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Innovate Your Outsourcing Contracts - The Future Is Now! (CFO Day, Netherlands)


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Over the past decade, organizations have used shared services and outsourcing for improving efficiency and costs. In the majority of instances however, sustained benefits have been limited after the initial consolidation and labor cost benefits. Meanwhile, some of your peers are re-writing the very rules that define the industry. Here's how Philips and Infosys BPO together transformed Philips' Shared Service Centers (SSCs) across the world. This is a must read for CFOs and Finance Directors who work for organization or departments with more than 250 employees. It was first presented on June 5, 2014 at CFO Day, Netherlands.

Published in: Business, Technology
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Innovate Your Outsourcing Contracts - The Future Is Now! (CFO Day, Netherlands)

  1. 1. Innovate Your Outsourcing Contracts The future is now!
  2. 2. ©2014 Infosys Confidential About Infosys Infosys is a global leader in technology, consulting, and business process outsourcing 2 ValuesMilestones People IntellectService Lines Founded in Pune, India, in 1981 $8.2 billion revenues Global presence across 71 countries $30 billion market capitalisation 160,220+ employees 100 nationalities 97% are university educated 22% have masters or doctorates World’s largest corporate university 2% of revenues invested in R&D 600+ researchers Investing $100 million in new platforms Transparency, ethics, and respect 98.3% of projects are delivered on time 97.8% of businesses are repeat businesses Among top 25 in Caring for Climate Initiative by UN Global Compact Consulting services Information Technology services Business process outsourcing services Products and platforms
  3. 3. ©2014 Infosys Confidential About Philips A strong, diversified, technology group with a vision to make the world healthier and more sustainable 3 1 Categories are calculated using 2013 full-year sales 2 Growth geographies exclude USA, Canada, Western Europe, Australia, New Zealand, South Korea, Japan and Israel Adjusted EBITA of €2.5 billion in 2013 €1.7 billion R&D spend in 2013 112,000 employees across 100 countries Established since 1891 €23.3 billion sales in 2013 70% B2B 25% revenues from recurring streams 50% of portfolio has global leadership positions 40 businesses in 3 sectors1 Healthcare Consumer Lifestyle Lighting 37%20%43% Geographies1 North America Growth Geographies2 Western Europe Other Mature Geographies 25% 30% 9% 36%
  4. 4. ©2014 Infosys Confidential Philips Accelerate! Program Philips is on a transformation journey, establishing a new operating model with standard processes 4
  5. 5. ©2014 Infosys Confidential BPO Industry Evolution We are journeying to the next generation of BPO model 5 Delivery Model Focus Key levers Value creation First Generation Second Generation Third Generation The Next Generation Relationship Labour arbitrage Offshore-centric Stable processes Cost impact Process improvements Offshore or near shore Efficiency Cost impact Automation process re-design Global delivery Process excellence Business impact Innovation, collaboration Hub and spoke Demonstrated business value Strategic impact Supplier-Buyer Partnership
  6. 6. ©2014 Infosys Confidential Philips – Infosys Journey The Philips – Infosys relationship started 7 years ago. We have extended it by another 5 years! 6 • Watermelon effect: green SLAs but red E2E KPIs • Alignment of innovation roadmap • Predictability of efficiencies • Standardization of processes & structure Stabilization Realized Business Value Enhanced Collaboration Future Focus Optimization • Took over 3 Philips captive centers • Technology enhancement • Transfer of rule based complex processes • Over 25 automation projects (some in progress) • Joint target for Fit2grow program Expansion First Six Years Key improvement opportunities in 2013 2012-132007-08 2010 20112009 • Implemented variable cost model • Moved from regional to global delivery model • Partnered in two strategic initiatives • Created Global Business Process Owners structure • Roadmap to achieve benchmarked cost levels for finance function 2014+ • Ensure that standardization is a pre- requisite • Drive E2E KPI improvements by leveraging analytics • Innovate together – shape the E2E roadmap • Have skin in the game
  7. 7. ©2014 Infosys Confidential Future Focus - Ensure that standardization is a pre-requisite Issues: Multiple, diverse, ways of functioning in finance and multiple IT solutions Solution Approach: Standardization, required to enable innovation 7 Multiple SAP systems Multiple Operating Units Multiple manual Journal Vouchers High variability in execution Multiple work instructions Standardize to innovate & become more flexible Move towards one Finance Standard for Philips Manage this centrally, but remain locally relevant Monitor and enforce adherence/compliance
  8. 8. ©2014 Infosys Confidential Future Focus - Drive E2E KPI improvements by leveraging analytics From cumbersome, partial measurements to joint ownership 8 • Watermelon effect • Lack of actionable insights • Lack of clear accountabilities • One dashboard for both Philips and Infosys • Infosys has clear accountability for E2E KPIs in-scope processes • Infosys creates insights to drive process changes Challenges: Solution Approach:
  9. 9. ©2014 Infosys Confidential Future Focus - Innovate together, shape the E2E roadmap From siloed improvements towards end-to-end roadmaps 9 Drive Transformation & End State Visioning Drive Operational Excellence (Compliance & Service Quality) Drive Continues Improvements (take the leakage out of it) Innovation Board Targets 3 Business Platforms and IT Tools 1 Governance 2 Co-creation and Innovation Fund 4 Robotics • Insufficient alignment of improvement roadmaps • Diverse capabilities, disagreements - unable to achieve a joint agenda • Defining Innovation agenda and governance – meet every 8-10 weeks • Leveraging Infosys IP and investments • Aligning with E2E roadmap Challenges: Solution Approach:
  10. 10. ©2014 Infosys Confidential Future Focus - Have skin in the game From siloed improvements towards Pain-Gain sharing 10 • Lack of initiative to improve end-to-end processes • Lack of integration of diverse Infosys capabilities • Clear improvement targets for key indicators • Quality variation causes significant penalty/incentive • Concrete control environment is a pre-requisite for incentives Challenges: Solution Approach: • Focus on seven key indicators • Incremental quarterly targets • Significant revenue at stake • Equal upside PAIN GAIN
  11. 11. ©2014 Infosys Confidential Connect with us 11
  12. 12. © 2013 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as expressly permitted, neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying,recording or otherwise, without the prior permission ofInfosys Limited and/ or anynamed intellectual property rights holders underthis document. Thank You