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The last two years have been largely affected by the pandemic, forcing companies to adapt both their internal processes and the services provided to their clients. On the other hand, the process of digitization and automation has rapidly accelerated, and this trend will continue in the near future. We asked Peter Pašek, the Managing Director & Partner of our Slovak branch, about the changes that can be expected in 2022 in the field of outsourcing and consulting.
The process of digitization, automation, and the growing involvement of AI in all areas of decision-making in this field will certainly continue. However, I personally think that beyond the already started process, there will be a gradual breakthrough, when consulting companies will stop providing consulting as a service, but rather as ready-made partial or fully comprehensive solutions that clients will be able to use by themselves for a fee.
It is understandable that during these times of acceleration, clients do not have the capacity or desire to spend financial resources to analyse their problems and find recommendations for their solution. Rather, they prefer an approach where the consultant has a ready-made solution for their current problems and which they can implement as quickly as possible.
We are living in the times of high inflation and it is questionable whether it will change soon. On the other hand, a lot of clients are going through difficult periods, so they often have limited budgets for consulting or BPO services. This, of course, puts pressure on their providers in the form of rising costs with limited price increases for their services.
The only way is to innovate, which allows the better scaling of services provided. Therefore, solutions are gradually being deployed, where the client gets more for the same money, respectively the same services for less money. Without innovation, it would always be at the expense of reducing margins – losses, which on the long run is impossible to cope with, especially for BPO providers.
I do not think they always have to be inspired by someone else at all costs, even though using things that are already well-established and working for other companies is convenient and may come in handy. I rather think that the company can look for inspiration among the people who work or used to work for the company. It is important not to accept the “status quo”, i.e. to be satisfied with what the company has achieved.
The competitive environment is tough and at the same time everything around us is constantly changing. Some business models have been erased overnight. Just looking at the delivery services, which have experienced an unreal boom in Slovakia in the last year thanks to COVID-19 and the behaviour of people in Slovakia changed within a few months. And there are many cases such as this.
Rather, it is important to constantly adapt and try to come to the market with something new that would simply change people’s behaviour. That is the key, I think. Sometimes that change of behaviour comes immediately, sometimes it takes years. We launched OCR (Optical Character Recognition) solutions for invoicing in 2008. It has been almost 14 years now, and it is currently a much-discussed topic. At that time, we were already trying to persuade suppliers and clients to switch from paper documents to at least PDF format.
Years ago, our development team researched how to extract data according to the transparency and colour of the paper, i.e. something that current solutions do not even have to solve much, therefore if so, they will find that there can be a rather complicated solution.
However, those 15 years were worth it, as our experienced systems can not only extract data, but also design a pre-account, depending on the client. This is a huge step forward when the system knows, e.g. recognizes that the invoice from the soft drink supplier is charged as inventory at the service station network, and more of a representative cost at the software company.
Personally, I am therefore pleased to see the valuations of start-ups trying to solve similar problems thanks to their raising capital. We entered this market at a time when investors did not trust it yet, but the current situation shows that we have done well, mainly because we have remained in our endeavour until now.
In the last two years, we have introduced a number of new services such as start-up consulting, new HR outsourcing services and we have become a temporary employment agency. I believe that there will be more of them every year, including 2022. We are currently preparing the launch of two new services and solutions: the Accace EWA and Optiomat.com.
The first project, EWA (earned or early wage access), focuses mainly on our clients’ employees. Its mission is to be able to request an advance payment from wages at any time during the month and to receive it immediately. On the other hand, everything has to “run” without their employer having any administrative burden. That is why we have adapted our online portal TULIP, in which employees can access their payslips, manage attendance or apply for benefits. We are working on the development of additional functionality, where by a single click this deposit can be paid by our company. This amount will be then credited to their salary after the end of the relevant month in the pay period.
However, it must be admitted that it is very capital intensive. We are still located in Slovakia, in the so-called “market fit” phase and we are currently able to refinance around 3,000 down payment requests per month. Nonetheless, we currently have over 20,000 users in Slovakia alone, so capital intensity is likely to increase. Not to mention about deploying the solution abroad.
It should be noted that even with an average advance of around EUR 400, we are already talking about tied-up capital with the already mentioned 3,000 requests from us in the amount of EUR 1.2 mil. However, we believe that employees deserve money already during the month of work without having to turn to short-term lending companies. Rather, we see it as a form of benefit for our clients’ employees.
The second project, Optiomat, is aimed at companies where their founders decide to increase the involvement of their colleagues by allocating part of the capital to them. It is for this reason that we participated in the creation of the Optiomat tool, which enables the entire process from creating an option plan to the founders, inviting their colleagues, verifying their identity to digital signing of the so-called ESOP contracts, all handled within 20 minutes. This brings incredible savings in both time and costs for consulting services from companies.
As part of the solution, we can also calculate the shares in the company that the colleague should acquire after the vesting period, as well as other additional services. The solution goes so far that, if the client wants, he can issue digital certificates at the end of the vesting period, which have the same tax consequences as if the employee owned the actual shares. We are currently testing the solution on a few start-ups in CEE, but its use is pan-European.
Our vision and goal, among other things, is to bring innovative solutions that make the work of our clients more efficient and better. It is important for us, even though we have a history of more than 15 years, that we constantly maintain our enthusiasm for new projects and ideas and put this enthusiasm in the result. These two new projects I mentioned are one of them.
We still feel that employees are the most important part of every company. As our core business is accounting, payroll, tax advisory and legal services, we perceive the space in similar projects as we know how to make the most of the employment environment in our region.
Changes do not happen overnight, although COVID-19 has accelerated a lot of things, but I’ll put it this way: a few years ago we processed motor vehicle tax returns for several days for one of our clients with a fleet of over 3,000 cars. Later, the same colleagues were part of a team that reduced this process of data collection, calculation and control for the same client to about 30 minutes. This, in my opinion, is the exact example of how traditional advisory is moving forward. The consultants will gradually stop providing services directly but will be responsible for the solutions that will provide these services for them. For example, I currently perceive the same innovations in the field of processing transfer pricing documentation, i.e. expat agenda.
In my opinion, clients already perceive the overall reputation of their provider. It plays an important role in the selection process itself. In addition, the integrity of advisors has been and will always be important.
I rather see CSR activities as an “internal agenda”. In my opinion, the main goal should not be how the company presents itself externally through these activities. It is important for me that my colleagues understand that neither the company nor they should be seen only for themselves, for their own benefit, but also to help people and those around them who may not have been so lucky in life.
I believe that if the people, companies and the environment around us are doing well, it will return to you. It is such a cycle that in time you get back what you give. And if you don’t succeed the way you wanted, it doesn’t matter, the important thing is that you at least tried.