Examine by ABSL and PwC Romania: Enterprise providers are within the prime 5 Romanian industries
The current ABSL study, which was carried out in collaboration with PwC, presents the corporate services industry both on a macroeconomic level and in a European context. In 2020, the corporate services industry contributed 5.4% to the Romanian gross domestic product (GDP) and ranked in the top 5 industries, along with real estate development (7.7%), construction (6.1%), public Administration (5.5%) and retail (5.3%).
The business services sector has seen significant growth over time, from around 1.8% of GDP in 2008 to 3.2% in 2011 and 5.4% in 2020.
Since 2011, the contribution of business services to Romania’s GDP has consistently been higher than the average contribution of this sector to the European Union’s GDP (3% in 2011 and 3.6% in 2019). In addition, this sector has a higher contribution to the Romanian GDP, even compared to other EU member states where the sector is developed (e.g. Slovakia 3.5%, Bulgaria 3.3%, Hungary 3%, Czech Republic 2 , 9%, Poland 2.8%).
At the same time, the average annual growth rate of income generated in this sector in Romania between 2011 and 2019 was 7%, while the average annual growth rate of GDP over the same period was 3.9%, according to data from Eurostat.
Also from the perspective of other industries that are dependent on the corporate services industry, 1 euro of the value added generated by the industry generates between 0.5 and 0.7 euros additional euros in other dependent industries such as real estate, construction, law, administrative support through indirect effects .
The growth of the sector comes mainly from existing customers who have expanded and diversified their projects.
“In 2021, we restored the increased losses in 2020 and resumed the forecast growth rate prior to the start of the pandemic. In the medium term, the business services industry is forecasting an increase of 5%, with the largest share being IT services, which are the spearheads of our industry. Services with high added value, in which our country lags behind Poland, will have enormous growth potential in the coming period. These include services related to process automation, data analysis services, complex financial services, advanced procurement services, ”said Ciprian Dan, President of ABSL.
For the future development of the industry, ABSL considers it essential to prepare the next development stage in good time by increasing the proportion of value-adding services in the company’s portfolio, attracting new investors or processes, through the development of the industry in smaller cities, but also through specific ones Measures to adapt higher education to market realities. The role of government is essential in supporting future plans.
This year, the companies in the sector will be working in a hybrid system. Although the employees of many companies had started to return to the office for a few days a week, the new epidemiological situation means that online work is now increasingly used, with consequences related to the loss of socialization and organizational culture Increased attempts to acquire new knowledge through online training and with negative effects on employee wellbeing.
“The current situation will continue to have an impact on the business environment, on our industry and on business-service-related industries such as real estate or in the vicinity of office buildings. I assume that our area will be affected by investments and new projects, but that it will continue to expand its existing capacities at a satisfactory pace. A significant reduction in mobility during the fourth wave could be a major obstacle to adopting new processes, as specialists travel during setup to impart basic knowledge, set up the systems and the environment in which the activity is to take place, ”explains Cătălin Iorgulescu, vice president of ABSL.
According to the ABSL study in cooperation with PwC Romania (if we only consider companies in the sector with a turnover of more than 1 million euros), the average turnover of a company is around 6.3 million. The number of employees per company is 109 people.
Thus, every newly founded medium-sized company in the field of business services can theoretically pay around 1.5 million euros annually (or 14,000 euros annually per employee) for salary and other taxes.
“Due to the continuous expansion and new investments that are being attracted to the local market from year to year, the corporate services industry has recorded a significant increase in sales from around 4.3 billion euros in 2008 to 9 billion euros in 2019. This development was reflected both. in the increase in the number of employees by 75,000 and in an increasing contribution to the Romanian GDP. We believe the sector has significant growth potential in the coming years, with positive effects on the economy as a whole, ”said Francesca Postolache, Vice President of ABSL.
In 2019, the corporate services sector generated sales of over 9 billion euros with 178,000 employees at national level and around 1,080 companies registered with the Ministry of Finance with specific NACE codes.
For NACE codes 6201 and 6202 with IT consulting activities, the 2019 revenue was € 5.3 billion. These services employed over 76,000 people that year. Microsoft, DB Global Technology, DXC Technology, Rinf Outsourcing Solutions are examples of companies, ABSL members, with these CAEN codes.
The second sector in terms of turnover (business and management consulting with NACE code 7022) recorded a turnover of 2.4 million euros in 2019. ABSL member companies include HP Inc, Hewlett Packard Enterprise, KMG Rompetrol Shared Services Center, Accenture.
The third sector (accounting, auditing, tax advice) with the NACE code 6920 had a turnover of 780 million euros in 2019. BAT Global Business Services, PWC, Deloitte, Ernst & Young, KPMG are examples of ABSL member companies that are active in this area.
The contact center sector (NACE code 8220) contributes 480 million to the business services sector. Companies in the industry include Global Remote Services, Sykes, Telus International, Teleperformance, Vodafone Shared Services Romania.