Park.

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“The requirements of SSCs and BPOs are mainly an efficient layout that helps them

to accommodate as many workstations as possible supported by cost efficient energy solutions and advanced mechanical systems. These companies try to create an attractive office environment that helps to keep, improve and motivate their staff.

Therefore, the services provided within the premises and the building is always in their focus,” commented Wing’s Schőmer.

Agora HUB, the first

34,000 sqm building

of one of the biggest Budapest office projects, the phased Agora Budapest (currently under construction by HB Reavis in the Váci Corridor), has been designed especially with SSC-type companies in mind.

“We are ready to serve startup SSCs and 10,000-20,000 sqm SSCs and BPOs as well. They have a strong focus on the office environment, smart buildings and the surrounding wide range of amenities serving daily needs of workers,” said HB Reavis.

Hungary is seen as typically competing with Poland (Warsaw, Wroclaw and Krakow) and Romania (Bucharest) for SSCs. Poland has now emerged as a regional leader in the provision of outsourced IT-BPM services. Oracle has its fourth largest operation in the world in Romania.

Hungary evolved from call center-type services to high value chain services.

“We are strong in mostly IT, finance, accounting and HR roles. The largest companies in Hungary include: T-Systems (4,000 headcount), GE (circa 5,000), EPAM (3,000) and more,” said Mazsaroff.

“BlackRock is entering the market, a recent win for Budapest, with a 500 headcount. BPOs are present with their companies not just in Budapest but in secondary cities as well, for example Debrecen and Szeged. More universities in Hungary are providing SSC specializations. Skilled/quality labor availability is the largest threat, just as in other CEE markets,” she concluded.

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Hungarian SSCs Moving up the Value Chain

The proportion of shared service centers performing complex duties has been significantly increasing in Hungary, but education must offer industry-specific training to keep the trend going.

LEVENTE HÖRÖMPÖLI-TÓTH

Although local shared service centers saw the number of employees increase by 10% in 2016, the sector continues to struggle with an image problem, as many still associate it with call centers. However, the industry has been moving up the value chain in Hungary, and, as a result, ever more corporations are setting up support and innovation hubs here that offer more complex services.

It is a misconception, to start with, that call centers offer only low-skilled jobs, Balázs G. Nagy, chairman of the Hungarian Service and Outsourcing Association (HOA) tells the Budapest Business Journal. “Apart from impeccable language skills, employees

Attila Suhajda.

Special Report | 13 Robotic Process Automation (RPA) is another hot trend shaping the future of the industry. The fact that Hungary has started its ascent up the value chain should provide some shelter against technology-bound redundancies.

Interestingly, cost-saving does not rank first on the list of reasons for applying RPA, Nagy says. It is more important that robots do not leave work, and their capacities can be precisely predicted. “At the end of the day, though, people will still be needed to carry out high-added value tasks,” he concludes. “That is why it is crucial to continue to have more highly educated people and attract the kind of SSCs that will employ them.”

Balázs G. Nagy.

must be also great at problem solving,” he says. Other types of SSCs performing more sophisticated duties require an even better educated workforce.

Market players have realized that a joint effort is badly needed to attract the best brains. Well-known corporate giants such as British Telecom, Shell, and Vodafone do not have a problem with branding, but less well-known companies do, Attila Suhajda, former chairmen of HOA adds. Therefore, on HOA’s initiative, a fully-fledged campaign will be launched to promote the image of the industry this year.

Suhajda further believes that the lack of professionals could seriously endanger the long-term perspectives of the entire sector, since it might become too risky to rely on finding hundreds of candidates within a short period of time.

Education Must Adapt Nagy stresses the importance of the ability to host such projects at all times. “It is a problem if a company leaves, even if sometimes it is for reasons beyond our control. Having no immediate replacement in sight poses an even greater challenge.” Investors choose locations where they believe they have partners who can help solve their problems, so Hungary must work on meeting this demand.

Introducing industry-specific training courses in the education system would mean a lot in this regard. In-house training is available at most SSCs; however, their finances are often limited for this purpose.

Therefore, it is essential that universities offer targeted training of six to 12 months to teach work methods typically applied at SSCs.

The Power of Pro Bono Pooling An increasingly popular type of corporate charity is when company staffs offer their knowledge to NGOs so that their functioning becomes more efficient. Under these so-called pro bono pooling schemes marketing campaigns, financial plans or legal documents are drawn up for free which have the potential to make a long-term impact on civil society. As Attila Suhajda, former chairman of the Hungarian Service and Outsourcing Association (HOA) says, more initiatives should be encouraged that aim to connect enterprises with NGOs so that instead of charity funding, valuable high-added value work is donated which benefits the civil sector best.

HOA has done precisely that, he says.

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BUILDING THE FUTURE THROUGH LANDMARK REAL ESTATE

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Special Report

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Latest SSC Openings Underline the Sector’s Immense Growth Potential

The shared services segment draws in the second most FDI for Hungary after automotive.

BlackRock, FrieslandCampina and Viessman have recently joined the crowd announcing ambitious plans in this country.

LEVENTE HÖRÖMPÖLI-TÓTH

The domestic shared services center sector shows no signs of fatigue. Quite the reverse. In spite of existing labor shortage bottlenecks, announcements of the establishment of new venues have been

hitting headlines in almost conveyor beltlike fashion.

One of the biggest lately was when BlackRock, a leading global investment management company, revealed its decision to set up its technology and innovation hub in Budapest. As managing director Patrick Olson said at the time, the office will handle the technological development of financial and business processes, develop new methodology to handle client data, and handle creative marketing tasks.

Recruitment started in Q1 of 2017 and BlackRock spokesperson Marc Bubeck confirmed that things have been going after schedule. That job is not easy, though, since candidates for some 500 jobs are being sought. “We have been very pleased so far with the quality of applications we have had for the jobs offered in Budapest. We are slightly north of 40 people now,” Bubeck told the Budapest Business Journal.

After word got out about BlackRock’s plans, the news quickly spread that at least a part of the recruitment process targeted Hungarian professionals living in the United Kingdom. Bubeck said that they are recruiting staff based on their skills and expertise rather than on their current location. “That said, we can hopefully help support keeping talent in

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BlackRock spokesperson Marc Bubeck.

Budapest as well as attracting some of the talent back,” he noted.

Strong Talent

“We chose Budapest for its strong talent in technology, data science, finance and language – a combination we believe will be fundamental across all areas of asset management in the future,” Bubeck said.

Apart from the above factors for the investment decision, the quality of infrastructure and security had also been mentioned. And government funding of up to HUF 280 million, an equivalent of nearly USD 1 mln, cannot have done any harm either.

Royal FrieslandCampina, a Dutch cooperative owned dairy company, already operates two finance shared services centers in the Netherlands and Malaysia, and is now opening its third one in Budapest.

As Minister of Foreign Affairs and Trade Péter Szijjártó pointed out earlier, the new regional SSC in Budapest will support the EMEA region with between 100 and 150 newly-created jobs in the next two years.

The dairy company has a strong presence in Hungary; FrieslandCampina Hungária Zrt. manufactures and markets dairy products in Hungary under the Pöttyös, Milli, Oké, Landliebe, Completa and Frico brands.

FrieslandCampina and its legal predecessors have held a prominent position in the Hungarian food sector for decades. FrieslandCampina Hungary employs about 500 people. Its product

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range contains about 120 different dairy products, 80% of which is produced locally at the company’s plant in Mátészalka. The milk is supplied by dozens of Hungarian dairy farms.

Similar Path

Viessmann, a German manufacturer of industrial heating and refrigeration systems, is walking a similar path; it has also has been present in Hungary in a manufacturing capacity, and now plans to proceed with an SSC in Pécs, located in the south of the country. The services center will represent a HUF 533 mln investment, and is scheduled to open in the fall of 2017.

This will be Viessmann’s third facility in Hungary after a sales office in Törökbálint and a manufacturing plant in Dombóvár.

The main task of the SSC will be to provide customer support, mainly in the area of after-sales, in cooperation with the technical services group operating in Allendorf, Germany.

The choice of Pécs was rooted in the fact that it is a university hub. The student pool of some 22,000 provides an excellent pool of candidates. German is also widely spoken in the region, and Pécs has an excellent industrial park and services.

The center will start operations with 50 employees who all need to be technologically qualified. This investment is also being backed by the government: A grant of HUF 106 mln has been made available for the project.

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CEU COLUMN

SSCs and BSCs: An Explainer You come across the term Shared Services Center (SSC) or Business Services Center (BSC) ever more often now. Large multi-unit enterprises have been setting up centers for shared services since the mid-1980s, first in the United States, and then increasingly around the globe since the early 1990s.

Anna Kaposvári Head of Career Services CEU BUSINESS SCHOOL Hungary is one of the most popular shared services hubs for multinational firms and other organizations in Europe, with more than 100 SSCs employing moe than 40,000 people. Budapest remains by far the most popular location, but SSCs are also popping up in cities such as Debrecen, Miskolc, Szeged, Veszprém and Székesfehérvár.

So what do SSCs actually do? In a large multi-unit enterprise, specialized services are consolidated into a single unit, which then supplies the services to the

organization’s other business units, based on Service Level Agreements (SLA) and charged to the receiving business units based on some system of transfer pricing.

There are several advantages to centralizing services into SSCs, with the two key benefits being cost reduction, which comes from labor arbitrage and resource consolidation, and an increase in efficiency, which comes from the standardization, reengineering and automation of processes and systems.

Major Transformation

SSCs in Hungary have undergone a major transformation and become increasing sophisticated over the last decade. Once the service delivery model has been successfully established, companies often continue to centralize more operational activities, and in the process move away from basic roles towards enhanced services and high value activities such as reporting, modelling and even technological innovation.

The sector provides excellent career

opportunities for young graduates speaking multiple languages. Compensation packages and prospects for career development and mobility are among the most attractive in the country. Big brand SSCs are attractive and stable workplaces with clear hierarchical structures, multicultural teams, flexible working hours, team-building activities, sports events and cool offices. They are not everyone’s cup of tea though, with often process-based jobs, technology-based administration and an obsession with KPIs. Attrition rates hover around 30%.

SSCs have been a great success story for Hungary overall, turning Budapest into one of Europe’s fastest rising financial services and technology hubs. Research shows that this trend can continue for years to come, generating hundreds if not thousands of new jobs every year.

That said, this trend could easily be stopped in its tracks by a very tight Hungarian labor market and a growing shortage of competitive local talent. At CEU, we have been working closely with

The most common fields in SSCs are the following: • IT • Finance • Accounting • Controlling • Tax • HR • Customer service • Data management • Logistics • Procurement • Business administration and support

SSCs to attract and train both Hungarian and international students in finance, data analytics, technology skills and other areas, thereby contributing to deepening of the talent pool. We have also been helping SSCs draw attention to their Budapest operations through our global university network. As a university, we have a great responsibility to create attractive career options for our students and alumni. We can only succeed if we work with key employers and constantly innovate to make sure that we deliver skills that are actually needed – and not just now, but ten years from now and beyond.

This column is part of a series of opinion pieces from experts at the CEU Business School in Budapest. The opinions stated here do not necessarily reflect those of the BBJ.

EXPERT OPINION

SSCs Need the Right Representation to get the Right Space

Valter Kalaus of tenant representation specialists VLK Cresa.

From a landlord’s perspective, shared service centers make near perfect tenants given their demand for large floorplates and typically longlease periods. That makes it all the more important SSCs have good representation when looking for a property, says Valter Kalaus of tenant representation specialists VLK Cresa.

Hungary has become a preferred location for SSC largely because of labor costs, Kalaus says, and a ready availability of young people with good language skills, especially beyond the relatively common German or English.

And if SSCs like Hungary, landlords in Hungary certainly like SSCs.

“With average leases between three and five years, SSCs tend to sign for a longerterm,” Kalaus explains. “The amount of IT infrastructure they put in makes them less likely to move, and that gives a feeling of greater comfort to the landlord.”

The sector also represents a sizeable share of the overall office market. Some 90 companies have around 100 SSCs in Hungary, mostly in Budapest, although secondary markets are beginning to develop. Collectively those centers employ around 40,000 people, the managing partner explains. Translate that into area, and it comes to 400,000500,000 square meters of office space.

“In other words, 10-12% of the entire

Budapest office space is leased by SSCs and this ratio is even higher in the countryside.”

So, in theory, once established, SSCs tend to stay put, securing a large chunk of space for the landlord. But SSCs also expand, especially over the initial twothree years of establishment, and that can bring a few growing pains. “Moves come when an SSC is not able to expand within the building.” Flexibility is key here; Kalaus says an average office rental is for 700-800 sqm; a typical SSC is more likely to need 1,000 – 3,000 sqm, but not all at once. Staff numbers – and thus the need for more space – are ramped up over time.

“Selecting the right building, working with the right advisor who can give unbiased opinion of what building, what property and what location is best for their business is key to the SSC’s success,” the real estate professional says.

Room to Expand

Each client has their own needs, Kalaus says. Exact equations change from deal to deal, but location is important (staff need easy access to their work place), as is availability of the right kind of skill sets, and room to expand as required.

This latter point, in particular, requires knowledge of a building. “You need to know the building; there might be space on the second floor because someone has moved out. You need to know the tenants opposite or above, to know who might be moving out in a year’s time.”

If these are challenges in Budapest, they are even more so in the countryside,

because second-tier markets are only now starting to launch speculative developments. The 22,000 sqm Forest Offices in Debrecen, due to be delivered in the third quarter of 2018, is particularly significant in this regard, in that it is the first speculative office building outside of Budapest since the financial crisis.

“More recently we are seeing SSCs going to second-tier cities like Debrecen, Szeged, and Pécs, based on good universities in cities where there are young people willing to work in such centers.”

Finding office space, particularly with flexibility on availability, remains something of a chicken-and-egg challenge, Kalaus says. Even for a builtto-suit project, landlords want a tenant who will be in place for longer than just a few years. They may also want at least the possibility of exiting in the longterm, and that requires liquidity in the local market. And tenants, particularly SSCs, need to know there will be space available for them if they wish to expand.

But the challenges are worth overcoming. With so many new developments up for grabs, SSC tenants should be very prudent of the choice they make in order to find the best building and make the best deal.

“I personally have done a number of SSC deals, in Budapest and the countryside for big companies like AVIS, AGCO, Cemex and SEI. They are very interesting projects; they usually have very good teams established internally. They make for good tenants and good clients.”

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

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Special Report

www.bbj.hu

Budapest Business Journal | June 16 – June 29, 2017

SSCs: Still a Matter of Economics

Economic benefits, such as lower salaries or lower rents, remain the single most important factor for companies choosing Hungary as a location for their shared services centers. As more SSCs push out into secondary Hungarian cities, they are also able to take advantage of the pay gap found in general between Budapest and countryside locations.

Ltd.) pays its foreign language-speaking employees more, but also finances language courses for those in need. It supports the operations of state-owned power company, MVM Zrt. Though the working language at Nemzeti Üzleti Szolgáltató remains Hungarian, it still needs those language skills.

It has centers in Budapest and three countryside locations, supporting backoffice activities in the field finances, HR, controlling, etc. But because MVM Zrt. has a lot of subsidiaries abroad (Austria, Croatia, Slovakia, Serbia, etc.) some of the functions, for example treasury, are centralized, and thus requires more foreign language speaking employees.

Special Training The main focus, however, is on postdegree training. “We place much emphasis on special training that is essential in this field,” says CEO Zsuzsa Gombkötő. Every year, the company pays for certified accountancy or tax consultancy training. The extra knowledge pays off – as long as one is based in Budapest. An experienced, highly qualified professional with language knowledge can earn

around

HUF 400,000-500,000

BBJ STAFF

An abundance of well-qualified workforce, an excellent geographic location and the advantage the Central European time zone offer are all important when companies are looking for a suitable place for their shared services centers. Yet in the order of priorities, economic benefits are still the single most important consideration.

You have to be more cost-effective than your competitors, says Balázs G. Nagy, president of the Hungarian Service and Outsourcing Association (HAO).

Companies that come here can save on office rents and salaries, while in terms of infrastructure, Budapest is on par with any European capital: Getting around is easy, the internet is often cheaper, and so on.

Yet in an SSC it is the work force that add value. “It is people who make a difference, therefore it is important that they feel good,” Nagy says.

Budapest is an attractive city that ranks high on many international livability indices. It is beautiful, safe, and housing is not a problem. With its roughly two million inhabitants, it is one of the most populated capitals not only in the region, but on the continent. This means more prospective employees to pick from, and Hungary is also able to attract workforce from nearby countries.

Good Feedback Nagy recalls a talk with the head of the UNICEF SSC who said the feedback on the quality of work delivered in Budapest is so good that, if they were to restart the creation of their center today, he would lower the required qualifications, and would take each level down a notch.

The language skills of locals may not be as good as, say, those of the Dutch, but

BBJ_2512_special_report.indd 16

“It is people who make a difference, therefore it is important that they feel good.” the salaries a company would have to pay for the same job in the Netherlands are not comparable either. Native French-, English-, and Dutch-speaking workforce is expensive, so centers do the math and make do with employees whose language skills are perhaps not quite so good.

The assumption of some that Hungarians might be able to study languages more easily as a result of the properties of their mother tongue, is not something SSCs take into consideration, according to Nagy.

“Companies don’t build on that [skill], if it exists at all. What does happen is that they often hire workforce with a college degree, instead of one with one with just secondary education, because of the better language command,” he added. Hungarian is not part of the Indo-European language

group, so every new language a Hungarian learns entails learning a new paradigm, says linguist Fruzsina Bencze. Hungarian shares only a few similarities with other European languages, so in fact it is more difficult for one to acquire a new language – especially if it is a second language i.e. the first foreign language.

After the World War 1, with the changes of the countries’ borders, the language landscape started to change.

Being bilingual used to be a widespread phenomenon until then, but with the demise of most empires and the creation of nation states, polyglotism started to disappear. This applies to much of Central Eastern Europe, but in Western European countries, plurilingualism is still comparatively common.

Post-degree Training The Hungary-based and

100% state-owned

Nemzeti Üzleti Szolgáltató Zrt. (National Service Business Provider

(gross) in the company’s Budapest center while their peers in the same position in country offices would get HUF 230,000300,000 (gross). The employees in the capital are more mobile, and willing to travel, whereas the maximum range employees in the country would move within is around 30 kilometers, Gombkötő notes.

“As opposed to multinationals, many of which divide operations based on geography and languages, we operate a procedure-based method. This means that our employees will not only support [the bookkeeping activity] of the Paks Nuclear Power Plant, but every company concerned by that process. Several multinational companies are also moving towards this direction as it makes operation more cost effective,” Gombkötő adds.

Overall, it all boils down to economics.

The key question is: “Is the Hungarian workforce worth as much in real terms?”

Nagy says. In terms of attracting new FDI, Hungary competes with Czech Republic, Poland, Romania, and Bulgaria. Shared services centers do not always stay, they sometimes leave Europe in search of even more competitive locations. One good example is India, where people speak English and salaries are even lower. By creating value-added services, migration can be avoided or at least slowed down.

“Companies have to be prepared to create more value-added workplaces,” Nagy said.

Many are: a growing number of companies are bringing here more complex services and offer. IBM, for one, started to offer bookkeeping services for external companies and clients.

This means that SSCs can also generate revenues. “This is a sector that employs thousands of people, and companies are willing to invest in them. We should be mindful of that.”

2017. 06. 14. 18:12

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Budapest Business Journal | June 16 – June 29, 2017

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Debrecen: SSC hub of the Hungarian East The city’s large student population promises to satiate the appetite for labor of SSCs that are now also helped by a large-scale office development project orchestrated by the municipality.

DEBRECEN'S GRADUATE RESERVES

Total student population 70,000

Students in higher education 27,000

Economics students 4,000

LEVENTE HÖRÖMPÖLI-TÓTH

The eastern regions of Hungary have always labored under a relatively negative reputation, caused by poor standard of living, low wages and backward infrastructure. However, one bright spot does defy the Budapestcentric logic of the economy by offering both quality life and a stress-free countryside atmosphere.

Debrecen is Hungary’s second city, both in terms of population size (it has 200,000 inhabitants) and its economic weight. According to a study entitled “Europe’s Business Services Destinations 2016” by JLL, Deloitte, and Hays, the city is now on the continental business map. It is set to outshine not only local peers like Szeged or Pécs, but it is also targeting the CEE level, as was made clear at the Next Generation Shared Services Day, a conference organized by SSC Heroes and Kinnarps Hungary on May 25.

“We have made it into the elite league featuring regional rivals such as Wroclaw, Kassa (Kosice), Kolozsvár (Cluj) and Kaunas,” Zoltán Póser, managing director of investment agency EDC Debrecen Center for Urban and Economic Development, says. “The next step is to get in the race against them.”

Another sign of international recognition came in the form of the “Emerging City of the Year 2016” title, awarded at the CEE Shared Services and Outsourcing Awards in February 2017.

It was by no means an accident since more than

3,000 workers

are employed by the SSC sector in the city, including behemoths like BT, EPAM and IT Services.

Helping Hand From Mayor’s Office “Three things draw families to a place: Quality jobs, a quality environment, meaning good transportation and schools, and affordable housing. We have them all,” Dr. László Erdey, vicedean at the Faculty of Economics of the University of Debrecen says.

BBJ_2512_special_report.indd 17

Dra

wn f

ro m 105 co u n t

rie

s

SOURCE: MUNICIPALITY OF DEBRECEN

Indeed, lower levels of cost of living, consumer prices and rent compared to Budapest are lucrative enough, and they also lead to lower wage costs. But that is only the employer part of the equation. It all means little if a skilled workforce is not attracted to stay.

The municipality has recognized the importance of proactivity. It is fully aware of the fact that one of the bottlenecks in appealing to investors is the shortage of offices, so it has launched an ambitious development program aimed at

creating

22,000 sqm

of new office space. The Forest Offices Debrecen project will be ready to welcome corporate tenants in Q3 of 2018. Miklós Ecsődi, Associate Director at Colliers International admits it does help accelerate things that the city is on board.

“The quality of offices makes a big difference when choosing a workplace,” Ecsődi notes. “After salary, the working environment is the second most important factor influencing such a decision.”

And decision makers are eager to meet all sorts of demands of corporations with FDI potential. As Dr. Lajos Barcsa, Deputy Mayor of the Municipality of Debrecen explains, it is happy to assist companies from early on; it will help set up links with universities and those creating 200+ jobs enjoy special incentives. Public transportation is also organized along such needs. The SSC sector makes up of 10% of the local economy, after all.

Skilled Labor at SSCs’ Fingertips Investor ambitions are further fueled by the lively academic scene.

Debrecen is home to 70,000 students in total, 27,000 of them being in

higher education and drawn from 105 countries. There are some 4,000 economics students alone. The local

university is, in fact, the most popular tertiary education institute outside the capital. The municipality is doing its fair share to boost education: Schools are getting renovated, targeted funding is being channeled to the university and vocational training has been put on a growth track.

Forecasts hint at dynamic expansion of the SSCs, so fresh graduates should have no problem finding meaningful work on their dormitory doorstep. As Póser says, it is key that jobs with high-added value are created, but having adequate number of workers, ever stronger education and a growing number of students are just as crucial.

“Newly-employed SSC workers will need proper housing, and we also need to take steps towards becoming a transportation hub,” Póser adds. Debrecen already boasts an international airport serving six countries with destinations like London, Paris and Tel-Aviv. Among the goals is to increase the number of air passengers and help the region’s population come to work to the city more easily.

“Our objectives and tools are strengthening the very areas that need to improve anyway,” Póser notes. “We are headed in the right direction, all we need to do is ‘just’ to work.”

EXPERT OPINION

More Complex Roles are Coming in the SSC Sector György Bucsku Business Services & Talent Sourcing Lead HAYS HUNGARY

Budapest is still a popular location for SSCs (Shared Services Center) although due to the significant amount of government support, more SSCs have started to appear in other cities such as Szeged, Debrecen and Pécs.

Hungary’s main competitors in attracting SSCs are Poland and Czech Republic, with Romania and Bulgaria also starting to challenge.

We expect dynamic progress in the SSC sector in 2017, which could result in a recruitment growth of 8,000-10,000 employees in the sector in the next few years.

Regarding the number of employees, the sector is the second fastest growth area after the automotive industry. However, there is a mismatch between supply and demand.

We experience a lack of labor in the market, which means there is a continuous rise in wages, especially for graduates. Companies are not only trying to compete with each other in terms of pay, but also in terms of environment and flexible working, depending on the position and other benefits packages.

This tense situation mainly favors the employees, as they can choose from various offered positions. Multilingual candidates enjoy a particular advantage because they can select from two or three offers within a short period of time, meaning employers have to be really fast during the selection process.

Universities are increasingly trying to serve the needs of SSCs, therefore besides Budapest, other countryside universities have already launched courses for this purpose. Students can also obtain the knowledge required for SSC positions at OKJ courses as well. Due to the lack of labor, SSCs are open to hiring non-qualified candidates if they are able to speak at least one foreign language fluently, besides English. English language knowledge is a basic requirement at every position, but German and French are strongly sought-after too. There is also a significant demand for Dutch and Scandinavian speaking candidates.

SSCs are not only aiming to keep their costs low, but to develop in quality too.

Existing SSCs tend to bring more complex positions in the finance and IT sector, while other simpler functions are taken to more cost-efficient locations.

www.hays.hu

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

2017. 06. 14. 18:12

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Special Report

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Budapest Business Journal | June 16 – June 29, 2017

SSCs eye Expansion in Hungary

Shared Services Centers (SSCs) in Hungary appear to be enjoying life here and are planning to further expand in what is the second largest market for SSCs in the Central Eastern Europe region. The Budapest Business Journal discusses the latest trends with Eszter Lukács, senior manager at Deloitte, based on the firm’s first survey into the field.

“Several large multinational enterprises have recently chosen Hungary as a location for their shared services center, such as Flowserve, BlackRock, and FrieslandCampina, and existing ones are opening new locations in Hungary.

This means trust has been built for Hungary and a sign for it is that currently there are several ongoing location selection projects.”

Just like virtually every other field of business in Hungary right now, recruiting and retaining talent are key challenges. “To address these challenges, leveraging the tools of employer branding is a strategy that many of the Hungarian shared services centers have already applied,” Lukács says. “To become highly visible and highly attractive, they are investing funds and energy into developing their brand as employers both externally on the talent market and internally towards their employees.”

Value-added Support CHRISTIAN KESZTHELYI

Hungary is strongly considered an attractive place for doing SSC business, chiefly due to the manpower here: Highly qualified professionals with strong technical capabilities and good service mentality. What is more, “the cost of highly qualified workforce is still relatively low compared to Western countries and not more expensive than their peers in Asia”, Lukács points out.

The fresh graduates also possess excellent language skills and high capabilities, offering a great arena for bringing complex and high value-added activities to the country.

Eszter Lukács, senior manager at Deloitte.

“Simultaneously, the legal and economic environment is stable and the government and educational institutions are open to cooperate with shared services companies to get the most value out of their operations in Hungary for all parties,” Lukács stresses.

In a bit more than a decade, the shared services sector in the country has grown into one of the largest employers, and observing recent trends, its size is expected to grow further. Currently, the field offers employment to

“There is also a tendency to move towards centralized more than governance structures and the development of regional according to the Deloitte survey, citing shared services portfolios. In data from the Hungarian Investment Promotion Agency (HIPA). While new order to correspond to the companies are still establishing centers in needs of the new generations Hungary, businesses already here are also planning for significant growth. such as the Millennials, a Migration of Processes cultural change is also expected, where atypical Additionally, new acquisitions and mergers of the parent company may also working methods are going drive expansion. New lines of business are to spread and virtual teams also often incorporated into the existing shared services organizations and the are going to be formed on a current trend shows a move toward the regional or even global level,” insourcing of previously outsourced

42,000,

activities,” Lukács says.

BBJ_2512_special_report.indd 18

According to Deloitte’s “Hungarian SSC Survey”,

almost

83%

of respondents plan to expand their operations in Budapest, while 17% said they are looking to expand outside the capital.

Therefore, a collaborative approach from the government, local municipalities and educational institutions, along with further infrastructural developments, are key factors in the further growth of this sector, Deloitte says.

Deloitte expects the sector to become a chief driver for FDI in the upcoming years. “Several large multinational enterprises have recently chosen Hungary as a location for their shared services center, such as Flowserve, BlackRock, and FrieslandCampina, and existing ones are opening new locations in Hungary. This means trust has been built for Hungary and a sign for it is that currently there are several ongoing location selection projects. We can see that the coordinated and focused approach on these firms, with special attention to their needs, is there for all related players: i.e. local governments, the state government, educational institutions, professional associations and chambers,” notes Lukács.

Additionally, the latest trends are signaling that SSCs appear to be transitioning transactional and repetitive tasks to low-cost locations, while bringing complex, high value-added support activities to Hungary, such as financial controlling, FP&A (financial planning and analysis), product development, R&D, and treasury functions.

“These high-quality tasks can provide an added incentive to employees and also allow for further professional development, which is going to turn shared services into an even more attractive career,” she adds.

In the short-term, Deloitte expects the sector to shift to even more high valueadded tasks and high-end automation with the help of robotics, while in the long run further automation tools like cognitive solutions and artificial intelligence could be leveraged.

“There is also a tendency to move towards centralized governance structures and the development of regional shared services portfolios. In order to correspond to the needs of the new generations such as the Millennials, a cultural change is also expected, where atypical working methods are going to spread and virtual teams are going to be formed on a regional or even global level,” Lukács forecasts.

Along with a surfacing need for industry-wide cooperation in order to protect the common interests of the sector, SSCs appear to be building the “workplace of the future”, with special attention paid to establishing a creative, inspiring and cozy environment where “focus on delivery” is the basic work management guideline, the Deloitte survey finds.

2017. 06. 14. 18:12

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Budapest Business Journal | June 16 – June 29, 2017

Special Report | 19

Shared service center operating companies

3

bt RoC kft.

http://sscheroes.com/company/ bt-hungary

ibm HungaRy inteRnational sHaRed seRviCe CentRe kft.

–

–

–

–

–

✓

–

–

✓

2,135

17,075

✓

✓

✓

✓

✓

–

–

–

✓

Ÿ Ÿ

✓

✓

✓

300

2007

– BT (Netherlands) Holdings B.V. (100)

zoltán szabó Attila Szűcs Máté Fazekas

1117 Budapest, Budafoki út 91-93.

(1) 777-0000 (1) 777-0001 reception.ipwest@bt.com

2,000

28,569

✓

✓

✓

–

✓

–

–

–

✓

Ÿ Ÿ

Ÿ

Ÿ

Ÿ

Ÿ

2004

– IBM Europe B.V. (100)

edina drabik Andrea Szőke –

1092 Budapest, Köztelek utca 6.

(1) 777-1055 (1) 777-1111 info@hu.ibm.com

1,830

Ÿ

✓

✓

✓

–

✓

–

✓

–

–

50 12

✓

✓

–

250

2001

– Tata Consultancy Services Ltd. (100)

prabal datta – Edit Bencsik

1117 Budapest, Irinyi József utca 4-20.

(1) 886-8000 (1) 886-8001 hungary.info@tcs.com

1,800

26,501 (2015)

–

Ÿ Ÿ

2009

GE Infrastructure Central & Eastern Europe Holding Kft. (100) –

bjorn bergabo Andrea Kerekes Csilla Kövesdi

1138 Budapest, Váci út 117–119.

(1) 237-6800 – reception@ge.com

✓

✓

✓

200

2007

– Vodafone International Holding B.V. (100)

dénes láng Tamás Pók Réka Juhász

1087 Budapest, Hungária körút 40–44.

(70) 460-8000 – –

– Citibank Holdings Ireland Ltd. (100)

kevin a. murray, Jane ellis Péter Kővári Éva Hencz

1051 Budapest, Szabadság tér 7.

(1) 374-5000 (1) 374-5100 –

4

tata ConsultanCy seRviCes ltd. magyaRoRszági fióktelepe

–

✓

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2006

WoRk fRom Home

–

– T-Systems International (100)

paRt-time WoRk

oWneRsHip (%) HungaRian non-HungaRian

flexbile WoRk HouRs

inteRnal

exteRnal

otHeR

Client management

sales

pRoCuRement

HR

finanCe

www.ibm.com

7

planned neW WoRk foRCe HiRed in H2, 2017

55,088

total net Revenue in 2016 (Huf mln)

4,627

Ÿ

Client division (%)

seRviCe aReas

yeaR establisHed

www.it-services.hu

aveRage WoRk entRy peRiod (days) aveRage no. of eduCation days peR yeaR

2

it seRviCes HungaRy szolgáltató kft.

avaliable WoRk Condition CHoiCes

botH

1

Company Website

no. of employees WoRking foR ssCs on may 1, 2017

Rank

Ranked by no. of employees working for SSCs on May 1, 2017

www.tcs.com

5

ge infRastRuCtuRe HungaRy Holding kft. (ge global opeRations) www.ge.com/hu

✓

✓

✓

✓

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✓

–

✓

✓

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Ÿ

vssb vodafone szolgáltató központ budapest zRt. 6

7

8

9

www.vodafone.hu

Citibank inteRnational ltd. magyaRoRszági fióktelepe

http://citibank.com/emeaservicecenter/hungary/csc-hungary.htm, https://jobs.citi.com/

bp bsC kft.

http://www.bp.com/en/global/bpcareers/professionals/locations/ hungary.html

moRgan stanley Magyarország ElEMző kft.

1,789

20,108

(1)

11

12

13

Cpl Jobs kft.

www.cpljobs.hu/integratedservices/

nokia solutions and netWoRks kft. www.nokia.com

aRConiC-köfém kft. www.arconic.com

lexmaRk inteRnational teCHnology HungaRia kft.

sap HungaRy kft.

15

kCi HungaRy kft.

16

agCo HungaRy kft.

www.sap.hu

www.acelity.com

www.agcocorp.com

Christopher Wilson Katalin Riedl Ollárné Zsuzsanna Sümegi

1117 Budapest, Neumann János utca 1/C (1) 456-5400 (1) 456-5499 fmb-ts-itsh-info@ t-systems.com

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– BP Global Investments Ltd. (100)

Jamie anderson Viktor Knezevics –

1095 Budapest, Soroksári út 32–34.

(1) 866-6300 (1) 866-6300 EBSCReception@bp.com

norbert fogarasi Beáta Juvancz –

1095 Budapest, Lechner Ödön fasor 8.

(1) 881-4000 (1) 889-2700 millennium-reception@ morganstanley.com

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2006

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660

4,360(2)

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14 25

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180

2009

– CPL Resources International Holdings Limited (100)

simone olivo Edit Lőkös –

1114 Budapest, Bartók Béla út 43-47.

(70) 417-9874 – edit.lokos@cpl.ie

–

Ÿ Ÿ

2007

– Nokia Solutions and Networks B.V. (100)

béla zagyva Erzsébet Tóth –

1092 Budapest, Köztelek utca 6.

(20) 977-7797 – –

1941/ 1993

Alcoa Európai Keréktermék Kft. (23.61), Fairchild Fasteners Fémipari Kft. (0.97) Alcoa Inversiones Internacionales (75.42)

istván katus – –

8000 Székesfehérvár, Verseci utca 1–15.

(22) 531-200 (22) 531-200 erika.sas@arconic.com

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2008

– Lexmark International Technology Sárl (100)

péter Csucska Ágota Ferenczi Alexandre Cole

1095 Budapest, Lechner Ödön fasor 8.

(1) 501-7200 (1) 501-7311 threcbud@lexmark.com

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1997

– SAP SE (100)

balázs ablonczy György Simon Gergely Karkiss

1031 Budapest, Záhony utca 7.

(1) 457-8333 (1) 457-8333 –

2010

– KCI Europe Holding B.V. (100)

péter fazekas, éva Csatlós – –

1133 Budapest, Váci út 76.

(1) 880-2501 – –

2011

– AGCO International Holdings B.V. (100)

emese szakács – –

1117 Budapest, Budafoki út 91–93.

(1) 882-8300 (1) 882-8380 BudapestReception@ agcocorp.com

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14

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NoteS (1) Data of business year April 1, 2015-March 31, 2016. (2) Data of business year July 1, 2015-June 30, 2016.

BBJ_2512_special_report.indd 19

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Roaming Roman Budapest

Our intrepid Englishman abroad is taken on a pilgrimage to the Roman ruins of Aquincum, the “beach” named after Rome, and a shed selling the best hekk in Budapest.

Relaxing at Római-part.

DAVID HOLZER

On a hot, sunny Saturday a week or so ago, I was taken to Római-part (Rome beach, though Rome riverside might be a better description) to taste what I had been told was the best hekk in the whole of Budapest, if not Hungary.

Before that, our guide insisted we see Aquincum on the Buda side of the city.

I think he was on operating on the “Do your chores before you get your reward” principle.

Aquincum was the name of an ancient city on the northeastern borders of the Pannonia province and part of the Roman Empire. By the end of the second century it was a substantial city of 30,000 to 40,000 people. The ruins of the Aquincum Civil and Military Amphitheaters – or at least that is what I think they were – can be seen but only through the fence that surrounds them.

Visit the Aquincum Museum itself – which proudly styles itself as “The Hungarian Pompeii” – if you would like a closer look. I will leave it you to find out whether the Museum lives up to that somewhat provocative billing. I have the Houses of Pleasure in mind.

What I liked most about Aquincum was the way socialist-era apartment blocks surrounded the ruins of the amphitheaters. This might have prompted another person to meditate

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on the rise and fall of empires. I just liked the strange juxtaposition. Once we had our fill culture, we headed off to Római beach for hekk.

What the Hekk?

Hekk, or Merluccius merluccius – the Latin name always sounds to me like it could belong to a Roman dignitary – is a Mediterranean Sea fish known as hake in the United Kingdom. It is satisfyingly steaky and, in Hungary, is served deep fried with fries and a torpedo-sized gherkin or two. Before frying, the skin of the hekk is rubbed with paprika. This gives it an extra spiciness that lifts it above traditional British fish and chips, which often cries out for salt and vinegar. But how did hekk, a sea fish, come to dominate a landlocked country?

My Hungarian partner tells me hekk became fashionable because it is eaten at Lake Balaton, a place of summer pilgrimage for Hungarians. It is sometimes known as Balaton Hekk. But that does not answer the question of how it came to be a food fashion at Balaton in the first place.

My theory is that it is all to do with mass nostalgia for the coastline that was so cruelly snatched from Hungary.

I only found out how much Hungarians love the ocean when my partner and I took our first holiday in Mallorca. The night we arrived she raced down to the beach and stood with her feet in the surf and her eyes

What I liked most about Aquincum was the way socialist-era apartment blocks surrounded the ruins of the amphitheaters. This might have prompted another person to meditate on the rise and fall of empires. I just liked the strange juxtaposition. closed for what must have been half an hour, smiling. She phoned her sister back in Hungary and pointed her cell phone out to sea so that her sister could listen too.

It must be said that my partner does not think much of my hekk theory. I thought I could try it out on the hekk man at Római beach.

Meeting the Hekk Man Római beach is a short bus ride up the Danube from Margit híd. If you want to work up an appetite for that hekk, it takes about 30 minutes to cycle. Bear in mind, though, that you will have to wait for another 40 minutes for your hekk so do not arrive starving. The beach, which is narrow and intermittent but sandy, is a five-minute stroll down from the main road. Once you hit the path that runs along the side of the Danube, it is best to turn back in the direction of the city if it is hekk you are after.

When we saw a restaurant with “Hekk mester” emblazoned on its side I assumed we had arrived. Our guide shook his head and forged on through the sun-pinked Hungarians, all of us dodging cyclists.

“How do you know your hekk man is the best?” I asked. “I don’t,” he said with characteristic Hungarian bluntness. “It’s just the first place we went to.”

The Roman ruins at Aquincum.

Photos: Gabriella Kiss

I was a little worried until my partner patted my arm and said, “Other people have told me it’s the best place too, so don’t worry.” I am afraid I cannot tell you the name of the hekk place. All I know is that it looks like a big wooden shed and it is on the left-hand side of the path as you are walking towards Margit hid. We can call it “Heaven or Hekk” if you like. Sorry I cannot be more helpful than that. To be honest, I think it is probably the case that all the hekk is delicious so you do not really have much to lose. And there are worse ways of spending your summer than hekk-hunting at Római-part.

Our hekk, brought to our table by the owner, was as delicious as our guide promised it would be. The fries were chunky and homemade, as were the onion rings. We also had fresh white bread, pickled cabbage and paprika salad and gherkins that were thankfully sweet.

Some Hungarian gherkins have a weird, medicinal flavor I have not tasted in any other country.

Hekk for four of us, with all the trimmings and drinks, was HUF 9,000.

In a vain attempt to walk off our feast, we sauntered upriver to where trees heavy with leaves shade the path. Here, away from the hekk shacks, things get a bit more bohemian. Our guide led us to a place called Fellini, which he claimed made excellent coffee.

The coffee was good; the place was even better. We sat in deckchairs set out on a narrow beach. If we had been more intrepid – and less full – we could have ventured out onto a raft anchored in the river. Apparently, in the evenings, the raft’s white sunshade is flipped over for al fresco movie screenings.

Wandering back to our car, we passed abandoned socialist-era apartment blocks. I like to think they were built on the remains of Roman villas.

Take the Number 34 or 36 bus from Margit híd to Római-part. Go in the daytime, before the mosquitoes descend. For more information about the Aquincum, check out www.aquincum.hu.

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Csopak: Complex Olaszrizling With a Lakeside View

Lake Balaton is brimming with more than its fair share of distinctively delicious wine thanks to its wide range of mesoclimates, soils, grape varieties and talented winemakers.

Csopak, on the lake’s northern shore, is notable for its varied soils and its ability to produce outstanding Olaszrizling – two words not often used together, but that certainly apply here.

ROB SMYTH

The Szent Donát winery, one of Csopak’s key movers and shakers, is a great destination for wine lovers to get to grips with this terrific terroir while enjoying the stunning views out over the lake and of the Tihany peninsula. The fairytale like estate building with a thatched roof not only contains the cellar but it also houses the renowned and highly innovative Márga restaurant, which is named after marl – one of the main soil types here. The restaurant sources its ingredients locally and is part of an initiative to promote a Balaton-style fish soup, which is on the menu and is white (not red) in color.

“Our aim is to show the nuances between the vineyards with their different soils and unique characteristics, and that Balaton is about more than the lake, and to also showcase the Bakony region,” says Tamás Kovács, St. Donát’s winemaker. The Bakony hills themselves, located to the north, play an important moderating role whereby cool air rolls in off the hills to temper the humidity of Lake Balaton. This serves to preserve the all-important freshness and acidity, which gives the wines structure, length and ageability. While they probably did not fuss much about acidity levels, the Romans certainly did know a good site for winemaking when they saw one and when you see these vine-friendly slopes that rise above the Balaton, it comes as no surprise that they made wine here.

The soils from which most of the Olaszrizling comes can be roughly divided into two main types. There is the red clay soil, which has been formed from decomposing Upper Permian

BBJ_2512_socialite.indd 21

sandstone and the topsoil is distinctively red in color. This contrasts sharply with the light-colored marl- and dolomite limestone-based vineyards that come from the Triassic period. “The red clay makes wines that are more elegant and floral, while the wines from the limestone are more linear with more body and more robust aromas,” asserts Kovács.

He adds that the red clay retains water while it quickly drains through the marl-limestone, and that the soils have different PH levels to each other.

Such factors should in theory provide the conditions for wines from the same grape variety to be distinct from each other. Indeed, the acid test for assessing single vineyard wines is not just whether the said wine is good, but if one wine tastes different to the next, and these wines certainly did have marked differences, despite being vinified in the same way – both in a combination of used oak and steel tank, and left unfiltered. See two single vineyard Olaszrizling suggestions at the end of this article.

Very top Level To be labelled ‘Csopak’, the wine can only be made from Olaszrizling, plus up to 15% Furmint. Csopak is divided up into three quality categories: generic wine which can be from any of 30 vineyards spread across five villages; Hegybor (hill wines) from the top vineyards; and Dűlőbor or single vineyard wines at the very top level – these are given the stamp of the Csopaki Kódex (Codex). For its part, Szent Donát only makes wine in the two upper categories. The whole estate, which comprises

Szent Donát also works with Furmint and Kékfrankos grapes, the wines of which are classified as part of the larger Balatonfüred-Csopak region. The Márga Furmint Selection from the 2015 vintage comes from the marl and dolomite soils of the Nagykút, Hegyalja and Szitahegy vineyards. It seriously impressed with its great texture, depth, and freshness with juicy tropical fruit (mango and pineapple) to supplement Furmint’s more typical quince and pear notes. In an interesting twist, half of it was fermented and aged in neutral pyrogranite stone vessels that allow gentle exposure to oxygen,

while

30%

went into used French oak and 20% into stainless steel. Incidentally, the planting of Furmint around the Balaton is not a case of jumping on the bandwagon, as it was a fixture before the phylloxera louse wiped it out in the late 19th century. A wine like this shows that Hungary’s most lauded white grape has a serious future around the Balaton.

The soil picture gets yet more colorful with the volcanic black basalt soil (like that of Badacsony) on the Tihany

peninsula, which juts out far into the lake. With the combination of basalt’s natural heat retention qualities and the warming influence of the lake, red wine grapes can be fully ripened. However, there’s a significant and beneficial diurnal temperature range with the cool air sweeping in at night to stop the wines from getting jammy. The Kékfrankos Magma has a cool, refined elegance to it.

Other excellent Csopak cellars, among others, include Jásdi, Guden, Petrányi, and Homola, with the wines at the latter made by Tokaj talent Attila Homonna.

St. Donát Slikker 2015 From red clay. Medium intensity on the nose, with generous mouthfeel. Fruity, floral, juicy and vibrant. Soft and smooth on the palate with just the right amount of oak. HUF 5,000 from the St. Donát website (szentdonat.hu/kiszallitas/)

St. Donát Kishegy 2015 From marl and limestone soil with some clay and loess. Powerful aromas that are less fruity but more on the savoury side. Green herbs, briney, umami notes throughout. Wilder and edgier than the silky Slikker with firmer mouthwatering acidity. Very complex and long.

HUF 6,000 from the St. Donát website (szentdonat.hu/kiszallitas/)

BBJournal.jun.16:Layout 1 6/2/17 4:07 PM Page 1 PROMOTION

Music in the Garden

1036 Bp., Kiskorona u. 7. Phone: +36 1 2500288 ticket: obudaitarsaskor.hu jegymester.hu

12

hectares

in ten different vineyards around Csopak, Tihany and Kál, is expected to be certified organic within three to five years with the single vineyard wines already coming from organically cultivated grapes. All Szent Donát wines, with the exception of the rosé, are spontaneously fermented.

28th June, 8 p. m.

29th June, 8 p. m.

3rd July, 8 p. m.

6th July, 8 p. m.

10th July, 8 p. m.

KlezMer MaGic – Budapest Klezmer Band new YorK, new YorK – Saint Ephraim Male Choir Franz liszt chaMBer orchestra suMMer niGht BooGie-wooGie Blues BudaPest strinGs

2017. 06. 14. 18:11

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The day Anyone Could Make the BBJ Cover Page

The sixth Budapest Business Party – and a Budapest Business Journal 25th anniversary event – took place on the Európa Boat on June 8 on a glorious summer evening.

BBJ STAFF

Founders and organizers ITL Group said the unconventional, if annual networking event welcomed 50 brand partners and more than 1,400 guests, mainly managing executives.

The Budapest Business Journal used the event to mark its 25th anniversary, with an illuminated tent from DOMUS on the top deck welcoming guests to have their photo taken and inserted into a mock BBJ front page, which they could share on social media. There was also a specially designed cake for 600 people.

Elsewhere, Dasvir, a new Indian beer, used the event for its official launch, with the Indian Ambassador to Hungary, Rahul Chhabra, cracking open the ceremonial first bottle.

“Companies like BMW, CBRE and Vagheggi and institutions like Fivosz, EuCham, Italian Trade Agency and several chambers of commerce participated. Local operating companies like IBUSZ and Stan Ahuja were also there to present their products and services in a professional and positive environment. The charity partner of the event was once again Bátor Tábor,” ITL Group said in a statement sent to the BBJ. ITL Group is a consulting firm active in the fields of accounting, audit, tax, HR, legal, real estate and marketing (www. itlgroup.hu). The Budapest Business Party was also supported by MVÜK Magyar Vállalatvezetők Üzleti Közössége (the Business Community of Hungarian Business Leaders).

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Italian National Day Celebrated in Style

Around 1,200 guests came to the historic surroundings of the Várkert Bazár on June 1 to enjoy the Festa della Repubblica Italian National Day celebrations.

ROBIN MARSHALL

Welcoming guests, Ambassador Massimo Rustico said the aim of the event was to remind people of the cultural and industrial influence of Italy, while at the same time giving a sense of the spirit of the country in a fun and relaxed evening.

“The national day is actually tomorrow, June 2, but we did not want to clash with people’s long weekend holiday plans,” the ambassador said.

It was an evening that saw a dramatic dry-ice launch of the all-new Alfa Romeo SUV, the Stelvio Quadrifoglio from one of the major sponsors, Fiat Chrysler. “I drove this car yesterday; it is a monster,” Rustico told guests.

Minister of Justice László Trócsányi and Ambassador Massimo Rustico toast the Italian national day celebrations in Budapest.

The other diamond sponsor, UniCredit, had gone for a “La Dolce Vita” inspired theme for its stands, while also bringing along some pieces from its contemporary art collection. Elsewhere you could find sweets from Ferrero, meats from Kométa, and scooters from Vespa, to name but a few attractions.

Representing the government, Minister of Justice László Trócsányi commented on

the long-standing history between the two countries, noting, “The biggest landmark in Budapest, Gellért Hill, is named after an Italian: Bishop Gerard Sagredo. Our greatest king, Mátyás, was married to an Italian, Beatrice, and together they brought the Italian Renaissance to Hungary.”

Although they have found themselves on opposite sides in war, the two countries are still partners, both bilaterally and

within the European Union, and the minister pledged Hungary’s commitment to the Union, even while member states may at times disagree with one another’s views.

“Europe is not just a community of values, but also of laws,” he said, noting (appropriately enough for a justice minister) that Hungary would always abide by the rule of law.

PARTNER CONTENT

Tom Jones Headlines as VeszprémFest Moves Down the Valley As Veszprém gets ready to host its 14th annual festival, Zoltán Mészáros will be keeping one eye on the tickets sales and one eye on the skies, while simultaneously hoping to catch a few satisfied smiles from concert goers.

It sounds like an act of visual contortion, but as you will see, it makes perfect sense.

ROBIN MARSHALL

The VeszprémFest Premium Music Festival runs from July 12-15. The weather, of course, is entirely out of his hands; last year was the wettest ever. In the previous worst year, outdoor concerts had to be moved inside on just one day; in 2016, it happened every day. Mészáros says problems this year in getting acts to confirm meant the marketing campaign started a month later than in the past three or four years. By June 1, around 50% of the tickets were still available.

“Financially, tickets sales form a big part of our budget; if we have been lucky and booked some very strong artists, it can be up to 40% of our annual budget.”

BBJ_2512_socialite.indd 23

“Most gastro festivals only take the gourmet side seriously; we take the music side very seriously too.”

Zoltán Mészáros.

There are certainly some strong artists lined up this year. Tom Jones will play the Veszprém Aréna on July 14. “I think his tickets will be sold out in the next two or three weeks,” the managing director says.

The fact that Tom Jones and New Power Generation, Prince’s former backing group, will both play the Aréna, usually reserved for rain days, is significant.

For 13 years the main stage has filled Szentháromság tér (Holy Trinity Square) with the beautiful Baroque building of the Archbishop’s Palace in Veszprém Castle serving as the backdrop; indeed, that location was part of the original inspiration.

Garden of Ease With restoration work due to begin on the palace, the main outdoor stage has moved down the slope to the eastern foot of Castle Hill and the former resting garden of the archbishops, now known as the História Garden, on the banks of Séd stream.

“It is a magnificent venue, but it is more complicated because of its geographical location: It is down in a valley, in a more open space, closer to residential areas.”

Szentháromság tér is more contained and isolated, and mindful of its duty as a good neighbor, the festival has carefully selected which acts will play where.

Not all the concerts require an entrance fee, however. In 2011, the Rosé, Riesling and Jazz Days were first organized, partly to give something back to local Veszprémites. Now it features 30 live music concerts, and 30 wine producers from the nearby regions of Lake Balaton, Somló and Pannonhalma.

A mini-gourmet festival, it wraps around VeszprémFest, and will run from July 7-16 at Óváros tér and Városháza tér. Festivalgoers pay only for the food and drink they consume, the music is free, and features mainly young up and coming Hungarian jazz talents. The one criterion is that they really do have talent.

“Most gastro festivals only take the gourmet side seriously; we take the music side very seriously too,” explains Mészáros. And what started as a gift for the city’s residents is now drawing its audience from further afield. Last year some 35% were not locals, some even coming from as far afield as Szeged.

The founder and managing director of the festival says his dream of bringing international stars to play against the backdrop of the castle is complete, and over the years the VeszprémFest brand has built to the point that it is one of the leading countryside events.

Does Mészáros still get the same buzz from it? “I like to hide myself away in some hidden corner and watch the faces of the concert goers as they leave. If they are smiling and happy, that is reward enough for me.”

2017. 06. 14. 18:12

Róbert at his best To me, challenge means opportunity.

At VSS Budapest, I can develop myself, reach professional milestones, and advance my career. I feel empowered to drive success.

We’re at our best, when you’re at yours.

Join our team at Vodafone Shared Services Budapest www.vodafone.hu/vssbudapest Vodafone Power to you

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