Work Service acquires the Germans

Work Service buys out Germans Thanks to a takeover worth 30 million PLN, the employment agency will enter the Belgian market and increase its margin. Further purchases in a few weeks.

Several months of negotiations ended in success. Exact System, a company from the Work Service group providing quality control outsourcing services for the automotive industry and manufacturing, is taking over two companies from the German CRS group: in Poland and Belgium. The takeover of the Polish company means a major strengthening, as CRS is Exact System's biggest competitor, and the Belgian one means entering a completely new territory, and with a bang at that, because the acquired company holds a 25 percent share in the local market.

"Our strategy assumes development in the segment of specialized work services, which are high-margin, and geographic expansion. This transaction fulfills both goals—we are increasing competencies in the area of outsourcing and quality control, and entering a very promising market," says Tomasz Hanczarek, CEO of Work Service.

"Exact System is the company that can achieve a global scale first in the group. We are thinking about entering the USA, China, Brazil, and India, i.e., markets where the automotive industry is developing strongly. The snowball effect works here—Exact has dozens of certificates from manufacturers, which are necessary to fulfill contracts, and when a new factory opens, it automatically drags subcontractors and suppliers with it, including companies like ours," adds Tomasz Misiak, head of the Work Service supervisory board.

Leader's bonus The two companies acquired from the CRS Group cost 7.15 million EUR (30 million PLN). According to previous announcements, Work Service also has an option to buy the German CRS company and will likely exercise it within a few months. But that is not the end.

"We are very close to concluding negotiations regarding the takeover of a German company providing outsourcing services in the IT industry. If everything goes according to plan, we will sign the agreement within a few weeks," announces Tomasz Hanczarek.

"Thanks to this, we will strengthen our position in the largest and most promising market in Europe, we will gain a strong sales network, and one must remember that Poland is famous for great programmers, and in the industry, there is no language barrier because universal languages apply: mathematics and English," adds Tomasz Misiak.

Last year's series of acquisitions turned out to be a bullseye—among other things, thanks to the dynamic growth of the Hungarian ProHuman (turnover increased by 69 percent in a year), the Polish company became the largest player in the CEE-Top5 region (Poland, Russia, the Czech Republic, Slovakia, Hungary), and this, apart from prestige, also brings tangible business benefits.

"Automatically, we are invited to international tenders, which until recently we could only dream of. Our biggest competitors derive 40-50 percent of revenues from such contracts, and we—zero. We are in 30 processes with a total value of over 50 million EUR. This could be an important source of revenue growth in the future," says Tomasz Hanczarek.

Boost from the investor In this way, Work Service, which is to have 2 billion PLN in revenue this year (after the first half of the year it had 977 million PLN), achieved the goal of its five-year strategy in three years.

"That is why we are working on a new one; we will announce it within a few months. We are already the leader in the region, among the 20 largest companies in Europe and in 65th place in the world. Now our goal is to enter the top five in Europe," says Tomasz Hanczarek.

This will require further acquisitions, and here a bottleneck appears. Work Service will finance the takeover of CRS companies and the one announced in Germany with money raised from the recent share issuance (82.5 million PLN flowed into the company). And since part of it went earlier to buy back shares in ProHuman and Work Express, the listed company will spend everything.

"Of course, we could develop from generated profits, but that would mean a much slower pace. To enter the European forefront, we need investments at the level of 100 million EUR. We are considering various possibilities of obtaining financing; we will announce details in the strategy," says Tomasz Misiak.

THROUGH THE EYES OF A COMPETITOR In Poland, the market can double

KAJETAN SŁONINA, Managing Director of Randstad Polska The temporary work market has large growth prospects in the region, and in particular in Poland. The indicator describing the ratio of the number of people performing temporary work to the total employed is 1-1.2 percent, while in countries where temporary work has a long history, it is 2 percent, and in the most developed markets, it exceeds 3 percent. This shows that the Polish market can double in size. The problem is that the number of companies using temporary work is increasing slowly; there are about 14,000 of them, and there could be significantly more. Practically, the public sector, which is a large recipient in the West, does not use such services at all. In Poland, companies do not yet see the advantages; sometimes there is also strong resistance within the company. The main advantage of using a temporary employment agency for companies is not cost reduction, because the nominal cost of an employee is even slightly higher, but flexibility—the ability to adjust the number of workers to needs resulting from dynamic changes in the market: one day a company has a contract, another time the market suddenly closes or shrinks due to, for example, the weather, which negatively affects demand.