TMF: What doesn't kill you, makes outsourcing stronger - OT print issue
While legal instability is a major burden, it drives up outsourcing for tax, legal and accounting services, a recent TMF survey reveals.
The three major challenges faced by foreign companies present on the Romanian market are the frequent changes in legislation (54 per cent), obtaining the appropriate level of support from the authorities (51 per cent), and the implementation of legislative requirements (49 per cent), shows a study conducted on behalf of TMF Group Romania, a company that has been active for 17 years on the Romanian outsourcing market.
Because of the context, companies are willing to outsource tax compliance and accounting (67 per cent), HR & payroll (40 per cent), and corporate secretarial services (17 per cent), in order to be able to focus on their core business.
The survey included tens of foreign companies present on the local market – most of them having their headquarters in Romania.
These companies constitute a representative sample. Out of those who filled in the questionnaire, 34 per cent are CFOs, 21 per cent CEOs, and 16 per cent, HR managers operating in industries such as retail, real estate, media, pharmaceutical, software, hardware, oil and gas, finance, and network and communications.
Adapting to legal requirements, quite a challenge
Apart from these three major challenges, the most difficult aspects of doing business in Romania are considered the adaptability of the corporate policies to local legislative requirements (41 per cent), the sourcing of skilled labour resources and the implementation of standardised processes across jurisdictions (36 per cent), and the efficient transposing of local financial reports and of other reports to management (26 per cent).
"In 2015 we have noticed an increase in the outsourcing activity of the foreign companies present in Romania. The managers appreciate the competitiveness of the local market and believe that its bar will be raised, especially given the context of economic growth. That is why they'd rather rely on professionals and delegate accounting, HR & payroll to them, while choosing to gain more time and put more effort into their core business, which is crucial to the evolution of any company," said Camelia Nita, managing director, TMF Group Romania.
As far as improvements are concerned, the foreign companies that are active in Romania appreciate how easy it is to find the right premises and local suppliers (29 per cent) and the adherence to labour law and the payment of employees at market rate (26 per cent). Insofar as the Romanian business environment is concerned, the foreign companies present on the local market perceive in a negative way the tax level and legislation (62 per cent), the collaboration with authorities (38 per cent) and finding the adequate workforce (33 per cent). The aspect that has worsened the most compared to last year is finding the right talent, 33 per cent of the participants having said they face difficulties in this respect.
Despite these obstacles, approximately 85 per cent of the participants to this study stated that their revenues have grown in 2015. 31 per cent of the managers reported a growth between 5 per cent and 10 per cent, 26 per cent, a growth up to 5 per cent, while 14 per cent said the growth of their revenues was between 10 and 15 per cent and the same percentile mentioned a growth of over 20 per cent. Furthermore, the foreign companies present on the local market have a good opinion regarding employee protection (36 per cent), regarding competition (28 per cent), and regarding the protection provided to the employer by legislation (15 per cent).
In 2014, a third of the managers that took part to the TMF Group study said that finding the right talent was a challenge for them. The fact that their number has increased significantly in 2015 could be construed as a wake-up call regarding the difficulties the companies face when trying to reach suitable potential employees. That is why many companies solve this problem by outsourcing the services for which they initially intended to bring in personnel.
Most of the managers that took part in the study feel that the companies they run need specialised assistance regarding tax compliance (40 per cent), HR & payroll (37 per cent), and accounting and financial reporting (30 per cent).
The reason why foreign companies would outsource these services is the desire to gain access to the expertise and experience of professionals (36 per cent), followed by the need for increased adaptability to legislative changes (28 per cent), and by the desire to obtain a better cost structure for high quality financial or management reporting (19 per cent). Thus, the managers that took part in the study would benefit from outsourcing services such as accounting, HR per cent payroll by gaining more time to focus on their core business (64 per cent), by reducing the cost of non-compliance (31 per cent), and by enjoying an increased comfort induced by the diminishing of the administrative burden (22 per cent).
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