Treasury & Shared Services - FinanceEstonia · 2015-10-05 · thus size, complexity of finances and...

FOR INTERNAL PURPOSES ONLY

Treasury &

Shared Services Industry Overview

Neil Mathieson

October 20th 2013

TREASURY & SHARED SERVICES INDUSTRY OVERVIEW OCT 2013

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Contents

Foreword ................................................................................................................................................ 4

Disclaimer .............................................................................................................................................. 5

Glossary .................................................................................................................................................. 6

1 Industry Definition........................................................................................................................ 7

1.1 Industry definition ......................................................................................................................... 7

1.2 Functional scope ............................................................................................................................ 7

1.3 Typical users .................................................................................................................................. 8

1.4 Triggers & Goals ............................................................................................................................ 9

1.5 Delivery model choice ................................................................................................................ 11

1.6 Industry structure ........................................................................................................................ 12

2 Industry Scope ............................................................................................................................. 13

2.1 Size ................................................................................................................................................ 13

2.2 Demand ......................................................................................................................................... 13

2.3 Supply ............................................................................................................................................ 14

2.4 Key trends ..................................................................................................................................... 15

3 Investment Decisions ................................................................................................................. 17

3.1 Investment life cycle .................................................................................................................. 17

3.2 Investment process ..................................................................................................................... 17

3.3 The Role of Advisors ................................................................................................................... 18

3.4 Location criteria .......................................................................................................................... 18

4 Estonia .......................................................................................................................................... 22

4.1 History ........................................................................................................................................... 22

4.2 Current participants ................................................................................................................... 22

4.3 Value chain ................................................................................................................................... 25

4.4 Independent rankings ................................................................................................................. 27

4.5 Current approach ....................................................................................................................... 29

4.6 Industry feedback ........................................................................................................................ 30

5 Competition ................................................................................................................................. 35

5.1 Competition dynamic .................................................................................................................. 35

5.2 Central and Eastern Europe overview ..................................................................................... 35

5.3 Baltic Sea competitors ............................................................................................................... 36

6 SWOT ............................................................................................................................................ 38

6.1 SWOT, Shared Services ............................................................................................................... 38

6.2 SWOT, Treasury ........................................................................................................................... 39

7 Findings & Recommendations .................................................................................................. 40


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7.1 Findings ........................................................................................................................................ 40

7.2 Recommendations ...................................................................................................................... 41

Appendix 1, Key Advisors and Media .............................................................................................. 43

Sources ................................................................................................................................................. 45

List of Tables & Graphs ..................................................................................................................... 46

Acknowledgements ............................................................................................................................ 47


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Foreword

Treasury & Shared Services is one of FinanceEstonia’s six priority niches.

During the past 18 months significant effort has been made to understand the respective industries,

create a viable platform and commence marketing and environmental enhancement activities.

This document communicates the information and intelligence accumulated over that period from

primary – industry events and meetings with thought leaders, existing and potential investors – and

secondary research.

Its purpose is to provide an overview of the respective industries, how Estonia performs and initial

recommendations on how Estonia and FinanceEstonia can contribute to future success.

Based on this overview separate 2014 Marketing and Environmental strategies shall be developed for

FinanceEstonia board approval.

It is proposed that this document could also be edited to remove confidential or commercially

sensitive information and thereafter circulated to FinanceEstonia members.

This document is not designed to constitute a country sector strategy, which would require additional

input, research and development.

FOREWORD


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Disclaimer

This document provides information which is general in nature and has been compiled from primary

and secondary sources over a period of 18 months. Whilst every effort has been made to ensure its

accuracy no guarantee is given as to the content, accuracy, completeness, or fitness for a particular

purpose.

This document, the data, logos and trademarks used herein are the exclusive property of the author

and FinanceEstonia. The author and FinanceEstonia shall own all rights including any copy, translation,

modification, adaptation or derivation.

This document cannot be shared without the prior approval of FinanceEstonia.

DISCLAIMER


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Glossary

The following terms and abbreviations are used in this document:

BPO Business Process Outsourcing - services provided by a third party.

Captive Delivery of services by in-house centre.

EAS Enterprise Estonia.

FE FinanceEstonia.

GBS Global Business Services - terminology used to describe multiple internal functions

such as IT, HR, Finance, etc grouped into one business unit.

Hub & Spoke A delivery model where a combination of Offshore and Nearshore Captive’s and BPO

services is used.

Hybrid A delivery model which combines Captive and BPO.

Nearshoring When services are delivered from a Captive and BPO centre which is geographically

proximate to the head office or operating subsidiary e.g. Finland to Estonia.

Offshoring When services are delivered from a Captive and BPO centre which is geographically

distant from the head office or operating subsidiary e.g. Estonia to India.

SSC Shared Service Centre.

The industries uses a significant amount of acronyms and jargon. A good overview for Shared Services

is provided here and for Treasury here.

GLOSSARY

http://www.ssonetwork.com/business-process-outsourcing/articles/jargon-buster-a-guide-to-common-terms-and-acronyms/

http://wiki.treasurers.org/wiki/Main_Page


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1 Industry Definition

1.1 Industry definition

At an industry level both Treasury and Shared Services are horizontals e.g. the model is able to meet

the needs of more than one vertical industry.

Shared Services

At an organisational level Shared Services are a

delivery model where a process, service,

technology or expertise is delivered from a central

unit to multiple consitutents within an

organisation. By centalising organisations can

eliminate redundant activities and improve

efficiency, services and customer satisfaction.

Treasury

At an organisational level, Treasury is the centralised management of an organisation’s funding and

capital, financial risks and liquidity. Some organisations also manage tax, pensions, insurance and

investor relations in the treasury function. By centralising organisations gain greater visibility, control

and economies of scale.

Are They Natural Partners?

At present c.35% of Treasury activities - mostly liquidity management and tax - are performed in a

Shared Service model while, for the remainder, Treasury generally sits under the CFO remit and

Shared Services under the COO or functional leader.

Nonetheless convergence is occurring due to advances in technology, the Shared Service model and

corporate culture. Overlaps in the investment process and location criteria also exist. It therefore

makes sense for FinanceEstonia to group Treasury and Shared Services but a nuanced approach is

required to each.

1.2 Functional scope

Both the Treasury & Shared Service industries define themselves based on functional scope:

Graph 2 – Key Functions In Treasury & Shared Services

Graph 1 - Industry Positioning

INDUSTRY DEFINITION


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Shared Services

The functions most commonly placed into the Shared Services model are Finance, HR and IT. Supply

Chain / Procurement and Legal are growing fast. Client Service tends to be cyclical in nature, either

centralised or provided in the local market close to the customer (who might be an internal

department or an external consumer).

Table 1 – Functions Placed In The Shared Services Model

Function Deloitte1 Accenture2 HFS and PWC3

Finance 93% 58% 91%

HR 60% 50% 75%

IT 48% 75% 83%

Supply Chain / Procurement 47% 41% 62%

Client service 51% 60%

Sales / Marketing 26% 28%

Real estate / Facilities 23% 53%

Legal 19% 30%

Logistics 39% 45%

Treasury

Funding and capital, risk and day-to-day liquidity (deposits, payments, working capital, etc)

management are most commonly managed in Treasury centres. Some organisations also include tax,

pensions and investor relations.

Tax may involve simple compliance, accounting and reporting but at the more aggressive end can also

involve registering companies or booking transactions in tax advantaged domiciles (often involving low

information disclosure) to reduce tax liabilities.

Are Shared & Global Business Services The Same?

No, whilst the aim of Shared Services is largely

tactical cost savings, GBS is about strategic value

creation e.g. creating synergies between functions

and leveraging their effect across the organisation

to support the wider corporate strategy.

Shared Services are best considered as a starting

point on the journey, but ultimately become a

tactic within a wider GBS strategy.

1.3 Typical users

Shared Services

The appropriateness of the Shared Services model is organisation specific but determined by factors

such as size, maturity and overall strategy5.

Graph 3 - Journey From Shared Services To GBS4

INDUSTRY DEFINITION INDUSTRY DEFINITION


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Small organisations favour BPO to gain access to services or technology they cannot justify owning

while aggressive profit seekers favour it because of quick bottom line impact. There is currently low

penetration among mid-sized corporates and the public sector, albeit both are expected to embrace

the model more.

The largest users are multi-national corporates, for

a number of reasons – they have complexity which

in turn creates inefficiency; their scale creates

potentially large savings and they have maturity

e.g. data, processes, management teams, etc

which makes standardisation easier.

At an industry level Financial Services has and

continues to be a heavy user of the Shared Services

model.

Treasury

Treasury departments are expensive due to their qualified professionals and supporting technology

thus size, complexity of finances and risk appetite determine whether Treasury management is

appropriate.

Small organisations cannot justify operating a treasury or BPO and manage via financial controllers.

Mid-sized corporates in the EUR 50-500m turnover range may have some element of treasury

management however the largest users are again multi-national corporates.

At an industry level those with no cross-border exposures and/or low leverage tend to have small

Treasury requirements. At the opposite end of the spectrum industries like Logistics and

Manufacturing have large capital requirements, operational risk and exposure to numerous financial

risks thus require treasury management.

1.4 Triggers & Goals

Shared Services

There are many reasons why organisations adopt the Shared Services model:

Table 2 – Motivations For Adopting The Shared Services Model

KMPG6 HFS & PWC7 The Hackett Group4 ACCA8 (Finance SS)

1. Reduce OpEx 1. Drive process

efficiency (cycle time

& quality)

1. Improve operating

margin

1. Deliver finance

process efficiency

2. Economies of scale 2. Increase scalability

and flexibility of

operations

2. Accelerate revenue

growth

2. Lower finance cost

base

3. Process improvement 3. Reduce costs

3. Improve customer

service

3. Enhance business

performance

4. IT optimization 4. Support global growth 4. Reduce overhead cost 4. Improve finance

Graph 4 – Shared Services Demand by Industry6

INDUSTRY DEFINITION


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strategy capability

5. Continuous process

improvement

5. Transform processes

5. Increase operational

agility and flexibility

5. Improve finance

service quality

6. Reduce CapEx

6. Align support services

with corporate

strategy

6. Enhance employee

talent, talent

retention &

development

6. Improve transparency

and control

7. Accessing offshore

7. Improve compliance

7. Improve cash flow /

working capital

7. Drive compliance &

regulatory

8. Process automation

8. Drive cultural change

8. Reduce total supply

chain cost

8. Free up resources

9. Accessing 3rd party

expertise

9. Gain access to talent

and capabilities

9. Manage enterprise risk 9. Transform onto

standard processes

10. Support access to new

markets

10. Improve access to

technology

10. Grow emerging

market presence

10. Enhance customer

satisfaction

11. Achieve non-financial,

social or sustainable

goals

11. Achieve finance

transformation

12. Drive data

transparency

13. Flexibility to scale

operational

14. Make finance function

more global

15. Support organisational

expansion

16. Improve finance

talent

17. Improve working

capital

18. Support broader

corporate strategic

agenda

19. Drive best practices

through other business

functions

20. Gain access to new

finance technology

Observing these factors we can summarise that cost efficiency, effective performance and developing

capabilities are the primary motivations. Efficiencies tend to be derived first, especially when

standardising technology and processes, with effectiveness and capabilities medium-term goals.

Treasury

The motivations for establishing a Treasury centre are control driven rather than cost - ensuring

adequate liquidity to support operations; reducing losses and volatility arising from financial risk;

managing and optimizing the cost of capital on long-term funding; ensuring financial statements

provide a true and fair view, etc.

INDUSTRY DEFINITION


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If not an outright motivation then tax is always a consideration. At an operational level this means

using internal structures such as offsets and natural hedges to reduce tax exposure and ensuring cash-

flows are not subject to penal charges, withholding or double taxation. More aggressive tax planners

may register companies or book transactions in tax advantaged domiciles (often involving low

information disclosure) to reduce tax liabilities.

How Does Estonia’s Environment Align With These Motivations?

This must always be considered in 2 dimensions – relative to the source country and relative to our

competitors e.g. does it make sense for an organisation to pursue this and is Estonia the favoured

location.

In terms of Shared Services Estonia offers significant savings over countries such as Finland but is 15-

20% more expensive than Latvia and Lithuania. On skills measures Estonia has only slightly lower skills

than W. European countries but outscores competitors. There are also important ‘effectiveness’

factors such as productivity, low red tape and country risk where Estonia can be considered world

class. Weaknesses to be addressed include language skills, business skills and the size of labour pool.

In terms of Treasury Estonia has mixed alignment, on the one hand having a good business

environment, little red tape, EURO membership and a supportive tax systems but on the other limited

expertise, industry name recognition and capital, hedging and liquidity solutions.

1.5 Delivery model choice

Shared Services

Before centralising delivery organisations must first

eliminate unneeded data and processes then

simplify, standardise and automate the remainder.

Thereafter the choice between Captive and BPO

delivery is organisation specific and influenced by

factors such as buy-in from the businesses using

the SSC, focus on operating costs, scale,

availability of capital, time and talent retention23.

BPO must not be viewed purely as a way to reduce cost or avoid capex, for some organisations it

provides to access expertise (often at a lower cost) or frees resources to focus on core competences.

Business risk is also important. Captives are a favoured first step as they offer great visibility and

control however over time, once performance is stable, BPO may be more attractive. Likewise

organisations rarely Offshore to a distant location without having experienced Nearshoring first.

Leading organisations increasingly use a ‘Hub and Spoke’ approach, with model choice and location

driven by what is best for their goals9. For example, Financial Service firms face regulatory change

and penalties at a time when their revenue model is under pressure. They therefore may BPO high

volume, repetitive processing tasks to India; centralise mid-level and control functions in a regional

Captive; and retain critical or client services in a local Captive centre of excellence.

Graph 5 - Shared Services Life Cycle4

INDUSTRY DEFINITION


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Treasury

In Treasury delivery by Captive is the overwhelming favourite. Multi-nationals almost exclusively

locate their global Treasury centre within the global head office. Thereafter the structure depends on

the degree of centralisation and risk appetite – if decentralised Treasury is performed on a country

level by a financial controller and, if centralised, this is usually via regional treasury centres.

Treasury BPO includes outsourced risk management, payment and reporting services and is typically

delivered from tax advantaged locations such as Ireland, the Netherlands, Jersey and Singapore.

Treasury BPO is typically used when an organisation’s requirement is not complex enough to justify

operating a treasury.

1.6 Industry structure

Shared Services

Highest in the food chain are the Captive and BPO centres.

Feeding off these are a relatively small number of ‘Advisors’ with specific Shared Services expertise

who provide research, business transformation advisory and implementation on a global or regional

basis. There is also a medium sized group of ‘Location Selection Advisors’ who help organisations

benchmark, chose and enter new locations. These advisors are typically local or regional basis in their

coverage. Investment agencies such as EAS can be considered among this segment.

‘Vendors’ sell a diverse range of products into Captive and BPO centres, with a strong bias towards IT

solutions which automate, provide efficiency, transparency, etc. This segment also includes the local

‘Value Chain’ providers such as real estate and HR who support market entry.

Finally, there is a small but active sector media comprising magazines, websites and conferences.

Treasury

Treasury is somewhat similar in that Captive and BPO centres are highest in the food chain.

‘Treasury Consultants’ are used to support Treasurers on labour intensive tasks such as creating

policies, running tenders, implementing liquidity solutions, etc. Accountants are used for tax advice

and a small number of specialised financial risk advisors also exist in financial centres.

Banks remain a key counterparty as they provide funding, access to other financial products and

markets and selective advisory services. In countries with developed financial markets Banks are

increasingly dis-intermediated by new capital and IT solution providers.

Again there are a range of vendors – financial technology, market data, credit ratings, etc – and a

small but active sector media comprising magazines, websites and conferences.

An overview of the key advisors and media for both industries is provided in Appendix 1.

INDUSTRY DEFINITION


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2 Industry Scope

2.1 Size

Shared Services

Developed in the 1980’s in the US and UK, Shared

Services has grown to become a global industry.

The Hackett Group estimate there are currently

4,900 SSC’s operating globally, of which 3,471

(70%) are Captives and 1,512 (30%) BPO.

In employment terms c. 1.7 million people are

estimated to work in the industry globally.

Overall monetary value is hard to calculate as the Capex, operating costs and internal re-charges for

Captives are confidential. Nonetheless the global BPO segment alone is estimated to be worth USD

300bn per annum10, with Financial Services representing a large proportion of this.

Treasury

As above, there are no formal statistics on market size. As a proxy, the notional amount of debt

securities outstanding in the world as at Dec 2012 was USD 22,500bn, derivative contracts USD

589,500bn and cash on deposit USD tbc.

2.2 Demand

Shared Services

The demand outlook for Shared Services is positive for a number of reasons:

Usage of the model is low. Although many organisations have some element overall utilisation is

only 30—50% of that possible in W. Europe and the US3, 30% in Nordic and just 10% among CEE11.

There is no better delivery model for lowering cost and improving delivery4 so more organisations

will adopt this, regardless of size.

Advances in the industry and IT make it is easier and cheaper to include new activities9 such as

supply chain, facilities, tax, legal, etc.

New locations are coming on-stream to meet demand for the exact mix of languages, skills and

costs they require.

Shared Services is moving up the corporate value chain9. Historically seen as a tactic to generate

cost savings it is now seen as a key element of a (GBS) value creation strategy.

BPO continues to go mainstream, becoming another standard business practise12.

Global economic conditions reinforce the need for cost savings, operational efficiencies,

performance improvement, control and compliance, capability building, etc2.

INDUSTRY SCOPE

Graph 6 - Global Shared Services, By Delivery Model4

70%

30%

Captive

BPO


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The Hackett Group forecast usage of Shared

Services will continue in all key activities -

Finance, IT, Procurement and HR. Considering W.

Europe and N. America alone, it is feasible that

another 1.8m jobs could be migrated to new

locations.

HfS Research estimate that the global BPO is

forecast to grow 5.1% in 2013 alone13.

Treasury

The demand outlook for Treasury is also positive for a number of reasons:

Treasury management is recognised for its role in creating and protecting value.

Organisations are more risk aware following financial crises which directly and indirectly impacted

them.

Increased governance, regulatory and accounting requirements.

The speed of change in Treasury is generally slow, indeed most organisations currently use simpler

financial strategies and products than 10 years ago, albeit that is often offset by more global business

operations e.g. higher operational risk, lower financial risk

2.3 Supply

Shared Services

Global supply is increasing as countries and cities are attracted by the industry’s growth dynamic.

Improved language skills and enabling technology alongside user demands for new solutions are largely

driving this.

Europe remains the single biggest market with

1,815 (52%) centres, followed by N. America with

898 (26%) and Asia with 540 (16%).

Data for the C.E. Europe region suggests 892

centres or 18% of the global market. See C.E.

Europe Overview for detailed analysis.

When looking on a Delivery Model basis, Asia dominates BPO markets to its huge labour pool and cost

competitiveness. Poland can be said to fulfil a similar role for Europe. Captives, which are often

motivated by effectiveness, control and capability considerations rather than cost, are still most

prevalent in traditional markets such as the N. America and W. Europe.

Graph 7 - Shared Services Future Offshoring4

Graph 8 - Location Of SSC’s4

52%

26%

16%

2%1% 3%

Europe

Americas

Asia

Oceania

Africa

Others

INDUSTRY SCOPE


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Graph 9 - Top BPO markets (No of Centres)4 Graph 10 - Top Captive markets (No of Centres)4

Treasury

No formal data exists however N. America and W. Europe are the traditional bases of Treasury. Asia

and Latin America are developing fast on the back of economic development while the Middle East

and Africa remain under developed.

2.4 Key trends

Shared Services

The Shared Services industry has and continues to change at great speed. Key trends for the next

years include:

IT is enabling more - new activities can be added, processes automated from end-to-end, big data

analysed to extract business intelligence, global delivery, etc13.

IT reduces time, distance and cultural barriers. This increases the likelihood of organisations

locating in countries which meet their needs rather than where their underlying businesses are.

IT is lowering costs, making the model more accessible to small and medium sized organisations.

Governments are increasingly outsourcing, including critical and complex services.

Leading organisations are adopting the GBS model. This is positive as it embeds Shared Services into

the strategic agenda and operating model of an organisation e.g. it is more valued and sustainable.

When choosing locations, labour quality,

expertise and effectiveness are becoming key

drivers rather than scale and cost13.

Centres are being repatriated to Europe/US

from Offshore locations. This is due to a

combination of wage inflation, exchange rates

and lower quality and productivity than

expected (especially on large deals).

Notwithstanding the above, there is still a consistent movement of delivery Eastward due to labour

pool availability and cost. This applies for W. EuropeC.E. Europe and for EuropeAsia.

274

158106 96 90

0

100

200

300

562

401

236182 166

0

200

400

600

INDUSTRY SCOPE

PWC11

“SSCs located in the CEE region achieved on average the highest savings on operating costs followed by the Asia-Pacific region. The reason could be their optimal balance between labour cost arbitrage and efficient, streamlined processes. Surveyed companies stated that CEE and Asia-Pacific will be the most preferred SSC locations in the future.“


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Observing these trends we can summarise that they are largely favourable to Estonia given the role

of technology, location decisions becoming based on qualitative factors and the likelihood that

Eastern Europe will grow further.

Treasury

Key trends for the next years include:

Focus on financial risk – due to losses and volatility organisations are trying to develop a more

structured approach to measuring and managing enterprise FX, credit, market, interest rate and

commodity risks.

New operating and reporting requirements – SEPA, EMIR, Dodd-Frank, IFRS, etc – are increasing

complexity and workloads.

More intensive tasks such as liquidity forecasting, working capital management and payments to be

moved into Shared Services model, including more BPO.

IT is enabling more – multi-bank connectivity, secure use of the cloud, process efficiencies, new

solutions, automation, etc

Growth of treasury management in Asia and LatAm, in many cases supported by specific legislation

and incentives for establishing regional Treasury centres.

INDUSTRY SCOPE


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3 Investment Decisions

3.1 Investment life cycle

Shared Services

For an organisation The Hackett Group estimate that “you can go 10% of the distance and gain 90% of

the benefits, meaning you then have to go a further 90% of the distance just to capture the remaining

10% of the benefits”. This means that (i) great care is involved in scoping and implementing deals and

(ii) geographical factors are important in location decisions.

Furthermore, as discussed in Delivery model choice, the risk of business interruption means it is

common for organisations to start small centre then expand, as demonstrated by Finnair and Orkla

ASA (Rieber & Son) in Estonia.

For a country, The Hackett Group estimate that “80% of the entire task is in the attraction phase”.

This implies (i) a mismatch between when resources are expended and benefits flow and (ii) that

aftercare is important to capture the full potential opportunity.

3.2 Investment process

Shared Services

The experience of the past 18 months indicates that location decisions are complex and nuanced due

to imperfect data, lack of comparability and multiple trade-offs. Nonetheless they generally follow a

set process14:

Graph 10 – Investment Decision Process

Diagnose

• Agree location criteria - language, cost, labour pool, etc - and their relative weightings

• Define investment objectives and process deliverables

Shortlist

• Identify possible countries

• Evaluate using broad measures such as financial attractiveness, labour quality and ease of doing business

Score

• Score each country bases on criteria and weightings

• Rank countries based on score

Entry mode

• For each selected country compare pro's and cons of greenfield, brownfield, JV or acquisition

Identify Site

• Identify possible sites within each selected country

• Site visits and meetings with investment agency, value chain and existing centes

Select

Site

• Review and finalize criteria and weightings

• Board decision

Prepare

• Recruiting staff, buying systems, seeking premises

• Pilot

Implent• Phased approach to avoid business interruption

INVESTMENT DECISIONS


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This process creates considerations for Estonia. Firstly, as an investment agency may only get access

to the prospective investor at a relatively late stage it is essential that information about Estonia is

available and accurate and that advisors understand the country proposition. Secondly, lead times

are long, ranging from 6-48mths depending on scale and complexity.

Treasury

Treasury location decisions generally follow a similar cycle, albeit location criteria also include tax

and size of the local financial markets. Cycle times tend to be shorter as Treasury is smaller and

easier to relocate.

3.3 The Role of Advisors

Shared Services

As discussed in Industry structure, specialist Shared Services or Location Selection Advisors often assist

organisations when benchmarking, choosing and entering a new country.

Size is generally the key determinant. For centres smaller than 50 FTE it is likely an organisation will

do this on their own, perhaps purchasing country data, especially on costs, from an advisor or an

investment agency. For centres of 50-100 FTE’s an advisor might be used to run the country

shortlisting and site selection elements with the company implementing themselves. For centres of

100+ FTE it is likely an advisor will be involved at all stages.

Treasury

Many organisations do not use advisors due to confidentiality however they may purchase country

data for the shortlisting exercise and accountants typically provide a tax opinion before

implementation.

3.4 Location criteria

Shared Services

There are many factors which organisations consider when selecting a country and thereafter the in-

country location:

Table 3 – Key Location Criteria, Shared Services

AT Kearney15 The Sourcing Line16 The Hackett Group4 Deloitte1

People Skills &

Availability

- relevant experience

- size & availability of

labour market

- education

- language capability

Cost competitiveness

- employee compensation

- real estate

- taxes

- telecoms

Labour cost

Labour quality

Financial

attractiveness

Resources & Skills

Capabilities Availability of existing

labour (with technical



19

- compensation cost

- infrastructure cost

- tax & regulatory cost

- education

- language

- technological readiness

skills)

Business environment

- country risk

- country infrastructure

- cultural exposure

- security of IP

Business & Economic env.

- economic competitiveness & - -

- stability

- infrastructure

- regulation

- corruption

3. Culture

Labour cost

Legal & Regulatory Availability of new

labour (inc graduates)

Accessibility Language skills

Sustainability

Proximity to

underlying operations

Proximity to HQ

Regulatory & Legal

Risk profile

Observing these factors we can summarise that cost efficiency, labour force and the overall business

environment are key location criteria. The Hackett Group believe that labour costs are the biggest

single consideration but, overall, the final decision is always based on non-financial factors.

The Role of Government Incentives?

Neither tax nor financial incentives are mentioned as key location criteria yet Lithuania directs state

and EU regional funds into the Business Services sector while Latvia, Poland and others direct EU

regional funds.

Estonia introduced a similar scheme in October 2012 (link) offering up to EUR 200k per project for

investments in fixed assets and recruitment and up to EUR 1,000k per project for investments in

training. Key criteria were a 50% matching contribution from the investor, 80% of services to be

exported, centre payroll to grow to 30 times the national average and an Estonian entity to be

registered. Although used by some market participants this scheme was withdrawn in August 2013

(link) and it is currently unclear whether it will return.

Having spoken to advisors and investors about this topic the feedback is that incentives do not affect

the location decision. Investors are usually well funded multinationals thus the monetary impact is

negligible and they do not wish to incur the reporting burden. At best incentives show a commitment

to the sector and investor however this can be demonstrated in other ways such as environmental

competitiveness and senior involvement in deals.

Treasury

There are many factors which organisations consider when making a location decision:


http://www.eas.ee/et/eas/pressikeskus/uudised?option=com_content&view=article&id=4927&catid=213

http://www.eas.ee/et/ettevotjale/ettevotte-arendamine/tugiteenuskeskuste-investeeringu-toetus


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Table 4 – Key Location Criteria, Treasury

EY17 The ACT18 FTI Treasury19 Polack20

Access to banking

services and expertise

Structural Issues

- restrictions on funds

movement, interco loans,

etc

- tax treatment on funds

movement, interco loans,

etc

- transfer pricing

- exchange regulations

- double taxation treaty

network

- resident v non-resident

treatment

- how internal transactions

are taxed and charged

Cost

- people

- premises

- IT

- telecoms

Controlled foreign

company rules

Liberalised capital

markets

Legal

- netting

- re-invoicing

- in-house lending

Proximity to operating

business

Constraints on cash pooling

or other transactions

Professional expertise

Corporate structure

- legal entity, branch or

division

Access to expertise

Cost of operation – staff

and infrastructure

Availability of trained

personnel

Currency regime

Country risk

Stable communications

infrastructure

Local financial market

and regulation

Economic stability

Political stability

Language

Financial system –

availability of liquidity &

products, payment systems,

etc,

Favourable regulation

Name recognition of

location

Free trade agreements

Tax

- corporation tax

- withholding tax on

interest, dividends &

royalties

- capital gains tax

- stamp duty & transaction

taxes

- VAT

Infrastructure – offices,

intl transport, telecoms,

etc



21

- double taxation treaty

network

- controlled foreign

company & transfer

pricing rules

- tax stability

Legislation – business

friendly, branch or

subsidiary, resident or non

resident, etc

Political stability

Regional variation –

language, time zone,

culture

Regulatory

Supervision

Talent – education, skills,

availability

Tax – low tax, double

taxation agreements,

reduced or exempted

WHT, simplicity, stability

Thin capitalization

Transfer pricing

Observing these factors we can summarise that skilled staff, taxation, country risk and regulations are

key considerations. Currency and access to capital markets are important but secondary factors given

Treasury management usually involves cross-border relationships.



22

4 Estonia

4.1 History

Shared Services

Estonia has an established track record in Shared Services dating back to the early 1990’s, when it

became a Nearshoring location for Nordic companies such as Finnair and Telia Sonera.

On joining the EU in 2004 Estonia attracted significant new and secondary investments, diversifying

the breadth of activities and investors in the process. World class organisations such as NATO, Stora

Enso and AGA Linde opened centres in this period.

Since EURO adoption in 2011 further growth has occurred especially in Finance and IT centres, often

with regional responsibility and world class investors. This coincided with a general migration of

shared Services business from W. Europe to C. E. Europe.

Estonia therefore enjoys good industry recognition as is perceived Nordic, efficient and skilled at

Finance and IT.

Challenges to be addressed include improving language and business skills and an up-tiering to higher

value (paid) jobs.

Treasury

Although many Estonian companies lack the scale and complexity to use Treasury management,

numerous Banks have managed their domestic B. Sheet, and large Estonian companies such as Eesti

Energia their global finances, from Estonia for many years.

Since EURO adoption in 2011 Estonia has received growing interest as a location for regional Treasury

centres. Thus far this has focused on operational treasury and is best illustrated by Statoil Fuel &

Retail’s significant investment in an in-house bank and payment factory.

Estonia is also receiving interest as a location for Tax Treasury thanks to a supportive tax system

which includes Corporation tax (21%) payable only on distribution of profit and zero at all other times,

no Capital Gains tax, competitive Withholding taxes and a wide Double Taxation Treaty network. This

should be welcomed if it generates legitimate and sustainable jobs, investment and funds flow but

discouraged if used for aggressive tax planning or arbitrage.

Estonia lacks industry recognition and is best described as an emerging location for Treasury.

Challenges to be addressed include improving the number of people with Treasury skills and ensuring

the local financial markets have adequate liquidity and products.

4.2 Current participants

Shared Services

As at October 2013 the following SSC’s were active in Estonia21:

ESTONIA


23

Table 5 – Estonian SSC’s

Name Type Function Industry Location FTE Invest

Date

Home

Country

Aditro BPO HR Tallinn Finland

AGA Linde Eesti Captive Industrial Tallinn 38 2006 Germany

Anthill Customer Services

(H1 communications)

BPO Customer

service

Tallinn Sweden

Arvato

(Bertlesmann)

BPO Customer

service

Tallinn 280 2006 Germany

Blue Travel Services OU

(SAS)

Captive Customer

service

Travel &

Transportation

Tallinn Sweden

CWT Estonia AS

(Carlson Wagonlit)

Captive Customer

service

Travel &

Transportation

Tallinn France

CV Online

(Alma Media OYJ)

Captive Technology Tallinn Finland

Elion

(Telia Sonera)

Captive Multi-

functional

Telecoms Tallinn 100+ Multiple Sweden

Ericcson Captive Telecoms Tallinn Sweden

EU Captive IT Public sector Tallinn 2012 Multi-lateral

Finnair Captive Multi-

functional

Travel &

Transportation

Tartu 100 2002 +

2012

Finland

Fortum CFS Eesti OU Captive Multi-

functional

Energy Tallinn 160 2003 +

2009

Finland

Fortumo Captive IT Financial

Services

Tartu Estonia

Fujitsu Nordic Shared

Services

Captive Multi-

functional

Technology Tallinn 11 Japan

Itella BPO IT Tallinn 2011 Finland

Hurtigruten Captive Customer

service

Travel &

Transportation

Tallinn Norway

KIT Finance Europe Captive Customer

service

Financial

Services

Tallinn Estonia

Konecranes Captive Finance Manufacturing Tallinn 8

(tgt 30)

2012 Finland

Kuhne & Nagel Captive IT Travel &

Transportation

Tallinn 103 2012 Germany

CGI Logica BPO IT Tallinn Canada

NATO CCD COE Captive IT Public sector Tallinn 2008 Multi-lateral

Nortal BPO IT Tallinn

& Tartu

Estonia

PlayTech Captive IT Technology Tartu 2006 UK

Rieber & Son

(Orkla ASA)

Captive Finance Consumer

(Food manuf)

Tallinn 2012 Norway

Riigi Tugiteenuste Keskuse

(RTK)

Captive Multi-

functional

Public sector Tallinn & Tartu Estonia

ESTONIA


24

Runway International BPO Multi-

functional

Tallinn 40 2003 Norway

Skype

(Microsoft)

Captive IT Technology Tallinn Multiple US

Stora Enso Captive Multi-

functional

Forestry

& Paper

Tallinn Finland

Sunny Business Services BPO Multi-

functional

Tallinn c.30 Estonia

Swedbank Captive Financial

Services

Tallinn Sweden

Symantec Captive IT Technology Tallinn US

TC Partner BPO Customer

service

Tallinn Estonia

Tieto BPO IT Tallinn Finland

Transcom BPO Multi-

functional

Tallinn 300+ 2000 +

2007

Sweden

Deals which are announced but not yet implemented:

Table 6 – Estonian SSC’s Announced But Not Yet Active


Date

Home

Country

Orkla ASA Captive Finance Consumer Tallinn 40 Sept

2013

Norway

Danpower GmbH Captive Customer

Service

Energy Voru 25 Sept

2013

Germany

Note: These lists require further refinement, some names might be removed and some added.

Considering live deals only, this produces a business mix of:

Graph 12 - Estonian Shared Services, By Delivery Model Graph 13 - Location of Estonian Shared Services

31%

69%

BPO

Captive

89%

11%

Tallinn

Tartu

ESTONIA


25

Graph 14 - Estonian Shared Services, By Source Country

Observing the data a number of considerations emerge. Captives dominate over BPO, a favourable

structure given Captives tend to be more sustainable investments for a country and offer better career

options for employees.

Tallinn is the favoured location, which is makes it easier to demonstrate a pool of existing of talent, a

key location criteria, but equally creates labour pool pressures such as churn and wage inflation.

Finally, it is apparent that Nordic countries deliver the majority of investment, Germany has grown

quickly as a source country in recent years and multi-laterals are the largest centres by employees.

Treasury

As at October 2013 the following Treasury centres were active in Estonia21:

Table 7 - Estonian Treasury Centres


Date

Home

Country

Eesti Energia Captive Global Energy Tallinn Estonia

Statoil Fuel & Retail Captive Regional

(Europe)

Energy Tallinn 9+3 2010 +

2012

Norway

Unicredit Captive Domestic Financial

Services

Tallinn 2 Italy

Note: This list requires further refinement. Additional centres exist - Tallink for example – but are not

included until we have validated their case.

Observing the data it is clear that only the largest Estonian companies have the scale or complexity

required to justify a treasury and that foreign investors already had underlying business operations

e.g. existing country exposure.

4.3 Value chain

By Value Chain we mean the HR, Real Estate, Legal, Financial and other advisors who help investors

enter the market.

8

6

6

4

3

2

21

1 1 1

Finland Sweden EstoniaGermany Norway Multi-lateralUS UK CanadaFrance Japan

ESTONIA


26

Value Chain is important as (i) such advisors have the most accurate information on prevailing

conditions and costs of their field; (ii) they influence the investment decision in the assessment and

implementation phases and (iii) they effectively represent the execution capability for FE and EAS.

As at October 2013 Estonia had a small but experienced range of providers21:

Human Resources

Amrop Fontes

Ariko ReServe HR Factory

Arista HRS Juhler Group

CV Keskus Manpower

CVO Simplika PW Partners

Executive LabFE member Recruitment Estonia

Commercial Real Estate

1Office Newsec

Arco Real Estate Petrasol

Baltic Property Expert Pindi Kinnisvara

Colliers International Regus

ERI Real Estate RIME Kinnisvara

Kapitali Grupp Technololis UlemisteFE member

MainorFE member UUS MAA

NAI Baltics Vestman

Ober-Haus

Professional advisors

Advisio (strategy)FE member Lawin (legal)FE member

Business Advisor Leinonen

Essentia Capital (financial)FE member Nordic CF Advisory (financial)FE member

Ernst & Young Baltic AS (multiple)FE member PriceWaterhouseCoopers Eesti (multiple)FE member

Excedea Redgate Capital (financial)FE member

Glimstedt (legal)FE member Superia (financial)FE member

Glikman, Alvin & Partnerid (legal)FE member Raidla Lejins & Norcous (legal)FE member

Grant Thornton Rimess (accountancy)FE member Rodl & Partner

IMG Sorainen (legal)FE member

Keystone Advisors (financial)FE member Varul (legal)FE member

KPMG Estonia (multiple)FE member Vertex

KRM Advisor

Location Selection Advisors

Currently there are no location selection advisors with specific Treasury & Shared Services

knowledge, although firms such as Cormack Consultancy, Equity & Grant, Excedea, Gateway Baltic,

Location Connections and Soft Landing work with investors considering Estonia.

Note: This list requires further refinement, other advisors exist but have not been fully verified.

Moreover a number of advisors such as those listed in Appendix 1 cover Estonia from overseas.

ESTONIA


27

4.4 Independent rankings

Shared Services

Specialist Shared Services and Location Selection Advisors provide country benchmarking studies on a

commissioned basis however these are confidential.

The most referenced publicly available survey is A.T. Kearney’s Global Services Location Index (link),

produced on a bi-annual basis. In the 2011 survey Estonia ranked #11 in the world, up from #18 in

2009, outscoring both key deal sourcing and competitor countries.

Table 8 – Global Services Location Index 201115

Country Rank Financial

attractivess

People skills

& Availability

Business

Environment

Overall

Score

Estonia 11 2.31 0.95 2.24 5.51

Latvia 13 2.56 0.93 1.96 5.46

Lithuania 14 2.48 0.93 2.02 5.43

UK 16 0.91 2.26 2.23 5.41

US 18 0.45 2.88 2.01 5.35

Russia 20 2.48 1.79 1.07 5.34

Poland 24 2.14 1.27 1.81 5.23

Germany 26 0.76 2.17 2.27 5.20

Sweden n/a

Norway n/a

Denmark n/a

Finland n/a

Observing the financial attractiveness factors (40% of total score) it is apparent that labour costs are

higher than immediate competitors while infrastructure and tax are broadly in line. This concurs

with current market feedback.

Table 9 - Global Services Location Index 2011, Financial Attractiveness

Country Rank Compensation

cost

Infrastructure

Cost

Tax &

regulatory cost

Latvia 22 5.32 0.48 0.62

Lithuania 24 5.11 0.50 0.59

Russia 25 5.16 0.48 0.55

Estonia 33 4.69 0.46 0.63

UK 43 1.12 0.37 0.79

Poland 35 4.29 0.39 0.67

Germany 45 0.80 0.40 0.70

US 48 0.54 0.59 n/a

ESTONIA

http://www.atkearney.com/gbpc/global-services-location-index/full-report


28

Observing people factors (30% of total score), Estonia outscores its competitors in education and

language capabilities but underperforms on experience. This contradicts current market feedback

which considers Estonia to have higher quality people but fallen behind on language skills.

Table 10 - Global Services Location Index 2011, People Factors

Country Rank Relevant

experience

Size & avail. of

labour force

Education Language

capabilities

US 1 4.37 2.22 1.34 1.67

UK 4 3.94 0.55 1.39 1.67

Germany 5 3.92 0.58 1.40 1.33

Russia 11 1.82 1.69 1.29 1.18

Poland 23 1.18 0.46 1.39 1.22

Estonia 33 0.40 Nil return 1.43 1.33

Latvia 37 0.53 Nil return 1.14 1.21

Lithuania 38 0.51 Nil return 1.34 1.21

Observing business environment factors (30% of total score), Estonia scores well in all factors but

especially so for country risk and infrastructure. This concurs with current market feedback and other

surveys such as the Global Competitiveness and Ease of Doing Business reports.

Table 11 - Global Services Location Index 2011, Business Environment

Country Rank Country risk Country

infrastructure

Cultural

exposure

Security of

Int. Property

Germany 2 4.62 1.64 0.48 0.81

Estonia 4 4.48 1.62 0.86 0.51

UK 5 4.31 1.64 0.69 0.80

Lithuania 16 4.17 1.43 0.70 0.43

US 17 4.20 1.29 0.39 0.83

Latvia 18 4.17 1.08 0.88 0.40

Poland 24 3.81 0.97 0.70 0.55

Russia 51 2.16 0.99 0.07 0.34

Another study by The Sourcing Line ranked Estonia as #3 Top Outsourcing Country in the world in 2012.

Table 12 – The Sourcing Line, Top Outsourcing Countries16

Country Rank Overall score Cost

competitiveness

Resources

& skills

Business &

economic env.

Estonia 3 6.6 7.5 5.2 6.9

Lithuania 9 5.9 7 3.9 6.5

Poland 16 5.6 6.8 3.6 5.5

Latvia 19 5.4 7 2.7 5.6

Russia 24 5.2 6.4 3.4 4.7

ESTONIA


29

US 35 4.2 1.7 6.9 8.3

Again it can be observed that Estonia is slightly more expensive that it’s immediate competitors but

outscores them on skills and environmental measures.

Finally, Tallinn regularly appears in the top 50 of Tholons Top 100 Outsourcing Destinations report:

Table 13 – Tholons, Top Outsourcing Destinations22

City 2012 2010 2009 2008 2007

Krakow 11 11 4 5 16

Prague 20 22 14 14 20

Budapest 27 27 22 25 28

Brno 31 34 30 29 27

Warsaw 38 38 28 28 26

Bucharest 44 43 34 38 43

Sofia 51 51 40 40 41

Tallinn 52 52 46 46 47

It is important to note that many European rankings have declined as cities in Asia have developed

their offering and capabilities.

Note: Many of these studies are tools to drive research and advisory business thus should be viewed as

just one part of the overall market picture.

Treasury

Accountants and Treasury Consultants occasionally provide benchmarking studies on a commissioned

basis however these are confidential.

Numerous publicly available surveys exist on tax however. In these Estonia generally scores poorly due

to the social tax component. This may deter potential investors in large centres thus it is essential

that Estonia’s country proposition and other advantages of the system such as simplicity, competitive

all-in rate, ability control payment date, etc are understood.

4.5 Current approach

Shared Services

EAS have targeted the Business Services sector for

some years and are recognised by the industry as

the development body for the sector.

Activity levels increased in 2012 with the

appointment of Priit Paesalu who had deep

industry experience, however he subsequently left

in October 2013.

ESTONIA

Tholons22

“Smaller players like Estonia…are seen to face

competition from the region as well as other global

locations…effective identification of unique value

propositions and selling points need for these countries

to spur upward movement in the rankings”


30

In 2013 EAS’s strategy was to exhibit at European, Nordic and East European sector conferences;

network with advisors and react to inbound inquiries. Target clients were corporates looking to

establish Captives of 10-100 FTE. The materials used for this were a PowerPoint presentation,

webpage (link), case studies, Life in Estonia magazine (link) and online listings (link). EAS also work

with existing investors to encourage expansion.

On the environmental side EAS work with existing investors and educational establishments. Positive

co-operation has been achieved with Tallinna Majanduskool (link) and there are plans for a new

project with Tallinna Teeninduskool (link).

EAS are measured on the number of jobs announced by a company when choosing Estonia rather than

the number finally created. The 2013 target has been omitted for confidentiality reasons.

EAS’s rely heavily on the Value Chain and relationships are largely informal.

Majandus ja Kommunikatsiooniministeerium (link) is also active in the sector. Their long-term

commitment is currently unclear, the financial assistance program introduced in 2012 being withdrawn

in 2013.

Other organisations actively promoting the sector include Teenusmajanduse Koda (link) and the Value

Chain advisors.

Whilst the desire to promote the sector can only be encouraged the current approach is disjointed,

resulting in an inconsistent message to the outside world and scarce resources not be maximised. A

single country proposition and co-ordinated approach to marketing and the environment would yield

better results.

Treasury

Treasury thus far has not been a focus sector in Estonia, although numerous accountants are active

providing Tax advice and a small number of technology companies create Treasury software.

4.6 Industry feedback

Over the past 18 months a range of industry participants have provided feedback:

Shared Services

Existing Investor

Konecranes (link) is a Finnish headquartered world leader in the manufacturing and service of lifting

equipment. Annual sales are EUR 2.1bn. In 2012 they opened a finance SSC with 8 FTE’s providing AR,

AP and travel expense management for the European region. Over numerous meetings Konecranes

provided valuable insights on their experience in Estonia:

PWC were used to benchmark possible countries and create a shortlist. In the end it came down to Tallinn

or Budapest. Konecranes felt that as a small centre they would get more staff loyalty and chance to

influence their own destiny in Estonia.

ESTONIA

http://investinestonia.com/en/business-opportunities/business-services#section-financial-shared-services

http://www.investinestonia.com/en/marketing-materials/life-in-estonia

http://outsourcemagazine.co.uk/directory/?query=estonia&by=&p=&page_id

http://www.tmk.edu.ee/

http://www.teeninduskool.ee/

http://www.mkm.ee/

http://teenusmajandus.ee/

http://www.konecranes.com/


31

The in-country location choice and market entry were managed internally with the help of EAS, who did a

good job.

Konecranes were not interested in government financial incentives.

Since going live the centre has not doubled in size as planned. The reason is that subsidiaries have not

migrated to SAP, meaning the centre does not have standard data or processes to work with.

Konecranes believe they can take on more group HR and IT responsibilities over time.

The lack of flexible working options for students, mothers and others is a constraint to the already small

labour pool.

Konecranes feel Estonia has fallen behind in languages and ensuring graduates have practical finance,

business and IT skills. For example, it takes 3mths to train someone in SAP but 3yrs to become literate in a

new language.

Konecranes would like someone to lobby the government to address such environmental weaknesses.

Shared Service Advisor

The Hackett Group (link) is an acknowledged world leader in providing strategic and operational

research, advisory and implementation advice to corporates and governments. Over numerous

meetings The Hackett Group provided valuable insights on the industry and Estonia:

Service centres can be located in totally new environments for a company. This is a big advantage for

Estonia as not many companies of considerable size are present here.

The Baltic’s have a similar skill base as Western Europe but the cost base is lower.

You can go 10% of the distance and gain 90% of the benefits, meaning you then have to go a further 90% of

the distance just to capture the remaining 10% of the benefits. For Nordic companies the Baltic countries

are therefore a very logical choice.

Qualitative criteria are becoming more important and this is good news for Estonia because although

Estonia’s cost level is still low it is already higher than in Latvia and Lithuania.

Cultural aspects are important. Obviously companies that seek a location for their service center would

prefer to deal with people like themselves. In this aspect Estonia is not differentiated from other Baltic

countries as, despite their differences, they are all perceived as Nordic in the Offshoring business.

The legal and regulatory framework is also something that is considered. For Estonia it is not a big issue as

it is a member of the EU, the box is ticked, but it is an important box and one which differentiates Estonia

very strongly from countries such as Belarus and Ukraine.

Accessibility is an important criteria and in terms of the Nordic region Estonia has good connections.

Estonia is maybe not top of the list when a company requires a 500 hundred strong unit that carries out very

standardized tasks. However Estonia is very strong when a smaller and more agile unit is required. If a

company has the need for very versatile activities - like 5 people doing this and 4 people doing that, work

being done in various languages, some during the day and some at night, etc - this is an opportunity for

Estonia as Estonian employees tend to be able to carry out more complex tasks by themselves and not just

to repeat simple routines.

Most of the centers in Estonia are of small to medium size and the Offshoring companies very happy with

such flexibility as a qualitative criteria.

In terms of size it might be difficult to sell the idea of a 1,000 strong unit in Estonia, that is probably easier

elsewhere, Estonia is more about qualitative factors.

Another selling point for Estonia is its e-solutions, everyone is eager to learn how this e-society can save

costs.

Although the Baltic States are different the location benchmarking exercises always produce very close

results thus softer factors and deal management come into play.

All countries lag on matching graduates to the skills required in SSC’s - only 3 universities in Europe teach

GBS as a subject.

BPO firm

ESTONIA

http://www.thehackettgroup.com/


32

UCMS Group (link) provide outsourced Payroll, HR and Accounting Services to multinationals from

centres in Poland, Hungary, Romania, Ukraine, Russia and via local partners in 19 non-core markets.

UCMS have visited Estonia many times to source business and provided the following insights:

Key motivations for BPO are flexibility, time to market, cost, system Capex, expertise and operational risk.

3-4 year lead time on the largest deals.

Don’t see having a large underlying domestic business being a prerequisite for BPO. Regional headquarters

are often a pre-cursor to SSC’s though.

UCMS are unable to find business in Estonia. Small size of payrolls plus flexible labour laws, high automation

and staff productivity limit the inefficiencies they need to generate business.

Polish businesses associate Estonia with IT expertise.

Poland is no.1 in Europe with over 100k people are employed in the SS/BPO sector. The drivers are a lot of

mid-size towns with good universities, cost differentials (even with HU for example) and standard of living

in the best cities.

Competition is high and constantly changing. Poland has faced price competition from Ukraine and Russia so

is starting to focus on quality and value added in fields such as research, finance and IT.

Potential Investor 1

In January 2013 a Finnish construction group and their advisor, PWC, visited Estonia with a view to

establishing a finance SSC. The format of up to 20 people was not conducive however the meeting was

striking for 2 things:

Lack of sales focus by Government agencies. Whilst not unprofessional in itself it was a missed opportunity

to provide compelling reasons backed by senior commitments close to the location decision.

The lack of information about the competition and decision criteria given. This may have been provided

privately but made it hard to understand their requirements let alone align Estonia to these.

Potential Investor 2

In June 2013 a US glass manufacturer visited Estonia with a view to establishing their European finance

SSC. The deal team of 5 senior management provided the following insights:

Shared Services are currently delivered from their European HQ in Switzerland, where they have 37 persons

speaking 10 languages processing 500k transactions per annum. This is too expensive.

They rejected BPO. Although slightly cheaper they want to standardise their data and processes and control

process, quality, data, etc.

Initial requirement is 50 FTE’s covering AR, AP, Master Data Management and Travel & Expenses. This could

expand to 100 FTE over time and possibly include a regional treasury centre.

Business language is English however they have requested language skills for their local markets – UK, FR,

ES, IT, CH, NL DE, CZ, PL, HU and EE – as the AR teams must interact with local partners.

Shortlisted locations are Estonia, Poland (two cities) and Ukraine. They look at advisory firm studies but

primary research is most important.

Concerns about Estonia are labour pool related, especially the availability of FR, ES and IT speakers. If

these cannot be found locally they will relocate staff from CH or recruit from these markets, Romania, etc.

There were very few questions on business environment but they were interested to talk about e-commerce

and the fiscal position. They were unaware of the tax system in Estonia (they have a Topco in NL and rest of

entities registered in CH so EE probably looks expensive to them).

In the end this deal was won by Poland for labour pool reasons.

In this and the previous case both potential investors had existing long-term operations in Estonia.

However as these involved different business cases and people it was dangerous to assume they

ESTONIA ESTONIA

http://www.ucmsgroup.com/


33

understood the country - specific information and messaging is required about Estonia’s Shared

Services proposition.

Lost Deal, Captive

In 2011 Statoil Fuel & Retail (link) announced they would open a SSC in Riga to provide administration

services to subsidiaries in NO, SE, DK, LT, LV, EE, PL and RU. The centre would have 40 FTE at launch

rising to 140 FTE over time.

Estonia was considered and EAS consulted in this decision however it is rumoured Statoil had concerns

about securing the required number of people. Latvia also deployed financial assistance, which

Estonia did not have at that time.

An advisor who worked on the deal provided a slightly different explanation, saying that Estonia was

slightly ahead based on the country benchmarking exercise but that Latvia performed better on the

country visit thus swaying the decision.

Other, Captive

In 2008 Barclays Bank had shortlisted Riga, Vilnius or Kaunas as the location for their IT SSC, with little

difference between them in terms of benchmark data. The Lithuanian government offered financial

assistance which, although small given Barclays scale, was viewed as a positive commitment and

aligning interests. Lithuania also assigned 1 civil servant on a full-time basis to smooth HR, property,

legal and other market entry issues. In the end ’attitude and application’ swayed the decision to

Lithuania.

Academic

Professor Philip Taylor (link) of Strathclyde University is considered an expert in the field, advises

Scottish Enterprise on their SS/BPO strategy and speaks at sector events. Over numerous meetings Phil

provided valuable insights on the industry and Estonia:

Language skills and labour cost are key location criteria. People get too hung up on cost however, you need

to consider productivity and quality, specifically how these relate to the source country.

There is not a linear relationship in savings when you put things in a SS/BPO environment.

Estonia’s size doesn’t preclude success, it is about domain expertise these days.

Larger organisations, are changing their behaviour towards multi-location delivery employing a hybrid of

captive and BPO, especially in Financial Services.

Estonia is small thus needs to develop expertise in 2 or 3 niches. It needs to think clearly about its

attributes, current activities, country competitive advantage and global trends. It also needs to consider

what is sustainable for the investor and country.

Sales narrative needs to be what (i) is country competitive advantage and (ii) sector expertise. Be careful to

be credible and realistic rather than make extravagant claims

Scotland’s strength in call centres took 25yrs to build, although it became easier once critical mass was

achieved.

Treasury

Existing Investor, Captive

Statoil Fuel & Retail (link) is the leading supplier of car, aviation and marine fuel, lubricants and

chemicals in Northern Europe. In 2010 they opened a regional treasury in Tallinn providing liquidity,

funding, risk services to subsidiaries in NO, SE, DK, LT, LV, EE, PL and RU, with an initial investment of

ESTONIA

http://www.statoilfuelretail.com/

http://www.ssoweek.com/SpeakerInfo.aspx?tp_spkid=23634

http://www.statoilfuelretail.com/


34

EUR 280m. In 2012 the centre was expanded with the addition of a payment factory. Over numerous

conversations Statoil Fuel & Retail provided valuable insights on their experience in Estonia:

An analysis of each shortlisted country was done in-house, but with location advisors providing the country

data.

A lot of the data for Estonia was inaccurate or did not paint a true picture.

Estonia was chosen because of SF&R’s large underlying commercial business; the competitive costs relative

to Nordics; flexibility of labour market, including lack of unionisation; EURO adoption; skills and tax.

Poland scored quite well but SF&R only have a small business there.

SF&R managed their own market entry. They had frustrations dealing with HR providers and in the end did

recruitment themselves.

Once live SF&R had a positive experience, infrastructure was stable, they found the people they needed

and interaction with the state was minimal.

Benefits derived include a better relationship with the operating business and lower costs (through

centralisation, automation and reducing external borrowing, payments and hedges).

Most of their service providers remain outside Estonia. Some products are missing and those that exist are

more expensive (lack of competition and because some transactions have to be back-to-backed with the

parent).

SF&R believe a joined up approach is required with education, to create the right skill-sets and employ

students as part-time workers. He believes the current syllabuses in local universities do not create the

right skill-sets for accountancy and finance, albeit the people are intelligent.

SF&R believe Estonia has an opportunity to leverage its EURO membership to attract treasury deals from

the Nordic region.

Note: In some cases the names have been omitted for confidentiality reasons however notes of these

meetings are available on request.

ESTONIA


35

5 Competition

5.1 Competition dynamic

Shared Services

As discussed in Industry scope, Shared Services is a

global industry thus competition can arise from

unlikely sources. For example The Philippines and

Scotland compete to deliver voice services to the

US in English. Estonia with its IT bias faces

increased competition from India and China.

Nonetheless key location criteria such as time, distance and cultural affinity tend to drive

regionalisation. In this regard all The Baltic States, are something of an anomaly, considered ‘Nordic’

within the industry but reported under C.E. Europe (or not at all) due to the historic similarities.

Treasury

C.E. Europe and The Baltic Sea regions are not recognised Treasury centres however many countries

do have active markets and Poland, with its availability of capital, products and a growing skill base,

is winning regional business such as the European portfolio risk management of RBS.

5.2 Central and Eastern Europe overview

Shared Services

C.E. Europe has experienced significant growth

since 2000, accelerating since 2009, due to

external and industry specific factors.

Within the industry there has been increased

demand from W. Europe for skilled but affordable

workers. Simultaneously countries such as Poland,

Hungary, Czech Republic and Lithuania made

Shared Services a strategic sector within their

economy, improving the skills base, business

environment and in some cases offering financial

incentives.

As the countries developed economically and in

terms of sophistication to join the EU so

investment became easier. These countries were

also successful in securing secondary investments.

This trend has been repeated in The Baltic States

since 2005, also accelerating in the past 3 years.

Today, of a global market of 4,900 SSC’s, C.E. Europe has 892 centres or 18% of the total. That makes

it the same size as Asia in terms of numbers of centres, albeit the numbers employed are significantly

smaller. Poland is by far the largest market with 394 centres.

Graph 15 - GBS Migration Eastward4

Graph 16 – SSC’s In CEE4

394

127 117

57 52 40 39 36 30

0

100

200

300

400

COMPETITION

Deloitte10

“Latin America and Eastern Europe have seen a

significant growth in SSCs represented in the survey and

show the greatest interest as locations for new centres”


36

Estonia has 30 centres as per The Hackett Group data, slightly lower than FinanceEstonia’s estimate of

35. This equates to 3.4% market share in C.E. Europe and 0.6% globally.

On a delivery model basis CEE has 62% Captives and 38% BPO, broadly in line with the global average.

Distinct differences can be observed from country to country, such as Slovakia’s bias toward Captives

or Bulgaria’s towards BPO. Based on The Hackett Group data, Estonia has 63% Captive / 37% BPO while

FinanceEstonia data suggests a 69% Captive / 31% BPO mix. This is a favourable mix given Captives

tend to be more sustainable investments for a country and offer better career options for employees.

Graph 17 – CEE Shared Services, By Delivery Model4

Treasury

See above.

5.3 Baltic Sea competitors

Shared Services

Poland

Poland is the largest market in C.E. Europe with over 100,000 FTE in the sector.

The sector has grown steadily since 2004 but doubled in size since 2009 thanks to the government’s

development strategy. This includes country level marketing and an environment strategies, especially

around languages and practical skills in higher education, but forces regions and cities to compete for

deals, including how they apply financial assistance. Poland also has a formal approach to aftercare

and has been successful in securing large secondary investments.

In addition to critical mass the sector also has a powerful members association, the Association of

Business Services Leaders (link) which markets internationally and lobbies the government.

60%

40%

POLAND

Captive

BPO 80%

20%

CZECH REPUBLIC

Captive

BPO 79%

21%

HUNGARY

Captive

BPO

86%

14%

SLOVAKIA

Captive

BPO

54%46%

ROMANIA

Captive

BPO

35%

65%

LITHUANIA

Captive

BPO

18%

82%

LATVIA

Captive

BPO

17%

83%

BULGARIA

Captive

BPO63%

37%

ESTONIA

Captive

BPO

COMPETITION

http://www.absl.pl/home


37

Poland ranks below Estonia in global suveys, #24 versus #11 with AT Kearney, however its scale means

it is often chosen over Estonia for large deals, indeed Poland has many centres of 1,000 FTE and its

largest is 2,500+ FTE.

Poland has recently lost a number of lower order jobs to cheaper locations such as Romania, Bulgaria

Ukraine and Asia thus is trying to re-focus on knowledge and IT based services which are growing and

considered more sustainable. This could increase competition for Estonia.

Lithuania

Lithuania can be considered the leader among the Baltic States having launched its Northern Europe

Service Hub strategy (McKinsey generated) in 2007, the goal of which is that the service sector will

provide 50% of exports and 50% of inbound FDI by 2015.

This is being actively pursued through (i) marketing which includes professional materials and large

presence at sector events; (ii) use of state and EU funds for financial assistance and (iii) active

involvement of senior government officials in closing deals and assigning dedicated civil servants to

smooth market entry. The private sector is also active, establishing a Nordic languages college to help

attract Nordic investors.

Lithuania’s country proposition is based around an Educated and Competitive Talent Pool, World Class

ICT Infrastructure, Business-Friendly Environment and Modern and affordable office space. Labour

costs are c.20% cheaper than Estonia.

Lithuania has been especially successful in attracting financial services deals and counts Barclays

(1000+ FTE), Western Union (1000 FTE), Danske bank, SEB bank, Storebrand and Swedbank among its

success.

Lithuania ranks below Estonia in global suveys, #14 versus #11 with AT Kearney, however is more

successful due to first mover advantage and a focused approach. Going forward we can expect this to

continue on a country level however recent feedback suggests the labour pool is close to exhausted

for Financial Services staff.

Latvia

Latvia has lagged Lithuania and Estonia in focusing on the sector but ranks relatively highly at #13

with AT Kearney and has won a number of recent deals, especially in the IT and Customer Service

functions. Labour costs are c.15% cheaper than Estonia.

Competition can be expected to increase as the government has hired advisors to develop a sector

strategy and the development agency is more active in offering financial assistance and marketing

(link).

Treasury

See above.

COMPETITION

http://www.investlithuania.com/en/why-invest/talent-pool

http://www.investlithuania.com/en/why-invest/infrastructure

http://www.investlithuania.com/en/why-invest/infrastructure

http://www.investlithuania.com/en/why-invest/business-friendly

http://www.investlithuania.com/en/sectors/shared-services-and-bpo#office space

http://www.noa.co.uk/event/trade-misson-to-latvia/


38

6 SWOT

6.1 SWOT, Shared Services

Estonia can be said to exhibit the following:

Table 14 – SWOT, Shared Services

Strengths Weaknesses

s1. Cost competitiveness relative to W. Europe,

Nordic and other regions

s2. Existing pool of talent, especially Finance and IT

s3. Higher labour productivity and quality than

competitors

s4. Simple, business friendly environment with little

government red tape or unionisation

s5. E-commerce adoption creates efficiencies

s6. Established track record of new and secondary investments

s7. High independent rankings

s8. Perceived within the industry as Nordic,

efficient and able to multi-task

w1. Lack of sector strategy on a country level

w2. Inconsistent approach to marketing and

environment

w3. Small labour pool

w4. More expensive than immediate competitors

w5. Falling behind on language (except Finnish) and

practical business skills

w6. Very few Financial Service firms using model

in Estonia

w7. Resource constraints on a country and

organisational level

Threats Opportunites

t1. Competitors proactivity and use of financial

incentives

t2. Price pressure from cheaper countries to East

t3. Wage inflation and labour churn in Tallinn

t4. Lack of joined up approach between EAS and FE

confuses the external market

t5. Long sales cycle with mismatch between costs

and benefits

o1. Demand for Shared Services is increasing,

especially from W. Europe

o2. Russia is predominantly serviced by SSC’s outside

the countrydd

o3. Focus on higher value (paying) jobs

o4. Attract IT shared services based on skillset,

jurisdiction and infrastructure

o5. Flexible working to make it easier for students and

mothers to participate in labour force

o6. Retrain public sector workers into private sector

o7. Develop a proper country strategy, including

locations outside Tallinn

o8. Collaborate with LT and LV on large deals

SWOT


39

6.2 SWOT, Treasury

Estonia can be said to exhibit the following:

Table 15 – SWOT, Treasury

Strengths Weaknesses

s1. Low country risk

s2. Simple, business friendly environment with little

red tape

s3. Simple tax rules, accounting and administration

s4. Tax payable only on distribution incentivises long-

term capital planning

s5. EURO membership makes it feasible base for many

companies

s6. Cost competitiveness relative to other regions

s7. Open to capital and trade flows

w1. Lack of talent pool with industry expertise

w2. Lack of track record

w3. Lack of name recognition within industry

w4. Falling behind on Double Taxation Treaties

w5. 21% tax on distribution is high compared to

other Treasury locations

w6. Underdeveloped financial markets leads to high

transaction costs or business going overseas

Threats Opportunites

t1. Financial Transaction Tax sends wrong message

t2. Aggressive tax planners create reputational risk

t3. Latvia adopting EURO removes Estonia’s

uniqueness among the Baltic States

t4. Finding deals and long sales cycle

o1. Demand for Treasury is increasing

o2. Create enabling legislation for legitimate treasury

operations and funds

o3. Get Treasury on the university curriculum

o4. Joint ventures with Treasury industry bodies

o5. Target locations such as Ireland and Channel

Islands where increased costs, tax or regulations are

impacting

o6. Seek to become regional Treasury centre for North

Eastern Europe.

SWOT


40

7 Findings & Recommendations

7.1 Findings

Chapter 1 – Industry Definition

The functions most commonly placed into the Shared Services model are Finance, HR and IT. Supply

Chain is growing fast. Client Service tends to be cyclical.

The functions most commonly performed in Treasury are the management of funding and capital,

risk and day-to-day liquidity. Tax, Pensions and Investor relations may also be included.

Small and large organisations are the biggest users of Shared Services. Large organisations are the

heaviest users of Treasury.

The Financial Services industry has and continues to be a heavy user of the Shared Services model.

Cost efficiency, effective performance and developing capabilities are the primary motivations for

Shared Services. Treasury is motivated by control rather than cost.

Chapter 2 – Industry Scope

The outlook for Shared Services is positive. Organisations are under pressure to reduce costs,

improve effectiveness and client service while developments in IT and industry maturity make the

model more accessible and valued.

The outlook for Treasury is attractive as organisations seek greater control of their finances,

maximise assets and reduce losses and volatility arising from liabilities.

Competition is high on a global and local basis however the C.E. Europe and Baltic Sea regions are

highly favoured.

The key trends in Shared Services are favourable for Estonia – bias towards IT, model more

accessible to small and mid-sized organisations, less need for large underlying operations, driven by

effectiveness rather than cost, etc.

The outlook for Treasury is also positive albeit the industry develops at a slow pace.

Chapter 3 – Industry Scope

Organisation’s adopting Shared Services derive most benefits immediately, meaning the great care

is taken in scoping and implementing. The investment cycle is thus long.

If an organisation is comfortable with a location it encourages secondary investment.

For a country 80% of the task is in the initial attraction, creating a mismatch between when

resources are expended and benefits flow and a need for aftercare to capture the full opportunity.

Investment agencies may only get involved relatively late in the deal cycle, reducing influence.

Shared Services and Location Selection Advisors assist organisations with benchmarking, choosing

and entering a new country for deals of 50+ FTE.

Cost efficiency, labour force and business environment are key criteria in Shared Services location

decisions. The final decision is always based on non-financial factors.

Skills, taxation, country risk and regulations are key criteria in Treasury. Currency and capital

markets are important but secondary.

Financial incentives are rarely a decision criteria or basis for sustainable investments. Commitment

and aligned interests can be demonstrated by environmental competitiveness and government

involvement.

Chapter 4 – Estonia

Estonia has an established track record in Shared Services as demonstrated by a track record of

successful deals and high independent rankings.

Estonia enjoys industry recognition and is perceived Nordic, flexible, efficient and skilled at

Finance and IT. The industry is signalling that some changes would be beneficial.

FINDINGS & RECOMMENDATIONS


41

Estonia offers significant cost savings over source countries but is more expensive than

competitors. Nonetheless it ranks as world class when effectiveness factors such as labour

skills, productivity, low red tape and country risk are included.

Estonia has more Captives that BPO, which is positive given they are a more sustainable

investment. Tallinn is the leading centre. The majority of deals are in Finance and IT and

sourced from Nordic and Germany corporates.

Challenges include improving language and business skills and up-tiering to higher value (paid) jobs.

Estonia is best described as an emerging location for Treasury. Only the largest Estonian companies

have the scale or complexity required to justify a treasury and the environment is mixed for foreign

investors, who usually require existing operations to understand the potential.

Chapter 5 – Competition

Estonia enjoys the highest scores in Shared Services rankings and Global Competitiveness and Ease

of Doing Business reports.

Estonia is the most expensive in cost terms but country benchmarking exercises are very close on

an overall basis, to the extent foreign multinationals are often swayed by softer factors.

Lithuania captures more and bigger deals, especially in the Financial Services sector, due to a long-

term strategy underpinned by strong marketing, financial assistance and involvement of senior

government officials in closing deals.

Competition from Latvia and Poland can be expected to increase albeit demand in the region

should continue to be strong if not outstrip supply (as perhaps already for IT in Estonia).

The C.E. Europe and Baltic Sea regions are not recognised Treasury centres however

Poland is winning regional business.

Chapter 6 – SWOT

There are no major impediments in Estonia’s environment to preventing it being successful in the

Treasury and Shared Services sectors.

The demand outlook is positive however a more structured and targeted approach is required to

capture the opportunity.

7.2 Recommendations

1. Estonia to remain committed to the Shared Services sector but adopt a more focused and strategic

approach.

2. Estonia to implement a single country proposition based on its track record, quality and

effectiveness across all industry stakeholders.

3. Country proposition to be communicated in a clear and consistent manner to target clients and

advisors. Refer to the 2014 Marketing Strategy for recommendations.

4. Higher value (paid) jobs to be targeted.

5. Captives should be preferred but BPO not ignored.

6. Weaknesses in Estonia’s environment to be addressed by ensuring graduates and workers have the

appropriate business and language skills, and that part-time and temporary workers have access to

the labour pool.



42

7. Based on the favourable outlook for Treasury & Shared Services, increased usage by Financial

Services firms and spill-over benefits, FE should continue to target the sector.

8. In order to avoid confusing the external market, maximise scarce resources and leverage

complimentary skills, FE and EAS should adopt a joint approach as far as possible.

9. FE should use the Value Chain as its execution capability. Members should be referred first given

they are trusted counterparties.

10. Further work is required to develop a country Treasury proposition. Until then the industry should

be approached opportunistically.



43

Appendix 1, Key Advisors and Media

Table 16 – Key Shared Services Advisors

Company Location

ACCA London, Warsaw and Kiev

Accenture London and Paris

Alsbridge London

AT Kearney Berlin

Bain & Co

BMGI Warsaw

Boston Consulting Group

Buck Consultants International Nijmegen

Chazey Partners Dublin and Amsterdam

Deloitte Brussels, Paris and London

Everest Group Mumbai

EY London

Gartner Group London

Goal Europe Frankfurt

HFS Research Boston

Information Services Group

KPMG Equaterra Multiple

Lean Horizons Conneticut

McKinsey & Co

National Outsourcing Association London

Organisational Edge Reading

Pierre Audoin Consultants Munich

PWC Multiple

Sourcing Change Washington

Tata Consultancy Services London, Copenhagen and Stockholm

The Hackett Group London and Frankfurt

The Sourcing Line New York

Tholons London

Table 17 – Key Shared Services Websites

Company Link

Horses for Sources (HfS) www.horsesforsources.com

IT Outsourcing www.itonews.eu

Outsource Magazine www.outsourcemagazine.co.uk

Outsource Portfolio www.outsourceportfolio.com

Outsourcing and More www.outsourcingandmore.pl

Professional Outsourcing Magazine www.professionaloutsourcingmagazine.net

Shared Services Link www.sharedserviceslink.com

SSO Network www.ssonetwork.com

= met

APPENDIX 1

http://www.horsesforsources.com/

http://www.itonews.eu/

http://www.outsourcemagazine.co.uk/

http://www.outsourceportfolio.com/

http://www.outsourcingandmore.pl/

http://www.professionaloutsourcingmagazine.net/

http://www.sharedserviceslink.com/

http://www.ssonetwork.com/


44

Table 18 – Key Treasury Advisors

Company Location

ABG Sundal Collier Oslo

AFME Finance for Europe London

Association of Chief Financial Officers Germany (GEFIU) Frankfurt

Association of Corporate Treasurers UK (ACT) London

Association of Finance Professionals (N. America) Bethesda

Canaccord Genuity London

Capitad Haarlem

Chartered Banker Institute (UK) Edinburgh

Chown Dewhurst LLC London

European Association of Corporate Treasurers (EACT) Paris

Exidio Helsinki

Finnish Association of Corporate Treasurers (FACT) Helsinki

Independent Debt Capital Markets London

Interest & Currency Consultants B.V. Utrecht

KH Treasury Solutions Oy Espoo

KPMG London

Nasarius Copenhagen, Oslo

Operandi OY Helsinki

Opus Capita Tampere

PWC London

Schwabe, Ley & Greiner Gesellschaft Vienna

Swedish Association for Corporate Treasurers (SACT) Stockholm

TradeTech Stockholm

Treasuris London

TreSol Espoo

Verband Deutscher Treasurer (VDT) Frankfurt

Table 19 – Key Treasury Websites

Company Link

GT News www.gtnews.com

International Treasurer www.neugroup.com

The Corporate Treasurer www.thecorporatetreasurer.com

Treasury & Risk www.treasuryandrisk.com

Treasury Management International www.treasury-management.com

Treasury Today www.treasurytoday.com

= met

APPENDIX 1

http://www.gtnews.com/

http://www.neugroup.com/

http://www.thecorporatetreasurer.com/

http://www.treasuryandrisk.com/

http://www.treasury-management.com/

http://www.treasurytoday.com/


45

Sources

1. Deloitte, Global Shared Services study, 2011

2. Accenture, Trends in Shared Services, 2011

3. PWC and HfS Research, The Future of GBS, 2012

4. The Hackett Group, FinanceEstonia forum, June 2013

5. ACCA and HfS, Finance Leaders on Sourcing Success, 2012

6. KPMG, Global Pulse, 2013

7. HfS and PWC, Evolution of Global Business Services, 2011

8. ACCA, Finance Leaders on Sourcing Success, 2012

9. Deloitte, Global Shared Service Survey, 2013

10. Deloitte, State of the Outsourcing Industry, 2013

11. PWC, Shared Services Centres - The Second Generation, 2011

12. Deloitte, Global Outsourcing and Insourcing Survey, 2012

13. HfS Research, What’s next in GBS, 2013

14. KPMG Poland, 2013

15. AT Kearney, Global Services Location study, 2011

16. The Sourcing Line, 2013

17. EY, Implementing A Regional Treasury Centre, 2002

18. Association of Corporate Treasurers (UK), The Treasurer, 2011

19. FTI Treasury, 2009

20. Polack, Location Criteria for Regional Treasury, 2009

21. FinanceEstonia data, 2013

22. Tholons, Top 100 Outsourcing Destinations, 2012

23. Information Services Group, Captive v BPO Outsourcing, 2011

SOURCES


46

List of Tables & Graphs

Graph 1 Industry Positioning page 7

Graph 2 Key Functions In Treasury & Shared Services page 7

Graph 3 Journey From Shared Services To GBS page 8

Graph 4 Shared Services, Demand by Industry page 9

Graph 5 Shared Services Life Cycle page 11

Graph 6 Global Shared Services, By Delivery Model page 13

Graph 7 Shared Services Future Offshoring page 14

Graph 8 Location Of SSC’s page 14

Graph 9 Top BPO markets (No of Centres) page 15

Graph 10 Top Captive markets (No of Centres) page 15

Graph 11 Investment Decision Process page 17

Graph 12 Estonian Shared Services, By Delivery Model page 24

Graph 13 Location of Estonian Shared Services page 24

Graph 14 Estonian Shared Services, By Source Country page 25

Graph 15 GBS Migration Eastward page 35

Graph 16 SSC’s in CEE page 35

Graph 17 CEE Shared Services, By Delivery Model page 36

Table 1 Functions Placed In Shared Services Model page 8

Table 2 Motivations For Adopting The Shared Services Model page 9

Table 3 Key Location Criteria, Shared Services page 18

Table 4 Key Location Criteria, Treasury page 20

Table 5 Estonian SSC’s page 23

Table 6 Estonian SSC’s Announced But Not Yet Active page 24

Table 7 Estonian Treasury Centres page 24

Table 8 Global Services Location Index 2011 page 27

Table 9 Global Services Location Index 2011, Financial Attractiveness page 27

Table 10 Global Services Location Index 2011, People Factors page 28

Table 11 Global Services Location Index 2011, Business Environment page 28

Table 12 The Sourcing Line, Top Outsourcing Countries page 28

Table 13 Tholons, Top Outsourcing Destinations page 29

Table 14 SWOT, Shared Services page 38

Table 15 SWOT, Treasury page 39

Table 16 Key Shared Services Advisors page 43

Table 17 Key Shared Services Websites page 43

Table 18 Key Treasury Advisors page 44

Table 19 Key Treasury Websites page 44

LIST OF TABLES & GRAPHS


47

Acknowledgements

Thanks to PP, MH, KO and many more too numerous to mention.

ACKNOWLEDGEMENTS

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