Ever Moving TargetsKeeping Ahead of theGameNASCOMM BPO StrategySummitSeptember 5-6, 2012
KPMG’s Shared Services and Outsourcing Advisory (SSOA) Cliff Justice ...
Today’s Discussion 1 Macro global business trends 2 Shared services and outsourcing market t...
Macro Global Business Trends Recession, Double Dips & Debt, Uncertain Recovery Capitalism vs. State Capitali...
2012 Trends with Biggest Negative Impact on User Organizations Weak global/regional economies; "double-dip" recessio...
2012 Trends with Biggest Positive Impact on User Organizations Improving/rebounding global econ...
Top 2012 User Organization Initiatives Continue to drive down operating co...
Top Challenges to Successfully Undertaking 2012 Initiatives Dysfunctional/fragmented org./operating models, desi...
Top Capabilities Required to Successfully Undertake Top 2012 Initiatives Smart/innovative management and manag...
Today’s Discussion 1 Macro global business trends 2 Shared services and outsourcing market t...
Shared Services and Outsourcing Market OverviewMacro Trends ...
Top Drivers for Improving GBS CapabilitiesCombined Advisor and Service Provider Totals ...
The Journey: Typical Stages of Development in Business Services MaturityA KPMG Research Effort ...
Integrated Global Business Services DimensionsTaking it to the Next Level ...
Today’s Discussion 1 Macro global business trends 2 Shared services and outsourcing market t...
BPO Market Trends BPO mega-deals in HRO are dead and never materialized in other BPO areas. Larger “horizontal” B...
Advisors: Top Approaches to Improve Service Delivery Capabilities Organizations continue to focus on maximizing an...
Buyer Global Sourcing Preferences & DemandCombined Advisor & Service Provider Totals 100% ...
Buyer Global Sourcing Maturity & Sophistication Service provider selection; assessing providers global ...
Service Providers: Demand by Function and Industry IT ...
Today’s Discussion 1 Macro global business trends 2 Shared services and outsourcing market t...
Implications for Clients Continue to Innovate or SellWhat the best are doing . . . . ...
Implications for Service ProvidersNew Relationships: Incumbency no longer equates to strong chance at renewal if you don’t...
© 2012 KPMG LLP, a Delaware limited liability partnership andthe U.S. member firm of the KPMG network of independentmember...
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NASSCOM BPO Summit 2012: Analyst Corner - Ever Moving Targets: Keeping Ahead of the Game

Published on: Mar 3, 2016
Published in: Business      
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Transcripts - NASSCOM BPO Summit 2012: Analyst Corner - Ever Moving Targets: Keeping Ahead of the Game

  • 1. Ever Moving TargetsKeeping Ahead of theGameNASCOMM BPO StrategySummitSeptember 5-6, 2012
  • 2. KPMG’s Shared Services and Outsourcing Advisory (SSOA) Cliff Justice What to expect from KPMG: Principal,  Who We Are: SSOA brings a specialized global U.S. Leader SSOA team of more than 400 professionals within KPMG’s global network of independent member firms operating in over 140 countries. Our professionals help clients design, build, and manage IT and business processes across the enterprise.  What We Do: We help clients align their business strategy, organization, and execution to enable them to manage the entire IT and business Has played an advisory role and had process lifecycle, improving business performance involvement in more than 53 large scale and laying the groundwork for genuine business shared services, outsourcing and offshoring transformation. transformations for Global 1000 companies  How We Do It: We apply focused research, automating tools, proprietary data, clear business Former Managing Director with EquaTerra, acumen, and a forward-thinking mindset to provide leading their globalization advisory practice, timely, objective, actionable advice and practical and one of the founding members and approaches for clients. Managing Director of neoIT cjustice@kpmg.com +1.713.319.2781© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 2member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 3. Today’s Discussion 1 Macro global business trends 2 Shared services and outsourcing market trends 3 BPO market trends 4 Implications for clients and service providers© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 3member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 4. Macro Global Business Trends Recession, Double Dips & Debt, Uncertain Recovery Capitalism vs. State Capitalism vs. the State Demise in the West – or Not – Occupy This! Populations Shifts in the World – Go East for Growth Next Gen (Again) IT: Social Media, Cloud, Crowd, Consumerization, Mobility Global Talent Management – Find, Attract, RetainWhat’s a 20+ year old company to do? Balancing risks and benefits acrossa myriad of increasingly interrelated choices, but standing still is not aviable option© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 4member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 5. 2012 Trends with Biggest Negative Impact on User Organizations Weak global/regional economies; "double-dip" recession 73% Weak consumer/customer demand 50% Talent shortages/talent management challenges 39% Political/government gridlock 38% Break-up of the Eurozone; Greek/Italian/Spanish, et al default 32% Repressive rules and regulatory regimes 31% Inability to access funding; bank illiquidity 29% Sovereign debt crisis 29% Rising input and commodity costs 26% Emerging market competitors 24% Trade protectionism; de-globalization 10% Geopolitical event; terrorism; war on terror 5% Source: KPMG Global Poll on Top 2012 Trends & Predictions, January 2012© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 5member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 6. 2012 Trends with Biggest Positive Impact on User Organizations Improving/rebounding global economic conditions 53% Maturation of/greater access to innovative technologies (e.g., cloud, social media, virtualization) 51% Expanding emerging market opportunities for selling goods and services 48% Improving consumer/customer demand 43% The ability to tap into skilled global talent pools 30% Improving Eurozone conditions and stability 27% Improved access to capital at competitive rates 23% Continued trade liberalism; globalization 18% Easing/resolution of sovereign debt crisis challenges 15% New, more business friendly governments and administrations 15% Easing/decline in input and commodity costs 13% Relative geopolitical calm globally; decline in terrorism 9% Lessening of repressive rules and regulatory regimes 8% Source: KPMG Global Poll on Top 2012 Trends & Predictions, January 2012© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 6member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 7. Top 2012 User Organization Initiatives Continue to drive down operating costs 69% Invest in new/improve IT (e.g., ent. systems, BI, cloud, social media) 51% Redesign/reengineer core business processes 47% Invest and expand in emerging markets such as China, India and Brazil 39% Engage in M&A or divestitures 36% Deliver new/innovative products & services into the market; increase/improve R&D 31% Improve global governance capabilities; reduce global risk exposure 31% Optimize global service delivery chains; excel at global business services 30% Optimize global supply chains 26% Find, attract and retain talent globally 26% Shift back-office operations offshore/into lower cost markets 24% Diversify product and service lines 12% Invest and expand in domestic/Western markets 4% Source: KPMG Global Poll on Top 2012 Trends & Predictions, January 2012© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 7member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 8. Top Challenges to Successfully Undertaking 2012 Initiatives Dysfunctional/fragmented org./operating models, designs & processes 69% Inadequate/antiquated IT infrastructure and systems 51% Lack of adequate & skilled talent; inability to attract & retain talent 47% Inadequate/fragmented global business services capabilities 39% Inability to innovate 33% Inadequate management/board skills and capabilities 31% Competitive pressures from new/emerging market competitors 25% Restrictive government regulatory policies; hostile business environments 24% Lack of access to capital; poor liquidity; inadequate funds to invest 21% Lack of global scale 16% Competitive pressures from traditional competitors 15% Restrictive government trade policies 6% Inadequate/antiquated local market physical infrastructure 6% Source: KPMG Global Poll on Top 2012 Trends & Predictions, January 2012© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 8member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 9. Top Capabilities Required to Successfully Undertake Top 2012 Initiatives Smart/innovative management and management practices 50% Reporting and analytics to make business decisions 44%Alternative service delivery models-shared services & outsourcing 43% IT systems and capabilities beyond cloud 41% The ability to find, attract and retain talent globally 40% Global business services 36% Business intelligence/harnessing "big data" 33% Strong global governance policies and procedures 30% Adequate access to capital and funding 25% Globally integrated supply chains 24% Strong brand 19% Cloud computing 16% Access to emerging market talent & skills at a low cost 16% Research and development capabilities 12% Supportive local market regulatory policies & regimes 8% Creative use of social media 8% Supportive local market trade policies 3% Source: KPMG Global Poll on Top 2012 Trends & Predictions, January 2012© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 9member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 10. Today’s Discussion 1 Macro global business trends 2 Shared services and outsourcing market trends 3 BPO market trends 4 Implications for clients and service providers© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 10member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 11. Shared Services and Outsourcing Market OverviewMacro Trends Current Market Trends Negative global economic conditions continue to  Organizations are using their growing portfolio of GBS weigh heavily on organizations’ decisions on how, efforts to drive value into the organization in an where, and why to invest in global business services increasingly diverse range of ways. Reducing (GBS). operating costs remains a paramount driver for GBS – Organizations are expanding the use of blended efforts, but there is a growing focus on using GBS GBS models, deploying, and more tightly to improve the effectiveness of the services being integrating retained operations with domestic, delivered, and create more tangible and measurable nearshore and offshore shared services and business value. outsourcing efforts.  Progressive organizations are realizing that by – Many organizations’ GBS remain fragmented capturing and leveraging synergies across multiple across functions, geographies, and business units, functional areas and geographies via shared complicating governance and detracting from services, they can improve capabilities to do things potential business benefits. such as enter new markets, integrate new acquisitions faster, adopt new processes more rapidly, and access Cloud and other innovative technologies are still and analyze a wide range of data that serves their “wildcards” in the services market but are customers, business partners, and employees better. increasingly viewed as elements in a continuum of  There continues a slow death of the traditional one- GBS infrastructure and delivery components. dimensional model of global outsourcing focused The challenge today for organizations is to drive the purely on labor arbitrage. This is in part due to collective maturity of GBS efforts–balancing the costs shrinking wage disparities across markets, but also of doing so with the opportunity costs of not. because aggressive GBS adopters have already driven extensive costs out of their operations.© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 11member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 12. Top Drivers for Improving GBS CapabilitiesCombined Advisor and Service Provider Totals Reduce operating costs Improve global delivery & operating models Improve process performance Support business growth/expansion agendas Improve financial flexibility/create more variable cost model Redirect resources to more strategic activities Gain economies of scale Gain access to external skills/talent/resources Reduce future investment costs 0% 20% 40% 60% 80% 100% Service Providers Advisors Source: KPMG Quarterly Global GBS Pulse Survey 2Q12© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 12member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 13. The Journey: Typical Stages of Development in Business Services MaturityA KPMG Research Effort Leaders Level 5 – Integrated Value Capture and Performance Sustainability Globally integrated services portfolio with aggressive 1/3 of KPMG Survey use of alternative and mixed delivery models Participants Top Third of Level 4 – Strategic Respondents* Optimized balance of internal and external delivery capabilities, global sourcing with multifunction focus Key Differentiators Level 3 – Optimized • Multifunctional Traditional outsourcing relationships with global delivery; • End-to-End non-integrated internal shared services capabilities • Global Accelerators Level 2 – Rationalized • Governance Single function shared services with tactical onshore or offshore provider relationships • Commercial Orientation • Talent Management Level 1 – Sub-optimized Decentralized and duplicative functions ; little central control over business support services * Initial sample of 18 multifunctional shared services organizations with The Journey . . . Development Stages . . . Time tenure over 5 years© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 13member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 14. Integrated Global Business Services DimensionsTaking it to the Next Level Linkage Across Broad, Multifunctional Integrated Scope End-to-End Resource View of Process Human Capital Ownership Function Talent Process Strong Brand, 1 Integrated Process Alignment and 10 2 & Technology Governance between Business Platform GBS, Customers & Solution 9 3 Stakeholders Fully Integrated Enterprise Services Business 8 4 Data & Analytics Intelligence Sourcing Seamless Combined with 7 5 Delivery Across Transaction 6 Hybrid Portfolio Services Global Commercial Supply Chain Globally Networked Financial Delivery Centers Transparency Seamless Across Enterprise Connectivity with Trading Partners© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 14member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 15. Today’s Discussion 1 Macro global business trends 2 Shared services and outsourcing market trends 3 BPO market trends 4 Implications for clients and service providers© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 15member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 16. BPO Market Trends BPO mega-deals in HRO are dead and never materialized in other BPO areas. Larger “horizontal” BPO deals continue to lose buyer interest in favor of more specialized and vertical specific BPO. BPO emphasis is on smaller and more targeted deals, specialized vertical industry functions, incremental expansion of existing efforts, and exploration of cloud and platform based services. Adoption and expansion of shared services for business functions continue to grow in relative importance and interest compared to traditional outsourcing. Economic conditions globally are not materially changing the nature and scope of buyers’ BPO efforts, though some work is being brought back onshore into shared services centers. Overall buyers’ appetites for global services remains strong. Cloud continues to grow in popularity for business functions and its adoption is increasing–though many buyers still struggle to decipher the true business case for cloud–especially relative to longer-term cost savings opportunities.© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 16member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 17. Advisors: Top Approaches to Improve Service Delivery Capabilities Organizations continue to focus on maximizing and better managing existing GBS investments Improve current SSC/outsourcing governance over aggressively making new investments. Insourcing and moving work onshore is a hot Internal process improvement/re-engineering topic among western firms though the volume or efforts work remitted is relatively small and often involves extensive efforts to automate activities Use/expansion of SSCs involved. Organizations are showing relatively more Use/expansion of ITO 2Q12 interest in expanding shared services usage 1Q12 over traditional outsourcing. 4Q11 Use/expansion of BPO BPO market activity is strongest in industry 3Q11 specific services and not in generic, horizontal Investments 2Q11 BPO. into/improvements to enterprise software systems Cloud adoption is a key element in global sourcing efforts though to date most firms have Use/expansion of offshore captive SSCs not optimized efforts to take full advantage of cloud capabilities. Investments into cloud Social media will significantly impact global computing services services efforts long term though the data to impact is nascent. 0% 20% 40% 60% 80% 100% Source: KPMG Quarterly Global GBS Pulse Survey 2Q12© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 17member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 18. Buyer Global Sourcing Preferences & DemandCombined Advisor & Service Provider Totals 100% 3% 4% 3% 4% 4% 10% 90% 80% 31% 31% 36% 39% 70% 50% 37% 60% 50% 40% 48% 53% 46% 48% 38% 30% 41% 20% 10% 14% 12% 13% 7% 2% 10% 2% 4% 3% 1% 2% 4% 0% Domestic SSC Nearshore captive Offshore captive Domestic Nearshore Offshore SSC SSC outsourcing outsourcing outsourcing Significant decrease Some decrease No change Some increase Significant increase Source: KPMG Global Pulse Survey 2Q12© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 18member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 19. Buyer Global Sourcing Maturity & Sophistication Service provider selection; assessing providers global capabilities Assessing/accounting for data, data privacy & IP risk Assessing/accounting for financial, geo. & legal risk Location assessment for captives or outsourcing Assessing/accounting for service provider risk Managing/governing multiple engagements, service providers, geos 1.00 2.00 3.00 4.00 5.00 Service Providers Advisors 1=Very unsophisticated/immature, 5=Very sophisticated/mature Source: KPMG Global Pulse Survey 2Q12© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 19member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 20. Service Providers: Demand by Function and Industry IT BFSI CPG, Food & Bev., Retail, Wholesale F&A Manufacturing Vertical industry specific services* Healthcare Bundled business 2Q12 2Q12 functions with IT Pharma/Biotech 1Q12 1Q12 Bundled multiple 4Q11 Ent./Media, 4Q11 business functions Hospitality/Travel 3Q11 3Q11 Energy/Utilities, Oil & 2Q11 Gas 2Q11 HR Govt (Fed, State, Local), Edu., Non-Profit Procurement/source to pay Bus Svcs/Consulting, Const./Eng. Customer care Telco * New category 2Q12 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% Source: KPMG Quarterly Global GBS Pulse Survey 2Q12© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 20member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 21. Today’s Discussion 1 Macro global business trends 2 Shared services and outsourcing market trends 3 BPO market trends 4 Implications for clients and service providers© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 21member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 22. Implications for Clients Continue to Innovate or SellWhat the best are doing . . . . And what they are achieving1 Expanding services from back-office to front and Business model alignment, impact, relevance to middle office business1. Breaking through functional boundaries to create2 Transformation, innovation, standardization, ability to end-to-end process ownership drive global process management2. Industrializing the service delivery platform3 Speed to implement, reduced investments, broader including adoption of cloud solutions transformation3. Optimizing the global service delivery footprint4 Economies of scale and place, consistency, flexibility to quickly ramp to serve new markets4. Optimizing the mix and form of outsourcing and5 Cost variability, best of breed delivery, shared risk, captive relationships access to talent5. Creating an Analytics capability6 Depth, insight, relevance6. Managing talent across GBS boundaries7 Accountability, leadership, “employer of choice”7. Creating an outcome based commercial8 Goal alignment with internal customers, relevance, orientation and GBS brand rejuvenation8.9 Creating seamless connectivity with trading Synchronization with suppliers, external customers, partners and other partners9. Installing service portfolio management to10 Ongoing competitiveness in supply chain; stronger manage internal and external relationships governance and performance © 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 22 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 23. Implications for Service ProvidersNew Relationships: Incumbency no longer equates to strong chance at renewal if you don’t engage at a newlevel. Many different alternative models and alternative providers.End-to-End Solutioning: Collaborative and integrated design; performance assurance for businessoutcomes; value based pricing.Complexity Management: Array of solutions to different process and geographic needs; broader set ofcompetencies to realize the opportunity; change and transition management.Multi-vendor Environments: Integrated performance assurance and accountability support for customerGBS governance; collaborative governance with clients and other providers.Retained Organization Impact: Assistance with organization, process, and technology redesign andrationalization; linkages between internal and external service providers and business units to drive businessinsight.IT: Enablers, and who brings them with what economic model; impact on agility; integration.Compliance and Risk: Service providers approaching core functions – the implications for related riskmitigation and allocation; solutions for financial controls, operational and regulatory visibility and audit.Data Security and Integrity: Evolution of technical solutions and impact on appropriateness of marketstandards.Outcomes Based Agreements: So many questions – appropriate when? What are the hurdles toeffectiveness? How close can we map to business outcomes?Third Party Support of the Relationship: From benchmarking to . . . what? © 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 23 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 56762SFO
  • 24. © 2012 KPMG LLP, a Delaware limited liability partnership andthe U.S. member firm of the KPMG network of independentmember firms affiliated with KPMG International Cooperative(“KPMG International”), a Swiss entity. All rights reserved.The KPMG name, logo and “cutting through complexity” areregistered trademarks or trademarks of KPMG International.

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