business process out sourcing
TRANSCRIPT
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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
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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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Addressing the Growth ChallengesAddressing the Growth Challenges
Key ChallengesKey Challenges
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
Mitigation OptionsMitigation Options
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Addressing the Growth ChallengesAddressing the Growth Challenges
Key ChallengesKey Challenges
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
Mitigation OptionsMitigation Options
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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
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