NILF 2014: Crouching Tiger / Hidden Dragon, Is there an opportunity for the Indian IT-BPM Industry in China? : Gary P. Nowak, KPMG Advisory  (China) Limited
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NILF 2014: Crouching Tiger / Hidden Dragon, Is there an opportunity for the Indian IT-BPM Industry in China? : Gary P. Nowak, KPMG Advisory (China) Limited

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  • Establish what I intend to discuss
  • Great article in the Economist, plan to discuss that China needs to change their ways as they are losing their competitive advantage. Highlight that cost reduction and moving to Shared Services quickly MUST happen.
  • Great stats on the growth potential in China. There IS opportunity for established BPM / IT providers in China
  • Some quick stats on the potential in China
  • Full government support in China for Shared Services, plenty of incentives readily available. Build strong China government relationships.
  • Highlights from KPMG’s annual Summit. Focus on shorter trajectory to maturity / data analytics / Innovation – Key areas where India excels
  • Light touch on this slide. China’s talent at the Management level isn’t strong. India should excel here
  • What china companies are looking for in an SP, building a strong relationship
  • What makes an Indian provider great. Tie this back into what China lacks and where they need to be heading

NILF 2014: Crouching Tiger / Hidden Dragon, Is there an opportunity for the Indian IT-BPM Industry in China? : Gary P. Nowak, KPMG Advisory (China) Limited Presentation Transcript

  • 1. NASSCOM Crouching Tiger / Hidden Dragon Is there an opportunity for the Indian IT-BPM Industry in China? February 13th, 2014
  • 2. Question Is there an opportunity for Indian IT-BPM Industry in China? © 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. 1
  • 3. 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 © 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. 2
  • 4. China Outsourcing Outlook Industry Size China Outlook in 2020 50 46.6 45 13.2 40 USD billion Global services export market in China forecasted to grow by between 20-25 per cent each year until 2015 CAGR 41.10% 35 30 32.4 7.7 25 3.7 15 26.1 10 0 27.3 8.7 4.9 20 5 7.2 19.9 5.9 2007 19.8 14.9 13.8 9 2008 2009 2010 2011 ITO Source: MOFCOM 2013 2012 BPO 2013 1H KPO Break up of IT-BPO by Service Line 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. IT-BPO Industry - 2020 USD 241.4 bn USD 143.7 bn USD 32.4 bn Global Locations Compass: China, published by the Everest Group, May 2012 • Human Resource • Customer management • Finance & Accounting • Procurement 2011 Source: MOFCOM 2013 CAGR 25% BPO 13.7% ITO 54.6% CAGR 18% KPO 31.7% • 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 2020 - "Base-Case" Scenerio - "Optimistic Scenario" 2020 Source: KPMG Research © 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. 3
  • 5. Opportunities in China Information Technology Cloud Computing Smart Cities 154 currently 600 to 800 projected China HRO is seeking value added “end to end” solutions Big Data KPO has seen a 70% yoy growth trajectory e-Commerce Business Process M Human Resource e-payment Expected to reach 1.5 trillion rmb in 2013 Cloud Computing 3% current 16% annual growth Finance Services Call Centre China Service Outsourcing Market (USD billion) 50 45 Supply Chain Management 40 USD billion 35 26.1 30 25 KPO Opportunities 20 19.8 7.2 15 Research and Development 10 4.9 5 7.7 13.2 0 Industrial Design Outsourcing © 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. 2011 2012 KPO BPO ITO 4
  • 6. Government Support in China 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 Government Support © 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. 5
  • 7. 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 © 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. 6
  • 8. Talent Requirements Traditional Talent Requirements • Operations and service delivery • Transitions How important are the following objectives to your team.... When you first started your outsourcing and/or shared services initiatives? Managing Transitions SLA Performance Management • Performance management • Service provider management Service Provider Selection Influencing Executives Contract Negotiation Managing Financial Business Cases Defining Business Outcomes… Emerging Talent Requirements • Process engineering • Industry expertise • Technology integration • Governance and change management Driving Innovation Improving Service Provider… Adding Addition Volumes to… Defining and Adding New In-… Tactical Objectives Improving Industry Acumen Raising the Bar for Existing SLAs External Benchmarking Not Important • Data analytics Strategic Objectives Improving Analytics Source: HfS Research 2013 , n = 282 Enterprise Buy-side Executives © 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. Somewhat Important Important Mission Critical Importance Rating 7
  • 9. The Buyers’ Consideration on Service Providers Delivery Is the service provider capable of handling complicated transition and delivery? Strategy Does the service provider help to bring strategic direction, innovation and vision for my business? Relationship Talent Technology Can the service provider integrate the technology part with an overall solution? Is the service provider‟s talent base strong enough to offer resources with strong industry experience, local knowledge, result oriented delivery, etc. ? Can the service provider build up a relevant mindset and get it across to all the levels of the buyer‟s organization? Culture Financials Is the service provider‟s financial situation stable and capable enough to go through long and voluminous outsourcing deal? © 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. Does the service provider maintain a culture fit with the buyer‟s organization and it growth style? 8
  • 10. Why Indian Service Providers . . . . . Unique customer centricity & global experience Trained talent in latest technology Scalable and secure Continued focus on optimal cost-efficiency © 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. 9
  • 11. Gary P. Nowak • Director KPMG Advisory +86 (21) 2212 3289 © 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). Gary.nowak@kpmg.com