Portugal, natural habitat of shared services. But why?

When it comes to sharing resources and doing more with less, sceptics raise their eyebrows. At the same time, entrepreneurs oppose it: shared services are not just about reducing costs. They result in efficiencies in operations, standardise the quality of services and even create jobs.

The idea is not new, but in recent years its been clear that shared services are here to stay. They have also shown that Portugal is in the centre of the trend. More and more multinationals are betting on the Portuguese market as a location for shared service centres, either owned or outsourced. Google’s new centre in Oeiras is the most striking example, but the technology giant is far from being the only one.

But what characteristics make Portugal an appealing market for shared services? The conclusions are transversal to the various cases analysed. Portugal attracts shared services thanks to the good qualifications of the Portuguese and even the diaspora, which has made the Portuguese people a good connoisseur of foreign languages, especially English.

Among the positive factors are the infrastructures, the good communications network, the “competitive” labour legislation and the existence of several international connections from the Portuguese airports, which are located close to the major urban centres of Lisbon and Porto. Good quality of life, social stability and, of course, the lower cost of talent also have influence.

Those who think shared services only concern the technology sector are wrong. Less obvious, but firmly rooted in Portugal, is the shared services operation of the BNP Paribas bank, with facilities in Parque das Nações, on Avenida Almirante Gago Coutinho and Avenida D. João II, but also outside Lisbon, in Porto. An example of the centralisation of various services in Portugal provided from here to the world. The most recent data point to close to 5,000 BNP Paribas workers in Portugal, a number that, according to the intentions already announced, should grow even more.

A Tower of Babel

Providing services from one location to several regions of the world means having to speak several languages. Many languages. By its very nature, Teleperformance is another case study of shared services in Portugal, but under the regime of providing services to other companies, such as Expedia, eBay and Netflix.

The 10,500 people from 85 nationalities who work at Teleperformance Portugal speak 27 languages. It is in the old UTIC building, at Infante Dom Henrique, in Lisbon. About 1,200 people work here, most of them allocated to this client, who allowed the visit of ECO on the condition that their anonymity was maintained.

Still, near this 11th Teleperformance centre, we understand why it is called TP Nations: it is an authentic Tower of Babel. Through the corridors, there are French, Germans, Portuguese, Italians and other citizens of the world. A mixture of different people from different cultures.

There are eight operating theatres in this centre. Nobody can get into them with backpacks or cell phones. If in the labyrinthine corridors, the TP Nations even looks like a common building, each room is like a new continent. Entering them gives us a feeling close to teleportation.

From here they provide customer support services in 12 different languages by chat and telephone. The most basic problems are solved by the first operator. The most complicated problems are passed on to a second line team and, from here, they are sent to the parent company. A sharing of resources to solve the problem in the smoothest way and in the shortest possible time.

“The significant decrease in management effort is a huge benefit for companies,” points out Pedro Gomes, COO of Teleperformance to ECO. He also mentions the “consistency of the services provided” as one of the advantages of shared services. “It gives companies the flexibility to launch new products and services,” he explains. It’s the same when it comes to training people. “Everyone is in the same place” and “it’s all easier,” he says. In this case, that place is Lisbon.

For Pedro Gomes, it is not difficult to understand why Portugal is on the map of shared services. The country welcomes “numerous communities of foreigners” and is “one of the most peaceful in the world”. It’s also a nation of emigrants: “When there are job opportunities where foreign languages are an asset, it’s interesting that these emigrants return and use those languages here,” he stresses.

Lower wages also help, he acknowledges, but they are not determinants: “It is an attractive factor for companies, but it is not the main one. It’s an additional factor”. This is because there are other locations in Europe, popular for shared services, that are not known for their low labour costs. This is the case in Berlin (Germany),” he argues.

Anyway, the specialist does not doubt that Portugal is on the map and that the trend will only accelerate: “As more companies place shared services in Portugal, the credibility of the country increases. A virtuous circle is generated that attracts more and more services to Portugal,” concludes the head of Teleperformance.

Portuguese state has already surrendered

This logic goes beyond the private domain and, since 2012, has also been exploited by the public sector. Launched in the post-crisis period and to improve the efficiency of the state and reduce expenditure, eSPap (Public Administration Shared Services Entity) is the body that centralises the shared services of the Portuguese state.

“We want to transform the back office into a front office”, says the president of eSPap, César Pestana, to People. “We offer a catalogue of services in several areas and this is our great contribution,” he says, remembering that many times this type of work, although important, is not visible to the public.

In addition to maintaining a data centre at the service of the Ministry of Finance and some municipalities, eSPap manages part of the state accounts, processes salaries for civil servants of various entities and manages the national public procurement system. It also provides “shared services” of technology “in everything that makes sense” on the state machine, says Vice-President Teresa Girbal, who also follows the conversation.

eSPap is considered to be a public institute of special regime, with state entrepreneurial management and an annual budget “of about 25 million euros”. The funding comes from the state budget, from own revenues and community funds, reveals César Pestana.

Before it existed, each state institution had departments that provided the various services now centralised in the eSPap ‘catalogue’. Today, state bodies and public companies only have to consult it and choose the services they need. The service is “always provided in a network,” in a logic of collaboration between eSPap’s employees and those of the state organisation that “hires” them.

For this year, the goal is to increase the number of services in the catalogue and the number of customers in the state. In short, it involves “more efficient, scalable and better quality processes in response,” says the president.

Thus, Portugal has favourable conditions to be a natural habitat for shared services, housing centres from north to south of the country. Bosch, Accenture, Adidas, Peugeot and Vodafone are some examples in the more northern region, Altran, IBM, La Redoute, Randstad and Altice Labs stand out in the central area. In the Lisbon region, the list seems endless.

The challenge

It is not easy to deal with so many people, especially when they are people of different nationalities and cultures. “It’s challenging. Each individual has their characteristics and easy is not the right word,” points out Pedro Gomes, COO of Teleperformance. ECO heard the same from a project leader, who said that it is necessary to know how to “adapt to a culture of different languages”. However, both recognized that it is these challenges that make the work “extremely attractive”.

From private to public

eSPap has 300 employees, but only a third are civil servants. The rest are individually hired workers, which allows eSPap to capture talent in the market without increasing the state’s workforce. It has specialists in public accounting, human resources and even technology, but faces difficulties in finding these people, as in the private sector.