ABSL and PwC Romania study: business services are among the top five Romanian industries
The latest ABSL study, carried out in collaboration with PwC, presents the business services industry at a macroeconomic level, as well as in a European context. In 2020, the business services sector contributed 5.4% to Romania’s gross domestic product (GDP), ranking among the top five industries, along with real estate development (7.7%), construction (6.1%), public administration (5.5%) and retail trade (5.3%).
The business services sector has grown substantially over time, growing 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 been consistently higher than the average contribution of this sector to the European Union’s GDP (3% in 2011, respectively 3.6% in 2019). In addition, this industry has a higher contribution to Romania’s GDP even compared to other EU member countries where the sector is developed (such as Slovakia 3.5%, Bulgaria 3.3%, Hungary 3 %, the Czech Republic 2.9%, Poland 2.8%).
At the same time, while the average annual growth rate of revenues generated by this sector between 2011-2019 was 7% in Romania, the average annual growth rate of GDP was 3.9% during the same period , according to Eurostat data.
Also, from the point of view of other industries dependent on the business services industry, 1 euro of added value produced by the industry generates between 0.5-0.7 euros additional, through indirect effects, in other dependent industries such as real estate, construction, law, administrative support.
The growth of the sector comes mainly from existing clients who have broadened and diversified their projects.
“In 2021, we have recovered the growth lost in 2020, resuming the growth rate predicted before 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 backbone of our industry. High added value services, where our country lags behind Poland, will have enormous growth potential in the coming period. Among them are 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 stage of development in a timely manner, increasing the share of high value-added services in the business portfolio, attracting new investors or process, through the development of industry in small towns, but also through concrete measures to adapt higher education to the reality of the market. The role of government is essential to support future plans.
Companies in the sector will continue to work in a hybrid system until the end of this year. Although employees of many companies have started to return to the office a few days a week, the new epidemiological situation means that online work is now used to a greater extent, with consequences linked to the loss of socialization and organizational culture. , with a greater effort to assimilate new knowledge through online training, as well as with negative effects on the well-being of employees.
“The current situation will continue to have an impact on the business environment, on our industry and on industries related to business services, such as real estate or those operating near office buildings. I believe that our field will be impacted in terms of investments and new projects, but it will continue to increase its existing capacities at a satisfactory pace. Significantly reducing mobility in wave four could be a significant barrier to supporting new processes, as during set-up specialists travel to teach essential knowledge, set up systems and the environment. in which the activity is to take place ”, explains Cătălin Iorgulescu, vice-president of ABSL.
According to the ABSL study carried out in collaboration with PwC Romania, (if we do an analysis taking into account only companies in the sector with a turnover greater than 1 million euros) the average turnover of a company is around 6.3 million euros, while the average number of employees per company is 109 people.
Thus, each newly created medium-sized enterprise in the business services sector can theoretically contribute to the state budget up to approx. 1.5 million euros per year (or 14,000 euros per year per employee) representing salaries and other taxes.
“Due to the continuous expansion and new investments attracted to the local market from year to year, the business services sector has seen a significant increase in revenues 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 thousand, and in an increasing contribution to the GDP of Romania. Our estimates are that the sector has significant growth potential in the coming years, with positive effects for the whole economy, ”said Francesca Postolache, vice president of ABSL.
The business services industry generated more than € 9 billion in revenue in 2019, with 178,000 employees nationwide and around 1,080 companies registered with the Ministry of Finance with specific NACE codes.
For NACE codes 6201 & 6202 involving IT consulting activities, the turnover recorded in 2019 was 5.3 billion euros. These services employed over 76,000 people that year. Microsoft, DB Global Technology, DXC Technology, Rinf Outsourcing Solutions are examples of companies, members of ABSL, with these CAEN codes.
The second sector in terms of turnover (business and management consulting activities with NACE code 7022) recorded in 2019 a turnover of 2.4 million euros. 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, recorded a turnover of 780 million euros in 2019. BAT Global Business Services, PWC, Deloitte, Ernst & Young, KPMG are examples of ABSL member companies active in this field.
The contact center sector (NACE code 8220) contributes 480 million to the business services sector. Companies in the sector include Global Remote Services, Sykes, Telus International, Teleperformance, Vodafone Shared Services Romania.