This interview was offered to www.wall-street.ro by Mr. Cristian Cilibiu, ABSL VP.
Would professional reconversion be a measure of further reducing the labour shortage in the SSC / BPO industry?
Frequently, within ABSL, we have meetings with different companies that want to invest in Romania and the question that always comes naturally is: “Is Romania still a long-term sustainable investment? What difficulties will we face?”.
Of course, Romania is still an attractive market primarily for the quality of human capital, but also due to the linguistic and technical aspects, as well as the financial ones that our country offers. However, presenting in a transparent manner the advantages of investments in Romania, there is a certain aspect that cannot be overlooked when it comes to the difficulties encountered in our market, especially in the Industry of Shared Service Centers (SSC) and Business Process Outsourcing ( BPO), and I refer to the availability, in numerical sense, of human capital.
Every year I follow with great interest the ABSL Industry Report, made in collaboration with our partners, and I am pleased to see that the Business Services Industry (SSC / BPO) has increased at an accelerated rate over the last 10 years, currently reaching 125,000. of employees and approximately 265 companies. Also interesting is the fact that 96% of ABSL Report participants do not regret this investment, more than they think to expand the business both quantitatively and qualitatively, in types of services offered to clients. I am sure that this trend will be confirmed once again, during the ABSL National Conference on November 18, 2019.
At the same time, I am a little surprised by the correlation and discrepancy of certain indicators that I would like to list:
- It is estimated that the SSC and BPO industry will reach approximately 220,000 employees by 2023 with a potential of 300,000 so an annual growth of about 40-50,000 jobs;
- SSC and BPO industry represent about 1.5% of the active population of Romania;
- At the same time in the academic year 2018-2019 at national level, the number of students enrolled in the license stagnates for 7 years around 400-450,000, being down 50% compared to 2010;
- It is estimated that about 40% of the students already have an active job;
- Romania has a natural increase of the negative population and at the same time migrates approximately 40,000 children between 0 and 19 years old, causing the population to decrease annually with about 120,000 people among young people;
- the unemployment rate at the national level, in the second quarter of 2019, reached about 3.8% while at the same time about 15% for young people between 15 and 24 years old.
By briefly analyzing the above figures, and extrapolating certain scenarios, it means that in order to support the growth that companies expect on our market, it is necessary that about 25% -30% of the graduates of the license, who are not already working, go to the SSC and BPO sectors. If we also add the fact that in the Romanian economy the “Services” sector accounts for just under 50% of the labor market, then we can say that we have a “fierce battle” over the few available human resources. Moreover, it is not surprising that one third of the companies participating in ABSL Industry Report declare that we have an extremely strong competition in Romania.
And under these conditions, what do we do? How can companies support the development plans announced in the next 5 years without jeopardizing the quality of the services offered?
Some companies practice the technique of raising wages above the real value of the business, which in some cases guarantees the achievement of short-term objectives, but in the long-term, Romania is unattractive and urges investors to target countries such as Poland, Hungary or the Czech Republic, subsequently generating imbalances in the other sectors of the economy.
A beneficial practice for employees, applied in almost all SSC and BPO companies is that of granting certain facilities and benefits to employees starting with private health insurance, contributions to Pillar 3, but especially the possibility of being able to balance the balance between private and professional life through offering the facilities to work from home a certain number of days a week.
At the same time, in recent years, more and more companies are trying to compensate for the lack of staff by implementing Robotics Process Automation (RPA) solutions or software solutions that take over the repetitive tasks of the employees making them concentrate on their activities, which add value to the work performed. Dragoș Ștefan, the President of ABSL, spoke at length about this in a previous interview.
There is also the practice of “import” of labor force, but which is mainly practiced in other industries such as construction, agriculture, etc., being very widespread in our industry mainly due to the fact that it is a long and arduous process with many restrictions.
There are also some tax facilities granted by the Romanian state to companies that employ full-time unemployed over 45 years, students and other categories but few companies in the service industry are interested in this facility because, as I said above, the number of people it is very limited and in most cases, these facilities are oriented to other economic sectors.
Under these conditions, one of the measures not fully exploited, in my opinion, is the practice of professional conversion, which unfortunately in Romania is not done through dedicated national programs, at least not in the SSC and BPO industry. This professional reconversion should come naturally, being influenced by the rather rapid technological evolution, but also by the RPA activities that replace certain tasks, as I said before. At the same time, it should come from the need to attract workforce and from other fields, different from the typology of our industry.
I was reading, at the beginning of the year, an article through which the Ministry of Labor puts into action a professional reconversion program offered to a number of 1,500 employees, mostly in trade, but also services. It is good that there are these programs but unfortunately, they are addressed to a very small number of people and the most important aspect is that they are designed on the “fill the gap” principle. That is, these programs are developed to cover the temporary need for labor in certain sectors and geographical areas and are not correlated, as well as part of the curriculum, with “jobs of the future” or with industries that are already oriented towards the jobs of the future.
Unfortunately, the professional conversion is done at the level of each company at the moment, ie each company has its own training programs in which it invests hundreds of thousands of euros annually. Thus, the companies try to compensate the deficit offered by the education system, from the point of view of the disciplines and subjects offered and which are no longer attractive in the current situation, but also from the point of view of the number of students by attracting and subsequently converting the personnel from the fields, which no longer have growth potential or are in decline. One such area that has suffered with the evolution of our society and that is not sufficiently explored is the TESA staff from former / current factories etc.
When I talk to some specialists in the field of Human Resources the opinions are divided when it comes to professional reconversion and the main factor is the typology of the persons to be reconverted who has both PROs and CONs, precisely:
- The reconversion of Generation X (born between 1965 and 1979) is difficult to do due to the fact that the representatives of these generations are present in a limited number in the SSC and BPO industry and this means in the first place an attraction from other sectors of the economy, often without a correlation with the activities of our sector. The difficulty also comes from the fact that the representatives of this generation are reluctant to change the current field of activity. In these conditions, the HR people complain that the integration is quite difficult, the process of assimilating a new foreign language is no longer so easy and fast and, once integrated, many of the candidates cannot keep up with the speed with which SSC and BPO industry evolve. At the same time, what many companies underestimate, is that this generation is one with a high sense of belonging to the company and one of the lowest rates of fluctuation due to resignations.
On average, the investment in the professional reconversion activities recovers after approximately 2 years and this category of personnel guarantees to a large extent the recovery of this investment but also long-term stability. It is well-known that the BPO and SSC industry have an average staff turnover rate of 20%, which is much higher if we focus on certain linguistic (eg German) or professional (eg IT developers) specializations.
Analyzing several companies in the field, from the countries of the West, it is observed that this generation is the majority, the average age per company being between 45 and 55 years and the difficulties presented previously in terms of flexibility, are real. However, in my opinion this generation should represent at least 15% in the structure of the human capital of a company. I was pleasantly surprised to find that one of the best Project Managers in a company had been a priest before.
- Reconversion of Millenials and Generation Z, meaning those who are now between 19 and 35 years old, have grown up with technology, catch everything in flight, are multitasking, being able to work on 2-3 screens simultaneously. Of course, these two generations are different from each other, so the managers but also the representatives of the human resources departments have different strategies when it comes to professional reconversion.
- In the case of Generation Z, it is relatively improper to talk about professional retraining programs, considering that their experience is limited, most of them committing to “entry level” positions, but we are talking about a retraining of graduatess. For example, I met in a company a colleague who graduated as an environmental engineer and who is now one of the best experts in process analysis but also a trainer in this field, not to mention a former Polo player in the junior league which has since become one of the best IT managers.
- As for Millenials, many of them have already had one or more professional experiences already being specialized in certain trades, thus making the process of professional conversion a little more difficult and longer. And in this case a dedicated recruitment process must be activated, this time not from universities but from other fields of activity, for example medicine from where a colleague became a very good project manager, a former lawyer is now a very good coach and HR Business Partner, not to mention a former foreign language teacher who is now conducting risk analysis.
- Of course, both generations do not have great difficulties in making this transition and most companies have dedicated and recurrent internal training programs that can be easily assimilated even if the recruited people have studies that apparently have no connection to this field such as Geography, Philosophy, Geology, Law, etc. The disadvantages of investing in these 2 generations is that the risk of non-recovery is quite high considering the fluctuation of personnel and yet almost all the companies in the field are explicitly oriented towards this category.
In my opinion, in addition to the need to expand the attracting / retraining Millenials and the Z generation, companies should consider a little more and exploring the possibility of attracting personally from the Generation X area as well, as a whole and in the long run the measure should be beneficial and contribute to the stabilization of staff and knowledge. As a result, the challenge of the next 5 years to take over a new flow of activities and expand the business can be eased. Also, by combining these measures over the 3 generations, in about 10-15 years all levels of seniority in a company will be achieved.
For students, graduates or employees my recommendation is not to limit themselves to activating or looking for a job only in the field in which they graduated, but to always think about whether the field / job in which they are activating is a job of the future or not. This can sometimes mean a step back, maybe giving up a certain role or current position, but it allows you to make much faster progress later on an area that has more chances in the future than your current job. The dynamics of the types of jobs in the future is also confirmed by a McKinsey study that states that by 2030, approximately 375 Million people worldwide will need a professional retraining due to the disappearance of existing jobs, the emergence of other jobs, or the development of some that recently appeared. But about this topic, let’s discuss another time. 🙂