mckinsey關(guān)于商業(yè)流程外包的presentation.ppt

ITES BPO Opportunitytomoveupthevaluechain January13 2004 Thisreportissolelyfortheuseofclientpersonnel Nopartofitmaybecirculated quoted orreproducedfordistributionoutsidetheclientorganizationwithoutpriorwrittenapprovalfromMcKinseyitisnotacompleterecordofthediscussion PresentationatiTECH2004 20030520DL ZXE332 ITES BoardPres JS 7 1 Source Gartner Dataquest Aberdeengroup McKinseyanalysis CONTEXT BUSINESSPROCESSOFFSHORINGHASEXPLODEDINTHELASTFEWYEARS 20030520DL ZXE332 ITES BoardPres JS 7 2 TechjobsleaveU S forIndia Russia Who stoblame July2003 Isyourjobnext February2003 BUTHASALSOCREATEDGREATANXIETYINPRIMARYMARKETS AmericanlegislatorsareaccusingIndiaofstealingjobs June2003 America spain India sgain January2003 3 3millionU S servicejobstogooffshoreby2015 November2002 CanAmericaLoseTheseJobsandStillProsper July2003 U S HouseSub businessCommittee 20030520DL ZXE332 ITES BoardPres JS 7 3 INTHISCONTEXT SEVERALDOUBTSHAVEARISENABOUTTHEFUNDAMENTALLONGEVITYANDEVOLUTIONOFBPOASANINDUSTRY 20030520DL ZXE332 ITES BoardPres JS 7 4 INTHISCONTEXT SEVERALDOUBTSHAVEARISENABOUTTHEFUNDAMENTALLONGEVITYANDEVOLUTIONOFBPOASANINDUSTRY 20030520DL ZXE332 ITES BoardPres JS 7 5 0 33 EstimatebasedonhistoricalU S reemploymenttrendsSource McKinseyGlobalInstitute 1 OFFSHORINGACTUALLYGENERATESGREATERVALUEFORTHEGLOBALECONOMY Taxes 0 04 Revenues 0 20 Localsuppliers 0 09 deliversvaluetoIndia 0 67 Costsavings 0 58 Goodssold 0 05 ProfitsfromIndianventures 0 04 bringsreturnstoU S 1 45 1 47 andmakestheglobalpiethatmuchbigger 0 45 0 47 createsnewvaluefromre employingU S labor 1previouslyspentinU S nowoffshoredtoIndia 1 00 20030520DL ZXE332 ITES BoardPres JS 7 6 0 03 0 33 0 10 0 09 0 10 0 01 ProfitsretainedinIndia INDIACAPTURES33CENTSFROMEACHDOLLAROFSPENDOFFSHOREDBYTHEU S Valueaccruedfrom 1ofU S spendoffshored1Dollars 2002 Centralgovern ment3 Stategovern ment4 TotalvalueaccruedtoIndia Labor Suppliers2 Offshoringsector 1EstimatedusingtheIndiaoffshoredservicesindustrycase2Includesrevenueaccruedtothesupplierindustrieslesssalestaxes incometaxestoemployeesandcorporatetaxes3Includesincometaxfromlaboremployedintheoffshoredservicessectorandthesupplierindustriesandcorporatetaxonthesupplierindustries4IncludessalestaxonthesupplierindustriesandrevenuefromthesaleofpowertooffshoredserviceprovidersSource McKinseyGlobalInstitute 20030520DL ZXE332 ITES BoardPres JS 7 7 JOBSOFFSHOREDWILLBEASMALLFRACTIONOFTHESHORTAGEINELIGIBLEWORKERS NumberofworkersMillions 2000 2015 Source U S Census McKinseyGlobalInstitute Jobsprojectedtogooffshore Declineinworkingpopulationduetoaging 20030520DL ZXE332 ITES BoardPres JS 7 8 JOBSOFFSHOREDAREAFRACTIONOFALLMASSLAYOFFS 1Bureauoflaborstatisticsdefinesmasslayoffsasjoblossactionsleadingtothedisplacementof50ormoreworkersbyagivenestablishmentduringa5 weekperiod2Average1996 993Average1989 20004Average2003 13Source NBER BLS Kletzer McKinseyGlobalInstitute Averageannualmasslayoffs1Millions Allmasslayoffs2 Offshoringprojection4 Trade relatedlayoffs3 20030520DL ZXE332 ITES BoardPres JS 7 9 THEREFORE BUSINESSLOGICWOULDINDICATETHATBPOHERETOSTAY BUTWILLREQUIREHANDLINGCUSTOMERCONCERNSWITHCOMPASSION 20030520DL ZXE332 ITES BoardPres JS 7 10 INTHISCONTEXT SEVERALDOUBTSHAVEARISENABOUTTHEFUNDAMENTALLONGEVITYANDEVOLUTIONOFBPOASANINDUSTRY 20030520DL ZXE332 ITES BoardPres JS 7 11 FOURPOSSIBLEVALUECHAINMOVESPOSSIBLE 20030520DL ZXE332 ITES BoardPres JS 7 12 A MOVESUPTHEVALUECHAINALREADYHAPPENINGINTERMSOFBREADTHANDDEPTHOFPROCESSESOFF SHORED AXAInsuranceclaimsprocessing CitibankCheckprocessing accountapplicationprocessing loanprocessingbyasubsidiary e Serve HSBCAccountopeningandclosing retailloanprocessing mortgageprocessing AmericanExpressLivebrokerageadvicefromqualifiedagentsthroughavendorinthePhilippines eTelecare Extensiveoffshoringofcreditcardservices includingriskmodelingandcreditevaluation Extensivefinancialanalyses GECapitalBusinessSolutionsRiskmodeling actuarialservices underwriting CitibankCreditcardprocessing collectioncalls inboundandoutboundservicecenters HSBCInboundcustomerservicecenterformortgage CapitalOneInboundcustomerservicecenter outboundtelemarketing MSourcE CitibankFinanceandaccounting GECapitalInsuranceclaimsprocessingOutboundtelemarketing inboundcustomerservice MBNAProcessingofonlineapplications TransWorks GECapitalPayrollaccountingInvoiceandpaymentprocessing McKinsey CompanyResearchandknowledgemanagementforworld wideofficesinGurgaon GECapitalRiskanalysis strategicplanningandforecastingFinancialstatementanalysis Examplesofsector specific vertical processes Examplesofcorporatecenter horizontal processes GEUKautoapplicationsdataentry 20030520DL ZXE332 ITES BoardPres JS 7 13 INFIs VENDORSATPOINTOFSERVICINGTHEWHOLERANGEOFCOREBANKINGANDSUPPORTPROCESSES Source Vendorinterviews literaturesearches vendorwebsites McKinseyanalysis Sampleprocesses TelesalesCustomerserviceTechnicalsupporthelpdesk E mailsupportFaxresponsesLiveinteraction chatroomcustomerservice Customerfacing Voice Non voice Inbound Outbound TelemarketingCollections bucketone Businessprocessoff shoringservices BenefitsadministrationPayrollprocessing Retailbanking accountmaintenance opening checkprocessing FundadministrationReferencedatamanagement Claimsprocessing Databaseintegration analyticalservicesSecondaryresearch A RandA PmanagementReconciliation Backoffice Corebusiness Support HR Admin Consumerbanking Wholesalebanking Insurance Research Finance Acctg Illustrativevendors 20030520DL ZXE332 ITES BoardPres JS 7 14 B REENGINEERINGANDPROCESSIMPROVEMENTCANPROVIDEADDITIONALGAINSOF30 40 100 Originalcostbase Factorcostsavings Additi onaltelecom manag ementcosts Off shorelocationcost Consoli dation standar dization superiorskills Taskreengi neering Econo miesofscale Processreengine ering Newcostbase 60 65 10 15 45 55 8 13 5 7 3 5 15 30 35 Doesnotincludegainsfromrevenueenhancement Taskaggregationandprocesslevelimprovement Taskmigration Tasklevelimprovement Factorcostbenefits 45 55 savings Additionalbenefits 30 40 savings 20030520DL ZXE332 ITES BoardPres JS 7 15 Productivityandprocessre engineering Economiesofscale Aggregatedchequeorderprocessingtasksandbought incross trainedagents whichhassignificantlyincreasedstaffutilisation Decreasedtimetakenformonth endclosingfrom5to2daysbymodifyingandeliminatingtasks Re engineering end to end INFACT OVERTIMECOMPANIESHAVECAPTUREDADDITIONALPRODUCTIVITYGAINS Reduced40FTEsbydigitisingthe backlining processinthecontactcentre Technologyapplication Efficiency Source Expertinterviews literaturesearches Reducedaveragecallcentretalktimefrom180to100secondsthroughuseofmorequalifiedagents Improvedtotalcustomersatisfactionscorefrom85 to92 afteroffshoringcallcentreservicestoIndia Bettertalentandtraining Efficiency IncreasedfirsttimeresolutionratesfromUSbenchmarkof59 to74 resultinginreductioninrepeatsupportcallsandon sitedispatchcallsleadingtosavingsof 2millionperannum 20030520DL ZXE332 ITES BoardPres JS 7 16 C F 1000INSTITUTIONSHAVEINCREASINGLYBEGUNTOREALISEOPPORTUNITIESFORREVENUEENHANCEMENT LivebrokerageadviceformassaffluentcustomersfromSeries7qualifiedagentsthroughvendorinthePhilippines eTelecare 50million yeargainedthroughrevenueaudits interline agent andusedtickets Abilitytopriceinsurancepoliciesatsignificantlybelowcompetitionleadingto5 7 marketshareimprovementinhomemarkets Researchplatformtoservicecustomersforafee offercustomizedresearchforstrategiccustomersDevelopmodelingplatformtoprovidefee basedanalyticalcapabilitiestoSMEfinancialservicescustomers offercustomizedservicestolargefinancialinstitutionsOffertradefinanceservicestoSMEcustomersthatareotherwiseuneconomicaltoserveOffshoreR D pharma chemicals usingcollaborations Knowledgeoncallservicesforcoreclients customizedresearchandanalytics Revenueopportunitiescreatedthroughoffshoring PotentialideasforF 1000institutions Customisedresearchforglobalcustomers potentialtocreateplatformtoserviceotherbanks 20030520DL ZXE332 ITES BoardPres JS 7 17 ColumbiaBank Trust laterSynovus transitionsinternalcredit cardprocessingbusinessintothird partycompany 1982 CB Tsells19 ofcompanyinIPO 1983 TSYSgrowstobecomethesecondlargestprocessorintheworld SIGNIFICANTVALUECANBECAPTUREDBYTRANSFORMINGINTERNALCAPABILITIESINTOTHIRD PARTYBUSINESSES AmExtransitionsinternalprocessingunitintothird partycompany FDR andsellsoffmajorityownershipstake 1992 FDRmergeswithlargestcompetitorandgrowstobecomegloballeaderintransactionprocessing Parent Newbusiness Transition March1 2002Sources Hoovers analystreports McKinseyanalysis ManagementbuyoutofMidlandBankprocessingunitfollowingmergerwithFirstBankSystem 1984 IPOin1986Growntobecomeleadingprovideroftechnologyandprocessingservicesforfinancialinstitutions MidlandBank 5billioninmarketcap growingat5 CAGRinthelast5years 8billioninmarketcap growingat31 CAGRinthelast5years 17billioninmarketcap growingat26 CAGRinthelast5years ValuecreationU S billion 20030520DL ZXE332 ITES BoardPres JS 7 18 D NEWINDUSTRIESTHATHAVEPLAYED WAITANDWATCH GAMETRADITIONALLYNOWACTIVELYEXPLORINGANDCOMMENCINGOFFSHORING PHARMACEUTICALEXAMPLE Area Attitudetowardsoutsourcing offshoring Keyfactorsdrivingincreasingmomentum Waitandwatch towardsoffshoringuntillate2001Significantlyhigheracceptancein2002 Triggerspulled in2003byseveralplayersincludingBMS Novartis Abbott MainstreamingofIToffshoringandemergenceofcrediblesuccessstoriesoncostandqualityimprovementsSolidvendorbase e g Infosys Satyam TCS withproventrackrecordObservedactionsofcompetingplayers Waitandwatch towardsoutsourcingofbusinessprocessthrough2002andearly2003Numerousongoingdiscussionsin2003withvendorsonfinance accountingandHRoffshoring IncreasingfocusonrationalizingsupportfunctioncostsEmergenceofcrediblesuccessstoriesandvendorsforF AandHRObservedactionsofcompetingplayersManycompaniesarticulating overallaspiration cuttingacrossnumerousopportunitiessuchasIT BPO R D ConcernsaroundIPandqualityofmedicalinfrastructure Positiveexperienceoffirstmoversinaddressingconcernsandbenefitingsignificantlye g AZandBMSinRNovartis PfizerindatamanagementImprovedmedicalinfrastructureandfavorableregulatoryenvironment 20030520DL ZXE332 ITES BoardPres JS 7 19 OPPORTUNITIESFOROFFSHORINGEXISTACROSSTHEPHARMACEUTICALVALUECHAIN SupportFunctions Strategicandcommercialbusi nessplanning pre launch ProductdevelopmentandlifecyclemanagementPricingandhealtheconomicsMarketaproduct newandlegacy CustomerrelationshipmanagementCustomerandconsumerservicesSalesmanagementLogistics distributionAftersalesservices Finance AccountingInformationTechnologyHumanresourcesLegalLegalcounselingadvocacyandlitigationIntellectualpropertycounselingSalesforcesupport Targetidentification validationLeadgeneration optimizationPreclinical ToxicologyClinicalDevelopment TrialsDataManagement NewproductiondevelopmentProcurementPlanningandmanufacturingPlantmaintenanceQualitymanagementProcesscontrolSupplychainmanagementPerformancemonitoringandcontrol Source Interviews McKinseyanalysis Offshorepotential 20030520DL ZXE332 ITES BoardPres JS 7 20 RECENTACTIVITYPOINTSTOGROWINGINTERESTOFPHARMACOSINOFFSHORING DATAMANAGEMENTEXAMPLE Source Interviews Globalstatisticaloperationsbusinesssystem Savingsofaround40 60 vis visglobalCROswithinfirstyearTargeting80 100globaltrialsin2003Planstostartrelatedareasoffilingandreportwriting efficacyreportingandstatisticaldesignforPhaseIVstudiesEnteringintoPhaseIreportingforcomplexoncologytrialsandtraditionallyoutsourced PhaseIVtrials OperationsinIndia Startedoperationsin2001Approximately30statisticiansoutofglobalteamof250locatedinIndiaFocusonstandardsafetyreportingforPhaseIIandIIItrialsReportsfocusedonUSFDAandEMEAOver40globaltrialssupportedinfirstyearofoperationSupporting2megatrialsofover10 000patientrecordseachConductseveralshortturn aroundanalysesforclinicalpharmacologystudies NOVARTISEXAMPLE 20030520DL ZXE332 ITES BoardPres JS 7 21 OFFSHORINGCANRAPIDLYMOVEUPTHEPHARMAVALUECHAIN SupportfunctionsFinanceandaccountingInformationtechnologyHumanresourcesR DClinicaldevelopmentDatamanagement includingbio stats ContractmanufacturingDrugmanufacturing TBD FormulationsdevelopmentCustomchemicalsynthesisR DBio informaticsAnaloggenerationSupportfunctionsSalesforcesupport ContractmanufacturingNewproductdevelopmentR DLeadgenerationandoptimisation Phase1 Earlywins Phase2 Minimalriskmove Phase3 High endactivities Rationale SignificantexperienceacrossotherindustriesStrongvendorbasePharmasalreadydoingit SignificantbottomlineimpactpotentialvisibleEmergingvendorbase IPRissuesneedtobeclarifiedComfortaroundAsianeedstobeestablished Opportunity 1 2 3 4 5 20030520DL ZXE332 ITES BoardPres JS 7 22 INTHISCONTEXT SEVERALDOUBTSHAVEARISENABOUTTHEFUNDAMENTALLONGEVITYANDEVOLUTIONOFBPOASANINDUSTRY 20030520DL ZXE332 ITES BoardPres JS 7 23 INTHEENDSTATE LARGEINSTITUTIONSWILLUSEACOMBINATIONOFCAPTIVEANDVENDORFACILITIES Examples Startedoffhandlingallprocessesin houseNowoutsourcescallcentreservicestomultiplethirdpartyvendors StartedoffshoringoperationsbyoutsourcingInadditiontooutsourcing nowalsorunsacaptivecentre JV Alliance Indianbest of breedvendor Delay OutsourcetoGlobalbrand Captive JV Alliance Indianbest of breedvendor Delay Captive Fromprimarilycaptive tohybridmodel Feasibilityofoutsourc ingtheprocess Cross borderoperationsophistication OutsourcetoGlobalbrand 20030520DL ZXE332 ITES BoardPres JS 7 24 INFACT MATUREOFFSHORERSHAVEDEVELOPEDANINTEGRATEDARCHITECTUREOVERTIME Startedwith150personcompletelycaptiveunitin1994primarilyforbackendprocessingEntryintoknowledgeintensiveactivitiesin2000 01Significantexpansionofheadcountandservicelinein2001GeographicaldiversificationintoPhilippinesin2001 Model Thirdparty PhilippinesReducescountryriskProvidesBCP Thirdparty IndiaExclusivesupporttoAMEXCreatesscalewithminimalinvestmentDiversifiesriskCompeteswithcaptiveandprovidesBCP CaptiveoperationsLeveragesbrand ImportantforregulatoryissuesPreservesproprietaryprocessknowledge oftotaloffshoredservices 700FTEsVoicebasedcustomersupportforcreditcardoperations Over2000FTEsacrossvendorssuchasSpectramind Daksh EFundsVoicebasedcustomersupportforcreditcardoperations Over1600FTEsInvolvedinhigh endandlow medium end proprietary nonproprietaryservices e g A Creconciliation A Copeningandclosing Ledgeractivitiesforcreditcards A Cplanningandforecasting Fraudandriskmodeling Scale scopeandmanagementmodel 30 50 20 20030520DL ZXE332 ITES BoardPres JS 7 25 DELETEDPAGES 20030520DL ZXE332 ITES BoardPres JS 7 26 F 1000PLAYERSHAVEADOPTEDTHREEAPPROACHESTOSELECTPROCESSESFOROFFSHORING Detailedanalysistoidentifyhighpotentialprocesses percent IdentifyprocessesforoffshoringbasedonsimplecriteriaSponsorshipfromprocessowner e g insideGroupOps inLTSB Leastorganizationalresistance e g overflowwork Lowreputation servicequalityrisk Useexternalbenchmarks activitiesandphasing toidentifyandprio ritizethecorrespondingcandidateprocessinyourorganizationUsebenchmarkinformationonoff shore onshoresplitandinternalFTEmapping foridentifiedcandidateprocesses tosizetheopportunity Filteractivitiesbyoffshorability Identifyprocesses activitiesoffshoredbyexistingplayers Buildandtheywillcome allowotherpartsoftheorganizationtodecideonoffshoringattheirownpace 20030520DL ZXE332 ITES BoardPres JS 7 27 Retailbanking Merchantacquiring Financialservicessectorswithhighpotentialforoffshoring Retailbanking Mortgages Servicing Origination Lifeandhealth Personal Groupandhealth Propertyandcasualty Depositproducts Consumerloans Creditcards Cardissuance servicing Investmentbanking Research 7 11 10 15 8 15 7 12 5 10 10 20 5 10 5 12 5 12 8 15 Percentofcostbaseoffshorable 15 20 20 25 25 30 20 25 10 15 30 40 10 15 20 30 20 25 25 30 THISHASPRIMARILYBEENDRIVENBYTHESIGNIFICANT35 50 COSTSAVINGSOPPORTUNITY Assetmanagementmoduleincludingretailbrokeragetobecompleted DoesnotincludepotentialcostsavingsfromoffshoringITandcorporatecenterprocesses Non interestexpense operatingcostonly excludinginterestexpense advertising andcorporateGassumesinstitutionisa pure player Potentialinstitution widesavings 35 50 savingsinoff shoredactivities Wholesalebanking Insurance PercentoftotalNIE 20030520DL ZXE332 ITES BoardPres JS 7 28 VENDORLANDSCAPEISCONSOLIDATINGANDMATURING BPOstart ups BPOarmsofIndianITservicesplayers BPOarmsoflargefinancialinstitutions GlobalBPOcompanies Callcenter technicalhelpdesksandemailbasedhelpdesks Callcenter Techmailhelpdesk Callcenter Insuranceclaimsprocessing airlinerevenueaccounting Inboundcallcenterandfinancialservices Callcent