Impact of COVID-19 on SSCs I.

Impact of COVID-19 on SSCs I.

Current situation of the Hungarian Shared Service Centres sector

Raczki Ildikó

Associate Partner

KPMG in Hungary


The Coronavirus has taken the businesses and global economy by storm. It is not a question anymore that the effects of the virus on businesses and economy will echo for a longer period and truly challenges the business continuity of GBS organizations. Business leaders are ‘highly concerned’ about the impact of COVID-19 on global delivery operations. As per the recent SSON (Share Service Organization Network) survey more than two-third have delivery centers in Asia Pacific or Central and Eastern Europe countries and two-third acknowledge that they have asked staff to work from home (WFH). The virus is most harmful for organizations having their delivery and support of critical business and IT services in countries facing problems to let their staff work from home. Therefore a bigger question arises if the shared service sector could still deliver services effectively.

Current Situation in Hungarian SSC sector

The impact of COVID-19 has also affected Hungarian day to day business and many industries are shut due to current precaution measures in order to curb the spread of the virus. The most effected industries are tourism, hospitality, event organization and transport services but manufacturing and supply chain area is also highly effected. As business service sector has developed in a rapid pace in the last 2 decades in Hungary and there are currently 120 service centers in the country we definitely need to pay attention to the direct or indirect effects of COVID-19 on BSC-s.

However the centers, which had already been known of its centralized and standardized operations spiced with digitalized solutions, took the hurdle smoothly and provided the same quality of service remotely from one day to another, continued ongoing transitions efficiently, kept hiring people for unfilled positions etc. they also face difficulties. Centers, which are supporting manufacturing, supply chain areas or strictly connected to tourism were adversely affected due to stand still of business. It has led to chain effect on various ancillary/depending industries business due to limited or no production, for instance Tire companies are also getting impacted due to limited or no demand from car manufacturer and car rental companys’ business drop nearly zero during the last two months.

At the same time Pharma and E-commerce sectors are having an unexpected increase in production/sales due to increase in demand of health and medical related inputs/services and increase in demand of online services due to close down of major retail and food chains.

Current situation require cost effectiveness from each sector and their supporting functions as well. Even major financial services are also re-thinking in automation and cost effectiveness on of it is through centralization of its services. In 2019 Hungary was in the list of most preferred place for cost-effectiveness and is also referred to as top most important Eastern European city of the future service hub* and the question is how to keep up this good reputation, how to overcome pandemic challenges despite being highly dependent on the business they support.

 (*The volume of investments successfully negotiated by the Hungarian Investment Promotion Agency (HIPA) amounted to EUR 5,350 million in 2019 alone.)

  • Stay up-to-date related to the rapidly changing regulations and economic environment in order to enable survival mode and utilize available support.
    • What kind of government aids are available and how to benefit from them? What are the application rules of employment retention aid?
    • What needs to be changed in the currently used accounting methodologies to comply with the changed economic environment resulted by COVID-19?
    • Does the company need to change the collection practice and customer evaluation?
    • How shell the group change the accounting of
      • Expected credit loss
      • Hedge, derivatives
      • Going concern, Deferred tax
      • Government assistance
      • Fair value
      • Impairment
      • Leasing
      • Liabilities
      • Provision

for more details please check KPMG webinars:

  • Stabilize the operation - mitigate the effect of COVID-19 through key actions:
    • Adopt new way of work-style
    • Centralization a new focus
    • Focus on Outputs versus observation time
    • Moving to new work-life practice
    • Effective communications
    • Reshaped leadership skills (Webinar)
  • More details about the key actions here.
  • Redesign or restart business – Increase the ability NOW to better identify, quantify and control risks and opportunities in order to lead post-pandemic business environment.

Short term lesson? Panicking doesn’t help! one need to manage the situation quickly, logically, in a sequential manner and to the best of organizational ability. On a bit longer term, having properly governed and digitalized processes and a properly working Business Continuity Plan in practice can help in the most critical circumstances to survive and concentrate on the next steps immediately. 

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