Business Process Out Sourcing

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Copyright 2003 neoIT | All Rights Reserved.

www.neoIT.comwww.neoIT.com

Moving Up the Value Chain:

Non Core to Core

Moving Up the Value Chain:

Non Core to Core

Business Process OutsourcingNASSCOM: ITES/BPO Strategy Summit 2003

June 12, 2003

Avinash Vashistha


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OverviewOverview

The Offshore ITES/BPO Market Market is sizable and growing

Deals are happening across a wide ranging set of scopes and price points

Numerous buyers have been signing full service BPO transactions

Not all suppliers are created equal

- ITES/BPO suppliers are coming from a variety of backgrounds

- Diverse backgrounds will influence the different supplier value propositions

and there is road to travel before it can be considered a mature market

- Todays value propositions are fairly tactical in nature versus transformational

- Most deals are still cost-driven versus total value based

- Buyers and global suppliers alike are looking at ownership options

- Domain knowledge and business process knowledge maturity is still a concern for many

offshore suppliers

- How will the market change and what does this mean for the global- minded organization?


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The Evolution of Offshore ITES/BPOThe Evolution of Offshore ITES/BPO

ComplexityofBusinessProcess

ComplexityofBusinessProcess

Time to Offshore Maturity of Business ProcessTime to Offshore Maturity of Business Process

20032003

20082008

data entry, call centers

technical support, collections

claims processing

human resources

finance and accounting

complex banking transactions

Source: neoIT


4/15Copyright 2003 neoIT | All Rights Reserved.

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ITES/BPO: Transactional to Full ServiceITES/BPO: Transactional to Full Service

The offshore ITES/BPO marketplace can be segmented into two

distinct pieces transactional and full service/transformational

relationships

Information Technology

Corporate

Strategy

Transactional

BPO

Transformational

BPO

Strategy

Core Process

Non-core Process

HR: Information Mgmt., Performance

Mgmt., Employee Administration

F&A: Regulatory & Compliance, TaxMgmt.

Customer Care: Customer

extension/selection

HR: Payroll Processing, Benefits Processing, Recruiting, Education &

TrainingF&A: Billing, Accounts Receivable, Accounts Payable

Customer Care: Help desk, customer retention/acquisition



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A Maturing Offshore ITES/BPO MarketA Maturing Offshore ITES/BPO Market

Current MarketCurrent Market

Quality Improvement Processes

Reengineering

Training

Certification Level Achievements

Education

Experience

Domain Knowledge

Cultural Compatibility

Scanner, Filenet, ACD

CTI, Links, Switch, CRM, OCRs

Technology Parks

Mature MarketMature Market

Technology

People

Processes

Reduced Risk



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The MarketOffshore LocationsThe MarketOffshore Locations

...there are a wealth of viable offshore locations

Source: neoIT

TotalLa

borCosts

TotalLa

borCosts

Quality of Supply (availability, cultural fit, skills, processes)Quality of Supply (availability, cultural fit, skills, processes)

RussiaRussia

CanadaCanadaSingaporeSingapore

ChinaChina

MexicoMexico

IrelandIreland

IndiaIndia

IsraelIsrael

HungaryHungaryMalaysiaMalaysia

PhilippinesPhilippines


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Leveraging the Value ChainLeveraging the Value Chain

The offshore ITES/BPO marketplace is attracting a swarm of

supplier models- all leveraging different parts of the value chain

Information Technology

Corporate

Strategy

Consulting firms leveraging strategy

relationships e.g. Accenture, Deloitte

Pure-play firms

e.g. Exult, Convergys, Hewitt

Specialist firms adding services

e.g. Carreker / Caretek

IT firms moving up to protect /

leverage IT business

e.g. Wipro, Infosys, SVI

Attacking from both ends

e.g. IBM with PWC acquisition

EDS w/AT Kearney & Solutions Consulting

Offshore firms moving up the

value chain

e.g. e-Telecare, eFunds, EXL,

WNS

Non- Core Processes

Core Processes



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Addressing the Growth ChallengesAddressing the Growth Challenges

Key ChallengesKey Challenges

Understand offshore activity of key competitors, partners, and customers.

Evaluate competitive advantages/disadvantages created by above activities.

Determine relative positioning for company (leading, following, conservative).

Competition and

Marketplace

Review the current status of various service-lines (IT, BPO, Infrastructure, etc.) and their

inclusion in offshore strategy.

Understand future needs and relative ability of the business to meet them (major upgrades,

projects, platform requirements, etc.).

Technology and

Business Process

Complexity of processes determine ease and speed of offshoring.

Core or non-core to business.

Internal readiness to offshoring and level of maturity.

Determine objectives and review operations against best in class parameters.

Operations

Identify and work with key stakeholders to determine offshore requirements and emergingneeds.

Assess HR and organizational requirements for offshore HR policies and guidelines (company

facilities offshore, contractor / partner requirements, transition of employees to outsourcer).

HR/Organization/

Culture

Develop financial business case for offshoring initiatives and programs.

Understand relative financial requirements of business and determine role that offshore

capabilities and cost savings should play in meeting those needs.Financial

Mitigation OptionsMitigation Options



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Create a consistent offshore message and approach to be used for communications to

employees, external parties, shareholders, media queries, etc.

Manage external requests (I.e., does company want to discuss experience, industry

organizations, etc.) or policies.

Communications

Work with key regulatory bodies to understand key compliance requirements.

Proactively determine risk areas, industry-wide standards, and overall compliance profile and

legal requirements.

Deliver a gap analysis and resolution plan between offshore and corporate standards.

Regulatory

Compliance and

Legal

Review customer requirements and align them with offshore plans (I.e., how would customer

base react to offshore projects, call-center support, etc.).

Review sources of competitive advantage/disadvantage.

Determine unique customer requirements and plans (I.e, high net worth individuals, complex

business support knowledge, etc.) in relation to offshore strategy.

Customers

Review relative position and offshoring perception with key stakeholders and community.

Ensure any impacts to brand are adequately incorporated and where necessary mitigated.

Communicate position pro-actively.

Community,

Shareholders and

Brand




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Maintain positions and management plan on offshore compliance and risk mitigation standards,

including Geographic Diversity, Disaster Recovery / Business Continuity, Security, IP, Audits,

Regulatory Compliance (I.e, OCC, FDIC, OTS, etc.) for Offshore

Risk Mitigation and

Compliance

Determine financial and performance standards for potential and current offshore vendors.

Vendor rationalization and determination of requirements (best in breed, single vs. multi-sourcesuppliers).

Supplier

Management

Determine processes (on-site, 3rd party, etc.) and scope for offshore PMO.

Ensure performance (financial, service level, contractual) of existing offshore initiatives.

Set standards and benchmarks to measure offshore activity and portfolio.

Offshore

Management

Manage future sourcing requirements (RFIs, RFPs, Contracting, etc.) and changing

scope/projects for existing projects and partnerships.

Provide framework and process to use across organization for offshore initiatives, including

offshore models, transition plans, partnering and sourcing strategy (# of suppliers, JVs, etc.).

Offshore

Sourcing/Build

Keep current on future trends and key issues like emerging offshore locations, state of offshore

markets currently deployed, and key factors like labor rates, capabilities, capabilities.

Determine key requirements for offshore that need to be incorporated into current and future

offshore sourcing.

Develop overall offshore strategic road-map and planning horizons, including periodic offshorereviews, assessments, etc.

Offshore

Knowledge and

Strategic Roadmap




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Lessons LearnedLessons Learned

There is substantial value for organizations in the short term

Cost savings are real and range from 15-50% depending on the situation

Improvements to service levels can be assured with the right supplier / captives

There are suppliers ready to meet the challenge

Numerous suppliers have the right emerging capabilities for clients

A few suppliers are willing to step up to a value proposition that delivers real

transformational improvements to your organization

Wh Sh ld W D T G S d?


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What Should We Do To Get Started?What Should We Do To Get Started?

Guiding Principles Ensure internal alignment and support at

the executive management layer is

obtained to seriously evaluate sourcing

Build a Business Case through an

Assessment Develop the sourcing materials to survey

the market

Develop a strong project team made

up of A players

Focus on the real business objectivesand how sourcing can help

address them

Get organized up-front and begin with the

end in mind

Manage risks and culture on ALL sides ofthe ocean

Dont approach the marketplace until you

are prepared Source: neoIT

G Off h O i RG t Off h O t i R


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Great Offshore Outsourcing ResourcesGreat Offshore Outsourcing Resources

For outsourcing and offshore outsourcing knowledge, visit

neoIT: www.neoIT.com

www.neoOffshore.com

Firmbuilder: www.firmbuilder.com

TPI: www.tpi.net

Outsourcing Journal: www.outsourcingjournal.com

Philippines: www.digitalphilippines.org

India: www.nasscom.org

C t t I f tiC t t I f ti


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Contact InformationContact Information

Avinash Vashistha

Co-founder and Managing Director

[email protected]

925.918.0102

98.45.030405

2603 Camino Ramon, Ste. 200San Ramon, CA 94583

No.210, Bellary Road

Upper Palace Orchards

Bangalore 560080, India

www.neoIT.com

Business Process Out Sourcing

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