Value Addition – Too                                                                                                    Bi...
Key messages        The prize – Large potential in excess of 3-5X of traditional    1   operational efficiency levers    2...
GICs are delivering impact beyond traditional operational     efficiency levers                         Helped generate an...
GICs are now uniquely positioned to drive value addition   leveraging their set of intrinsic and developed strengths   Co-...
Four key value dimensions likely to emerge and drive    sustainable value proposition for GICs                            ...
Each value dimension has three levels of impact …              Levels of impact                Level 1 – Execution     Lev...
… that said, senior enterprise leaders have rising (baseline)  expectations of performance and, therefore, value addition ...
Recap of our key messages – The prize1                     ▪   GICs are now uniquely positioned to drive valueThe prize – ...
Where GICs add value              Impact levels                Level 1 – Execution   Level 2 – Ownership   Level 3 – Leade...
Clear evidence exists of GICs directly contributing toenterprise revenue, although not pervasive (or systematic)          ...
Analyzing and extending existing services can itself generate  significant value vs. large-scale disruptive innovations   ...
Recap of our key messages – Current status1                  ▪   Most value addition concentrated in high-skill           ...
Recap of our key messages – Call for action1                     ▪   Govern GICs at the CXO/ business leadership level    ...
Key messages        The prize – Large potential in excess of 3-5X of traditional    1   operational efficiency levers    2...
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NASSCOM GIC Conclave 2012: Value addition - too big an opportunity to miss - Alexander R. Edlich (Session 9)

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NASSCOM GIC Conclave 2012: Value addition - too big an opportunity to miss - Alexander R. Edlich (Session 9)

  1. 1. Value Addition – Too Big an Opportunity to Miss NASSCOM GIC Conclave March 21, 2012CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited
  2. 2. Key messages The prize – Large potential in excess of 3-5X of traditional 1 operational efficiency levers 2 Current status – Isolated examples with great successes, but no concerted push so far 3 Call for action – Too big an opportunity to miss; success will require five shifts both onshore and offshore McKinsey & Company | 1
  3. 3. GICs are delivering impact beyond traditional operational efficiency levers Helped generate an additional ~500 Mn TCV orders1 Technology GIC through a transformed account planning process Contributes ~15% of BU’s revenue target through2 Insurance GIC expansion of services to previously unviable business segments Contact Center is now cost neutral based on service to3 Technology GICs sales successes Engineering and Helping fundamentally alter product designs based on4 Design GIC customer insights generated from technical helpdesk Increased online sales by reengineering new account Financial5 services GIC activation process and dramatically reducing the turn around time (7 days to 2 hours) Taken complete ownership of platform development and Engineering and6 Design GIC customer front-end for a product line across emerging markets McKinsey & Company | 2
  4. 4. GICs are now uniquely positioned to drive value addition leveraging their set of intrinsic and developed strengths Co-location Proximity to across functions local markets and businessesCritical scale Deepand strategic integrationimportance with the enterprise Domain expertise Access to larger and leadership data sets maturity McKinsey & Company | 3
  5. 5. Four key value dimensions likely to emerge and drive sustainable value proposition for GICs 1 2 Operational High-skillCost-efficient efficiency capability Capabilities beyondoperations with “back-office” – highcontinuous productivity expertise delivered endimprovements to end 4 3 Total Revenue customer impact experienceTop line growth by Operationsextending services and/ focused on endor building new services customer needs McKinsey & Company | 4
  6. 6. Each value dimension has three levels of impact … Levels of impact Level 1 – Execution Level 2 – Ownership Level 3 – Leadership Revenue impact Revenue contribution Innovation for Revenue through leakage from existing services emerging markets and impact prevention delivered to new globally segments Total Measure customer Adapt processes to Transform customer customer experience address customer experience and takeexperience needs accountability Expand to upstream Deliver high expertise Develop new High-skill segments on core processes end to end capabilities for the capability processes enterprise which did not exist Labor arbitrage Transformation – ReengineeredOperational benefits at scale with fundamentally altered processes exported efficiency continuous processes to the enterprise improvements McKinsey & Company | 5
  7. 7. … that said, senior enterprise leaders have rising (baseline) expectations of performance and, therefore, value addition Baseline expectation Value addition Levels of impact in the near future potential Level 1 – Execution Level 2 – Ownership Level 3 – Leadership Revenue impact Revenue contribution Innovation for Revenue through leakage from existing services emerging markets and impact prevention delivered to new globally segments Total Measure customer Adapt processes to Transform customer customer experience address customer experience and takeexperience needs accountability Expand to upstream Deliver high expertise Develop new High-skill segments on core processes end to end capabilities for the capability processes enterprise which did not exist Labor arbitrage Transformation – ReengineeredOperational benefits at scale with fundamentally altered processes exported efficiency continuous processes to the enterprise improvements McKinsey & Company | 6
  8. 8. Recap of our key messages – The prize1 ▪ GICs are now uniquely positioned to drive valueThe prize – addition leveraging a set of intrinsic and develpedLarge potential in strengths (e.g., domain expertise, critical scale, co-excess of 3-5X of location and emerging market understanding)traditionaloperationalefficiency levers ▪ Four key value dimensions likely to emerge and drive sustainable value proposition for GICs: Operational efficiency, high-skill capabilities, customer experience2 and revenue impactCurrent status ▪ Senior enterprise leaders have rising expectations of3 impact across all value dimensions from GICs, givenCall for action current scale and high-quality service delivery McKinsey & Company | 7
  9. 9. Where GICs add value Impact levels Level 1 – Execution Level 2 – Ownership Level 3 – Leadership Revenue impact Total customerexperience High-skill capabilityOperational efficiency McKinsey & Company | 8
  10. 10. Clear evidence exists of GICs directly contributing toenterprise revenue, although not pervasive (or systematic) Select examples Financial services GIC  Leveraged low ‘cost-to-serve’ to expand existing collection services to lower ticket sizes Level 2  Reduced revenue leakage through segmented collections strategy and differentiated settlement offers Research GIC  Leveraged a global product to launch a successfulRevenue domestic business in India Level 3 impact  Contributed to the organization’s research library and built a compelling value proposition for attracting talent in India Financial services GIC Level 3  Created ‘on demand’ financial processing and analytics capability for both internal employees and franchisees  Fees charged from franchisees is driving direct revenue contribution McKinsey & Company | 9
  11. 11. Analyzing and extending existing services can itself generate significant value vs. large-scale disruptive innovations Key principles Select examples Leverage expertise and tools to Analytics on maintenance call data led to move from ‘data to insights’ reduced spend & better purchase decisionsHigh-skillcapability Move upstream or to judgment- Established a new judgment based claims based processes adjudication capability Leverage customer data to Established a linkage between support and Total redesign processes that product design teams to enhance product customer impact customer experience designexperience Preempt customer needs and Created specialized high touch queue to provide differentiated service improve customer experience Expand services through lower Increasing scope of outreach to improve ‘cost to serve’ collections efficiency Revenue impact Product/service innovation for Built a new service plan to meet customer emerging or international markets need for comprehensive support McKinsey & Company | 10
  12. 12. Recap of our key messages – Current status1 ▪ Most value addition concentrated in high-skill capabilities where GICs showcase ‘centers ofThe prize excellence’ ▪ Clear evidence exists of GICs directly contributing to2 enterprise revenue, although not pervasive (orCurrent status – systematic)Isolatedexamples with ▪ Analyzing and extending existing services can itselfgreat successes, generate significant value vs. large-scale disruptivebut no concerted innovationspush so far ▪ Structural challenge on lack of proximity/insufficient domain expertise to markets/clients limiting value-3 addition at scaleCall for action ▪ Driving value addition requires a different mindset, talent, operating and leadership model. Current process centric approach may also limit rapid scale-up McKinsey & Company | 11
  13. 13. Recap of our key messages – Call for action1 ▪ Govern GICs at the CXO/ business leadership level with adequate operational flexibility and decisionThe prize rights2 ▪ Build a team of business leaders who demonstrate entrepreneurship and commercial acumenCurrent status ▪ Escalate level of engagement with network of3 business leaders and establish a ‘burning platform’Call for action –Too big an ▪ Leverage access to local markets to developopportunity to business context and drive products/ servicesmiss; success will innovationrequire five shiftsboth onshore and ▪ Measure impact systematically to align stakeholdersoffshore and build credibility McKinsey & Company | 12
  14. 14. Key messages The prize – Large potential in excess of 3-5X of traditional 1 operational efficiency levers 2 Current status – Isolated examples with great successes, but no concerted push so far 3 Call for action – Too big an opportunity to miss; success will require five shifts both onshore and offshore McKinsey & Company | 13

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