No. 16
Summer 2002
Page 2
IN THIS ISSUE
1. Trend: Centralizing European activities
2. Outsourcing of Business activities
3. Low transportation costs make Netherlands attractive location in Continental Western Europe.
4. Dutch Corporate income tax reduced to 29% and 34.5% respectively
5. Ministry of Justice speeds up procedure for Dutch legal entity 'BV' or 'NV'
6. Hong Kong and the Netherlands sign Technology MOU
Outsourcing of Business activities
 
Faced with the current fast pace and complexity of the global marketplace, companies have very few trusted paths to success. However, two guidelines that always point companies in the right direction are:

1. Concentrate on what you do best.
2. Be as efficient as possible.

Consequently, Business Process Outsourcing ("BPO"), the contracting of non-core business processes to a specialist outsource partner, has now become a trend. Non-core processes consist of the essential day-to-day operations that are universal in the corporate world, like accounting, human resources, and procurement. As a business strategy, BPO allows companies to

consolidate and streamline their "back-office" operations and focus on their core area of expertise to maximize the potential benefits of the EMU. An important factor that raised interest in BPO is the slowing of the global economy which resulted in companies adopting prudent fiscal strategies and cost cutting exercises.

Although larger companies have the most to gain from BPO, for they operate across borders and have sizable 'back office' (administrative and transactional) departments, it is an appealing prospect for large and small operations alike. As multiple processes are outsourced, synergies can be identified. Thus, smaller companies can benefit from the pan-European reach of the outsourcing partner, because these partners can help them manage operations in countries where their resources are limited.

Companies can centralize one or more activities, or operations, for an entire regional market in a single office, or office warehouse combination, to create and enjoy the benefits of economies of scale, increased efficiencies and resultant cost savings. However, a complexity presented by operation centers, particularly in Europe, is the need to gather a group of professionals from many different countries under one roof to work together. While Europe often presents itself as a single entity on the world economic stage, it still consists of Germans, Frenchmen, Italians, and Spaniards with vastly divergent business cultures. To avoid problems associated with this diversity, some companies have even gone so far as to set up e.g. a virtual Shared Service Center, which centralizes administrative functions in a company's system, but not in an actual physical location. At any Operation Center (or SSC), people management and team building are essential.

And this is exactly where one of the great advantages of the Netherlands comes into play. The Netherlands has a diverse multicultural and multilingual nature and a long tradition of bringing Europeans of different nationalities together on neutral ground. This makes it the ideal location for pan-European operations such as an SSC, where serving a common interest is of the essence.