MARKETS GERMANY | Focus

Inside the Leipzig office of CompetenceCall Center (CCC). Today, nine of their
22 international locations are basedin Germany, Europe’s biggest market,
because of its progressive economic
values and the innovation of its SMEs.

Photo: 1998–2019 © CCC Holding GmbH

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MARKETS GERMANY | Focus

Outsourcing 4.0
Driven by digitalization, the market for corporate services in Germany is growing.
More corporations and SMEs than ever are outsourcing their business processes andmany are choosing to operate customer-delivery centers directly from Germany.

CUSTOMER FOCUS

A

sk Thomas Güther, managing
director of outsourcing solutions
provider Capita Europe, to list thebiggest changes his industry is facing rightnow, and he answers with a scenario: “Imagine a classic customer service case in which acustomer wants to switch electricity or telecommunications providers...” He describes
a complex, and largely manually-controlled
process that begins at the back end: data is forwarded from one “IT input screen” (a template
to which inputted data must conform) to thenext and is subject to various approvals. Manycompanies already outsource this process toservice providers such as Capita. “The processing of a service case like this takes two to
three weeks,” says Güther.

Outsourcing andshared services
Germany is one of Europe’s biggest business service markets. The country is home
to domestic and international captive service centers (wholly owned subsidiaries)
and business service provider operations.
Optimal infrastructure, high productivity, advanced technology, and highly
qualified personnel make Germany an
attractive location for service delivery ingeneral. With nearly 7,000 contact centers
employing around 540,000 people, the service provider market has a market volume
of EUR 40 billion. The volume of the business and IT service market has been growing by 2.5 percent a year since 2014, withdemand for quality and high-value services
growing particularly strongly.
Source: GTAI Fact Sheet Business Services in Germany

Today, thankfully, things are changing. “Wetrain artificial intelligence (AI) to automatically take over click work from screen to
screen,” he explains. “And suddenly we canreduce the processing time for the entire process by 80 percent. It only takes a few weeks todevelop and train such an algorithm. “Without the company itself having to change its IT
infrastructure, we, as a service provider, canaccelerate its processes in customer service
enormously and at the same time relieve ourown employees of this click work and employ
them in more demanding activities.”
Digitalization is becoming a great opportunity for business process outsourcers andshared service centers to position themselves
as supporters and partners for companies

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MARKETS GERMANY | Focus»Without the company itself having tochange its IT infrastructure, we as aservice provider can use automation andartificial intelligence to accelerate its
customer service processes enormously.«Thomas Güther, Capita Europe

in the era of digital transformation. Thisis because of the drive of corporations andsmall and medium-sized enterprises (SMEs)
in Germany to offer their customers faster,
more up-to-date digital services. “Many companies in Germany, however, lack the internal specialists and expertise to implement
the necessary automation in the back officethemselves,” says Stephan Fricke, board
member and chairman of the advisory boardof the German Outsourcing Association (seeinterview on page 8). “Many companies therefore use external service providers in the IT
and back office areas.”
This trend is contributing to major changes across the German economy. Germany has
primarily been known internationally for
its industrial production. Its reputation as aservice location has rarely extended beyond
its own borders. But B2B companies that offer services to corporate customers are now
booming in the country – and opportunities
for growth extend to their foreign providers.
Now SMEs are outsourcing too
The outsourcing of processes in the areas ofhuman resources, accounting, IT, and customer care is no longer solely something forlarge corporations. Even SMEs, which typify
Germany’s economy, are increasingly open
to cooperation with external service providers, if only under certain conditions, explains
Josefine Dutschmann, industry expert at
GTAI. “German SMEs are often so-called‘hidden champions’ – they are internationally very successful in their respective niches,»There is increasing
demand for a combinationof digital services andsupport from highly
trained professionals.«Thorsten Meyer, Competence Call Center (CCC)

but at the same time they are also strongly
anchored in their home market,” she says.
“In order to win the trust of German corporate customers, it is therefore very importantto have a local team that is familiar with thelocal market conditions.” That doesn’t necessarily mean that foreign providers of corporate services have to set up large local teams,
or that they can’t offer services from foreign
locations, “but at least one German-speaking sales team should be based locally if you
want to be successful here, and ideally there
is a German-speaking delivery center withspecialists who are in close contact with corporate customers.”
A trend toward more flexibility in purchasing outsourcing services can be seen inboth large and small companies in Germany. “Companies are increasingly looking forspecialists for certain IT topics and processoptimizations,” says Dutschmann. “This isa reaction to the acceleration of innovationand product development processes.”
Local knowledge is key
Thomas Güther of Capita Europe takes a similar view. The international outsourcing service provider, which is headquartered in London, took over the German business processservice provider Avocis in 2015 in order to gaina foothold in the German market. “­Capita wasthus able to plug into existing customer relationships with large corporations and medium-sized companies and could depend on an
experienced local team,” says Güther. This isof great strategic importance for foreign companies entering the German market: local

Photo: Capita

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MARKETS GERMANY | Focus

service providers help to build the necessary
trust. “When choosing their service partners,
German companies want to be sure that they
are familiar with German peculiarities suchas industry regulations and labor law,” hesays. This is particularly true because service
providers are increasingly becoming strategic
partners in digitalization. “And digitalization
projects can only be successfully implemented in Germany if the complex regulations ofGerman and European data protection andlabor law, for example, are observed very
carefully,” he says.
Capita’s services in Germany focus on customer experience. “In this area, many companies are currently looking for innovation partners who can help them offer contemporary
customer service across all communication
channels and can advise them on the potential of new technological possibilities such as

artificial intelligence and robotics in customer
service,” says Güther.
Only when local customer-facing teams
are integrated into an international team of
specialists can providers of corporate services be successful in the German market,
explains Thorsten Meyer, director of German
call centers at the Austrian service provider
Competence Call Center (CCC). CCC has been
active in the German market for 18 years.

FACTS & FIGURES

Outsourcing in Germany

80%

€21bn

50%

2.5%

of German contact ­centers
are in-house, with the­remaining 20% in the handsof service providers. 1)

Turnover generated by
the 7,000 call centers in­Germany, which employ
around 540,000 people. 1)of contact centers are­ ctive in the financiala­services, telecommunications,and IT sectors. 1)

Annual growth rateof the business and IT
service market in Germany
since 2014

Office rental prices in German cities (EUR per square meter) 2)

Nordics

France + Benelux

D

DACH

2.53

1.05

1.03

1.97

A

0.92

Africa + Middle East

The German-speaking region (Germany/Austria/Switzerland or DACH)
is one of the most important outsourcing markets in the EMEA region. 4)

Eastern + Southern Europe

Real estate costs in Germany are affordable

U.K. + Ireland

DACH: a competitive business location

City

Good/Very Good

MediumBasic

Berlin18.00–32.50

11.00

8.00

Dortmund

9.80

7.80

5.70

Hamburg

16.00–26.00

10.90

7.50

Hannover11.50–16.50

8.00

6.50

Magdeburg

7.00–12.25

5.80

3.80

Nuremberg

11.03

8.76

6.88

Saarbrücken

11.00

7.00

6.00

0.45

CH

Outsourcing volume in EMEA in 2018 (in €bn)

Customer experience and BPO are core services
Service provider core activities (top answers) 3)

Inbound calls 80%

Outbound calls 75%

Email management 75%

BPO 70%Complaints 67%

Social media 65%

1) Source: GTAI Fact Sheet Business Centers in Germany 2018; 2) Source: IVD-Gewerbe-Preisspiegel 2018/2019; Note: without ancillary costs; 3) Source: Call Center Profi 2018; multiple responses possible; 4) Source: ISG Index 20197

MARKETS GERMANY | Focus

Stephan Fricke,
German Outsourcing Association"How can I help you?"Chatbots are by no means
the best solution for direct
customer communication,according to Stephan Fricke.

»Process automationis still both a curseand a blessing.«
The digitalization of business services presents companies withsignificant challenges. Stephan Fricke, board member and chairman of the advisory board of the German Outsourcing Association, talks to Markets Germany about chatbots, changing job
profiles, and the opportunities automation brings.
Mr. Fricke, digitalization, new technologies, and concepts likerobotic process automation have a big impact on how companies
handle their day-to-day operations now and in the future. What’s
your assessment of these developments?
Process automation in the back office is still both a curse and a blessing
at the moment. A curse because there’s a lack of specialists who candevelop, implement and maintain such solutions. A blessing because
this can lead to considerable savings and unprecedented flexibility.
What will be the consequences? For example, will we see a reduction in the workforce in the coming years?
This is a question that many managers are asking themselves today.
The professional world and job profiles are seeing fundamental changes. This is nothing new. We need both specialists who understand, forexample, the profession and activities of an accountant and also robots that ultimately carry out these activities. This requires not just a
few highly specialized experts, but a large number of people.
Speaking of robots, chatbots are very popular in customer service
operations today. Is this type of automation becoming standard?
The real potential for automation lies less in customer communication
than in in-house departments and shared service center and businessprocess outsourcing operations. Chatbots are by no means the bestsolution for direct customer communication. Rather, I see their potential, for instance, in data management, financial ­processes and documentation. This is because automation generally creates more quality,
shortens processing times, is more flexible, and therefore also offers
immense potential for savings.
Manfred Stockmann, president of the German Call Center Association for many years, has said, “Contact centers as they exist today
will not be needed anymore in the year 2025.” Do you concur withthat statement?
I absolutely agree with Mr. Stockmann here. Some time ago, “contact centers” were still called “call centers.” An interesting detail that
couldn’t better express the changes across the industry. The people
who years ago handled customer contact exclusively over the telephone now use all available channels. This development will certainly
continue. Nevertheless, I think in many cases person-to-person communication is irreplaceable.

Photos: 5com Media, freedom_naruk

8

MARKETS GERMANY | Focus»International service providers need atleast a small, preferably German-­speaking
local delivery center with specialists who are
in close contact with corporate customers,
if they want to be successful here.«Dr. Josefine Dutschmann, GTAIFACTS & FIGURESThe Austrian company established its firstlocation in Berlin in 2001. Today, nine out of
22 of their international locations are basedin Germany. “Germany is the most important European market for us, because of theinnovative strength of the local companies
and the overall very progressive economic
structure, which also attracts many foreigncompanies wanting to gain customers here,”says Meyer.
Mixing AI and human intelligence
Services in the social media domain are currently just as much in demand in the Germanmarket as automation solutions. “There isincreasing demand for a combination of digital services and support from highly-trained
specialists,” explains Meyer. Simple services
should be delivered quickly and efficiently
using robotics and AI solutions. At the sametime, emotional and complex customer enquiries should end up with customer advisors. High-quality consulting is importantbecause when it comes to customer service,
German consumers have particularly highexpectations and can easily become resentful. That is the result of a recent study byZen­desk, a customer service platform provider, focusing on the interaction between customer service operatives and consumers inGermany, Great Britain, and France. Not only
do 81 percent of respondents in Germany remember bad customer service experiences ayear or more in the past, they also tell others
about those experiences.

€40bn
Total value of themarket for business services
provision in Germany.

7,000

Number of contact service centers
based in Germany, all of which
benefit from local knowledge.

540k
Number of people­employed in the call center
market in Germany.

Despite rising expectations, the outsourcing
industry is still very cost-driven. “The accessto skilled labor is crucial for our choice of location in Germany,” says Meyer. “The skilledlabor situation in Germany is tense. Today it
is hardly possible to build up a large location
with 1,000 people. We therefore tend to focus
on decentralized, smaller, distributed locations with two or three hundred employees
in towns with good transport connections.
In addition to Berlin, the leading examples
are Leipzig, Dresden, Essen, Dortmund, andAachen.”Pathway to success
The advantage of this decentralized location
strategy is that the provider is able to be close
to company locations and economic centersin Germany (which are also very decentralized) and therefore establish good proximity
to the customer.
Adapting to the needs of the dispersed,
medium-sized economic structure of Germany, positioning as a partner even for highly-­complex outsourcing projects, and setting
up an experienced local team with local
knowledge: these are the three strategies for
success that foreign providers of corporate
services should follow when entering theGerman market.
Contact:

Sources: Zendesk and GTAI

josefine.dutschmann@gtai.com
GTAI expert for BPO/Shared
Services910

MARKETS GERMANY | Focus

Global Going Local
TMF Group is a global professional services company that helps international companies set up businesses in new markets. Markets Germany talks to the managing directorof TMF Germany, Ursula Rutovitz, about the current trends in the German market.

SETTING UP IN GERMANY

U

rsula Rutovitz is an expert in
helping foreign corporations to set
up company locations in Germany.
Rutovitz, a lawyer by profession in both U.S.
and German law, has been working in thiscapacity for the TMF Group for 19 years – infact, her employer was her first case. “WhenTMF entered the German market, I set up
the first branch in Frankfurt/Main – my goodknowledge of local legal and economic structures and my international work experience
helped me to do this,” recalls Rutovitz, who ismanaging director of TMF Germany.
This combination of international networking and local market knowledge is at theheart of TMF’s business model. Or as theirwebsite puts it, “We believe that the only way
to be truly ‘global’ is to put local first.” The
Group has a team of 7,000 in-country experts
operating in 83 countries (across 125 offices)to help businesses of all sizes succeed in new
territories and be compliant with local andinternational regulations. At the last count,
TMF had 15,000 clients worldwide.
Rutovitz explains the focus of the German
offices: “We open up the local headquarters
for companies wishing to enter the ­Germanmarket, handle the entire bureaucratic process of setting up a company, establish con-

€10bn
Value of the global market forprovision of compliance andadministrative services

TMF Group: a truly international player
TMF Group is a global professional services company employing more than 7,000
in-county experts across 83 jurisdictions
worldwide. Headquartered in Amsterdam,
TMF Group helps its clients operate internationally by ensuring they are properly
set up to do business in any country andcompliant with local and international regulations. The firm’s work includes helping
companies of all sizes with business services including HR and payroll, accounting
and tax, corporate secretarial, global governance and administration, and fiduciary
services for capital markets, private clients,
private equity, and real estate investments.
TMF Group has been active in Germany
since 2001 and has 60 employees based at
its two offices in Munich and Frankfurt/
Main (Germany’s most important financial
services location).

tacts with the authorities, and set up all backoffice services such as accounting and reporting, HR and payroll administration, tax andlegal compliance services on site.”
Challenges for foreign companies
For foreign companies wanting to enter in
the German market, these formal bureaucratic prerequisites are one of the biggest initialchallenges. “The requirements of German
and European law for financial transparency,
reporting and data protection are very high,”says Rutovitz. “If you want to find business
partners in Germany, you have to have therelevant processes under control right fromthe start. Then the strict German bureaucracy becomes an advantage: “The bureaucratic
processes and regulations in Germany arevery reliable and predictable. This gives companies planning security.”
Because Germany is such a stable basefor launching a business in Europe, TMF
Germany has seen rising demand from foreign enterprises that want to gain a footholdin the German market, reports Rutovitz. The
growing and innovative German economy isattracting many enterprises from the U.S.,
Asia and other regions. “The demand for ourservices is high at present – HR and payroll inMARKETS GERMANY | Focus

Photo: TMF Groupparticular, and also bookkeeping and corporate secretarial services. Because of the Brexit
situation, we find that it is mainly financial
sector businesses that want to develop locations in Germany.” The demand for professional services and for support for developing
growth in Germany is also strong. “International companies are looking for partners
who can highlight the special features of themarket, who are up to date with current legal
and technological developments, and who
can point out risks and opportunities.”
In addition to the Frankfurt office, TMF
set up an office in Munich six years ago.
“Just like in Frankfurt, there are many large
corporations and successful medium-sized»Germany is an
attractive ­market
and offers companies great­opportunities.«
Ursula Rutovitz,
managing director, TMF Germany

companies from various sectors as well asprivate equity companies based there,” says
Rutovitz. Another critical factor influencing
choice of location is workforce: Frankfurt andMunich offer a large pool of well-trained specialists within close proximity. As the processof digitalization demands ever more complex
and sophisticated services, it is importantto have access to technically qualified andmultilingual specialists. “Germany is an attractive market that offers enterprises greatchances,” summarizes Rutovitz. And since
TMF Germany is part of a wholly-owned
global group, it can help its clients to do business seamlessly across borders from the stable hub of Germany.

Frankfurt:a fine location

Photo: David Jrg Engel/EyeEm

The economic center of the FrankfurtRheinMain region, Frankfurt/
Main is home to some 43,000
companies and generates mostof the employment for the region(650,000 jobs). While it is famous
as a financial hub, it is also home
to many key target industries: thecreative industries, IT and telecommunications, life science andlogistics, and industrial production.
Its superb infrastructure, transportand proximity to institutions andeducational facilities add to its attractiveness as a location.

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