Post on 01-Dec-2014
description
Offshoring
Relocation opportunity study, execution and oversight
Stephanie Baruk sbaruk@chappuishalder.com
AGENDA
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Business Drivers of an Offshoring Program
High level approachKey Challenges and Success FactorsAppendix: Focus on the methodology
BenefitsBusiness drivers
Reduce significantly salaries (up to 55% depending on location) and premises costs (up to 60% depending on location)
Being granted with specific Tax incentives
Achieve economies of scale
Cost reduction1
Business Drivers of an Off-shoring Program
Take advantage of the program to homogenize and standardize processes in both locations
Improve efficiency of the processes and redeploy workforce in onshore location
Process standardization and improvement2
Focus on core competencies in the onshore location: retained staff focus on “value‐add” activities
Establish or reinforce a local presence
Implement a “multi‐tasking” resources pool and create synergies in the offshore location
Create a shared services center able to assist several countries & business lines and more flexible/ agile if volumes increase
Optimizationof competencies3
Set up a “Follow The Sun” organization with overnight coverage
Comply with specific BCP requirements (According to the FED US bond settlements activity has to be able to settle, clear & close out from a location >100 miles from the main processing center)
Ensure constant back up and full business continuity
Coverage extension4
3
Partial off/near shoring potential
Partial off/near shoring potential
Off/near shoring potential
Overview of Functions Potentially Transferrable within an Operations Department
Sensitivity vs. Proximity matrix Methodology used
Based on this analysis teams are identified as fully or partially near/off-shorable
10%0% 30%20% 50%40% 70%60% 90%80% 100%
10%
0%
30%
20%
50%
40%
70%
60%
90%
80%
100% Sensitivity
Proximity
Sensitivity
Proximity
Team were categorized according to several aspects indicating proximity needs:
Client facing
Physical proximity
Shared time‐zone
Language skills
Cultural Proximity
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Teams were categorized according to several aspects indicating business sensitivity:
Legal/regulatory restriction
Specific stakeholders requirements
Specific staff skill requirement/labor market offering at off/near‐shoring location
Application sensitivity
Operational risk level
Complexity of tasks
Capital Market Ops
Corporate Banking Ops
AGENDA
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Business Drivers of an Offshoring Program
High level approach
Key Challenges and Success FactorsAppendix: Focus on the methodology
High Level Approach of an Off-shoring Program
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Business Case
Target location choice
Near vs. Off location
Pool of resources availability (specific expertise…)
Savings (base salaries, premises, tax incentives…)
Expected savings & ROI
Cost reduction target
Return on Investment
Strategy definition
Global vs. Regional
Coverage strategy (Same time zone vs. worldwide coverage: ”Follow The Sun”)
Hub/ Regionalization
Number of waves to be implemented
Affected perimeter
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6 weeks*
Transfer OpportunitiesStudy
Identification of transfer constraints
Operational risks (process stability, automation level, function sensitivity)
Specific expertise required and related recruitment issues
Critical size
Regulatory constraints
Proximity needs with other units/departments or clients
Business case validation
Synthesis of the functions to be transferred
Scenario building and target set up choice:
• Functions to transfer
• Choice between near shoring or offshoring
• Estimation of the overlap period required
• Calculation of the project costs and related savings
Definition of different Implementation phases
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3‐4 months*
Implementation Follow‐up, Optimization & Oversight
HR strategy definition Onshore location: retention of top performers
Offshore location: assessment of the staff turnover and identification of retention strategy
HR policy review (Holiday policy…)
TOM optimization Improvement of communication between off shore and on shore location
Workload optimization: as‐is analysis and identification of opportunities for process improvements
Workflows and systems enhancement
Optimization of synergies in both on and offshore locations
Performance monitoring Satisfaction study: evaluation of team performance on a regular basis and identification of potential issues , quick wins and long term remediation actions
Define the escalation process Track the realization of the business case
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Execution/Transition Phase
Target organization Definition of Target Operating Model (Governance, org. charts, P&P, SLAs…)
Definition of TOM KPIs
Project Management Project Monitoring Savings & costs monitoring
External & internal communication Dedicated meetings with affected staff, HR & Managers (and design of RIF matrix)
Press release
Recruitment Posting of job offers (internal & external) Hiring process (rounds of interviews, final approver ...)
Regional organization charts (solid vs. doted reporting lines)
On‐boarding Task force set‐up including Logistics, BCP, IT, Security and HR
Training Definition of a training plan for each department (e.g. specific content, active/ passive shadowing) & training material
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1 year** Timing for information only as it may vary depending on the project’ scope
AGENDA
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Business Drivers of an Offshoring ProgramHigh level approach
Key Challenges and Success Factors
Appendix: Focus on the methodology
Key challenges and success factorsBusiness Case
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Key Success Factors identified and proposed by CH&CieChallenges Shortfalls
Deeply analyze key indicators of the country: staff cost, O&P cost political stability, level of workforce education, languages spoken, quality of infrastructures, difficulty to travel (visa…)
Have a good overview of regulatory and legal constraints
Analyze work market depth
List the key competencies and specific required expertise
Target locationchoice
• Difficulty in finding candidates with desirable background and skills
• Salaries ending up higher than expected
• Legal issues due to cultural differences (max. working hours…)
• Additional constraints due to very high data protection (Singapore)
• Training issue due to specific visa requirements
Business Case1
Transfer OpportunitiesStudy
2Execution/Transition
Phase
3Implementation Follow‐up, Optimization & Oversight
4
Ensure that offshoring strategy to be established is a real leaver of the whole business strategy
Have a very clear overview of the offshoring strategy to be implemented
Strategy assessment• Offshoring strategy not in line with overall business approach
• Lack of clear strategy overview
Ensure a proper current state assessment
Define appropriate performance measures
Assess qualitative & quantitative benefits
Check the organization “readiness “
Feasibility study • Organization which is not ready to support a significant transformation initiative
A
B
C
Key challenges and success factorsTransfer Opportunities Study
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Business Case1
Transfer OpportunitiesStudy
2Execution/Transition
Phase
3Implementation Follow‐up, Optimization & Oversight
4
Key Success Factors identified and proposed by CH&CieChallenges Shortfalls
Spend time to design the overall target operating model and get the buy‐in of all key stakeholders
Take advantage of time zone differences (‘Follow The Sun’)
Push end‐to‐end processes instead of tasks
Consistency and efficiency of the target
operating model
• Offshore teams performing a multitude of micro‐tasks with no connection between them
• Onshore teams placing orders on a ad‐hoc basis to offshore teams
Communicate only with Heads of department and middle mgmt until the transfer opportunities are identified and validated
On‐board team leaders at the beginning of the project and implement follow‐up on a regular basis
Confidentiality and Communication
• Resistance and lack of cooperation from Middle Management
Analyze the existing process entirely to identify potential stickiness with other departments
Ensure critical size is reached for each unit, global consistency and leverage on potential synergies among transferred units
Transfer opportunities identification • Constraints not properly identified
A
B
C
Key challenges and success factorsExecution/Transition Phase
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Business Case1
Transfer OpportunitiesStudy
2Execution/Transition
Phase
3Implementation Follow‐up, Optimization & Oversight
4
Key Success Factors identified and proposed by CH&CieChallenges Shortfalls
Explain the various stages of the governance model
Communicate the criteria to move from one step to another
Establish clear RACI and kill potential redundancies
Process ownership & understanding of the new organization
• A‐team vs. B‐team syndrome creating de‐motivation
• Difficulty to apprehend who is in charge of what• Offshore teams perceived as a separate entity
B
Draft transition check‐list for communication between teams Test the readiness of IT systems and assess the quality of the process documentation early in the project
Design a transversal training plan
Transitioning processes without compromising
on risks
• Delays in the roadmap due to unforeseen logistical issues (visa, space planning, IT connectivity…)
• Lack of documentation & training materials
C
Build brand awareness through corporate events (buzz)
Invest in premises and quality of the working environment
Secure a pool of ‘multi‐tasking’ resources
Recruiting & retaining CIB‐skilled resources
• Limited brand image in the local market to attract talents
• Inappropriate planning of the recruitments leading to delays in the roadmap
D
Structure with HR a well‐structured, open mobility plan and anticipate/preempt open positions in advance
Explain what is going to happen and how you plan to handle itChanging mindset
• Senior executive delivering conflicting messages• Fear of losing the job and inability to call into question (acquisition of new skills)
E
Negotiation and dialogue with working councils and adaptation of the communication plan
Focus change management efforts on middle managers / team leaders
Keeping the communication under
control
• Project going public unexpectedly, reputation & media risks not anticipated
F
Monitor dependencies with other projects Define a unique sponsor to ensure the lead of the project Set up a project structure with frequent committees, comprehensive project tools & an escalation process to ensure alerts are quickly identified
Suitable governance
• All dimensions of the project (process, organization, time, cost, HR, communication, IS, etc.) not properly monitored
• Issues not escalated
A
Key challenges and success factorsImplementation Follow-up, Optimization & Oversight
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Business Case1
Transfer OpportunitiesStudy
2Execution/Transition
Phase
3Implementation Follow‐up, Optimization & Oversight
4
Key Success Factors identified and proposed by CH&CieChallenges Shortfalls
Plan in the project a reorganization of onshore and offshore teams after the transfers (optimization phase)
Strengthen the headcount monitoring process globally
Agree on conversion ratio (Offshoring In – Productivity Gain) and monitor their evolution over time (underlying action plan)
Delivering the business case ROI
• Return On Investment not delivered in many cases
• Late detection of hidden project costs
• Underestimation of exit costs
• Project changes (de‐scoping) not factored in
A
Assess teams performance on a regular basis (off shore location)
Ensure that off shore location set‐up is fully up & running (no duplicated tasks between locations or tasks still performed by on shore site)
Assessment of strategy effectiveness
• Under performance compared to initial expectation
• Poor level of services quality (complaints from clients)
• Onshore set‐up overwhelmed due to partial take over from new platform
C
Review on shore and off shore HR strategy (retention packages, review of working conditions if conflict with local culture…)
Appropriate HR Strategy
• High turnover in off shore location (cultural issue…)
• Resignation of high potential staff in on shore location
B
AGENDA
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2
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Business Drivers of an Offshoring ProgramHigh level approachKey Challenges and Success Factors
Appendix: Focus on the methodology