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Business process management- India's Success Story


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BPO operations in India kick started with voice based transactions. However, the industry is now doing exceptional complex work, including analyzing investment portfolios, advising credit card companies on collection strategies, securities market research, supply chain inventory optimization and budgetary planning for its clients. The industry is developing future-ready solutions by developing in-depth capabilities across verticals and creating customer impact through service delivery excellence. It has successfully been able to position itself as a partner to customers and has changed the way service is being delivered to create a broader impact on clients.

Therefore, we now feel that is important to recognize and communicate that the industry is no longer only about outsourcing and has moved up the value chain extensively. Witnessing the industry’s exceptional performance, NASSCOM now wants to replace the acronym BPO that the world has come to associate with India over the past decade, with Business Processing Management (BPM). We firmly believe that BPM is more appropriate an acronym for the industry's current maturity level as it has gone up the value chain, managing entire businesses processes of clients and not just outsourcing them.

Post the NASSCOM BPO Strategy Summit 2012 where we first unveiled the moving to BPM strategy of the industry; we have received immensely positive response from key stakeholders on our rebranding attempt and have therefore stepped up our efforts to communicate the same to all in the eco-system. The tremendous growth that Indian companies showcased during the economic downturn and their rapid transformation from business process outsourcer to business process manager are the two most vital factors which have helped India maintain its leadership position in the global sourcing market and we believe it is important to communicate the same.

We seek your support to establish the BPM brand and continue to use it in all your tools of communication used internally and externally to support us in our endeavor of rebranding the BPO industry. If we continue working in the same momentum, we can collectively deliver enduring growth to the sector and emerge as an empowered BPM industry of India.

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Business process management- India's Success Story

  1. 1. Business Process Management-India’s Success Story
  2. 2. Global BPO Industry- Cause for Concern Key growth areas till date in 2012 • Manufacturing Verticals • Healthcare Total ACV of BPO contracts (USD Mn) • Government 932 835 • F&A Service Lines • Analytics and Legal 516 • Procurement Services • RoW Q2 2011 Q12012 Q2 2012 Geographies • Continental Europe Key concern areas till date in 2012 Total number of BPO transactions • BFSI Verticals • Telecom 160 132 107 Service • Customer Interaction Services Lines • HRO Q2 2011 Q12012 Q2 2012 • US Geographies • UK
  3. 3. Global megatrends are witnessing winds of change Global Megatrends – Key Drivers Demographic shifts, social and environmental trends to create hitherto unseen opportunities- 80% of incremental opportunity to come from non core markets New technology trends to create further opportunities (e.g., Big data analytics and social media, Verticalisation, Platform based services, Non linear models etc) 2012- Major Highlights High Competition: Increasing competition as service providers expand capabilities, add skills and focus on account optimization Growth in GICs: GIC set-ups and expansions during 2012 has so far largely driven by the technology and manufacturing sectors Transformation: Wide array of services (verticals, sectors, geographies, customer centricity) involving wide array of stakeholders- CEO/ CIO, Legal, HR etc New Value proposition: Expertise, standardization, impact on top line revenues, effective pricing solutions, technology enabled solutions etc New wave: Larger “horizontal” deals continue to lose buyer interest in favor of more specialized and vertical specific solutions
  4. 4. The Industry in India is achieving excellence 1 India’s position in the global BPM sourcing landscape 36% India’s share of the global BPM sourcing market Number of companies offering BPM services in India; 500+ All top 15 BPM players offer platform solutions Number of MNCs and global in-house centers doing 200+ BPM out of India ~66 Number of countries serviced by India Number of languages served 35+
  5. 5. BPO to BPM- The time is now! Disruptive Innovation Productivity Improvement / Innovation Disruptive Innovation Transferring basic data Even though work continued to come to these locations with the entry work to cost effective addition of certain newer ones like Philippines and Brazil, it locations would still not count as disruptive BPM 1.0 BPM 2.0 BPM 3.0 BPM (1995 – 2000) (2000 - 2005) (2005 - 2011) (2011 & Beyond) Emphasis on Cost Emphasis on greater Emphasis on value Emphasis on Platform efficiencies / depth and breadth while added end-to-end Multi tenancy, Non Productivity embracing the solutions and inclusive linear revenue growth “globalization” of growth esp. in Tier II/III and utilization of same delivery capacity cities resources across multiple clients • Cost • Real time • Specialization • Quality processing & voice • Process reengineering • Productivity • Multi faceted • Technology enabled • Era of GICs service offering Platforms • Era of 3rd party • Domestic BPM - off shoring E-governance, Rural BPM We are at the threshold of another wave of Disruptive innovation which possesses the ability to create a new market, new brand and value proposition
  6. 6. Transformation- from Business ProcessOutsourcing (BPO) to Business Process Management (BPM) Off-shoring/ Outsourcing Business Process Management • Revenue model linked to Business outcomes • Lift and shift to low cost destinations • Off shoring - key cost arbitrage driver • End-to-end services offered including • Low domain intervention Consulting, BPR, Strategic decision • Labor arbitrage the sole proposition support system • Focus on Delivery Efficiencies, • Business Transformation and Operational improvement Optimization are the drivers • Productivity enhancement thru Quality • Usage of Platform based solutions Improvement process leading to Non linear models • Revenue Model linked to operational • Value based pricing SLAs • Global delivery model 2000- 2010 2010 & beyond 4
  7. 7. Despite global slowdown, Indian BPM Industry has been experienced substantial growth Employment (‘000) BPM Revenues (USD billion) 2.1x 876 414 2.6x FY06 FY12 16 13 per CAGR cent Revenue per Employee USD(‘000) 6 5.7 FY06 FY12 16 per 4.8 YoY 19 per CAGR cent Growth cent Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 • CAGR growth of 16 per cent in revenues, 13 per cent in employment over last 6 yrs • India bucking global trend- YoY growth of 16 per cent (selected BPM companies) in Q1FY13 over Q1 FY12 is indication of a strong year for India • Lean and mean- focus on organizational efficiencies driving growthSource: NASSCOM, exports only
  8. 8. BPM- Necessitated by Teutonic shifts inclient expectations and delivered services Piecemeal outsourcing to End-to-end services 1 2 Lights on services to Quasi-consulting services 3 Lift and shift to Best practices 4 Labor arbitrage to Business Transformation 5 Efficiency to Business Outcome Impact 6 Disaggregated to Integrated (tech+process) services 2010- Till date
  9. 9. Indian BPM business goal today- elimination of work Indian BPM Market- Elimination of work • Integrate technology capabilities to eliminate work Eliminate Work • STP (Straight through processing) • Value added reporting / analytics • Business assurance Transformation • Role reengineering Do it Differently • Shop floor automation GOAL • Process & org restructuring • Inter & Intra industry best practices • Six sigma • Benchmarking Efficiency Do it Better • Technology augmentation Improvement • Global delivery model • Front end automation Do it Cheaper • Adaptive operating model Cost Saving Activity Benefit
  10. 10. TREND # 1: NEW AGE BUSINESS CENTRIC SOLUTIONSNew age solutions - key differentiating enablersfor Innovation Focus on technology deployment Compelling process innovations • Services through a mix of re-engineering • Greater breadth and specialization skills, and technology-enabled platforms across key verticals – BFSI, Telecom, Healthcare • Harmonize technology with new set of processes • New business processes to increase efficiency and productivity • Platforms, Shared services and Cloud computing Key Technology Innovations Innovation Internal Processes Cloud based services to widen target customer IBM built real-time staff base and service portfolio utilization & productivity with effective use of Business tracking platform in-built technology Model WNS Analytics Decision Engine (WADE) With launch of Smart Enterprise Processes Some business model innovations WADE enable organizations (SEP), Genpact has to scale the 4 stages of introduced a proven, • New pricing models & delivery mechanisms analytical maturity to achieve scientific model that to suit client needs their long-term growth targets. delivers the benefits of • Fixed T&M to transaction based pricing It provides insights that drive effectiveness in addition intelligent and sustainable model to efficiency and focuses growth in companies on client- specific Alternate Business Models through outcome-based business outcomes transformational solution
  11. 11. TREND # 2: GLOBAL DELIVERYThink Global act local - emerging as multinationalswith global delivery capabilities Global Footprint Offering Local (nos)-BPM 2011 Solutions Acquiring Talent Countries of ~60 • Local business Operations understanding • Global Worforce •Customer specific •Multi language Operating Centers ~300 solutions Languages Served ~35 Ireland This box is shifted Eastern Europe* a bit please make Bermuda the change Mexico El Salvador Egypt Shanghai Costa Rica Closer to Philippines Customers • Similar time zones Sharing Best • Easy to offer 24- Practices hours support • End to end service South Africa • World class Global delivery networks Chile • Exchange of better ideas and opportunities
  12. 12. TREND # 3: VERTICALIZATIONIndustry building vertical specific capabilities; keybenefits- Non Linear Growth, Customer Stickiness, and differentiation 2002 2007 2012 • Geographic expansion Observations and scale: Sales • Build vertical capability: primarily in industries like • BPM Verticalization over theIntegrated presence in Western past few years has been countries and delivery Healthcare, BFSI , Players Telecom, Retail and Travel accompanied by investments centers in low cost in capability development countries (East Europe, • Continued investments in APAC) horizontal capabilities like • Both broad-based players analytics and IT-BPMs have used M&A route to build vertical • P&L responsibility around capabilities • Enhance horizontal verticals offering: investments in • Developed ability to impactPure-play analytics, HR, F&A • Broader set of offerings business outcomes for providers • Investments in vertical clients through enhanced platform capability domain capabilities Benefits Non Linear Growth Customer Stickiness Price Premium
  13. 13. TREND # 3: ContinueAdoption of Verticalization has lead to higherthan average growth for industry players BFSI Focused BPM Supplier Large BPM Supplier (Verticalization initiated in (Verticalization initiated in the India BPM Industry last 5 years) last 5 years) ~12% ~ 20% ~40% 20% 24% ~20% 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Lack of Verticalization leads Experienced strong topline Continued strong growth to moderate growth post growth through adoption of even while industry growth is 2009 to just maintain the Hyper Verticalization relatively low Industry Average Revenue
  14. 14. TREND # 3: ContinueCase Study: A full scale execution of Verticalizedprocesses Company background • Supplier is one of leading BPMs in India that provides significant vertical specific solutions • >50% of the work done by the Company is very specific to the verticals • The company had enough scale in both horizontal and vertical processes Verticalization process Impact on Performance • Invested in sales and business • Higher market success development team with domain specific experts − Increase in revenue realization • Planned and executed acquisition − 50% jump in establishing new client with focus on developing capabilities relationships in target verticals • Increase in financial performance on • Identification of middle management account of improved offerings leaders to drive new business model and for training • Increase in sales expenditure due to investments in capability development • Consistent communication across the organization on the need for change
  15. 15. TREND # 4: CRM (relation) to CEM (experience) to CCM (collaboration)Customer service increasingly evolving to Multi-channel ; collaboration required to service cross touch points
  16. 16. TREND # 4: ContinueTechnology effecting rapid transformation ofIndia’s contact centers Opportunity Areas • Multiple channel communication Key Trends • Unified communication technologies that allow integration of voice with business processes and • Blend of voice and live-chat (text collaboration based) – real-time chat, email, web • Web engagement, particularly Web retention • Technology decreasing costs and and Web conversion call volume; improving customer service • Social media interactions – help build better customer relations • Providers developing expertise in niche areas – growth to specialised Opportunity Areas voice services • Increasing diversity and sheer number of • Virtual “agent anywhere” routing and products and services available in the consumer secure calling market • Enterprises moving to hosted • Consumer demand for speed and multichannel contact centres media • Security certifications and client concerns about privacy
  17. 17. TREND # 4: ContinueCase Study: A move from Agent led to Agentassisted solutionsCompany background• Drishti-Soft is an innovator in customer interaction management for contact centers with its IP-based solution AMEYO• Provide solutions across various verticals including: BFSI (MOSL, India bulls), E-Commerce (Flipkart, Jabong), Entertainment (BookMyShow), Aviation (Indigo), Logistics (Startrek), Healthcare (Fortis) etc• Has won several awards including “NASSCOM Innovation Award” and “IP Contact Center - Technology Pioneer Award” & “Innovation Award” from TMC LabsProcess and Execution Impact• Traditionally an IVR is implemented for a self-help • Agent Assisted IVR Improves the quality process, to enable interesting capabilities of interactions with consistent experience• One such application is when a lower skilled agent • Provides efficient cost management by interacts with a customer through guiding of recorded utilizing lesser skilled resources prompts without the customer realizing the difference • Agent Assisted IVR is flexible according• A contact center may use Agent Assisted IVR to multiplex to different business requirements and interactions of Agents into concurrent customer calls can be fully automated to use with a third party application rather than an agent Benefits to clients • Enhanced Customer Satisfaction with consistent Interaction Quality • Cost ReductionSource:
  18. 18. TREND # 5: SUSTAINABLE SOURCING“Impact Sourcing” - sustainable, balancedand profitable Concept: • An off shored outsourcing concept, which involves leveraging availability of talent at the base of the pyramid, with limited opportunity for sustainable Future Opportunities employment, to provide high-quality, information- based services to domestic and international clients Already a US$4.5 billion market globally employing Nature of work: 144,000 people and has the potential to be a $20 billion Impact • Manage “Micro work” in a kind of virtual assembly line market by 2015, directly e.g., data entry, digitization, back-office processes employing 780,000 socio-Sourcing economically disadvantaged search engine optimization support etc individuals Benefits: Emergence of new • Harness underserved locations where the purpose possibilities for Impact is to utilise local talent for running processes. These Sourcing in new emerging markets where BPM activities organisations are often called Impact Sourcing have been initiated Service Providers (ISSPs), that operate in non- urban areas and underserved urban areas • Subcontracting work to ISSPs in alternate locations for cost-effectiveness/ setting up own ISSPs to gain a wider reach even from underserved areas
  19. 19. TREND # 5: ContinueCase Study: Creating a new business modelthrough Impact Sourcing eGramIT- A direct delivery IS model • Uses a direct delivery model, contracting with BPM buyers directly for work performed in its IS centers • Through a decentralized system, the company has the capacity to quickly ramp up for larger projects due to its virtual workforce bench. • 4 centers in Andhra Pradesh, India, located in underserved villages with between 1,000 and 15,000 inhabitants Nature of work • Provide a range of services to its domestic and international clients • Basic digitization services, product profiling, image editing, bill and payment processing, voice services, and knowledge-based basic tasks such as translations, research, data gathering etc Competitive advantages • Provide services for a cost that is about 40 percent lower than prices charged for comparable work by urban BPMs • Workforce is comprised of rural university graduates who earn $80 to $340 per month, with wages are almost on par with city salaries, resulting in extremely low attrition rates of around 4 ~5 percent as contrast to BPM attrition rates in urban India of approx 35~40 percent
  20. 20. TREND # 6: CUSTOMER CENTRICITYCustomer centricity- moving to the next orbit Exploring potential areas of opportunities around customer centric 1 business objectives 2 Encouraging clients to adopt new technology, tools and practices 3 Creating a commercial model that offers wide range of solutions to multiple clients across the value chain 4 Creating a commercial model that incentivizes both parties to drive value 5 Setting up customer cells for better connect
  21. 21. Availability of diverse and high skill talent ishelping India to maintain its global leadership • 37% Market share TALENT HIGHLIGHTS BPM • Quality Excellence, Six Leader sigma, Lean certified • Communication & soft skills •Young and passionate TALENT PROFILE of the workforce • Attitude to excel • ~900,000 Employees (per cent) World •Global centers- 300+ • Combination of- 100%= Knowledge 12 876,000 Skills, and • Market 2Research Attitude 5 • Business Research Over the 5 • Survey Analytics • Data Analytics years, India is 7 • Quasi consulting poised to 54 maintain its • Legal Process Outsourcing dominance in 15 BPM Industry COMPARATIVE ADVANTAGE TO INDIA • Young and highly qualified Grads - Non-Engg CAs/ CPAs Lawyers MBAs professionals Docs (MBBS/ MD) Linguists • Over two million English • 70% Market share Others speaking graduates every year • USD 2.8 Bn revenues • Excellent education based Knowledge • ~100,000 employees infrastructure in over ~100 firms Services • Strategic, high value add, • To do attitude Hub Quasi consulting services
  22. 22. Future opportunities exists across emergingmarkets and new technologies Emerging • Proliferation of mobility, social media, Cloud, Big Data & Analytics Technologies • Adaptability, consumerisation, integrated approach • Tweaks in business models to offer customer centric solutions • End Consumers: Enriched user experience; accessibility and availability at lower costs Customers • Enterprise Customers: End-to-end integrated transformational service delivery; optimisation and outcome based business SLAs • Expand beyond core developed markets (US, UK) Markets • Explore Domestic market: Tier II/III/IV locations • Other emerging markets (APAC, Middle East, Africa) • Blended service delivery approach – meeting customer expectations Engagement • Flexible pricing models ((fixed T&M to transaction based pricing Models model; building core capabilities and adding business value • Delivery models- a way to achieve excellence Delivery • Custom hybrid delivery model that fits business goals Models
  23. 23. And Opportunities exist across 3 pillars ofdelivery excellence ▪ What are the best ways to systematically identify new growth slivers (e.g., Strategic consumer analytics in credit cards focus sales)? ▪ How can you develop a competitively differentiated value proposition for the growth slivers? ▪ How can BPM organizations By driving initiatives Sales and debottleneck frontline sales across the three commercial productivity? dimensions, companies excellence can uplift sales by 5-7% ▪ What are the key shifts in account points and improve mining capabilities to have a greater margins by 4-6% points share of wallet? Operations ▪ How can providers truly impact client’s excellence performance on business outcomes? 19-Nov-12
  24. 24. Delivery excellence needs Innovative solutions Organizations need to come up with solutions that result in “Re-architecting the Product-Price-Performance Equation” & “Enabling Value Creation” for its customers The 2 approaches which can be utilized to achieve this are : Exploring New Implementing Innovative 1 2 Market Segments Business Models Focusing on Small & Medium businesses Implemented through Innovative Service (SMBs) by providing revenue enhancing delivery through Software as a platform based solutions Service(SaaS), Platform as a Service(PaaS) & Infrastructure as a Service(IaaS) model
  25. 25. OPPORTUNITY # 1: BIG DATAIndia showcases a core competitive advantage inBig Data offerings India Big Data outsourcing opportunity India Big Data outsourcing opportunity, Key Trends 2011 – 2015E, USD billion by category, 2015F, Percent 100%= ~USD 1.1 billion 1.1-1.2 Pure-play Telecom and financial Analytics firms services verticals are early 24%-27% adopters of Big Data Integrated IT/ technologies BPM players Indian IT and analytics players are gaining maturity to serve the Big ~0.2 73%-76% Data opportunity ~0.1 2011E 2012E 2015F Source: CRISIL GR&A analysis Source: CRISIL GR&A analysis 2012: Big Data market to grow manifold The opportunity for Indian service providers lies in offering services around Big Data implementation and analytics for global multinationals India’s business opportunity in Big Data outsourcing is estimated at ~USD 90- 100 in 2011 expected to reach ~USD 200 - 205 million in 2012, showing a growth of over 110% IT services segment is expected to be the major contributor to the Big Data services market accounting for about 82% with analytics accounting for the remaining The domestic demand for Big Data implementation is still at an embryonic stage* 10 petabytes and aboveSource: Deloitte; industry reporting; CRISIL GR&A analysis
  26. 26. OPPORTUNITY #1: Continue Big Data Analytics is gaining momentum in the Industry Indian M&As to Increase in Partnership companies gain Big venture with foreign expanding Data funding players overseas capabilities presence • In Dec 2011, MuSigma • In June 2012, Capgemini • Big Data players like • In July 2012, MuSigma raised USD 108 million to partnered with SAS to AbsolutData and MuSigma announced plans to expand grow its Big Data analytics launch a campaign in UK expect M&As to be a key in new markets and grow its business focusing on Big Data and focus area in the industry, to employees to over 2,800, • In May 2012, Nuevora, a Big analytics build capabilities (Jun ’12) primarily analytics Data analytics firm that professionals, in the next operates an analytics CoE • In July 2011, HCL opened a • In July 2012, Alten Group, a year in India secured its first co-innovation lab in European provider of round of institutional funding Singapore, along with Eli technology consulting and • TCS opened a Silicon Valley from Fortisure Ventures Lilly to create innovative engineering announced plans Customer Collaboration - Nuevora plans to use applications using business to make strategic acquisitions Center to bring the benifits the proceeds to develop analytics and cloud in India in areas of Big Data of emerging technologies a suite of cloud-based computing in the healthcare analytics like Big Data, analytics and business-processes-as- space mobility to enterprises a-service (BPaaS) across all industries analytics applications Indian service providers undertake several growth avenuesSource: Industry reporting; CRISIL GR&A analysis
  27. 27. OPPORTUNITY # 2: MARKETING ANALYTICSMarketing Analytics industry has started gainingan increased prominence Marketing Analytics potential for India (in $ billions) Key Trends 1.4 1.2 1.2 Marketing Analytics is top on the agenda 1 of CXOs 0.8 Newer digital platforms are increasingly 0.6 becoming relevant for marketing decisions 0.4 0.2 Marketing Analytics is increasingly being 0.2 leveraged real time for execution support 0 2012 2020 Value chain of analytics work being delivered from India End User App: Real Time Digital Feeds, User Developed Models and Interactive Dashboards Modelling: Market Assessment, CRM and Marketing Effectiveness Reporting/ Visualization: Metrics Reporting , Dash boarding and Ad-hoc analysis Data Management: Data Integration, ETL services and Digital Data Integration Infrastructure: Data Sourcing, Data Warehousing, Tools and Technologies and Organizational Development
  28. 28. A few successful cases of marketing analyticssolutions being delivered from India Illustrative Marketing Segmentation Lead Propensity Cross Sell A global confectionary Nationalized bank in the An automotive OEM in Leading Banking Group Client company Gulf Region US The analytical The analytical challenge The analytical challenge The analytical challenge challenges were to: was to: was to: was to: Analytics Quantify drivers Identify ideal Build Predictive Optimally sell Evaluate future group of model for Fixed Deposits scenarios customers incoming leads (FD) to Prescribe actions Identify segments that Predictive model to customers Conducted Marketing generate higher classify lead into hot, Identified behavioral Mix Modelling for their revenue warm, cold differences between biscuits brand in order Tool to deliver real time customer segments to grow top-line hot leads developed Ranked the Checking and Saving customers based on their needs for FD products Recommendations from Expected increase in Auto sales went up by Enhanced ROI through the model increased revenue: At least 40% 12% across dealerships reduced cost of Impact clients net revenue by based on making the within 3 months capturing 80% of $21 million right offers to every customers by half segment 2 8
  29. 29. Indian BPM Industry is ahead on the growth curveand addressing a few challenges will lead to newer opportunities • Enhanced value propositions • Differentiated approach strategy Competition• Rising expectations • Infrastructure support• Focus on customer Customers Infrastructure for movement to Tier centric solutions III/IV locations• Domestic market • Special policies for scalability location of centres in• Enhanced user Talent locations beyond the experience current five locations • Creating career paths, global talent pool • Specialized domain/vertical expertise • Training cost • Driving cost competitiveness
  30. 30. SUMMARYTo Summarize • Despite global economic uncertainties, the Indian BPM industry reaffirms its leadership. • Industry has strong fundamentals, premier global sourcing destination, resilient, demonstrated ability to change. • Industry undergoes fundamental transformation- from business process outsourcing to business process management • Outsourcing models changing- – driven by new technologies, new business models and solutions, new buyer segments and solutions around emerging markets • Opportunities around big data, analytics and legal services expected to drive future growth • Customer centricity and delivery excellence creating additional business 30