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Outsourcing Romania – 5 signs that may predict an eventual collapse

I have been working in the outsourcing industry since 2005, I lived the first steps of the industry and I put myself some bricks in its development, I created the Shared Service Centers from scratch in Romania and then I replied this system in China or India. In 2008 I launched the first blog on leadership topics in outsourcing, in 2011 I participate in early discussions to establish an Association business services in Romania for the one that is going to be ABSL and in 2012 I launched the first community portal – Outsourcingadvisors.ro, a platform designed to inform, educate and connect the people that are working in outsourcing industry. Starting with 2013 I constantly advise those interested to outsource their services in the Romanian outsourcing industry, my team provides training niche for organizations like Business Process Outsourcing / Shared Service Centers and through my presence in different communities in large cities of the country, I am aware of what are the industry struggles.

What I am going to write below is my personal opinion, I am convinced that the leaders that are leading BPO companies or Shared Service Centers know the signs and every one of them are acting in their organization’s interest, but not necessarily in the interest of the industry in Romania. The signs of this potential collapse occurred since 2008, but they have been more visible in the last 3 years, as many industry leaders have mentioned in the most recent event “People in Outsourcing and Shared Service Centers” – held in October in Bucharest.

A possible collapse of the outsourcing industry in Romania and I’m not referring to software producers, but only to BPO and SSC can be translated into:

  1. Loss of Romania’s attractiveness as a destination for outsourcing, in the context in which we cannot speak about a low cost location targeting new business to other destinations.
  2. Failure to ensure business continuity and to accommodate the growing demand for outsourcing in Romania through the dramatic fall in the number of competent resources in the labor market over demand steadily increased human resources, especially in cities Tier 1 (Bucharest) and Tier 2 (Cluj, Iaşi).
  3. Lack of foreign language skills, especially rare languages, “large number languages” as well as the technical skills required by this industry.

I know that some people will say that I have a pessimistic approach, but I prefer to better pull the alarm now than to grumble later when others by their headquarters will be attracted by another destination and will relocate massive operations from Romania to other promising locations.

For many years, the leaders of this industry in Romania complain at any profile event about the same things: lack of government support, the partnership with the Ministry of Education is not supported long term, the battle for resources and for the salaries, lack of centralised information regarding the industry, difficulties in the management and motivation of generations X and Y.

So, what if…

What if we remain as little as we can in the area of “I wish” and we focus much more on “doing together” something for the industry? What would happen if we replaced more often “initiative of our company is” with effective actions in “the interest of our industry in Romania”? And what about if I’m right and we are living the signs of a potential collapse, how can we transform it into something else? How well prepared are we in order to reduce the growth rate? How can we maintain a competitive advantage as a destination for outsourcing when we don’t accelerate anymore?

I don’t want to offend anyone by what I am writing, especially those who are trying through their actions to keep an attractive Romania on the global outsourcing map, but the outsourcing industry events have become like a litany industry norm.

Here are 5 signs that can show the future industry collapse or its transformation process:

  1. The lack of a national agency of information for potential investors in outsourcing or for those who want to relocate to other cities in Romania – the lack of studies, statistics, information, generated sometimes business decisions taken after summary research, which determined a massive concentration of investors in Bucharest, Cluj and Iasi – cities that are actually suffocated under the battles pressure for benefits of any kind. Drained of the big waves of “employee attrition” companies are desperately searching for any info about other potential locations in Romania from Tier 3 to not lose the battle cost.
  2. Lack of Government Partnership – Outsourcing industry in the long term: since 2005 every time when the Minister of Communications it is changed we had to explain to the Government the ABCs for outsourcing industry. With the current government we felt a radical improvement of dialogue with the industry representatives. They are talking about Digital Romania, E-Governance and other initiatives. Unfortunately, even if the strategies and initiatives of the actual Government will transition the new Government, the industry has no guarantee that the new government will continue the good ideas of the previous Government and we will begin again from scratch, while the other countries in the region will continue to offer discounts through government programs, information through national specialised agencies, budget to promote their country as a destination for outsourcing and even involving their embassies in the promotion.
  3. Our fountain dried. In a previous article I was saying that this industry looks very similar to summer days full of heat from the countryside, where the village wells were quickly emptied of the good and clean water. Some villagers were using deceit (in this case we can call them recruitment strategies / attracting talent) and went at night at the best the fountain in the village and collecting all the good water and in the morning the other villagers who believed that they woke up early just realized that all was left was muddy and unattractive water. That is how things are in this battle for resources. We dry fountain, import resources from Moldova or Ukraine and surprise, the Poles are doing the same thing .. with us, because yes the European population is getting old and the foundain is dried everywhere. In parallel we are making efforts to regain our resources. There are good local initiatives aimed at accelerating the development of future resources, but insufficient to satisfy the current demand.
  4. Universities do not prepare as it should be. Even if there are master programs that were created for the industry – overall the Ministry of Education does not keep up with adapting the training curricula to the needs of one of the biggest employers in Romania – the outsourcing industry.
  5. Poor representation of the outsourcing industry in Romania, that was divided into various associations for call center, business services and outsourcing contractors. One voice – this is the thing that this industry needs, to be able to influence more and to coagulate some industry leaders that are interested in supporting the continuity of this industry in Romania on long term and not just during management contracts.

In an industry dominated by Millenials and post Millenials the need to change mentalities through continuing education – is greater than ever. How the leaders of Generation X can quickly adapt quickly to the demands of the ones from Generation Y? How can we educate parents from the Y and Z generation that a part time contract, flexible work schedule and working remote are OK for their child? How can we better present to students the benefits of working in this industry? Why we don’t consider freelancers as a temporary resource? What about the retirees?

The red card is about to be shown to the outsourcing industry – the solutions that were adopted until now satisfy short-term needs of the big players – it depends only on these industry leaders to outline those strategies that are meant to build a strong industry in the long term. And what if the “collapse” is just “transformation” and means a slowdown to the growth rate that we got used to – then how prepared are we for this? How to communicate this on the vertical level in order for Romania to remain in the top 50 outsourcing destinations in the world?

Take it as a theme for reflection or as an invitation to dialogue.

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