Latvia Proves Right for Cytec

Interview with Egbert Boerrigter, Director Shared Services, Cytec

BH: Egbert, thanks for speaking with me today. Could you start out by describing Cytec’s operations to our readers?

EB: Cytec is a global specialty chemicals and materials company. We employ about 5,500 people across the globe and we decided to set up a shared service centre for our North American and European operations. We have quite a broad scope, for being a relatively small company — about 5,500 people, with an approximately $3 billion turnover. Our centre includes pieces of finance, HR, procurement, data management and IT.

We have a multi-functional shared service centre since we needed a critical mass to establish the centre. In finance we do the more traditional things, like accounts payable, accounts receivable, as well as collections. We also do a range of financial accounting — things like fixed asset accounting, cost accounting, inter-company billing and general ledger accounting. And within HR we do payroll services, employee data management, and what we call employee life-cycle services. That last part includes recruitment services and administrative support for training. And in procurement we provide support for both direct and indirect procurement.

As far as IT is concerned, we offer first line support and an IT help desk for Cytec globally. So even though the scope for our shared services centre is primarily North America and Europe, for the IT help desk it’s global. In fact, two members of our team are not in Riga but are based in Asia, in Singapore; they are part of the global IT help desk organisation, which offers support 24 hours a day. From February onwards, we’ll also be offering some remote support and second level support IT services.

Given that Cytec has such global operations, as you’ve described, why choose East Europe as your shared services base?

Our location team looked at many different aspects, but what was of primary importance for us was access to a good pool of talent – talented people that we can recruit. There needs to be an affinity, in terms of culture, to the rest of the organisation.

And you are talking about the international organisation?

It is international, yes, but the bulk of the activities and the biggest proportion of the organisation is in North America and Europe. What is really important for us is language capability. In our shared services centre I currently have seven different language capabilities, which are easier to find in Eastern Europe than, for example, in Asia, where a lot of shared services are moving today.

I would imagine, when you’re talking about language capabilities, Egbert, we’re talking about the variation that you find in Europe?

It is primarily the Western European languages, yes. Besides English we speak German, French, Spanish, Italian, Norwegian and Dutch.

Apart from languages, what are some of the other advantages in Riga?

Time zone is important. One alternative would be to go to Asia, but that means working through the night, given the regions we support. That’s obviously possible but it brings in a lot of additional complexities. From Eastern Europe we work late to support the US, but for most of the functions, we don’t need to work after 11 o’clock in the evening. So the time zone differences work in favour of Eastern Europe.

And what about the costs? When you work out the value proposition of Eastern Europe versus, for example, Asia, were costs significant for your location team?

Cost is significant, yes, and there is a cost advantage, in Asia. But cost is only one element in the overall picture for decision-making and we felt we wouldn’t be able to operate there based on time zone and language requirements.

What are your plans for expanding scope, Egbert? I know you’re regionally focused right now, but are you aiming for global business services?

Yes, in the course of time I think we’ll see a natural progression towards more global services. IT and data management are already global today. Also for Asia and South America, in the course of time, we may move towards a more globalised services model. Today I would say we’re not a global services centre.

Do you feel that you could supply those other regions by up-skilling and expanding your Latvian team?

We will be looking into that. I think supporting Asia from Eastern Europe is possible but it’s not a natural choice, because typically costs are lower in Asia; you don’t have the benefit of the time zone and you don’t have the need for the languages. In fact, you need other languages that you may not be able to get in Latvia easily.

And what about Latin America?

Latin America would be possible, because both language and the time zone work fine. So I think you can pretty much cover two out of the three regions very well from Eastern Europe.

You mentioned data management just now. That’s a very interesting subject for a lot of practitioners today. When did you start to include data management in your shared services?

We started taking about data management in the beginning of 2010 and we progressively took on more activities and more people. We provide data management for vendor and for customer data, and we do this in a multitude of systems. Historically, Cytec has grown through acquisitions and we are not on a single ERP system; we work with a multitude of systems, so there’s quite a lot of data administration that we need to take care of. So, progressively, we took on a matrix of combinations of customers, products and suppliers, across each of these systems. We still haven’t incorporated everything today.

Thank you for your time today, Egbert.

Egbert Boerrigter will be speaking at SSON’s Eastern European Shared Services Summit 2012 in Budapest March 19-21. Visit www.ssoeasterneurope.com for more information.