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Outsource magazine: thought-leadership and outsourcing strategy | September 23, 2017

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Financial support rules change in the EU

Financial support rules change in the EU
Outsource Magazine

With high inflation, high attrition, data security issues and challenges around levels of customer service, European companies are increasingly wanting their back and middle office operations onshore in Europe. The decision of where to put the operation is complex and requires insight into availability of skills, cost, attrition, cluster of similar companies and many more factors. One factor which also has to be considered is the level of government assistance – and that is about to change for all of Europe.

Every country in Europe has different levels of financial support they can provide, whether it’s CAPEX, training and development, or any other grants. Within the service sector one of the highest levels of assistance is through selective financial assistance – or, simply, grants for job creation.

On 1st July the level and T&Cs around selective financial assistance changed. How it changes depends on the size of your organisation and where you’re located. For example, within the UK there are only a few locations now able to support expansion of large (over 250 FTEs) existing businesses such as the west of Wales and Cornwall. So if you’re an existing contact centre operation in South Wales, Scotland or Northern Ireland and are wanting to add more call centre roles, selective financial assistance is no longer available unless you are an SME.  Similarly if you are deciding to enter a new location you have to be careful which postcode you’re entering as Northern Ireland is now the only part of the UK with 100% coverage.

The second major change is where those jobs are coming from. If the roles you create result in redundancies anywhere in Europe in the two years preceding or succeeding your new operation, these roles cannot be supported anywhere in Europe. Previously this could have been covered if there was a risk of losing jobs outside the EU to areas such as India or South Africa; this is no longer the case. In effect this loophole has been closed.

In truth how much will change is yet to be seen. Grants are in place to support areas of economic underdevelopment which are, as a result, cheaper locations to do business. The business case for choosing these locations should still stand. Further the loss of the grant only applies if you are expanding existing roles. This means if you’re a BPO provider covering customer service and want to add technical support, you can. As long as the new roles fall into a different SIC code, they can still be supported.

Is the new regime fair? Is the EU becoming anti-big business? Whatever your view the rules are here and now in place. How it will play out only time will tell.

This article was first published in Outsource #37 (Autumn 2014)


About the Author

Ryan Wray 150Ryan Wray is Business Development Director at HMC Global, working strategically with organisations and governments on location selection.

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