< Previous78 MAY 2021 S I T E S EL E C T I O N INVES TMENT PROFILE: HUNGARY The pandemic that adversely affected so many sectors in 2020 did not stop investment in Hungary’s booming Business Service Center (BSC) industry. Nearly 64,000 people work at more than 130 such companies, mainly in Budapest but in five other metros as well. In 2020, 25 companies picked Hungary for their BSC, ICT and R&D operations, adding 3,000 employees working in national, regional and global capacities. One was U.S.-based Diligent Corporation, which is opening a €31 million ($37 million) Center for Global Product Innovation in Budapest, where it will employ 300. The company markets software for public corporate governing bodies. Some Diligent employees may work remotely, as do many in the BSC sector already, notes Robert Ésik, CEO at the Hungarian Investment Promotion Agency (HIPA). “In response to the pandemic, business services centers have shown flexibility and resilience. On the one hand, companies have successfully shifted their activities — including complex processes — to a home-office environment. Working from home can be managed effectively by the centers without sacrificing productivity. Face- to-face interactions may not always be required, and employees appreciate the flexibility that the opportunity to work from home has provided to them. On the other hand, the pandemic has opened new opportunities for recruitment, and companies started to reach out for new talent pools in the countryside, as a physical presence in the office was no longer a requirement.” From wherever their employees work, BSC operations find in Hungary a plentiful, highly skilled and multilingual workforce; advanced infrastructure that facilitates remote working and commuting; and a location that is ideal for providing business services across multiple time zones. Where Location Requirements Are Met Thermo Fisher Scientific employs more than 400 at its Budapest Global Business Service Center, which opened in 2018. The Center supports customers in such areas as Finance, Customer Care, by MARK AREND mark.arend@siteselection.com Budapest Photo: iStock Where Business Services Meet Business Resiliency S I T E S E L E C T I O N MAY 2021 79 This Investment Profile was prepared under the auspices of HIPA, the Hungarian Investment Promotion Agency. For more information, please visit www.hipa.hu. IT, Technical Application Support, Payroll and Procurement. “Hungary is home to a skilled and talented workforce, which was a major factor in our decision to locate our center here,” says Miklós Koczor, Site Lead GBS Budapest at Thermo Fisher Scientific. Other factors, he adds, include ”the size and growth trajectory of the business service industry, the competitive labor cost, the quality of infrastructure and the significant support provided by the Hungarian Government, HIPA and the Hungarian Outsourcing Association.” Also in 2018, American investment management firm BlackRock opened a data, technology and business operations hub in Budapest. “The Budapest operation is a core part of BlackRock’s strategic operating model,” says Katie Parry, Head of BlackRock Budapest. ”With its more than 800 employees, it provides technology, language and quantitative-analysis skills that are critical to creating value for clients while driving operational efficiencies.“ BlackRock picked Budapest to access its talent pool and to diversify its footprint in a location that would foster future innovation and growth, Parry explains. “Hungary was primarily selected for the diverse talent pool that has deep technology and financial education and experience combined with a challenging mindset that helps drive innovation. The central European location is also an advantage for multinationals in terms of proximity to the rest of Europe and overlap with global time zones.” Irving, Texas-based Flowserve Corporation, a supplier of fluid motion and control products and services, is celebrating its fifth anniversary in Hungary this summer. “We decided to go with a hybrid model of having one site in Debrecen and one in the capital, Budapest,” says Tamás Kovács, Managing Director, BSC, Flowserve Hungary Services. The multinational employs about 400 people in Hungary in Accounting, IT, Payroll, Audit, Tax, Pre-Sales and R&D Engineering. A Location for Higher-End Services “We chose to open the Center primarily for labor arbitrage purposes, initially,” says Kovács. “Ever since, the BSC has become a centralization hub and one of the vehicles for driving change in the company. Hungary was chosen for its favorable geographical location and ability to work with the important time zones from North America to Asia simultaneously. Human resource flow is ensured by the number of universities; graduates are capable and multilingual. While Hungary is a medium- cost location now, the value for money is still there. Cost, education, resource availability, languages and infrastructure allow us to bring in higher-value- add and knowledge-based activities as opposed to repetitive, transactional ones only, as was the case historically. Flowserve, like other players in the BSC sector, is offering higher-value-add, more complex jobs now, and various other corporate functions are planning to use the BSC more extensively.” Flowserve operates an R&D Center in addition to its BSC presence in Hungary. Simulation, design to value and order engineering are the primary areas of focus. “Lately,” says Kovács, “we are expanding to IoT (Internet of Things) solutions, which is a leading-edge technology within Flowserve. We are happy with the performance of the R&D function in Hungary, and it is being extended to other corporate functions, like IT.” This example of companies expanding their business service functions in Hungary underscores HIPA CEO Ésik’s assertion that: “The Hungarian BSC sector will continue to stand out as a dynamically developing segment of the economy, and Hungary will remain an attractive and proven location for business service centers in Central and Eastern Europe.” Thermo Fisher Scientific, Flowserve and BlackRock have opened Business Service Center hubs in Budapest in recent years and are expanding the array of services they provide. Photos courtesy of HIPA20 21 PRO SPERITY CUP 80 MAY 2021 S I T E S EL E C T I O Nby MARK AREND mark.arend@siteselection.com When Site Selection recognizes a state as having the top business climate in the U.S., you can bet that state is enjoying prosperity. North Carolina returned to the top of our annual ranking of state business climates in 2020, tying Georgia for first place, as was reported in the November 2020 issue. That prosperity presumption is accurate: The Tar Heel State claims Site Selection’s Prosperity Cup this year, which recognizes state-level economic development agency success based on a 10-point index of criteria based largely on capital investment project activity the previous calendar year (see methodology, page 92). North Carolina jumped five spots to win the Cup from sixth place in 2020, replacing Texas in first place. The Lone Star State finished third this year, while second-place Georgia retains its first-runner- up status, underlining the link between a strong business climate and the prosperity that ensues. Two newcomers to the top 10 in 2021 are South Carolina, climbing from 15th place to seventh, and Arizona, which finishes in eighth place, up from 12th in 2020. If the first few months of this year are any indication, North Carolina is on track to make a very strong showing in next year’s Prosperity Cup ranking. The state is up against some tough competition in its geographic region, with Virginia, South Carolina, Georgia and Tennessee, among others, all competing for the same projects it fights for. “We know that most of the time we are competing with other Southeastern states,” says Chris Chung, CEO of the Economic Development Partnership of North Carolina (EDPNC). “We also know all of those states are very formidable, and we would be foolish to take any of them for granted. Not only are they attractive from a business climate standpoint, but they have economic development teams that are as aggressive as we are in wanting to do everything possible to win those deals. It’s very competitive.” S I T E S E L E C T I O N MAY 2021 81 North Carolina’s prowess in life sciences, aerospace and statewide business-recruitment teamwork are delivering enviable results. Top 10 States 2021 2020 STATE 1 6 North Carolina 2 2 Georgia 3 1 Texas 4 5 Ohio T5 3 Indiana T5 9 Kentucky 7 15 South Carolina 8 12 Arizona 9 7 Tennessee 10 4 Michigan84 MAY 2021 S I T E S EL E C T I O N Apple’s Tar Heel Footprint Expands In late April, Apple picked North Carolina’s Research Triangle region as the location for its newest research and development campus and will create 3,000 jobs in Wake County. Apple plans to invest more than $1 billion in the state by 2032. The company’s new project in North Carolina will create an R&D, operations and engineering hub in Wake County of at least 1 million sq. ft., powered 100% from renewable energy sources from day one, similar to all Apple facilities worldwide. In addition, Apple will set up a $100 million fund to support schools and community initiatives across the state. “As a North Carolina native, I’m thrilled Apple is expanding and creating new, long-term job opportunities in the community I grew up in,” said Apple Chief Operating Officer Jeff Williams. “We’re proud that this new investment will also be supporting education and critical infrastructure projects across the state. Apple has been a part of North Carolina for nearly two decades, and we’re looking forward to continuing to grow and a bright future ahead.” The North Carolina Department of Commerce led the state’s efforts to attract Apple’s new R&D campus. The company will retain its existing 1,100-person workforce at various locations in North Carolina. Apple’s new positions over the entire period of the grant will offer salaries that average $187,001, creating a regional payroll impact estimated to top $550 million per year. Wake County’s overall average annual wage is currently $63,966. “Apple’s choice to grow in North Carolina comes at an important time for our state,” said Commerce Secretary Machelle Baker Sanders. “As we move (continued on page 88) Governor Roy Cooper takes the podium outside North Carolina’s Executive Mansion to announce Apple will create 3,000 jobs in the Research Triangle region. Photo courtesy Office of the GovernorPACIFIC 2021 2020 1 2 California 2 3 Washington 3 1 Oregon 4 4 Alaska 5 5 Hawaii SOUTH CENTRAL 2021 2020 1 1 Texas 2 4 Kentucky 3 2 Tennessee 4 3 Alabama 5 5 Louisiana 6 6 Mississippi 7 8 Oklahoma 8 7 Arkansas SOUTH ATLANTIC 2021 2020 1 2 North Carolina 2 1 Georgia 3 4 South Carolina 4 3 Virginia 5 5 Florida 6 6 Delaware 7 8 Maryland 8 7 West Virginia EAST NORTH CENTRAL 2021 2020 1 3 Ohio 2 1 Indiana 3 2 Michigan 4 4 Illinois 5 5 Wisconsin WEST NORTH CENTRAL 2021 2020 1 4 Kansas 2 3 Nebraska 3 2 Missouri 4 1 Iowa 5 6 South Dakota 6 5 Minnesota 7 7 North Dakota NORTHEAST 2021 2020 1 1 Pennsylvania 2 2 New York 3 3 Massachusetts 4 4 Maine 5 5 New Hampshire 6 9 New Jersey 7 7 Connecticut 8 8 Rhode Island 9 6 Vermont MOUNTAIN 2021 2020 1 1 Arizona 2 2 Utah 3 7 New Mexico 4 6 Nevada 5 3 Idaho 6 5 Colorado 7 3 Wyoming 8 8 Montana 2021 State Rankings BY REGION 86 MAY 2021 S I T E S EL E C T I O N Source: Conway Projects DatabaseNext >