Moving Up the Value Chain: Non-Core to · PDF fileTransactional BPO Transformational BPO...

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Moving Up the Value Chain:Non-Core to Core

Moving Up the Value Chain:Non-Core to Core

Business Process Outsourcing


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OverviewOverviewThe Offshore ITES/BPO Market…

Market is sizable and growingDeals are happening across a wide ranging set of scopes and price pointsNumerous 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…- Today’s 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/BPOC

ompl

exity

of B

usin

ess

Proc

ess

Com

plex

ity o

f Bus

ines

s Pr

oces

s

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

20032003

20082008data entry, call centers

technical support, collections

claims processing

human resources

finance and accounting

complex banking transactions

Source: neoIT


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

StrategyCore Process

Non-core Process

HR: Information Mgmt., Performance Mgmt., Employee Administration

F&A: Regulatory & Compliance, Tax Mgmt.

Customer Care: Customer extension/selection

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

F&A: Billing, Accounts Receivable, Accounts PayableCustomer 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 ProcessesReengineeringTrainingCertification Level Achievements

EducationExperienceDomain KnowledgeCultural Compatibility

Scanner, Filenet, ACDCTI, Links, Switch, CRM, OCRsTechnology Parks

Mature MarketMature Market

Technology

People

Processes

Reduced Risk


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The Market…Offshore LocationsThe Market…Offshore Locations

...there are a wealth of viable offshore locations

Source: neoIT

Tota

l Lab

or C

osts

Tota

l Lab

or C

osts

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

RussiaRussia

Canada Canada SingaporeSingapore

ChinaChina

MexicoMexico

IrelandIreland

IndiaIndia

IsraelIsrael

HungaryHungary MalaysiaMalaysia

PhilippinesPhilippines


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BPO Country-specific CapabilitiesBPO Country-specific Capabilities

Source: neoIT

…a look into what buyers are evaluating today.


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Leveraging the Value ChainLeveraging the Value ChainThe offshore ITES/BPO marketplace is attracting a swarm of supplier models- all leveraging different parts of the value chain

Information Technology

CorporateStrategy

Consulting firms leveraging strategy relationships e.g. Accenture, Deloitte

Pure-play firmse.g. Exult, Convergys, Hewitt

Specialist firms adding servicese.g. Carreker / Caretek

IT firms moving up to protect / leverage IT business

e.g. Wipro, Infosys, SVI

Attacking from both endse.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 Challenges Addressing 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 emerging needs.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-source suppliers).

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 offshore reviews, 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


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

Guiding PrinciplesEnsure 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 objectives and how sourcing can help address them

Get organized up-front and “begin with the end in mind”

Manage risks and culture on ALL sides of the ocean

Don’t approach the marketplace until you are prepared

Source: neoIT


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Great Offshore Outsourcing ResourcesGreat Offshore Outsourcing Resources

For outsourcing and offshore outsourcing knowledge, visit…

neoIT: www.neoIT.comwww.neoOffshore.com

Firmbuilder: www.firmbuilder.com

TPI: www.tpi.net

Outsourcing Journal: www.outsourcingjournal.com

Philippines: www.digitalphilippines.org

India: www.nasscom.org

http://www.neoit.com/




http://www.firmbuilder.com/

http://www.tpi.net/

http://www.outsourcingjournal.com/

http://www.digitalphilippines.org/

http://www.nasscom.org/


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Contact InformationContact Information

Avinash VashisthaCo-founder and Managing [email protected]

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

No.210, Bellary RoadUpper Palace OrchardsBangalore 560080, India

www.neoIT.com


Moving Up the Value Chain: Non-Core to · PDF fileTransactional BPO Transformational BPO...

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