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The Development of e-business Services in Poland

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The Development of e-business Services in Poland Elzbieta Wyslocka and Renata Biadacz Abstract Services based on the potential of information technology are named e-services. They are particularly noticeable
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The Development of e-business Services in Poland Elzbieta Wyslocka and Renata Biadacz Abstract Services based on the potential of information technology are named e-services. They are particularly noticeable in the industries related to finance and consulting. In this context no doubt that they have critical significance for a sector of modern business services. Today's business services primarily consist of centers with foreign capital, such as a common service center, business processes outsourcing, IT outsourcing as well as research and development (R & D) center. The article presents considerations whose goal is to underline the importance of e-business process outsourcing services, including financial-accounting services in today's world, when we stand in front of a vast variety of social and technological challenges. The purpose of this work is to obtain knowledge of utilization and development of financial services in outsourcing as well as e- business services in Poland. The research is based on the need to deploy solutions in order to improve business services. The methodical base to this dissertation consists of the literature analysis and reports developed by the Leaders of Business Services containing data for development of e- business services in Poland. Keywords accounting, services, e-business. I. INTRODUCTION owadays the Internet has become a medium, which Ndetermines almost every sphere of human activity. It has an impact on conducting the business, settlement of official errands, leisure time, and even shaping human relationships. From a business perspective, it is noticeable that the Internet facilitates creation of new business areas, which use virtual marketplace. Through the Internet, companies can offer a lot of services, often unprecedented in the real world [1]. This is particularly evident in financial sectors (insurance, banking, accounting), and related to widely understood consulting. This approach of companies and organizations is to develop a new model of provision of services based on the potential of information technology [2], so-called e-services. There are many definitions of e-services in the literature. Because of difficulties in defining e-service, it is usually recognized and understood as a service that meets the following conditions: - is provided in partially or fully automated way by information technology, - is carried out on the Internet and via the Internet, - is individualized with E. Wyslocka (corresponding autor) and R. Biadacz are with the Department of Management, Czestochowa University of Technology, Czestochowa, Poland (phone: ; fax: ; e- mail: zim.pcz.pl). respect to the recipient (personalized), - parties of the service are located in different locations (remote service) [3]. According to another, much broader approach, e-services are understood as a new form of providing services through the Internet, from the moment of contact of the company with the client in order to present the offer, through ordering services, providing it and contacting with the client after the end of contract [4, 5]. E-services market, both in Poland and in the world is growing rapidly, covering all sectors and all areas of the traditional market. Many Internet services occur because of the simplicity and greater, as opposed to the traditional market, availability to the customer. Relatively low start-up cost and a very large potential market audience are also important elements [2]. The growing popularity of the Internet and at the same time easier access to it cause that there are no restrictions in this type of communication in the form of language barrier, the time or location [6]. Research and megatrends indicate that the most rapidly developing areas of business, in which e-services will play a key role, due to the need to reduce costs and save time, include [1]: support of business (professional business services, financial intermediation), electronic banking services, cloud computing and web solutions, e-commerce, - education and training of employees (elearning) [7]. It should also be noted that modern enterprises, aiming to run business more efficiently must be constantly active, which is expressed, among others, in the ability to continuously develop and adopt new ideas and create new value. Often, it is emphasized that presently, only those companies that are flexible enough and can adapt to demands of an increasingly dynamic and globalized environment, will be able to survive and develop [8]. The complexity of the business, the level of complexity of the manufacturing processes, relentless pressure to reduce costs and increasingly common trend among companies to focus on key activities (core business) make some or all of the processes (activities, resources) increasingly entrusted to specialized companies. Using outsourcing becomes more and more important, which largely reflects the changes taking place in the business environment of enterprises [9]. Although the concept of outsourcing is not a new concept, it is the process, which systematically gains ISBN: greater popularity, as indicated by studies carried out in 2011 by the Outsourcing Institute [10]. M. Trotsky defines outsourcing as a project for a spin-off of realized functions from the organizational structure of the parent company and transferring them to external service providers [11]. W. M. Lankford and F. Parsa indicate that outsourcing involves disposing of tasks, which may be waived or that can be done cheaper and often better outside the company. The company focuses on their core competencies, which represent competitive advantage. In contrast, areas that don t provide this advantage, and are often only a secondary or incidental, are separated from the business unit processes and carried out by external companies [12]. In this approach, the authors draw attention to new features on this phenomenon, such as the cost and quality of external services. Both factors play a significant role. The use of outsourcing is in fact justified when the outsourced functions are performed better or at least not differ from the current level. Costs should be lower than those generated by the business prior to the separation of a particular function [8]. In the broadest perspective outsourcing is seen as a restructuring project, which aims to increase the flexibility of actions by reducing the unit's organizational structure through reduction in the number of cells, organizational positions and management levels, which lead to a reduction of employment and thus reduction of costs. It is connected with the management concept of Lean Management [14]. Among types of outsourcing the following concepts can be distinguished: offshoring (moving business to other countries), nearshoring (ordering part of the function to the same or a neighboring country to be executed by an external firm) and centralized services, involving separation of certain activities in several divisions of the company and moving them to one center owned or controlled by the parent company [15]. The concept of outsourcing is also linked with such terms as subcontracting (which is a transfer of part of the burden of the contract to another, independent business entity, while the order is made by the main contractor for the project and must assume responsibility for the execution of the whole project), e-outsourcing (is to control the entire outsourced process of with the help of e-business solutions, using the Internet) [9]. Outsourcing has gained particular importance in the 80s and 90s, when companies began to abandon their non-core activities. Initially, it covered mainly the huge data centers and spread to other areas of information technology, e.g. network management and storage management. In a further stage, it was related to administrative processes within the enterprise. At that time, the outsourcing of payroll, staff consulting, human resource management, and outsourcing of financial and accounting processes have been established in large enterprises. The next stage in the development of outsourcing is to isolate the key operational processes in the enterprise - logistics outsourcing, call centers, operations of the banking facilities. II. OUTSOURCING OF FINANCIAL AND ACCOUNTING SERVICES On the basis of aforementioned considerations, it can be concluded that outsourcing is a kind of long-term cooperation and the special bond between organizations. A typical services outsourced to an external entity are financial and accounting services. Outsourcing of financial and accounting management as a strategy is important for companies in order to maintain a growth of its effectiveness. This is a relatively new concept in the management of the company, which is becoming more and more popular [13]. Of course, small companies often use the services of accounting offices and abandon running bookkeeping inside the unit. Note, however, that larger companies can also benefit from the financial and accounting outsourcing. Along with the growing scale of business, the complexity of performed tasks increases, and thus there is more possibility of using outsourcing and the potential benefits associated with this decision are greater. It is worth noting that not only accounting services are in high demand among entrepreneurs, but also payroll or financial services experience increased interest in outsourcing. The result is that outsourcing companies expand the package of provided services by these much-related services. In order to improve and broaden the scope of their services, they employ highly qualified specialists (HR, payroll, accounting), but also more and more often, due to the considerable complexity of the problems, collaborate with specialized tax offices. This allows to maintain the high quality of services, and solve problems in a broad sense. The main advantages associated with a decision to outsource, especially accounting, include [16]: - possibility of cost savings, - greater financial flexibility resulting from the reduction of fixed costs, - desire or need to focus on key activities, - flexibility in employment, - improvement in the quality of implementation of the accounting function. It should also be noted that the accounting service provider, i.e. for example accounting offices, thanks to dozens of clients achieve significant economies of scale, which are not available for small and medium-sized enterprises, implementing the accounting function within their organizational structures. It represents also a significant reduction in the risk, because it is the accounting office, which at this point takes over the risk and is responsible for any errors in the accounts. A relatively high liability insurance policy held by the service provided contributes to the safety of clients. Another important aspect of risk reduction that occurs when using financial and accounting services outsourcing is protection against the negative consequences of unexpected absences (e.g. disease) of staff performing the function of chief accountant. Provider of accounting services, or outsourcing companies, has many professionals who can replace each other, and the disease of any of them does not affect the price of the service, or interfere with the course of its implementation. ISBN: Transaction processes, which seem to be simple, repetitive, and mass, are frequently subject of financial and accounting outsourcing in the organization. This translates into the release of specialized employees from the performance of standard, repetitive tasks. It allows using their potential in the processes, the execution of which is increasingly expected in financial and accounting departments - the processes responsible for the processing and delivery of information to support decisionmaking, often shaping the competitive advantage of the organization. What is more, expectations towards such processes intensively grow - information must be generated faster and must be more accurate. They should now be the main activity of the finance and accounting departments [17]. III. THE DEVELOPMENT OF THE MODERN BUSINESS SERVICES SECTOR IN POLAND The development of the business services sector is one of the most important manifestations of globalization. It is a source of enterprise competitive advantage and determines the possibilities of their development. Poland is one of the most interesting locations on the map of global business services. The data indicate that more than 10 years ago, there was no such business services sector in Poland, and over the years the development was so strong, that Poland became number 1 in Europe and number 3 in the world [18]. In Poland there are already 470 service centers with foreign capital, belonging to 325 investors and employing people (as of ). 66 new service centers have been established since the beginning of New investors, which did not have service centers in Poland yet, have formed 60% of them. The ten largest business service centers (Cracow, Warsaw, Wroclaw, Gdansk Agglomeration, Lodz, Katowice Agglomeration, Poznan, Bydgoszcz, Szczecin, Lublin) employed a total of 95% of all employees service centers with foreign capital in Poland. Business services sector is therefore one of the fastest growing sectors of the Polish economy. Financial sector in Poland, which grows rapidly, is a forge of human resources for the business service centers. The financial services sector (BIFS - banking, insurance, financial services) are activities for banks, insurers and other financial institutions. Polish financial services sector is the biggest in Central and Eastern Europe. For several years, is also one of the fastest growing markets in Europe. In the field of business services, a clear trend has been noticeable for several years, shifting the focus from traditional customer service to solutions based on specialized knowledge (Knowledge Process Outsourcing) and highly qualified staff. This applies to both the core processes of the organization, as well as supporting functions such as finance, accounting, HR and IT. Understanding market segment (i.e. vertical) for which the services are performed, and access to experts, is the key to success. After a slowdown that took place in , in the years 2010 and 2011, the global market for outsourcing services for the financial sector has been growing at more than 16-percent annual rate [19]. Processes shaping the international division of labor in the global economy led to the strengthening of the Polish position as one of the most often chosen service centers location for business process outsourcing (BPO, ITO, SSC, R&D) by the investor 1. Employment in the modern business services sector in Poland has been steadily increasing. Compared to the beginning of 2012 the number of employees of service centers financed by foreign capital increased by over 50% - from to people. Over the past 12 months (from April 2013) at least new jobs have been established, of which the most in Cracow ( 5 000). The average annual increase in employment in the country in a few years (from 2009) stood at about people. Centers in Poland have 10 out of the 25 largest banks in the world (Deutsche Bank, HSBC, BNP Paribas, RBS, Citigroup, ING, Santander, UBS, UniCredit and Credit Suisse), now making Poland one of the Europe's leading BIFS business services sector. It is also worth to note a number of Polish outsourcing companies working for clients in the financial sector. Examples include among others: Ericpol, Outsourcing Experts Group (OEX), Casus Finance. It is worth to underline that the vast majority of service centers with foreign capital in Poland, acting on behalf of the financial industry, delivers offshored services, working mainly for their counterparts from Western Europe and the USA. It is estimated that services, which came to Poland thanks to offshoring, are provided by several thousand people - 2/3 of center employees working with foreign capital for the financial industry (i.e. also outsourcing companies) [19]. Given the current development of the industry, it can be concluded that centers located on Polish territory, will be able to carry out all operations for investment banks, international brokerage, custodian banks and other financial institutions in the near future. It should be noted that Polish workers are well prepared to provide services to entities in the financial sector. Knowledge of foreign legal conditions (including regulatory issues) related to the implementation of business processes along with the ability to provide services in several world languages, represent an added value for service centers located in Poland. There are several organizational models of service activities in BIFS sector. In case of financial services the most common type are hybrid models, in which the company uses both outsourcing and services offered by captive centers. The second, slightly less popular operating model for BIFS services are shared service centers (captive centers). It is worth noting that the financial services sector has been one of the first, in which such operating centers were established. The 1 The study adopted a broad definition of the industry, including such activities as: shared service centers (SSC), companies providing business process outsourcing (BPO) and IT outsourcing (ITO) as well as centers of research and development (R&D). This definition was adopted after the report Sektor nowoczesnych usług biznesowych w Polsce, Association of Business Service Leaders In Poland (ABSL), 2014, p.7 ISBN: popularity of shared services on a global scale is not decreasing. The activities performed by these centers include both supporting key processes (core processes, e.g. for BIFS sector companies these are risk analysis, key processes related to capital markets, credit card services, etc.) and support services (support, for example IT and HR support). On the other hand, BPO centers (business process outsourcing) usually offer support services, but in Poland more often have the ability to support key business processes [19]. Services in the BIFS sector experience a rapid development due to the need for cost optimization, standardization of processes and the development of technology, the need to comply with regulatory requirements and to obtain access to talented employees. In recent years, a financial and accounting processes in Poland were provided by the largest number of business service centers. It should be noted that the centers usually offer at least two such processes. Finance and accounting and IT services. Centers operating in Poland won and still maintain many major global customers. A common challenge undertaken by centers operating in Poland is the need for standardization of financial and accounting processes between local client, enabling the client transformation processes at the global level and supporting the expansion plans of the client. Often, provision of financial and accounting services requires to meet the customer expectations concerning not only reduction of operating costs, but also improvement of the financial indicators, including on recovery of or collection of overdue receivables and the time to deal with potential disputes. At the same time, such actions must be accompanied by a high level of service to maintain key customers, posing problems with timeliness, but subject to custom service [19]. An example might be Capgemini 2, which, among others has been providing financial and accounting services to one of the world's market leaders in insurance products and services for 8 years. This required the transfer of operations from the client to the local Polish offices, which resulted in the transfer of knowledge and documenting processes by describing them in the form of hundreds of detailed procedures. Currently, this client service is being provided by a fully dedicated workers in two Ca
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