ch&cie - offshoring - teaser

Offshoring

Relocation opportunity study, execution and oversight

Stephanie Baruk [email protected]

AGENDA

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Business Drivers of an Offshoring Program

High level approachKey Challenges and Success FactorsAppendix: Focus on the methodology

BenefitsBusiness drivers

Reduce significantly salaries (up to 55% depending on location) and premises costs (up to 60% depending on location)

Being granted with specific Tax incentives

Achieve economies of scale

Cost reduction1

Business Drivers of an Off-shoring Program

Take advantage of the program to homogenize and standardize processes in both locations

Improve efficiency of the processes and redeploy workforce in onshore location

Process standardization and improvement2

Focus on core competencies in the onshore location: retained staff focus on “value‐add” activities

Establish or reinforce a local presence

Implement a “multi‐tasking” resources pool and create synergies in the offshore location

Create a shared services center able to assist several countries & business lines and more flexible/ agile if volumes increase

Optimizationof competencies3

Set up a “Follow The Sun” organization with overnight coverage

Comply with specific BCP requirements (According to the FED US bond settlements activity has to be able to settle, clear & close out from a location >100 miles from the main processing center)

Ensure constant back up and full business continuity

Coverage extension4

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Partial off/near shoring potential

Partial off/near shoring potential

Off/near shoring potential

Overview of Functions Potentially Transferrable within an Operations Department

Sensitivity vs. Proximity matrix Methodology used

Based on this analysis teams are identified as fully or partially near/off-shorable

10%0% 30%20% 50%40% 70%60% 90%80% 100%

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100% Sensitivity

Proximity

Sensitivity

Proximity

Team were categorized according to several aspects indicating proximity needs:

Client facing

Physical proximity

Shared time‐zone

Language skills

Cultural Proximity

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Teams were categorized according to several aspects indicating business sensitivity:

Legal/regulatory restriction

Specific stakeholders requirements

Specific staff skill requirement/labor market offering at off/near‐shoring location

Application sensitivity

Operational risk level

Complexity of tasks

Capital Market Ops

Corporate Banking Ops

AGENDA

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Business Drivers of an Offshoring Program

High level approach

Key Challenges and Success FactorsAppendix: Focus on the methodology

High Level Approach of an Off-shoring Program

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Business Case

Target location choice

Near vs. Off location

Pool of resources availability (specific expertise…)

Savings (base salaries, premises, tax incentives…)

Expected savings & ROI

Cost reduction target

Return on Investment

Strategy definition

Global vs. Regional

Coverage strategy (Same time zone vs. worldwide coverage: ”Follow The Sun”)

Hub/ Regionalization

Number of waves to be implemented

Affected perimeter

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6 weeks*

Transfer OpportunitiesStudy

Identification of transfer constraints

Operational risks (process stability, automation level, function sensitivity)

Specific expertise required and related recruitment issues

Critical size

Regulatory constraints

Proximity needs with other units/departments or clients

Business case validation

Synthesis of the functions to be transferred

Scenario building and target set up choice:

• Functions to transfer

• Choice between near shoring or offshoring

• Estimation of the overlap period required

• Calculation of the project costs and related savings

Definition of different Implementation phases

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3‐4 months*

Implementation Follow‐up, Optimization & Oversight

HR strategy definition Onshore location: retention of top performers

Offshore location: assessment of the staff turnover and identification of retention strategy

HR policy review (Holiday policy…)

TOM optimization Improvement of communication between off shore and on shore location

Workload optimization: as‐is analysis and identification of opportunities for process improvements

Workflows and systems enhancement

Optimization of synergies in both on and offshore locations

Performance monitoring Satisfaction study: evaluation of team performance on a regular basis and identification of potential issues , quick wins and long term remediation actions

Define the escalation process Track the realization of the business case

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Execution/Transition Phase

Target organization Definition of Target Operating Model (Governance, org. charts, P&P, SLAs…)

Definition of TOM KPIs

Project Management Project Monitoring Savings & costs monitoring

External & internal communication Dedicated meetings with affected staff, HR & Managers (and design of RIF matrix)

Press release

Recruitment Posting of job offers (internal & external) Hiring process (rounds of interviews, final approver ...)

Regional organization charts (solid vs. doted reporting lines)

On‐boarding Task force set‐up including Logistics, BCP, IT, Security and HR

Training Definition of a training plan for each department (e.g. specific content, active/ passive shadowing) & training material

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1 year** Timing for information only as it may vary depending on the project’ scope

AGENDA

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Business Drivers of an Offshoring ProgramHigh level approach

Key Challenges and Success Factors

Appendix: Focus on the methodology

Key challenges and success factorsBusiness Case

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Key Success Factors identified and proposed by CH&CieChallenges Shortfalls

Deeply analyze key indicators of the country: staff cost, O&P cost political stability, level of workforce education, languages spoken, quality of infrastructures, difficulty to travel (visa…)

Have a good overview of regulatory and legal constraints

Analyze work market depth

List the key competencies and specific required expertise

Target locationchoice

• Difficulty in finding candidates with desirable background and skills

• Salaries ending up higher than expected

• Legal issues due to cultural differences (max. working hours…)

• Additional constraints due to very high data protection (Singapore)

• Training issue due to specific visa requirements

Business Case1


2Execution/Transition

Phase

3Implementation Follow‐up, Optimization & Oversight

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Ensure that offshoring strategy to be established is a real leaver of the whole business strategy

Have a very clear overview of the offshoring strategy to be implemented

Strategy assessment• Offshoring strategy not in line with overall business approach

• Lack of clear strategy overview

Ensure a proper current state assessment

Define appropriate performance measures

Assess qualitative & quantitative benefits

Check the organization “readiness “

Feasibility study • Organization which is not ready to support a significant transformation initiative

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Key challenges and success factorsTransfer Opportunities Study

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Business Case1



Phase


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Spend time to design the overall target operating model and get the buy‐in of all key stakeholders

Take advantage of time zone differences (‘Follow The Sun’)

Push end‐to‐end processes instead of tasks

Consistency and efficiency of the target

operating model

• Offshore teams performing a multitude of micro‐tasks with no connection between them

• Onshore teams placing orders on a ad‐hoc basis to offshore teams

Communicate only with Heads of department and middle mgmt until the transfer opportunities are identified and validated

On‐board team leaders at the beginning of the project and implement follow‐up on a regular basis

Confidentiality and Communication

• Resistance and lack of cooperation from Middle Management

Analyze the existing process entirely to identify potential stickiness with other departments

Ensure critical size is reached for each unit, global consistency and leverage on potential synergies among transferred units

Transfer opportunities identification • Constraints not properly identified

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Key challenges and success factorsExecution/Transition Phase

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Business Case1



Phase


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Explain the various stages of the governance model

Communicate the criteria to move from one step to another

Establish clear RACI and kill potential redundancies

Process ownership & understanding of the new organization

• A‐team vs. B‐team syndrome creating de‐motivation

• Difficulty to apprehend who is in charge of what• Offshore teams perceived as a separate entity

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Draft transition check‐list for communication between teams Test the readiness of IT systems and assess the quality of the process documentation early in the project

Design a transversal training plan

Transitioning processes without compromising

on risks

• Delays in the roadmap due to unforeseen logistical issues (visa, space planning, IT connectivity…)

• Lack of documentation & training materials

C

Build brand awareness through corporate events (buzz)

Invest in premises and quality of the working environment

Secure a pool of ‘multi‐tasking’ resources

Recruiting & retaining CIB‐skilled resources

• Limited brand image in the local market to attract talents

• Inappropriate planning of the recruitments leading to delays in the roadmap

D

Structure with HR a well‐structured, open mobility plan and anticipate/preempt open positions in advance

Explain what is going to happen and how you plan to handle itChanging mindset

• Senior executive delivering conflicting messages• Fear of losing the job and inability to call into question (acquisition of new skills)

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Negotiation and dialogue with working councils and adaptation of the communication plan

Focus change management efforts on middle managers / team leaders

Keeping the communication under

control

• Project going public unexpectedly, reputation & media risks not anticipated

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Monitor dependencies with other projects Define a unique sponsor to ensure the lead of the project Set up a project structure with frequent committees, comprehensive project tools & an escalation process to ensure alerts are quickly identified

Suitable governance

• All dimensions of the project (process, organization, time, cost, HR, communication, IS, etc.) not properly monitored

• Issues not escalated

A

Key challenges and success factorsImplementation Follow-up, Optimization & Oversight

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Business Case1



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Plan in the project a reorganization of onshore and offshore teams after the transfers (optimization phase)

Strengthen the headcount monitoring process globally

Agree on conversion ratio (Offshoring In – Productivity Gain) and monitor their evolution over time (underlying action plan)

Delivering the business case ROI

• Return On Investment not delivered in many cases

• Late detection of hidden project costs

• Underestimation of exit costs

• Project changes (de‐scoping) not factored in

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Assess teams performance on a regular basis (off shore location)

Ensure that off shore location set‐up is fully up & running (no duplicated tasks between locations or tasks still performed by on shore site)

Assessment of strategy effectiveness

• Under performance compared to initial expectation

• Poor level of services quality (complaints from clients)

• Onshore set‐up overwhelmed due to partial take over from new platform

C

Review on shore and off shore HR strategy (retention packages, review of working conditions if conflict with local culture…)

Appropriate HR Strategy

• High turnover in off shore location (cultural issue…)

• Resignation of high potential staff in on shore location

B

AGENDA

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Business Drivers of an Offshoring ProgramHigh level approachKey Challenges and Success Factors

Appendix: Focus on the methodology

ch&cie - offshoring - teaser

Economy & Finance