Investing in Portugal. Business Support Services Sector

Transcription

1 Investing in Portugal Business Support Services Sector 2013

2 Introductory note This presentations aims to provide an overview of Portugal and the Business Support Services to potential investors. Information provided highlights the most relevant data and key examples, namely players and investment opportunities. The content of this presentation is not exhaustive, and thus it is intended to be used only as a guideline for potential investors. 1

3 Portugal Portuguese Business Support Services Industry aicep Portugal Global

5 Portugal is a business opportunity Strategic location Qualified Workforce Competitive costs High-quality infrastructure Business friendly environment Attractive incentives/ grants 4

6 Strategic Location The country has a privileged position in the world market Portugal has an excellent weather with the highest number of days of sunshine per year in Europe. Portugal connects with major hubs Time zone With easy access to other markets Attractive Consumer Market Portugal 10,6 Iberian Market 51 European Market 494 Portuguese Speaking countries (e.g. Brazil, Angola, Mozambique) 220 Million Inhabitants European nearest country to the U.S. and South America 3-hour time-zone difference with Brazil and Russia Privileged economic relations with, Angola and Mozambique Daily flights to major European cities, Africa and Brazil Portuguese is the 5 th. most widely spoken language in the world and the 1 st. in the Southern hemisphere

7 Qualified Workforce Portugal has a highly skilled and educated workforce Young generations are highly skilled: Portuguese graduation rates are well above the OECD average 71,7% Portugal ranks on Top within the EU countries in number of PhDs per 1,000 inhabitants. Four universities among the best 500 in the world. Portuguese people are known for their commitment to work and versatility: working days lost per year in Portugal are below the EU average 40% of students in tertiary education are enrolled in engineering, sciences and health. The increase rate in the last 3 years is about 30% 43,6 11,3 Working Days Lost (per employees EIRO, ) 42% At least 1 foreign language 6% At least 3 languages 23% At least 2 languages English is widely spoken and universally taught from 1st grade Language skills: English, French and Spanish are widely spoken languages 6

8 Competitive Costs Portugal is a cost competitive country Electricity Natural Gas Labor Cost Index Cost of Living Occupancy cost: office space Occupancy cost: industrial space 12,4 11,4 4,0 3,4 +2, , 5 79,2 52,2-4,9 (Prices for industries in /100kWh Eurostat 2012 S1) (Prices for industries, in /GJ Eurostat 2012 S1) (Year-on-year rate of change Eurostat 2012 Q1) (HFC Eurostat) (Prices in /sqm/year, C&W2013) (Prices in /sqm/year, C&W2011 Energy costs in Portugal are bellow Euro 27 average Energy efficiency practices are encouraged in construction as well as in consumption Hourly labor costs in 2012 decreased -4,9% (Euro 27 rose by +2,2%) 2012: average hourly labour costs of 12.2 in Portugal, 23.4 in the EU27, 28.0 in the euro area. In terms of real estate, Portugal is among the least expensive locations Figures are shown for Lisbon. If we considered Porto area, prices can lower 25%

9 Macroeconomic External Adjustment External Balance in % of GDP (Current and Capital Account) Exports as % of GDP The driver for economic growth + Portuguese competitiveness is improving rapidly with the implementation of ambitious structural reforms External balance was already positive in 2012 and is expected to improve further in 2013 and 2014 Portuguese exports have been performing very well in recent years The second highest growth of exports (after Germany) in the European Union pre-enlargement (UE15) between 2005 and 2012, reaching more than 40% of the GDP Fast export growth has been driven by the diversification of exports to outside EU markets 8

10 High-quality Infrastructure Great technological advances have been made in Portugal Telecommunications The country has now 95% coverage of broadband infrastructures The Internet is also well developed, with over 60% of households with internet access Telecom prices remain below European average Electricity Electricity supply presents significant reliability, with downtime below 1day/year (0days during 2012) The country is currently investing in energy efficiency, by developing smart grids, as well as promoting Renewables Road network Infrastructure has been considerably improved, with many road sections being upgraded (8th. Best in the world World Economic Forum 2010) The overall motorway density in Portugal is significantly higher than European averages Ports One of the best deep ports in Europe terminal XXI in Sines: road connection to Spain and Europe; Unique Port window (JUP) An unique contact point to all port entities. 0,72 0,38 Telecom Prices Euro/10 min call Eurostat ,7 19,7 % Renewable Energy % of gross energy consumption, Eurostat ,5 3,3 Motorway Density km/100km 2, ERF ,7 2,3 Weight of Goods Handled, Growth rate 2011/2010 (%) Eurostat 2011

11 Business friendly environment Portugal has a receptive environment for business Institutional conditions promote business Portugal has a good business environment: It is the best country to do business in whole Southern Europe and it is 11th place out of the 28 countries of the European Union (Doing Business, World Bank) Average time to set up a firm is less than 1-hour Portugal is ranked number one among EU countries in terms of public services online (European Commission) and is considered, by the United Nations, a case study in e-government A top country in facilitating international trade (World Bank) Entrepreneurial spirit seen by a large number of innovative enterprises (PT: 60%; UE 52%) Culture is also welcoming to foreigners Portugal is very open to foreign cultures: the availability of international schools, the safety record and quality of life attract many expatriates As a result Portugal is ranked #2 in the Migrant Integration Policy Index 2011 Portugal is unique in attracting young graduates and executives. Carlos Brazão, Cisco Portugal Security: Portugal is the 13th safest country in the world to live (Global Peace Index) 10

12 Why Portugal? - Corporate tax credit of up to 20% of the investment; - Exemption of local taxes; - Exemption of stamp duty; - Tax incentives for R&D (SIFIDE II). - Personal income tax: flat tax rate for expatriates of 20% for a 10 years period. Internships (Unemployed/ handicapped people) monthly support for 12 months (80% to 100% depending on nr of employees) Exemption (for 36 months) of social contributions - Young (first job) or long term unemployed people (> 12 months) - Permanent labor contracts only; - Not cumulative with Social Security Refund Social Security Refund - Long term (more than 6 months) unemployed people (young or over 45) - 75% to 100 % of monthly social contribution - Limit between 175 and Maximum duration: 18 months; - Net increase in total employment; Applies to a maximum of 20 employees. - Cumulative with Estímulo 2013 incentive Estímulo 2013 Initiative - Unemployed for more than 3 or 6 months - Support: 50% to 60% of monthly wage - Limit: between 419,33 and 544,98 - Maximum duration between 6 and 18 months - Net increase in total employment - Cumulative with Social Security Refund and Social Contribution Exemptions A detailed incentives offer can be prepared for a specific investment and business plan.

13 Many companies choose Portugal to do business Selected recent cases Services Manufacturing Our decision is a result of the recognition of the hospitality and the commitment of the Portuguese Government, of the multilingual skills of the local population as well as its professionalism and ability, and proven success in innovation areas. Chris Dedicoat, Senior Vice-President for Europe, Cisco One of our main strategic lines was always to shorten distances with the academic world and to bet in strong innovation, investigation and development in Portugal thus taking advantage of the Portuguese engineer s excellence. João Picoito, Chairman of Nokia Siemens Networks Portugal

15 Top reasons to invest in Business Support Services in Portugal Potential for development Competitive Costs Office space Reference Players Industry knowledge Recruitment Agencies Shared Services & Outsourcing widely available Institutional environment Incentives & Grants 14

16 Potential for development Industry Current Context Industry Outlook Key Figures Sector Business Support Services industry Nº Companies Employment Production (M ) Exports (M ) Average wage ( )

17 Potential for development Industry Current Context (I/XIX) Competitive Costs 1. Among EU Countries, Portugal is rather competitive. MININUM WAGES ELECTRCITY PRICES EU Eurozone Portugal Eurostat, Electricity prices for industrial, 2 nd Q, 2011 ( /Kwh) LABOUR COSTS EU-27 Eurozone Portugal Eurostat, Labour cost per hour in euros (> 10 employees), 2011 REAL ESTATE RANKINGS # 19 Office space in Lisbon CBD # 11 Office space in Lisbon non-cbd Cushman & Wakefield, 2012; 63 cities No statutory minimum wage Source: Eurostat, 2012 Data as on 1st of January in European Union. 16

18 Potential for development Industry Current Context (II/XIX) Competitive Costs 2. Wages breakdown The table below is an exercise of the salary breakdown, highlighting the mandatory components. SALARY BREAKDOWN Base Salary x14 (Holiday and Christmas Bonuses) Meal Allowance x11 Work Insurance x14 Medical Plan (per year) Social Security x14 (23,75% over gross salary) Total annual employer s cost VALUE 800, ,00 126, ,08 5,36 75, ,12 TYPE Compulsory Compulsory Compulsory Compulsory Source: aicep Portugal Global, 2012; Monthly salary of 800; 3.5 UNIT LABOUR COSTS - Total Economy Annual Growth Rate (%) Unit Labor Costs in Portugal decreased by 4,6% in the whole economy AT CZ DK SL FI DE GR HU IE NL NO PT SK SL SE -1.0 Source: Eurostat, Unit Labour Costs, 2012 (%) Annual Growth Rate

19 Potential for development Industry Current Context (III/XIX) Competitive Costs 3. Average wages in Contact Centers in Portugal AVERAGE WAGE OF AN OPERATOR /Month More than Between 901 and 1200 Between 751 and 900 Between 601 and 750 Between 500 and 600 Less than 500 AVERAGE WAGE OF A SUPERVISOR /Month Specialized center Large center More than Between and 1500 Between 1001 and 1200 Between 851 and 1000 Between 700 and 850 Less than % of the salary levels range between 500 and 600/month. In case of specialized centers, the range moves up one level. For higher job positions a supervisor the salary increases by 30% on average. Source: Benchmark Survey 2011, Portuguese Contact Center Association 18

20 Potential for development Industry Current Context (IV/XIX) Competitive Costs 4. Average Bonus in Contact Centers in Portugal Operators No Bonus Supervisors Others Most common bonuses are cashrelated, sales commission and health insurance. The differences in bonuses between operators and supervisors are relatively small. Health Insurance Mobile Gift voucher for other criteria Gift voucher for quality service Gift voucher for efficiency Gift voucher for attendance Sales commission Cash bonus for other criteria Cash bonus for quality of service Cash bonus for efficiency Cash bonus for attendance Source: Benchmark Survey 2011, Portuguese Contact Center Association 19

21 Potential for development Industry Current Context (V/XIX) Competitive Costs 5. Wages by Industry Average AVERAGE WAGE OF AN OPERATOR /Month The monthly wage of an operator is around 736, on average. On average, a supervisor gets 40% more than an operator. On average, the most common bonus is awarded according to service quality and efficiency. MOST COMMON BONUS OF AN OPERATOR (%) Source: Benchmark Survey 2011, Portuguese Contact Center Association IT Services Retail & Commerce Postal Services Utilities Telecommunications Insurance & Travel Assistance Banks & other financial entities Average Others No Bonus Health Insurance Mobile Telephone Sales Commission Cash bonus for other criteria Cash bonus for service quality Cash bonus for efficiency Cash bonus for attendance 20

22 Potential for development Industry Current Context (VI/XIX) Office Space The office market in Portugal is quite competitive and recorded a tremendous change: new or rebuild properties, eco-efficient construction, modern and design-oriented, close to public transportation. Calls centers, financial services and technology are the most active sectors in terms of occupancy of new office space, as a result of growing availability of modern office space. Prime Rents: are expected to see further pressure to decrease as landlords compete for tenants. Vacancy rates 2012: 12%, the highest ever recorded Total Vacant Area (sqm): 545,000 (Lisbon, 2012) Space currently under construction: almost two thirds is pre-let. (Out of town) The trend in prime rents has been clearly downwards in the last 7 years, in major Lisbon office areas. Source: Cushman & Wakefield, Marketbeat Portugal, Spring 2013 Source: Jones Long LaSalle, Portugal Market Pulse, 2012 Q4 21

23 Potential for development Industry Current Context (VII/XIX) Shared Services & Outsourcing 1.Shared Services and contact Centers : Overview 22

24 Potential for development Industry Current Context (VIII/XIX) Shared Services & Outsourcing 2.Outsourcing services: Overview The Outsourcing activities are growing fast across the country. Currently, this industry represents around 900 Million (0.54% of GDP), still below the European average. It is expected an increasing employment through the creation of 10,000 new jobs and the value generated achieve one billion in productivity gains. Outsourcing Value 2012 (Million ) 23

25 Potential for development Industry Current Context (IX/XIX) Shared Services & Outsourcing 3.The Industry Association Portugal Outsourcing gathers the TOP IT and BPO companies in the country, with the objective of contributing for the development of the Portuguese Outsourcing Industry promoting best practices, stimulate the creation of competence centers and disclose the offer and the outsourcing activity in Portugal. It represents 85% of the BPO and IT market share. Members 24

26 Potential for development Industry Current Context (X/XIX) Shared Services & Outsourcing 4.Main cities attracting services in Portugal Largest cities in Portugal Porto and Lisbon concentrate the main services centers. But smaller cities are also attracting IT outsourcing activities and shared services, for their lower costs, dynamic and skilled local university graduates and higher office vacancy rates. 25

27 Potential for development Industry Current Context (XI/XIX) Shared Services & Outsourcing 5.Contact Centre World Awards 2012 Portugal is top Performer in key areas of SSC sector, showing its value among other countries from EMEA Region and at worldwide level. 26

28 Potential for development Industry Current Context (XII/XIX) Shared Services & Outsourcing 6. Breaking News Source: aicep Portugal Global 27

29 Potential for development Industry Current Context (XIII/XIX) Reference Players 1. NOKIA SIEMENS NETWORKS 2. MICROSOFT Number of Employees Number of Companies Served Number of Employees 28

30 Potential for development Industry Current Context (XIV/XIX) Reference Players 1.NOKIA SIEMENS NETWORKS 2.MICROSOFT Number of Employees Number of Companies Served Number of Employees 29

31 Potential for development Industry Current Context (XV/XIX) Reference Players 3. SIEMENS, S.A 4. XEROX Portugal 30

32 Potential for development Industry Current Context (XVI/XIX) Reference Players 5. FUJITSU 6. SOLVAY Number of Employees Number of Companies 31

33 Potential for development Industry Current Context (XVII/XIX) Reference Players 7. CISCO 8. BNP Paribas Securities Services 32

34 Potential for development Industry Current Context (XVIII/XIX) Reference Players 9. ALTRAN 10. ADIDAS 33

35 Potential for development Industry Current Context (XIX/XIX) Reference Players 11. INFINEON 12. TELEPERFORMANCE Number of Companies 34

36 Industry Knowledge Recruitment Agencies 35

37 Institutional Environment Government Incentives Incentives for the industry are given based on the standards defined for productive investments in general, with tailored conditions aligned with each company's specific needs. These conditions are negotiated and defined together with aicep and IAPMEI. There are many mechanisms available Financial grants Fiscal grants Training grants Job creation incentives Ad-hoc negotiated conditions 36

39 aicep Portugal Global Overview Who are we? We are a Business Development Agency, focused on the development of a competitive business environment that contributes to the international expansion of the Portuguese Economy Mission Increasing the country s competitiveness Promoting large private investment Fostering the internationalization of Portuguese companies Values Focus on clients. We serve our clients in accordance to their requirements through various solutions and long-term relationships Selectiveness. We direct our activity towards projects and markets that make a better contribution to company competitiveness and the sustainability of the Portuguese economy Excellence. We seek to exceed expectations by means of a rigorous approach, effectiveness, enthusiasm and a willingness to innovate 38

40 aicep Portugal Global How can we help you? Single point of contact in all phases: Pre-investment, Incentives negotiation, Settling in and After care Pre- Investment Incentives Negotiation Settling In After Care Dynamic approach focused on the client or investor Government business entity, flexible, free of charges and streamlined services Promoting a direct negotiation with companies, through which a tailored approach to incentives may be applied in order to define a global package that fully satisfies the investor's needs 39

41 Portuguese Business Support Services A great investment opportunity A favorable country A promising industry A meaningful partner Industry-related picture Strategic location Qualified Workforce Competitive costs High-quality infrastructure Shared services & outsourcing Business opportunities + + Cost competitiveness Good office space Dynamic approach Focus on client or investor Flexibility and no charges Point of contact in all phases Business friendly environment Attractive incentives/grants International players Incentives & grants Direct negotiations Tailored incentives package The right opportunity to invest in an attractive business with solid conditions Suggestion, to be filled per industry 40

42 For further information, please contacts us aicep Portugal Global Headquarters Overseas Network Lisboa Av. 5 de Outubro, Lisboa Tel: Porto Rua Júlio Dinis, 748 9º Dto Porto Tel: Select the region and then the country and note the coordinates of AICEP network: Webmail: [email protected] Website: eaicepglobal.aspx