gs2010 preview

TRENDS, TRAPS AND EMERGING OPPORTUNITIES Rethinking Outsourcing

Atul Vashistha Chairman & CEO

Silicon Valley • Bangalore • New York • Chicago • Sao Paulo • Monterrey • Manila • Amsterdam • Prague

About Neo Advisory A consulting firm singularly focused on helping organizations

capitalize on Outsourcing and Services Globalization

Consulting

Risk Monitoring

Research

Since 1999

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TRENDS

© 2010 Neo Advisory & Atul Vashistha All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited

Q2 Insights

  Revenue   Pricing   Spend   Utilization   Talent


Trend: New Roles Emerging

  Integrator   Chief Transformation Officer   Head of Shared Services

Altering organization structure to aggregate and buy services •  A business model that

centralizes common business services

•  Leveraging economies of scale and scope


Trend: Vehicle for Operational Transformation

Source: AMR Research / Global Services Media, 2009 Sample: 127 Enterprises


Trend: Convergence of ITO/BPO

Source: Horses for Sources, 2010


Trend: Attractiveness of Rural Sourcing

  Cost of doing business in low cost locations rising   Interruptions in supply  Cost of sourcing  Cost of management   Inflation

  Locations like Omaha, Ann Arbor etc. becoming more attractive supplementary centers   Ease of doing business   Productivity enhancements  Managing political risk


Trend: Relationship Models Evolve

  Staff Augmentation to Managed Services   Focus on SLAs and not resources   Increased focus on leading indicators   Benefits accrue to both

  Transaction pricing   Performance rewards   Gain sharing

  Suppliers want this. Do you know how to manage this?


Trend: Collaborative Sourcing

  Time to Sourcing: 12 weeks or less

  Negotiation Process  Non-negotiable term sheet   Solution design   Pricing benchmarks


Trend: Services Supply Chain: Demand Focus


Trend: Better Monitoring of Risk

COUNTRY RISKS

Macro-economic Risk

Financial Risk

Geopolitical Risk

Industry Risk

Infrastructure Risk

Business Environment Risk

Human Resources Risk

CITY RISKS

PROVIDER RISKS

Legal Risk

Financial Risk

Geopolitical Risk

Industry Risk

Infrastructure Risk

Business Environment Risk

Human Resources Risk

Strategy Risk

Financial Risk

Service Capability Risk

Legal Risk

Client & Service Mix Risk


Trap: All Suppliers Are Created Equal

  Asia for scale   Geographic clusters for time zone/special needs   Domain Knowledge vs Processing Skills

•  Revenue: $6 B •  Market Cap: $32 B •  Revenue Growth (yoy): 6.2% •  Profit Margin%: 16.94% • Total Cash: $2B

•  Revenue: $22.33 B •  Market Cap: $26 Billion •  Revenue Growth (yoy): -2.1 % •  Profit Margin%: 6.91% • Total Cash: $4B


Trap: Not Investing In The Retained Organization

  Strategic Planning   Architects   Business Analysts   Trainers   Program Leaders   Vendor Management   Supply Chain Monitoring

  Single Labor Pool   Career Movements   Knowledge Management

EMERGING OPPORTUNITIES


Regional Operations

Beyond U.S.A. Operations

  Scouting locations and suppliers to service MNC regional operations  Asia Pacific   Europe   South America

  J&J, SAP  Colombia


Driving Innovation: Knowledge Management

  Collective Intelligence   Enabling Collaboration  Driving Innovation

  Predictive, real time   Leverage best practices

  Novartis – Cognizant   UPMC – Accenture - Microsoft


Vendor Optimization

Making Strategic Partners responsible for success •  Expanding scope of

existing partners; negotiating better terms and pricing

•  Selecting new partners that can deliver results

•  Identifying vendor optimization opportunities

Incremental New

Current

New

Globalization Portfolio

Strategic Partners

Add Scope & Re-negotiate

Multi-source


Expansion of Global Operations

Institutionalizing an enterprise view for cost reduction and globalization   Finding early adopters   Ensuring buy-in from business

units and globally dispersed units

  CEO/CFO breaking down silos

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Finance & Accounting

Human Resources

Procurement

Sales & Marketing

Engineering/Product Development

Legal Services

Global Location 1

Global Location 2

Business Unit 1

Business Unit 2

Currently Globalized

Potential to Globalize

Retain

Expanding globalization footprint •  Globalization continues to be

one of the most viable cost optimization levers

•  Evaluating globalization potential for all common services

•  Enabling the early adopters


Leverage Technology To Better Integrate Partners

  Learn to manage complex SLAs, outcomes   Convergence of portfolio, program, project, resource

and performance management

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Chairman Globalization Wisdom Group Neo Group Neo Advisory Best Outsourcing Jobs

Atul Vashistha [email protected]

[email protected]

[email protected]

4000 Pimlico Dr., 114-108

Pleasanton, CA 94588

www.globalizationwisdom.com

gs2010 preview

Business

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services focus

services supply chain

b revenue growth yoy

b market cap

b total cash

low cost locations

collaborative sourcing