Costs

In 2018, labor costs in the sourcing industry increased by 17.2% y/y, at a significantly lower rate than the 19.5% rise of the aggregate operating revenue. In 2017, the total labor costs had grown at a slightly faster rate of 20.7% y/y. Labor costs grew across almost all segments in 2018, with the Other BPO segment expanding at the highest rate of 22.4% y/y, closely followed by the ITO and SSC sectors, with growth rates of 20.4% and 19.5%, respectively. The KPO segment saw the slowest increase, of 4.2% y/y to EUR 50.4 mln, while HRO was the only segment to decrease its labor costs on an annual basis - by 6.0%.

In terms of social security contributions, the annual growth of the industry was significantly faster compared to salary costs – 23.2% y/y, with all but one segment reporting double-digit rates in 2018. The KPO segment even doubled its social security contributions to EUR 12.7 mln from EUR 6.2 mln in 2017. HRO was the only segment with falling social security contributions, albeit by a moderate 0.7% annual rate.