nilf 2014: crouching tiger / hidden dragon, is there an opportunity for the indian it-bpm industry...
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Crouching Tiger / Hidden Dragon
Is there an opportunity for the Indian IT-BPM Industry in China?
February 13th, 2014
2© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
Question
Is there an opportunity for Indian IT-BPM Industry in China?
3© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
The Economist
“But for many foreign companies, things are getting harder. That is partly because growth is flagging, while costs are rising. Talented young workers are getting harder to find, and pay is soaring”
“China is big, but it is hard . . . [Other] places are equally big, but they are not quite as hard.”
- Jeffrey Immelt GE
One China is over
Rising costs mean that bosses must shift from going for growth to enhancing productivity
Tighter control is another must
A One China policy no longer makes sense (localize marketing and perhaps product development)
January 25th, 2014 Edition
4© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
China Outsourcing Outlook
2007 2008 2009 2010 2011 2012 2013 1H
0
5
10
15
20
25
30
35
40
45
50
5.9 913.8
19.919.7963999999999
26.12577
14.91126
4.8924
7.21835
3.74147
7.7112
13.22588
8.65727
ITO BPO KPO
US
D b
illi
on
ITO54.6%
BPO13.7%
KPO31.7%
Global services export market in China forecasted to grow by between 20-25 per cent each year until 2015
Global Locations Compass: China, published by the
Everest Group, May 2012
Service outsourcing industry has been one of the focus development areas in China’s 12th five-year plan. The effort to boost the SSO industry is evidenced by heavy investment in infrastructure, human resources and a series of favorable policies and government supports. The Ministry of Commerce (MOFCOM) is proactively working as a change agent to introduce foreign investments and promote Chinese vendors and services.
With strong government supports, large talent pool and fast developing infrastructures, China is expected to be one of the top choices of SSO destinations in ASPAC.
China Outlook in 2020
2011 2020 - "Base-Case" Scenerio
2020 - "Optimistic Scenario"
CA
GR
18%
CA
GR
25%
USD 143.7 bn
USD 32.4 bn
Source: KPMG Research
USD 241.4 bn
IT-BPO Industry - 2020
Industry Size
•Human Resource•Customer management•Finance & Accounting•Procurement
•Software development•IT software training •Software product support •Application management and equipment consignment •Application implementation•Integrated circuit design •Software testing •Other IT advisory•Hardware support•Others
Break up of IT-BPO by Service Line
Source: MOFCOM 2013
Source: MOFCOM 2013
CAGR 41.10% 32.4
46.6
27.3
5© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
Opportunities in China
Information Technology
Cloud Computing
Big Data
e-Commerce
Business Process M
Human Resource
Finance Services
Call Centre
Supply Chain Management
KPO Opportunities
Research and Development
Industrial Design Outsourcing
Smart Cities154 currently600 to 800 projected
Cloud Computing3% current
16% annual growth
e-paymentExpected to reach 1.5 trillion rmb in
2013
China HRO is seeking value added “end to
end” solutions
2011 2012
0
5
10
15
20
25
30
35
40
45
50
7.713.2
4.9
7.2
19.8
26.1
China Service Outsourcing Market(USD billion)
KPO BPO ITO
US
D b
illio
n
KPO has seen a 70% yoy growth trajectory
6© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
Government Support in China
Fiscal &
Taxation
Service Trade Associations
IPR
Information Security
Globalization Initiative
Talent
Government Support
Various guidelines and policies available at multiple levels i.e. national, provincial and city, to attract, motivate and bolster investments to grow outsourcing industry in China
7© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
KPMG SSOA Summit Sept 2013
China moving forward
Global Business Services discussion
– Education
– Shorter trajectory to maturity
– Consistently Re-invent
Improve English skills
Need to innovate / Cheap China is gone
Data Privacy
Key themes
Innovation
Best Practice
Data Analytics
8© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
Talent Requirements
• Operations and service delivery
• Transitions
• Performance management
• Service provider management
• Process engineering
• Industry expertise
• Technology integration
• Governance and change management
• Data analytics
Traditional Talent Requirements
Emerging Talent Requirements
How important are the following objectives to your team.... When you first started your outsourcing and/or shared services initiatives?
External Benchmarking
Raising the Bar for Existing SLAs
Improving Industry Acumen
Defining and Adding New In-Scope Processes
Improving Analytics
Adding Addition Volumes to Existing Services
Improving Service Provider Relationships
Driving Innovation
Defining Business Outcomes Beyond Cost Reduction and Efficiency
Managing Financial Business Cases
Contract Negotiation
Influencing Executives
Service Provider Selection
SLA Performance Management
Managing Transitions
Importance Rating
Not Important
SomewhatImportant Important
MissionCritical
Source: HfS Research 2013 , n = 282 Enterprise Buy-side Executives
Strategic Objectives
Tactical Objectives
9© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
The Buyers’ Consideration on Service Providers
StrategyDoes the service provider
help to bring strategic direction, innovation and vision for my business?
TechnologyCan the service provider
integrate the technology part with an overall solution?
FinancialsIs the service provider’s
financial situation stable and capable enough to go through
long and voluminous outsourcing deal?
RelationshipCan the service provider
build up a relevant mindset and get it across to all the
levels of the buyer’s organization?
TalentIs the service provider’s talent base strong enough to offer
resources with strong industry experience, local knowledge, result oriented delivery, etc. ?
DeliveryIs the service provider
capable of handling complicated transition and
delivery?
CultureDoes the service provider
maintain a culture fit with the buyer’s organization and it
growth style?
10© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
Why Indian Service Providers . . . . .
Unique customer centricity & global experience
Trained talent in latest technology
Scalable and secure
Continued focus on optimal cost-efficiency
Gary P. Nowak•Director
KPMG Advisory+86 (21) 2212 3289
[email protected]© 2014 KPMG Advisory (China) Limited, a wholly foreign owned enterprise in China 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. Printed in China.
The KPMG name, logo and ‘cutting through complexity’ are registered trademarks or trademarks of KPMG International Cooperative (KPMG International).