We interviewed István Lenk on the effects of the pandemic
HOA Newsletter: In the last year and a half, the pandemic has turned the world upside down and the Business Services Sector has been no exception. What challenges did the pandemic pose to the industry and how did you overcome them?
István Lenk: The most important thing that has happened in the last 1-1.5 years is that in the new situation created by the pandemic, companies have had to reorganise their operations according to new models.
The larger multinationals, SSCs, BPOs were able to do this quite easily because of the relatively high level of digitisation they had achieved up to that point. It was noticeable that the majority had adopted a similar approach and were able to react quickly to the sudden change.
The first aspect that everyone prioritised was the protection of people: "people, health and safety" became the watchword. It can be said that in the home office, in an isolated environment, the protection of people's health was successfully achieved, and this provided a very good basis. Of course, it was also a huge challenge for managers, who had to manage teams in a remote environment, with most of them having some home office experience, and now having to make a complete shift to remote working.
In the remote environment, BCP, Business Continuity Plan, proved to be the biggest challenge. In addition, it was essential to maintain and, where possible, increase performance and productivity. Of course, these areas are still very important for companies today, as the economy and business go back to similar levels in many cases as before the pandemic. There have been some companies that have seen productivity increase, but the big question is how much long-term isolation has affected performance along with psychological factors.
Remote people management has emerged as a new area of focus in the wake of the COVID-19 epidemic: managers, frontline leaders, face the challenge of effectively leading a team in a hybrid and remote environment. There are many challenges to be met: focus on effective communication, team cohesion, increasing attention to the physical and mental health of employees, and last but not least, the work-life balance.
HOA Newsletter: As the pandemic progresses, another issue has come up, the return to the office. What is the state of play on this, how is the return shaping up? Do workers want it and do employers want it as well? What new solutions are emerging in the practice of centres?
István Lenk: As the pandemic progressed, as caseloads decreased and things began to stabilise, it became obvious that we should be looking more and more intensively at what the return to the office would look like. That is different company by company, and the business. The way in which the new norm is adapted, the way in which workers are expected to return, depends very much on the practices that companies had in place before the epidemic, and the extent to which the 'flexi-work solution' was already working for them.
Typically, companies that did not have a home office practice before Covid are now, once conditions have stabilised, usually going to a 2–3-day home office, and are also using different part-time solutions, or remote working. Location and physical proximity are no longer an issue, as employees can easily do the job from a rural location. This can also work in a hybrid way in the new environment.
One of the most striking changes we are witnessing is the complete transformation of the office function: according to the new norm, offices are becoming the main venues for socialisation, training and onboarding, where teams can meet, or where new staff arrive for their onboarding.
However, there are also companies where, because of the interdependence of the different teams' processes and tasks, it is essential that teams meet regularly in an environment defined by business function – e.g. those that are working close and as part of the supply chain. Therefore, the future must be a company-specific hybrid model that serves the business needs, which can both serve the company's business perfectly and make use of the different recruitment opportunities in a much more open and flexible way than ever before. In parallel with these changes, opportunities are becoming available in the labour market that make it possible to attract staff from more remote, rural locations and thus to tap into a wider talent pool. Of course, in addition to attraction, retention is a new challenge for the company due to the remote environment.
HOA Newsletter: Let us now turn to Hungary. Where are we in the region now in terms of capacity, competitiveness, what can we do to be even more on the map for investors?
István Lenk: It is clear that we have got a boost from the shift towards nearshoring. The attractiveness of the environment for nearshore investors depends on the cost-quality balance, in other words the value for money of the activities. Investors are looking at many factors at once, but typically the most important aspect is where can we have a good operation, where is it possible to work remotely? These generally work well in the CEE region, unlike in India, for example, where the widespread implementation of home offices is virtually impossible.
Apart from the cost factor, other important elements in the investor decision include support for the sector, proximity (where difficult to travel in case of pandemic travel restrictions), the legal environment and government subsidies - these are the things that motivate investors. Budapest is an attractive environment for companies, but the country as a whole has much greater potential. So far, the big cities in the provinces remain untapped. While some of the conditions for successful centres, such as high-quality education, skilled labour, language skills and infrastructure are clearly present, awareness, visibility and readiness to manage centres in potential provincial locations are not yet fully recognised there.
This is why the HOA has set itself the goal of supporting the development of provincial towns and cities. By bringing together local governments, universities and industry players, a large city can become a more attractive destination.
For development, strong sector awareness and sector presence are needed, and for this the attractive operating model of Budapest is not enough. We need to get to the point where we can provide more investment options for investors, necessarily in places where the talent from universities in the region is available, because Hungary has a relative advantage in terms of a strong undergraduate education with a high volume of students. The HOA is making a major effort to enhance rural locations and help create a more attractive investment environment. The Municipality of Pécs and the HOA have recently signed a strategic agreement to help achieve these goals, and we are launching similar initiatives in several other large cities.
HOA Newsletter: What other activities and initiatives does the HOA undertake to serve the sector and the effective operation of its member companies?
István Lenk: The HOA, as the professional organisation representing the Business Services Sector, provides a platform and networking opportunity, which is in fact best practice sharing, and can also help existing and potential new members on the international scene.
This could be the basis for a sector awareness and sector representation to foreign investors and to the government.
And finally, let us highlight a very important initiative that the HOA is developing and implementing in a hands-on way in the provincial context: the HOA Leadership Academy, which will integrate with universities to access the provinces, and thus increase competitiveness. As part of this, a postgraduate leadership training programme is already underway with the University of Pécs, where senior practitioners with extensive experience in the sector will provide a gap-filling, practical knowledge transfer for future leaders.