© Helvetas

Ready for Takeoff? This is How the COVID-19 Crisis has Triggered More Opportunities

FROM: Selma Begović – 14. June 2020
© Helvetas

With the unfolding COVID-19 crisis, countries like India and the Philippines, which have been the titans and hubs for the Business Process Outsourcing (BPO) sector, were hard hit. Clients disallowed transfer to work-from-home model; employees in the BPO sector were also unable to commute to work due to the lockdowns. Comparatively, countries such as Bosnia & Herzegovina have become a ‘nearshoring Mecca’ because of their proximity to major clients like Western Europe. Besides, a multilingual talent pool for communicating with clients in a similar time zone (mainly German, English, and Dutch), good quality of internet available across the country, as well as recent investments in the sector have provided an opportunity to transform the sector by adopting and strengthening new models, such as work-from-home arrangements.  

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The COVID-19 crisis has shed a special light on the BPO sector. The sector is about providing internal business functions such as human resources or finance and accounting, and front office outsourcing, like customer-related services such as call centers. When the crisis hit, clients had to make rapid decisions on highly important and sensitive topics such as security, data privacy as well as service obligations.

Globally, the sector has faced two critical choices due to the COVID-19 crisis: either to check the contract with clients, call ‘force majeure’, and simply try to minimize any short-term losses, or to move from an on-premise delivery model to a work-at-home model (telecommuting). In Bosnia & Herzegovina, the focus has been on improving the practices that will transform the market incrementally or substantially, thus supporting the growth in the long-run. Many BPOs companies counting over 300 employees were able to retain and even grow their labor force which seems quite miraculous.

The adaptation to the crisis in Bosnia & Herzegovina was possible thanks to the facilitation by the MarketMakers project of the Swiss Agency for Development and Cooperation (SDC). The project, implemented by Helvetas and Kolektiv, has invested in the sector by supporting key partners. It has also worked towards policy change which is still an ongoing process.

Oftentimes, government, non-government and development players in the country focused on developing traditional industries such as wood, metal, and agriculture. The MarketMakers project was the first development initiative in Bosnia & Herzegovina to recognize the potential of the BPO sector in 2013 for creating employment opportunities for young people. Now many other development initiatives are working in the BPO sector. While the IT portion of the BPO sector was recognized and embraced a lot earlier, other sub-sectors of BPO such as shared service centers, customer support centers, and back-office outsourcing only gained proper recognition in the past one to two years.

When a crisis becomes an opportunity

Most Asian countries were fighting the raging COVID-19 epidemic and imposed lockdowns in January and February, while the virus only gained a footing in Europe in March and April after which lockdowns were imposed. During the beginning of 2020, most of MarketMakers’ partners reported that their biggest clients were asking them to take on larger portions of the outsourcing business since their main destinations in Asia are under lockdowns and are unable to adapt fast enough. While the COVID-19 crisis spread quickly to Europe in a similar way to Asia, this time lag allowed Europe (Bosnia & Herzegovina included) to prepare and adapt to continue functioning during the crisis.

Bosnia & Herzegovina cannot compete with popular Asian outsourcing destinations (i.e. India, Philippines, Vietnam, etc.) when it comes to price (most directly tied to the cost of labor); however, other qualities can win over companies looking to outsource. Key unique selling points for Bosnia & Herzegovina are geographical location, near-native language capabilities of the labor force (mainly German, English, and Dutch), and familiarity with cultural traits of EU countries.

A lot of these qualities can be attributed to the vast number of refugees that were accepted by western countries during the war in the 1990s, and the remaining family ties with generations of Bosnia & Herzegovina nationals living abroad. The labor force, linguistically so sophisticated that it is hard to differentiate from native speakers, was one of the first determining factors for attracting large BPO names to the country. 

Also, the geographical proximity to the EU (which is where most of Bosnia & Herzegovina’s outsourcing clients are based) allowed to experience the stages of COVID-19 crisis at the same time and same pace as the EU countries which was also an important factor in servicing clients at a challenging time. Furthermore, Bosnia & Herzegovina’s BPO companies showed resilience and a surprising level of adaptability that was simply not possible for Asian countries at the time. Another important factor that determined adaptability was the quality of the internet available across all regions of the country which enabled local companies to quickly adapt to remote work. This was crucial for the continuation of service offerings during lockdowns.

All of the above factors combined produced an unexpected silver lining, enabling Bosnia & Herzegovina to finally gain the spotlight (at least for large existing clients that faced problems in their other outsourcing locations) and provided for increased demand for outsourcing in the country. MarketMakers’ partners have reported both increases in business from current foreign clients and an increase in the number of new foreign clients, mainly focused on digital industries.

Our role

As a job creation project, MarketMakers has faced a great challenge of maintaining its mandate during the crisis and economic contractions, both globally and locally. When it comes to the BPO sector, we were able to recognize the need for adaptability to continue functioning during the COVID-19 crisis. Thus, we decided to support our existing partners in their efforts to adapt and continue their operations, as well as facilitated the transformative and innovative practices proposed by the sector players.

What did we do and how?

We were able to act quickly in supporting key BPO providers in their efforts to continue and expand their operations through work-from-home arrangements. It was particularly interesting to hear that BPO providers in Bosnia & Herzegovina are not only continuing their operations but are given even more business by their clients. Generally, during more stable market conditions, BPO providers in Bosnia & Herzegovina compete to gain and retain quality labor force as they are mostly concentrated in the biggest cities in the country, thus all sharing the same pool of potential employees.

By increasingly integrating work-from-home arrangements into their business operations, BPO companies were able to reach a much larger pool of potential employees in rural areas as well, which, in turn, has provided stable grounds for BPO companies to consider offering this type of arrangement in the long term. We were able to target the BPO companies that recognized the potential advantages of offering work-from-home arrangements in the long-term, thus ensuring new and sustainable employment opportunities for those in rural areas of the country as well.

Expanding their employee base through work-from-home offerings has offset the negative effects that the COVID-19 crisis has created for the tourism and hospitality industry. The tourism and hospitality industry in Bosnia & Herzegovina is highly reliant on foreign tourist inflow, thus the labor force in this sector is typically equipped with quality foreign language skills. As the COVID-19 crisis has and will have some of the most deteriorating effects on this industry, the BPO industry is able to offset some of those job losses with new opportunities.

One of our partners, GoCloud Solutions, operates almost exclusively through work-from-home arrangements. We were able to learn from them about the advantages of this model during the crisis. ‘The advantages for the BPO company are primarily that the pool of associates is practically unlimited,’ says GoCloud Solutions. An example is a possibility of finding easily specific profiles of associates. However, the virtual business model brings more benefits to the client. ‘Our peak performance, our flexibility, and our scalability are unbeatable. No stationary company can copy that,’ adds GoCloud Solutions.

In conversations with GoCloud, we also learned about the agility and scalability of this model. Fast ramp-up is a trademark for scalability. Based on GoCloud’s virtuality, location independence, e-training, and short decision-making processes, the company was able to set up a quality team for any task in the shortest possible time. All of these factors will play a significant role in the transformation of the local BPO industry to a more adaptable, agile, and scalable environment, which positively will attract even more business and investment into Bosnia & Herzegovina.

We have also partnered with ABSL (Association Business Service Leaders) and supported their efforts in opening a first ABSL Western Balkan ABSL branch in Bosnia & Herzegovina. One of the key goals of ABSL is to present B&H as a well-rounded outsourcing destination that can compete with other outsourcing destinations in Europe and beyond.

Conclusion

Bosnia & Herzegovina is no longer the ‘new kid on the block’ when it comes to the BPO sector. Companies have increasingly accepted, adapted, and embraced change, especially in new ways of doing business. Such a change is often one of the most difficult things to implement in any setting, and extensive change management is required.

The COVID-19 crisis, as tragic as it was, could have been a push that local markets needed to quickly accept new ways of doing business, such as remote work, which have and will bring numerous benefits and opportunities. In times of hardship, finding silver linings is key to keep pushing forward and tailoring creative ways that may result in transformational changes.

Instead of simply subsidizing the preservation of existing or creation of new jobs to amortize the most tangible effects of the crisis in the short run, the MarketMakers project has contributed to improving the practices that will transform the market incrementally or substantially, thus supporting the growth in the long-run and creating more employment opportunities.

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Selma Begović is the Business Process Outsourcing (BPO) Sector Leader at the MarketMakers project in Bosnia and Herzegovina (BiH). She is working with both private and public sector on developing inclusive and innovative solutions to market challenges within the BPO industry in B&H. Her experience comes from working for several international companies in Europe and the USA, holding business development and managerial positions. With fresh experience with new business models and innovation from the private sector multinationals, she is passionately working on developing inclusive systems private sector growth and job creation in Bosnia and Herzegovina.