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Moving Up the Value Chain:
Non-Core to Core
Business Process Outsourcing
NASSCOM: ITES/BPO Strategy Summit 2003
June 12, 2003
Avinash Vashistha

Copyright © 2003 neoIT® | All Rights Reserved.

Diverse backgrounds will influence the different supplier value propositions …and there is road to travel before it can be considered a mature market… .Overview 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… .Today’s value propositions are fairly tactical in nature versus transformational .Most deals are still cost-driven versus “total value” based .minded organization? 2 Copyright © 2003 neoIT® | All Rights Reserved.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 . .ITES/BPO suppliers are coming from a variety of backgrounds .How will the market change and what does this mean for the global.

Complexity of Business Process The Evolution of Offshore ITES/BPO complex banking transactions human resources finance and accounting claims processing technical support. call centers 2003 Time to Offshore Maturity of Business Process Source: neoIT 3 Copyright © 2003 neoIT® | All Rights Reserved. collections 2008 data entry. .

Accounts Receivable.. Accounts Payable Customer Care: Help desk. Tax Mgmt. Customer Care: Customer extension/selection HR: Payroll Processing. customer retention/acquisition Information Technology 4 Copyright © 2003 neoIT® | All Rights Reserved. Employee Administration F&A: Regulatory & Compliance. Performance Mgmt. Education & Training F&A: Billing.ITES/BPO: Transactional to Full Service The offshore ITES/BPO marketplace can be segmented into two distinct pieces – transactional and full service/transformational relationships Strategy Core Process Non-core Process Corporate Strategy Transformational BPO HR: Information Mgmt. Transactional BPO . Recruiting.. Benefits Processing.

Switch. Links. ACD CTI. CRM. Scanner. OCRs Technology Parks Education Experience Domain Knowledge Cultural Compatibility Quality Improvement Processes Reengineering Training Certification Level Achievements Mature Mature Market Market Reduced Risk .A Maturing Offshore ITES/BPO Market Current Current Market Market Technology People Processes 5 Copyright © 2003 neoIT® | All Rights Reserved. Filenet.

processes) Source: neoIT 6 Copyright © 2003 neoIT® | All Rights Reserved.. skills.The Market…Offshore Locations .there are a wealth of viable offshore locations Ireland Total Labor Costs Israel Singapore Canada Mexico Hungary Malaysia Philippines China Russia India Quality of Supply (availability.. cultural fit. .

.BPO Country-specific Capabilities Source: neoIT 7 …a look into what buyers are evaluating today. Copyright © 2003 neoIT® | All Rights Reserved.

Infosys. eFunds. SVI 8 Copyright © 2003 neoIT® | All Rights Reserved.g.Core Processes Information Technology Offshore firms moving up the value chain e.Leveraging the Value Chain The offshore ITES/BPO marketplace is attracting a swarm of supplier models. EXL. Accenture. Carreker / Caretek IT firms moving up to protect / leverage IT business e. e-Telecare.g. Hewitt Attacking from both ends e. IBM with PWC acquisition EDS w/AT Kearney & Solutions Consulting Core Processes Specialist firms adding services e. Wipro. Non. Deloitte Corporate Strategy Pure-play firms e.g. Convergys. Exult.g.g.g. WNS .all leveraging different parts of the value chain Consulting firms leveraging strategy relationships e.

Infrastructure. ™ Internal readiness to offshoring and level of maturity. ™ Complexity of processes determine ease and speed of offshoring. conservative).) and their inclusion in offshore strategy. Technology and Business Process Competition and Marketplace 9 Copyright © 2003 neoIT® | All Rights Reserved. ™ Identify and work with key stakeholders to determine offshore requirements and emerging needs.). Operations ™ Core or non-core to business. BPO. contractor / partner requirements. ™ Understand relative financial requirements of business and determine role that offshore capabilities and cost savings should play in meeting those needs. ™ Assess HR and organizational requirements for offshore HR policies and guidelines (company facilities offshore. etc. etc. ™ Understand future needs and relative ability of the business to meet them (major upgrades. ™ Understand offshore activity of key competitors. and customers. following. projects. ™ Evaluate competitive advantages/disadvantages created by above activities. platform requirements. partners. . ™ Determine objectives and review operations against “best in class” parameters. transition of employees to outsourcer). ™ Review the current status of various service-lines (IT. ™ Determine relative positioning for company (leading.Addressing the Growth Challenges Key Key Challenges Challenges Financial HR/Organization/ Culture Mitigation Mitigation Options Options ™ Develop financial business case for offshoring initiatives and programs.

how would customer Customers Regulatory Compliance and Legal base react to offshore projects. and overall compliance profile and legal requirements. ™ Review sources of competitive advantage/disadvantage.e. ™ Determine unique customer requirements and plans (I. employees. high net worth individuals. industry-wide standards. ™ Proactively determine risk areas. ™ Ensure any impacts to brand are adequately incorporated and where necessary mitigated. etc. ™ Deliver a gap analysis and resolution plan between offshore and corporate standards. industry organizations. shareholders.)... etc. external parties. . Shareholders and Brand Mitigation Mitigation Options Options ™ Review relative position and offshoring perception with key stakeholders and community. media queries. etc. does company want to discuss experience. etc.) or policies. ™ Create a consistent offshore message and approach to be used for communications to Communications 10 Copyright © 2003 neoIT® | All Rights Reserved.) in relation to offshore strategy.e.e. ™ Manage external requests (I. ™ Review customer requirements and align them with offshore plans (I. ™ Communicate position pro-actively.Addressing the Growth Challenges Key Key Challenges Challenges Community. ™ Work with key regulatory bodies to understand key compliance requirements. call-center support. complex business support knowledge.

etc. Risk Mitigation and Compliance ™ Maintain positions and management plan on offshore compliance and risk mitigation standards. ™ Develop overall offshore strategic road-map and planning horizons. capabilities. multi-source suppliers). Regulatory Compliance (I. single vs. Disaster Recovery / Business Continuity. ™ Set standards and benchmarks to measure offshore activity and portfolio. Supplier Management ™ Determine financial and performance standards for potential and current offshore vendors. Contracting. ™ Vendor rationalization and determination of requirements (best in breed. including periodic offshore reviews. state of offshore Offshore Knowledge and Strategic Roadmap Offshore Sourcing/Build markets currently deployed. OCC. etc.). etc. transition plans. and key factors like labor rates. ™ Manage future sourcing requirements (RFIs.) and changing scope/projects for existing projects and partnerships. ™ Provide framework and process to use across organization for offshore initiatives. capabilities. contractual) of existing offshore initiatives. Offshore Management ™ Determine processes (on-site. including offshore models. assessments. Security. 3rd party. RFPs. 11 Copyright © 2003 neoIT® | All Rights Reserved. OTS. ™ Ensure performance (financial.) and scope for offshore PMO.) for Offshore .e. service level.Addressing the Growth Challenges Key Key Challenges Challenges Mitigation Mitigation Options Options ™ Keep current on future trends and key issues like emerging offshore locations. ™ Determine key requirements for offshore that need to be incorporated into current and future offshore sourcing. JVs. partnering and sourcing strategy (# of suppliers. IP. including Geographic Diversity. Audits. etc. FDIC. etc.

Lessons 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 12 Copyright © 2003 neoIT® | All Rights Reserved. .

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 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 13 Copyright © 2003 neoIT® | All Rights Reserved. Source: neoIT .

neoOffshore.firmbuilder.Great Offshore Outsourcing Resources For outsourcing and offshore outsourcing knowledge.digitalphilippines. .tpi.neoIT.nasscom.com TPI: www.org 14 Copyright © 2003 neoIT® | All Rights Reserved.com Philippines: www. visit… neoIT: www.com Firmbuilder: www.outsourcingjournal.org India: www.net Outsourcing Journal: www.com www.

.45.0102 98.918.neoIT.com 15 Copyright © 2003 neoIT® | All Rights Reserved.210. 200 San Ramon.com 925. Bellary Road Upper Palace Orchards Bangalore 560080.Contact Information Avinash Vashistha Co-founder and Managing Director avinash@neoIT. India www. CA 94583 No. Ste.030405 2603 Camino Ramon.