LITHUANIA: Paroc group to pool finance, accounting forces in Vilnius

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Lithuania may never rise to a global player in the shared services market yet it is getting its share of the business due to its favourable geographical position, available language skills and – not least - financial incentives.

The last name to jump on the bandwagon is Paroc, a Finland-based major European mineral wool insulation maker. The firm has decided to pool the group's finance and accounting functions into a new service centre in Vilnius. Lithuania's capital is where Paroc's only Baltic production base is located.

"Paroc has production plants in four countries, Finland, Sweden, Poland and Lithuania, but the group's sales activities cover many more European states with sales offices in both the East and West. So during this year all finance and accounting jobs from these locations will be pooled in Vilnius," says Jonas Liubertas, head of Lithuanian Paroc, to news2biz.

"As many other businesses, Paroc is striving to make every possible process more efficient, so accounting is no different. Several options for establishing such a centre were discussed by the group, including locations outside the EU but Vilnius won thanks to a combination of factors, such as easy access by air, availability of skilled employees and their language skills."

Insulating against high costs too: Finnish Paroc will
provide accounting services for group companies
from Vilnius. Picture: Judita Grigelyte, Verslo zinios

"In the end we plan to have around 40 people in the new financial shared services centre operating in a variety of languages. English, of course, will dominate but we will also need skills in Scandinavian, German and eastern European languages – we hope to find them all," Liubertas says.

The new centre will have four teams: customer invoices and credit collection, supplier invoices and payments, general accounting, and reporting. The hiring process is already underway as is firing of employees at Paroc's international offices. Paroc would not disclose the planned investment but says the biggest share will go towards an IT infrastructure. EU and government aid will be sought to cover part of the investment budget.

Paroc in Lithuania employs nearly 200 staff, last year it turned over LTL 100m+ and reported a minor growth. Paroc group's turnover in 2010 stood at EUR 348m with nearly 2,000 staff.

SSC inflow deepens

In January, news2biz reported about a similar shared services centre development initiated by Danish Nielsen & Nielsen Holding (see no 329 page 3), and then there are other names on the list.

The trend is often supported by the government in the form of financial incentives. Apart from that, the main reasons why investors choose Lithuania is its skilled staff, language skills and top class IT infrastructure (best global results in upload speeds and fibre broadband penetration).

The government's overall vision is to turn the country into a service hub for Northern Europe by 2015 by attracting higher added value jobs. The list of companies that already have their shared services centres in Lithuania include WorldOne, Unicall, SEB, Western Union, Barclays, CSC. Norwegian Mirror Accounting and Storebrand Group's projects are under development (see no 320 page 10).

Internal devaluation works

The 2011 edition of US A. T. Kearney business consultancy's Global Services Location Index placed Lithuania's attractiveness as a shared services and outsourcing destination no 14th, just below Estonia (11) and Latvia (13).  

The Baltic trio are now the highest ranking European locations on the list that stacks up countries by financial attractiveness, people skills and availability and business environment.

All three nations advanced compared to the 2009 ranking: Lithuania and Estonia moved up 5 notches while Latvia jumped 14. A. T. Kearney attributes the progress directly to the economic crisis that gave birth to internal currency devaluation that in turn has brought local wages down.