International outsourcers are also starting to produce at German locations in order to meet the high quality and data security requirements of their German customers.
Home to a large and culturally diverse labor pool of highly qualifi ed and motivated people with international work experience and foreign language ability, Germany is an excellent location for pan-European and other international projects.
High productivity rates and steady wage levels make Germany an extremely attractive investment location for the service sector.
The German SSC and BPO Industry at a Glance
Captives – Market Segmentation – Around 75 percent of large German companies have already installed SSCs. Moreover, German companiesare extremely satisfied with the SSCs established: three quarterswould not outsource any of the processes bundled within a SSC to a third party.
Estimated Market Potential – Seventy percent of German companies in this segment will establish further SSCs in German locations. Key development drivers are the ready availability of qualified personnel,stable labor costs, and low labor turnover rates.
Industry Players in Germany – Internationally active companies with pan-European and EMEA-dedicated SSCs in Germany include BASF, Bayer, Daimler, HeidelbergCement,and Merck.
Vendors – Market Segmentation – The BPO market in Germany is highly fragmented, with the top 20 BPO providers occupying less than 30 percent market share. Front office and middle office services currently dominate the market, but back office services are forecast to have the largest growth potential.
Estimated Market Potential – According to NelsonHall, annual growth rates for the German BPO market are forecast at around 7.2 percent.
Front office has a forecast CAGR of around 6.5 percent, while middle office and back office record growth rates of 7.3 and 9.2 percent respectively.By 2013, the BPO market in Germany is expected to have reached an estimated volume of EUR 14.4 billion. Potential outsourcing volume created from within the German business environment has forecast at around EUR 32 billion. Around one third of German companies plan to outsource business processes within the next two-year period.
Industry Players in Germany – Although German players like adm, buw, walter services, d+s, defacto and others are particularly active in front office services, they are increasing their back office service activities.
A number of international BPO companies are active in Germany. Global players like ADP, HP, Paychex, and TCS operate their own BPO delivery centers in Germany.
Cost Factors – Labor turnover rates in Germany are significantly lower than in nearshore or offshore locations (being between five and ten percent in Germany).
Labor cost increases in Germany are marginal. At just two percent, the labor cost increase rate in Germany is the lowest within the European Union (EU). Indirect labor costs are actually declining due to changes in the regulatory framework.
A general statutory minimum wage does not exist within the SSC and BPO industry in Germany. Special collective agreements negotiated and signed with trade unions help reduce labor costs by up to 40 percent.
Quelle: Industry Overview BPO & Shared Services April 2010 by GTAI