2016 q1 china shared services and outsourcing survey results · pdf filekpmg china is proud to...

1© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a

Swiss entity. All rights reserved.

2016 Q1 China Shared Services and OutsourcingSurvey Results



Table of Contents1. KPMG SSOA Practice Pg. 3

2. About this Survey Pg. 4

3. Business Outlook Pg. 5

4. Captive Centre Pg. 11

5. Outsourcing Pg. 17

6. Robotics Process Automation (RPA) Pg. 23

7. KPMG Contacts Pg. 29



KPMG’s Shared Services and Outsourcing Advisory PracticeKPMG has the ability to help member firms’ clients transform enterprise services to help improve

value, increase agility and create sustainable business performance.

How

we do

it

What

we do

Who

we are

The Shared Services and Outsourcing Advisory practice brings a specialized

global team of more than 1,000 professionals within KPMG’s global network of

independent member firms operating in 155 countries. Our professionals help

clients design, build, and manage information technology (IT) and business

processes across the enterprise.

We help clients align their business strategy, organization and execution

to enable them to manage the entire IT and business process life cycle,

improving business performance, and laying the groundwork for genuine

business transformation.

We apply focused research, automating tools, proprietary data, clear

business acumen, and a forward-thinking mind-set to provide timely,

objective, actionable advice and practical approaches for clients.



About this SurveyKPMG China Shared Service and Outsourcing SurveysKPMG China is proud to present the results of our 2016 Q1 China Shared Services and Outsourcing Survey.

Input sources: Topics evaluated: Primary functional focus:

— KPMG sourcing advisors

throughout China and Hong

Kong

— Companies (MNC ,SOE ,POE)

— Leading global business, IT,

and cloud service providers

— KPMG thought leadership

China Overview

— Business Outlook, growth and

overall enablers

— Shared Services

— Internal Captive

— Outsourcing

Robotic Process Automation (RPA)

and overall observations

— Finance and Accounting

— Human Resources

— Information Technology

— Customer Care

— Data & Analytics

— Procurement

New for 2016!— Starting this quarter, we have added new survey questions to address the global

trend of Robotic Process Automation (RPA)



Business Outlook



China Overview 70% of companies surveyed viewed internal captive centres as critical to reaching their goals and

objectives

“People experience” at a leadership & team level are key challenges when setting up and maintaining an

efficient internal captive center

Companies look to third parties for assistance in Process design, benchmarking and risk management

Internal captive centres continue to focus on operational efficiency and effectiveness improvements helping

the business to focus on revenue growth and outpacing local market competitors

Outsourcing is growing slightly in acceptance with the main challenges being funding and change

management

Growth expectations continue to be a key company challenge with 60% predicting less than 10% revenue

growth

Robotics Process Automation (RPA) technologies have not gained sufficient visibility and momentum

amongst China organizations, whereas globally this is a very hot trend



Growth ExpectationsQ: What are your Organization growth expectations within the next 1 - 2 years?

Company Advisor

Over 20%Growth

10%t o 20%Growth

0% to 10% Growth

Negative Growth

0% 10% 20% 30% 40% 50% 40% 20% 10% 0%30%50% 60%

Company Advisor



EnablersQ: What do you feel are the biggest enablers of growth for your Organization over the next 1 to 2 years?

Company Advisor

0% 10% 20% 10% 0%

Improved access to capital and funding

Better execution of sales and marketing efforts

Innovation in products/services improved return on

research and development

Improved operational efficiency — reduced operating

cost, reduced investment costs

Improved operational effectiveness—improved process

performance, greater

Growth via mergers/acquisitions

Export growth for good/services

Domestic market growth for goods/services

Improving regulatory environment

Company Advisor



ChallengesQ: What is the biggest challenge for your Organization within the next 1 to 2 years?

Revenue Growth

Increasing Net Income

Finding and Retaining Talent

Merger Execution and Integration

Managing Wage Inflation

Developing and Executing a Competitive…

Managing Supply Chain

Leveraging Technology

Restrictive Regulatory Environmnent

Increased Competition

Growing Exports

Slowing Business Demand

Access to Capital and funding

Slowing Demand for Core Products & Services

New Local Market Competitors

Reducing SG&A Costs

5% 0%10%5%0% 10% 15%Company Advisor

Company Advisor



Shared Services CriticalityQ:

How important and critical is the usage of Shared Services (Internal Captive Centre / Outsourcing)

to helping your Organization achieve its goals and objectives over the next 2 years?

Criticality of Internal Captive Centre Criticality of Outsourcing

Not important 1

2

3

4

Very important 5

30% 20%40%10%0% 20% 30% 10% 0%

Criticality of Internal Captive Centre Criticality of Outsourcing

Not important 1

2

3

4

Very important 5

Co

mp

an

yA

dvis

ors

45% 30%60%15%0% 30% 45% 15% 0%

Internal captive centre Outsourcing



Captive Centre



Management ExpectationsQ:

What is top expectation from the executive management for your / your clients’ Internal Captive

Centres efforts for the coming 2-3 years?

Company Advisor

Company Advisor

Drive down ongoing costs

Improve in-scope process performanceand operations

Greater use of data analytics

Greater use of cloud

Greater of commercial enterprise software

Greater efficiencies gained(harmonization)

Increase scope of efforts

Improve talent/skills of resources

Improve governance of efforts

25% 20%20%5%0% 10% 15% 15% 10% 5% 0%



Adoption DriversQ:

What do you think are the most important drivers to your clients adoption or expansion of Internal

Captive Centre?

Advisor

0% 5% 10% 15%

Gain access to external skills/talent/resources

Gain economies of scale

Productivity and efficiency gains

Improve financial flexibility/create more variable cost model

Improve global delivery & operating models

Improve process performance

No specific reasons/many competing reasons

Redirect resources to more strategic activities

Reduce future investment costs (CapEx)

Reduce operating costs (OpEx)

Support business growth/expansion agendas

Standardization, simplification and harmonization

Advisor



Current ChallengesQ:

What are the top challenges your organization faces with your current shared service center (internal

captive center)?

Company Advisor

Company Advisor

Lack of Executive Leadership

Lack of funding

Lack of Leadership Team Experience tomanage the center / relationship

Lack of operational team experience tomanage efforts/weak governance

Change Management Challenges

Lack of a viable business case,assumptions have changed

Inability to drive improvements andefficiencies

Inexperienced Governance Organization

Use of technology

Organizational structure design

20%5%0% 10% 15% 15% 10% 5% 0%



Third Party AssistanceQ:

In which of the following areas do you feel your organization / your clients would seek third party

assistance regarding shared services (internal captive center)?

Company Advisor

Company Advisor

Project Management

Stakeholder alignment

Stakeholder management

People and change management

Scope Assessment

Process design

Business case

Risk assessment and mitigation

Location assessment

Retained organization design

Transition support

Governance structure and design

Continuous improvement

Benchmarking / health check

5% 0%10%5%0% 10% 15%



DemandQ:

What do you feel are the major demand areas for Internal Captive Centre for your clients today [next

24 months?] ?

0% 5% 10% 15%

Administrative services

Customer care / Customer Service

Data and analytics

Documentation services (scanning, print, mail)

Finance & accounting

Human resources

Industry specific services

Information technology

Real estate & facilities management

Research & development

Supply Chain - Sourcing & Procurement

Sales Support & Marketing Research

Advisor

Advisor



Outsourcing



Management ExpectationsQ:

What is top expectation from the executive management for your / your clients’ Outsourcing efforts for

the coming 2-3 years?

Company Advisor

Company Advisor

Drive down ongoing costs

Improve in-scope process performance andoperations

Greater use of data analytics

Greater use of cloud

Greater of commercial enterprise software

Greater efficiencies gained (harmonization)

Increase scope of efforts

Improve talent/skills of resources

Improve governance of efforts

25% 20%20%5%0% 10% 15% 15% 10% 5% 0%



Adoption DriversQ:

What do you think are the most important drivers to your clients adoption or expansion of

Outsourcing?

Advisor

0% 5% 10% 15%

Gain access to external skills/talent/resources

Gain economies of scale

Productivity and efficiency gains

Improve financial flexibility/create more variable cost model

Improve global delivery & operating models

Improve process performance

No specific reasons/many competing reasons

Redirect resources to more strategic activities

Reduce future investment costs (CapEx)

Reduce operating costs (OpEx)

Support business growth/expansion agendas

Standardization, simplification and harmonization

Advisor



Current ChallengesQ:

What are the top challenges your organization faces with your current shared service center

(outsourcing)?

Company Advisor

Company Advisor

Lack of Executive Leadership

Lack of funding

Lack of Leadership Team Experience tomanage the center / relationship

Lack of operational team experience to manageefforts/weak governance

Change Management Challenges

Lack of a viable business case, assumptionshave changed

Inability to drive improvements and efficiencies

Inexperienced Governance Organization

Use of technology

Organizational structure design

20%5%0% 10% 15% 15% 10% 5% 0%



Third Party AssistanceQ:

In which of the following areas do you feel your organization / your clients would seek third party

assistance regarding shared services (outsourcing)?

Company Advisor

Company Advisor

Service provider identification and assessment

RFP development / Management

Opportunity case / Business case

Scope definition

Service level / reporting requirements

Site selections

Retained organizational design / restructuring

Negotiations support

Transition project management office support

Governance structure design

Benchmarking

20%5%0% 10% 15% 15% 10% 5% 0%



DemandQ:

What do you feel are the major demand areas for Outsourcing for your clients today [next 24

months?] ?

Advisor

Advisor

0% 5% 10% 15%

Administrative services

Customer care / Customer Service

Data and analytics

Documentation services (scanning, print, mail)

Finance & accounting

Human resources

Industry specific services


Real estate & facilities management

Research & development

Supply Chain - Sourcing & Procurement

Sales Support & Marketing Research



Robotics Process Automation (RPA)



Digital Labor (a.k.a. Robotic and Cognitive Automation) is a range of technologies that

companies can use to automate both business processes and operations. It includes

automation of transactional parts of a business process through the application of

technologies such as workflow, screen scraping and rules engines, up through automating

more strategic business operations by leveraging more sophisticated technologies involving

cognitive machine processing and elements of artificial intelligence. .

These types of technologies will drive exponential and unparalleled transformation of

business models. Their use is set to enable a progressive digitization of labor. Their

development has been driven by significant advancements in natural language processing,

machine intelligence, digital engagement, analytics, big data, social, mobile, and cloud.

Ranging from basic optical character recognition (OCR)/screen scraping technologies, these

technologies sit on top of existing IT architecture components. In their most advanced form,

they interpret data from multiple sources to make decisions like a human would.

Changing How Business is DoneShifting to a digital labour force



Benefits of a Digital Labor Force

Source: The Outsourcing Institute, Three Secrets Your Traditional Service Providers Are Not Telling You, June 2014

WAVE 2:

LABOR AUTOMATION

WAVE 1:

LABOR ARBITRAGE

40 - 75 percent15 - 30 percent

Cost take out for relevant functionsCost take out

Model is scalable to the extent that

you can scale labor

Custom/complex, legacy:

“Your Mess for Less”

Ongoing access to low cost labor necessary

to provide continuous value

Revenue/profit correlated to people

Model is scalable through technology, and is

largely independent of labor growth

Transformative – new way of doing business

One-Time (and limited ongoing) access

to analysts who can codify

manual processes

Revenue/profit not correlated to people

DigitalBusiness Models

CloudMobileSocial Data/Analytics

Cognitive



RULES

ENGINES

WORK

FLOWSCREEN

SCRAPING

Machine

Learning

Large-scale

Processing

Adaptive

Alteratio

n

Artificial

Intelligence

“Big Data”

Analytics

Natural

Language

Processin

g

Processing of

Unstructured

Data & Base Knowledge

» Macro-based applets

» Screen scrapping data collection

» Workflow

» Visio-type building blocks

» Process mapping

» Business process management “BPM”

Basic Robotic Process

Automation (RPA)1» Built-in knowledge repository

» Learning capabilities (e.g. ‘learning assist’)

» Ability to work with unstructured data

» Pattern recognition

» “Reading” source data manuals (e.g. NLP)

Enhanced Process

Automation2» Artificial intelligence

» ‘Teaching’ versus ‘programming’

» Natural language recognition & processing

» Self-optimization / self-learning

» Digestion of super data sets

» Predictive analytics

» Hypothesis generation

» Evidence-based learning

Autonomic/Cognitive3

Digital Labor Automation (DLA)

» Customer On-Boarding

» Account Opening

» Fund Payments

» Cross check multiple systems, with

structured and unstructured data, to

ensure compliance

» An intelligent virtual personal assistant

can rapidly solve customer problems and

help users navigate and connect to the

correct information

High value use cases across key financial service providers



RPA Deployment – Global SurveyQ:

What is your organization’s level of activity relative to the deployment of robotics process

automation and cognitive automation technologies?

43%

36%

15%

5%

1%

Basic Process Automation

38%

32%

19%

9%

2%

Enhanced Process Automation

28%

28%

22%

14%

8%

Cognitive Automation

Source: KPMG Global Pulse Survey 2015Q4



RPA Deployment – China SurveyQ:

What is your / your clients’ current level of activity relative to the deployment of Robotic Process

Automation (RPA) technologies and systems?

Company Advisor

Company Advisor

No activity

Self-education andplanning

Experimenting andrunning pilots

Live implementations

60% 40%80%20%0% 40% 60% 20% 0%

Process areas involving RPA techniques Level of activity relative to the deployment of RPA

0% 20% 40%

Source to Procure

Procure to Pay

Quote to Cash

Record to Report

Finance & accounting - Other

Supply chain/procurement -Other

Human resources


Customer care

KPMG observed large scale cross functional RPA deployment globally, while China has

limited awareness and almost no activity

Source: KPMG China SSOA Survey 2016Q1



Key KPMG Contacts



KPMG Contacts

Partner-in-Charge

Shanghai Office

[email protected]

Gary P. Nowak

Partner

Beijing Office

[email protected]

Kai Cui

Partner

Hong Kong Office

[email protected]

James O’Callaghan

Director

Shanghai Office

[email protected]

Yong Zhu

Director

Guangzhou Office

[email protected]

Max YangWebster Shao

Director

Beijing Office

[email protected]

© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any

particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no

guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the

future. No one should act on such information without appropriate professional advice after a thorough examination of

the particular situation.

2016 q1 china shared services and outsourcing survey results · pdf filekpmg china is proud to...

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