Future Of Outsourcing

1,857 views

Published on

3forward, OI and NelsonHall CEO John Willmott discuss trends in outsourcing.

Published in: Business, Technology
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,857
On SlideShare
0
From Embeds
0
Number of Embeds
56
Actions
Shares
0
Downloads
88
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Future Of Outsourcing

  1. 1. The Future of Outsourcing - What to Expect in 2010 - Sales Leader Series – TeleBriefing #7 November 19, 2009
  2. 2. Sales Leader Series – Fall 2009 Escaping Pipeline Purgatory - view Sept, 17 2009 Creating Qualified Opportunities (Not Just Leads) - view September 24, 2009 Sales Readiness for 2010 –view October 1, 2009 2.0 Sales Tools for the Real World - view October 19, 2009 Outsourcing Buyers Panel: “Why We (Really) Buy” - view October 27, 2009 Sales Leaders Dream Team - view November 5, 2009 Future of Outsourcing – What to Expect in 2010 - view November 19, 2009 The Outsourcing Institute / 3forward All Rights Reserved 1
  3. 3. Sales Leader Series: Hosts and Sponsors Dan Hudson Frank Casale Matt Smith President, Co-Founder CEO and Founder, EVP, Co-Founder 3forward The Outsourcing Institute 3forward The Outsourcing Institute / 3forward All Rights Reserved 2
  4. 4. Guest Panelist John Willmott CEO, NelsonHall john.willmott@nelson-hall.com The Outsourcing Institute / 3forward All Rights Reserved 3
  5. 5. State of the Outsourcing Marketplace John Willmott NelsonHall Copyright  2009 NelsonHall 4
  6. 6. Contents • Role of BPO in a Recessionary Climate • The Good, the Bad, and the Ugly • Conclusions Copyright  2009 NelsonHall 5
  7. 7. Role of BPO in a Recessionary Climate Copyright  2009 NelsonHall 6
  8. 8. Seasonally Adjusted BPO TCV Up 25% in Q3, recovering from dramatic fall in Q1 – shows emergence of recession-driven contracts Key Business Process Outsourcing Global Outsourcing Contract Value Average 2002-2008 6 -15% ($Bn) -40% 4 +25% 5.1 5.1 4.6 2 4.3 3.7 3.1 Q3 2009 Q2 2009 Q1 2009 Copyright  2009 NelsonHall John.willmott@nelson-hall.com 7
  9. 9. Impact of Recession on Sourcing in 2009 and 2010 Action in response to recession Taken in 12- Planned for months to Q3 Q4 2009 and 2009 (%) 2010 (%) Significant review of business strategy 54 21 Revision of operational budgets 71 15 Organizational restructuring and lay-offs 44 21 Revision of sourcing strategy 34 16 Review and renegotiation of existing BPO 43 20 contracts Identification of new BPO opportunities 25 25 Preparation of RFPs for new BPO opportunities 15 48 Award of new BPO contracts 8 37 Copyright  2009 NelsonHall 8
  10. 10. Organizational Priorities in a Recession • First priority is to cut cost-to-serve in core operations • Second priority is to retain and maximize value of existing clients • Third priority is to enter emerging markets more quickly • Compliance, risk management, and certainty of outcome are critical • Investment is severely constrained Copyright  2009 NelsonHall 9
  11. 11. Required Outsourcing Contract Characteristics • Greater certainty of business case • Rapid pay-back achieving year-one cost savings • Focus on removing cost from high-volume transaction-oriented processes • Shift in risk in timing and certainty of cost reduction in favor of client • Shift in pricing mechanisms to move volume risk to suppliers • Potential increase in contract scope Copyright  2009 NelsonHall 10
  12. 12. The Good, the Bad, and the Ugly Copyright  2009 NelsonHall 11
  13. 13. Realizing Business Value Risk Factors What works • Cost reduction based on • Labor arbitrage major IT platform • Continuous change improvement/six-sigma • IT-centricity • Improved agent • Extensive subcontracting management • Taking on scope beyond • Interfacing with client supplier cost levers systems • Using the wrong • Channel shift location/channel • Technology fixes • Client abdicating • Limited scope platform responsibility BPO • Leaving service • Operational focus unchanged • Strong client management Copyright  2009 NelsonHall 12
  14. 14. Philips Case Study • Strategy – Salary arbitrage (1) – Process improvement savings (2) • Issues – Need for increased automation – Improving organizational agility – Sustainability/what’s the value proposition to staff? • Actions – Development of transformation roadmap – Tool for measuring error rates and timecycles – Moving global hubs to India and China – Leverage technology: PTP platform, general ledger cockpit, OCR, electronic invoicing….. Copyright  2009 NelsonHall 13
  15. 15. Key Lessons: BPO Service Management • Day-to-day operational management is the key requirement • Be process-led and aim to standardize but continuous improvement is arguably more important than major change • Start with the possible not the impossible • It takes time to stabilize operations & to change operations • Offshore services take time to introduce within complex multi-service contracts Copyright  2009 NelsonHall 14
  16. 16. Drivers of Reduced Total Cost per Policy Ratio of supervisors to personnel Ratio of managers to Cost impact personnel Proportion of customer files in image format Copyright  2009 NelsonHall 15
  17. 17. Impact of Staff Turnover 50 45 40 35 • Low staff turnover often regarded as an end in itself 30 Cost 25 • But needs to be: 20 – The right staff 15 – Creative tension 10 5 0 <12% 15% to 20% >25% Staff turnover Copyright  2009 NelsonHall 16
  18. 18. Key Lessons: Use of Technology • Be pragmatic. A single platform is not always necessary or appropriate • Do not under-estimate the complexity embedded in legacy platforms and processes • Systems integration projects are still late and over-budget, even within BPO contracts • Channel change means changing customer behavior as well as technology • Technology is only part of the answer. People management is ultimately more important Copyright  2009 NelsonHall 17
  19. 19. Use of Tools/Technology • Digitization & Workflow – Scanning, automatic queuing, work distribution & agent management • Specialist applications – Auto cash application – Invoice duplication avoidance tool – Online payments – Collections tools – Collaborative dispute resolution • Self-service Copyright  2009 NelsonHall 18
  20. 20. Planned IT & BPO Initiatives Initiative High Extent (%) Greater use of standard software 50 packages without further customization Simplification of business processes 47 Use of cloud computing/standard supplier 40 managed IT infrastructure Use of BPO services based on supplier 27 hosted software SaaS (hosted software using supplier 23 best practice) Copyright  2009 NelsonHall 19
  21. 21. Future of BPO lies in Combination of Inward-Out and Surround-the-Core Non-core functions Core Process functions improvement - Client systems - Labor arbitrage - Channel optimization - Technology “gap fillers” - Platform BPO - Labor arbitrage Copyright  2009 NelsonHall 20
  22. 22. Increasing Optimization of Channels and Delivery Locations Channel Role IVR Routing (customer and company controlled) and presenting options; simple transactions Web Self-Service Obtaining information; changing static info; simple purchases Email and chat Technical support and problem-solving SMS Outbound notification Agents - India Low cost; technical support; back-office; analytical - Philippines Low cost customer service with increased cultural acceptance - Onshore Ability to retain, cross-sell & up-sell - Onshore WAHA Graduate-level; domain-specific capability to retain, cross-sell & up-sell Copyright  2009 NelsonHall 21
  23. 23. Key Lessons: Partnership • Work towards common goals, not hidden client or vendor goals • Improve strategy alignment • Challenge one another to achieve best solution e.g. imaging paper vs. moving to Internet • Vendor should disclose cost & profitability forecasts as well as current costs & margins • Introduce lean sigma to improve service quality and staff motivation • New services will emphasize partnership aspects more than cost reduction • Formalize innovation and consider use of “innovation budgets” Copyright  2009 NelsonHall 22
  24. 24. Impact of Outsourcing on Application of Business-Oriented Metrics How does outsourcing help Role of Business- High- High in business-oriented Oriented Metrics effectiveness in-house (%) effectiveness outsourced metric application? (%) • More reliable/consistent metrics Improving • Easier access to metrics/improved techniques service 47 84 for data gathering delivery • Increased standardization of Improving processes business • Improved knowledge of how to 24 54 use information to drive value change achievement • Separation of management from implementation Copyright  2009 NelsonHall 23
  25. 25. Timing of Introduction of Business-Oriented Pricing Proportion Why establish initially? Stage (%) • To establish good knowledge of operations Initially 13 at this stage • To reduce the time Once costs & involved in setting service levels 81 metrics and SLAs established • To increase speed of process transformation Never 6 Copyright  2009 NelsonHall 24
  26. 26. Conclusions • Business value realization has three components: – Cost reduction and SLA compliance – Ongoing contribution to process improvement – Support for wider business objectives • Core functions remain dependent on labor arbitrage, process improvement, channel optimization and technology tools • Non-core functions increasingly susceptible to platform BPO • Client needs to participate proactively Copyright  2009 NelsonHall 25
  27. 27. TAKING OI ON THE ROAD… Outsourcing 2.0: From Theory to Reality Are you still doing it the old fashioned way? London, Dallas, San Francisco, Miami, Washington DC, New York, Chicago Outsourcing 2.0 - the new outsourcing and what it means to you - your strategy, your process and your career. More Cities coming soon… Check out www.outsourcing.com/roadshow With the largest outsourcing network in the world and the most trafficked outsourcing portal on the internet at Outsourcing.com, OI is the go-to-source for those seeking targeted sales and marketing traction and ROI in the outsourcing space. If you need: - Qualified Outsourcing Leads, - Exposure to outsourcing decision-makers - Thought Leadership opportunities Contact Jared Gleason at 516-279-6850 x712 or e-mail jgleason@outsourcing.com to request an 2009 The Outsourcing Institute overview summary on promotional vehicles.
  28. 28. 3forward’s Sales Transformation ModelTM Sales 2.0 Design and Deployment Social Media & Networks Lead Generation and Management Outbound Events & Broadcasts Messages Sales Readiness Essentials Executive Appointment Setting Markets Targets Messages Research & Intelligent Surveillance Nurturing To Discuss: Dan.Hudson@3forward.net 3forward, LLC; All Rights Reserved 27
  29. 29. Resources The Outsourcing Institute Group 3forward – Sales Readiness OI 3forward The OI Roadshow 3forward Sales Leaders Blog 3forward’s New Tools Directory Other OI’s Recruiting Home Page Outsourcing 2.0 The Outsourcing Institute / 3forward All Rights Reserved 28
  30. 30. Sales Leader Series – Fall 2009 Escaping Pipeline Purgatory - view Sept, 17 2009 Creating Qualified Opportunities (Not Just Leads) - view September 24, 2009 Sales Readiness for 2010 –view October 1, 2009 2.0 Sales Tools for the Real World - view October 19, 2009 Outsourcing Buyers Panel: “Why We (Really) Buy” - view October 27, 2009 Sales Leaders Dream Team - view November 5, 2009 Future of Outsourcing – What to Expect in 2010 - view November 19, 2009 The Outsourcing Institute / 3forward All Rights Reserved 29
  31. 31. Thank You For Joining The Future of Outsourcing Sales Leader Series – TeleBriefing #7 November 19, 2009

×