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Deloitte Shared
Services, GBS &
BPO Conference
Locations to Enable
a Global Delivery
Model: What are the
Options?
Berlin, Germany
Elias van Herwaarden &
Val Popovici, Deloitte
22 – 23 September 2015
²
Business
regulations &
practices
Human
resources
Infrastructure,
accessibility
& hazards
Location
attractiveness
Taxation &
incentives
Political & macro-
economic environment
Durable
advantage
Process quality
Scalability
Why and when location matters
Process drives location options, location impacts design
Deloitte Shared Services, GBS & BPO Conference 2015 2
Location choice
Vision & Design
Requir
em
ents
Constr
ain
ts
Some other basic principles …
Designing / upgrading your delivery organisation
Deloitte Shared Services, GBS & BPO Conference 2015 3
•Potential to leverage
•No need for local controls
•No significant tax/ legal issues
•Low/moderate dependency on local
information
•Little communication complexity
•Potential cost/other benefits
•Process stability
•Required cultural understanding
•Process criticality
•Risk
•Cost of systems/communications
breakdown
•Comprehensiveness of contingency
plans/back-ups
•Time zone impact
Criteria for sharing Selecting the location
Site Support Business Partner Center of Excellence Shared Services
Local or Regional Local, Regional
and/or Corporate
Virtual, Regional or
Global
Regional or Global
On shore Off shore
Evolution of shared services SSOs have been evolving and so have the requirements for locations
Deloitte Shared Services, GBS & BPO Conference 2015 4
Local SSO Regional SSO Global SSO / Global
Business Services
Internet of
Competencies?
De
live
ry
mo
de
ls
Prio
ritie
s a
nd
ch
ara
cte
ristics
Ke
y lo
ca
tio
n
drive
rs
Cost reduction Service standards Value creation Innovation
+ Financial stability and safety
+ Multi-lingual specialised skills
+ Transport connectivity
+ Technology savvy talent
+ Technical infrastructure
+ Local innovation cluster
+ Natural hazards and risks
+ Political & economic stability
+ Taxation and incentives
+ Market proximity
+ Proximity to corp operations
+ Labour costs
+ Property costs
1990s 2000s 2010s 2020s
Evolution of shared services SSOs have been evolving and so have the locations options
Deloitte Shared Services, GBS & BPO Conference 2015 5
Local SSO Regional SSO Global SSO / Global
Business Services
Internet of
Competencies?
De
live
ry
mo
de
ls
Lo
ca
tio
n
op
tio
ns
Mostly: In existing operations
Offshoring begins with pioneers:
British Airways, American
Express, General Electric,
Swissair set up back offices in
India
Bangalore
Barcelona
Beijing
Belfast
Bucharest
Budapest
Buenos Aires
Chennai
Dalian
Dublin
Glasgow
Hyderabad
Kuala Lumpur
Manila
Mexico City
Mumbai
New Delhi
Prague
Sao Paulo
Shanghai
Shenzhen
Singapore
Warsaw
1990s 2000s 2010s 2020s
Bratislava
Brno
Bogota
Casablanca
Cebu
Cluj
Cochin
Gdansk
Gurgaon
Iasi
Katowice
Kolkata
Krakow
Monterrey
Noida
Port Louis
Poznan
Pune
San Jose
Sofia
Szczecin
Timisoara
Vilnius
Wroclaw
Build on top of existing
SSC/GBS competencies and
infrastructures in more mature
locations
GBS and location requirements GBS require mature and quality locations to be successful. Talent and operating
ecosystem must trump cost in the decision making
Deloitte Shared Services, GBS & BPO Conference 2015 6
Requirements Implications on locations
Multiple sets of specialised skills across different functional
domains
Need for high quality graduates to sustain long-term growth
Large and wide pools of experienced specialised talent
Quality business and technical universities
Local investments/initiatives for new skilling and up-skilling
Ability to support a wide range of important local and
regional entities
Ability to stay connected to main business operations in the
region
Multi-lingual specialised staff (combination of skills and
languages)
Good and frequent multi-modal transport connectivity
Quality telco infrastructure
Consolidate to achieve economies of scale
Be able to attract talent from outside
Ensure sustainability and stability of operations
Favourable fiscal regime justifying consolidation
Healthy labour market (i.e. no war for talent)
Large pools of experienced specialised talent
Sizeable pools of university graduates
High quality of living to act as magnet for regional talent
Stable operating environment
Ability to combine in-/out- sourcing models per GBS activity
Ability to decide on and manage GBS SLAs and service
delivery
Local presence of strategic sourcing vendors’/partners’
operations
Maturity and quality of local management skills
Industry-specific or specific sector knowledge Presence of relevant industry / sector clusters
Presence of similar industry GBS operations
Mul
ti-re
gion
M
ulti-
func
tion
Mul
ti-lo
catio
n M
ulti-
sour
ced
Mul
ti-bu
sine
ss
Too few locations?
Our client’s TOM aimed for a GBS with 3 regional hubs
Deloitte Shared Services, GBS & BPO Conference 2015 7
Finance Customer Service / Master Data HR Management + Support
Drivers
• PMI
• Accommodate growth
• Service excellence
• Cost reduction
69% 12%
10%
9%
46%
27%
9%
9% 9%
60%
15%
13%
4% 8%
Supply Chain
Too few locations?
Over 40 cities were initially considered
Deloitte Shared Services, GBS & BPO Conference 2015 8
Proven Hotspot Emerging Under the Radar
Mumbai KL
Bangkok
Manila
Dalian
Kochi
Cebu
Johor Bahru
HCM City
Mexico City
Bogota
Guadalajara
Guatemala City
Medellin
Montevideo
Panama City
San José
Santiago de Chile
Bratislava Bucharest
Budapest
Krakow
Prague
Riga
Vilnius
Warsaw
Sofia
Wroclaw
Poznan
Szczecin
Gdansk Kaunas
Kosice
Cluj-Napoca Brno
Tallinn
Belgrade
Zagreb
Ljubljana
Chennai
Too few locations?
21 made it to the long list
Deloitte Shared Services, GBS & BPO Conference 2015 9
Proven Hotspot Emerging Under the Radar
Mumbai KL
Bangkok
Manila
Dalian
Johor Bahru
Mexico City
Bogota
Montevideo
Panama City
San José
Santiago de Chile
Bratislava Bucharest
Budapest
Krakow
Prague
Riga
Vilnius
Warsaw
Chennai
Too few locations?
Of the 8 visited cities, 3 were selected
Deloitte Shared Services, GBS & BPO Conference 2015 10
Proven Hotspot Emerging Under the Radar
Mumbai KL
Manila
Johor Bahru
Mexico City
Bogota
San José
Bucharest
Warsaw
Sourcing strategies
If cost would drive the decision …
Deloitte Shared Services, GBS & BPO Conference 2015 11
-
10
20
30
40
50
60
Finance team member wage costs (annual, Berlin = 100)
Sourcing strategies
Bit costs aren’t everything: Saturated and emerging locations
Deloitte Shared Services, GBS & BPO Conference 2015 12
Emerging
Hotspot Hotspot Proven Under the Radar
Process Moderate V-A
Increased
interaction
High V-A
Increased
Consultation
Highest V-A
Consultation, MIS Low Value-add
AP AR
GL
GMD VAT
T&E Purchasing
Recruiting
2nd line IT support
Low cost
Many graduates
Higher cost
Many experts
Sourcing locations - What’s hot and what’s not (2014-15)
CE (33%) capitalises on its success, LATAM (14%) is expanding,
APAC (45%) remains stable as SSC destination
Deloitte Shared Services, GBS & BPO Conference 2015 13
Cebu
Manila
Quezon
KL
Colombo
Pune
Mumbai
Bangalore
Hyderabad
Belen Araraquara
Montevideo
San Jose
Belfast
Dublin
Newcastle
Lisbon
Swansea
Bucharest
Budapest
Krakow
Prague
Riga
Vilnius
Warsaw
Sofia
Wroclaw
Gdansk
Kazan
Cluj-Napoca Ostrava
Tallinn
Katowice
Lodz
Proven Hotspot Emerging Under the Radar
Sourcing locations – Global optimisation
HR shared services case example
Deloitte Shared Services, GBS & BPO Conference 2015 14
Regional DC
Learning Admin
Mexico, Panama,
Argentina
Spanish CountryDC
Learning Admin
Brazil
Portuguese
Regional DC
Learning Admin
Malta, France,
Germany
French
Canadian French
Regional DC
Learning Admin
UAE, Egypt,
Saudi Arabia
Arabic
Regional DC
China, Hong
Kong
Cantonese,
Mandarin
Global /
Regional DC
Reward
Performance
Management
Learning Admin
UK, NAM,
Malaysia,
Singapore,
Philippines, Hong
Kong
English
Global /
Regional DC
Global Mobility
Reporting
System Support
Reward
UK, NAM, India,
Hong Kong
English
• Tiered SDM
• Some global processes
mirrored regionally
• Key languages supported
from global / regional
SDCs
Mexico City
Sao Paulo
Cairo
Prague
Shanghai
Manila Bangalore
Prevailing TOMs
SSO maturity, historical geographic footprint impact GBS location
choice Tentative insights
• Apparently no single “best-in-class” TOM
• More mature SSOs are more prone to locate their
GBS hub offshore, relative newcomers prefer
Europe
• Companies with a historic multi-site SSO footprint
evolve into integrated structure of CoEs
Deloitte Shared Services, GBS & BPO Conference 2015 15
Regional spoke
Main / global hub or Mnt. office
Examples
Transport company
Energy company
FMCG company
Cities in 2020
Large city doesn’t equal right city
Deloitte Shared Services, GBS & BPO Conference 2015 16
Africa as next destination for GBS? Despite favourable demographic prospects, a multilingual skilled work force will remain in limited
supply in most of the African countries to serve as GBS destination. Some new African countries
will emerge as Pan-Africa regional SSC hubs, such as Egypt, Algeria, Ghana.
Deloitte Shared Services, GBS & BPO Conference 2015 17
Ethiopia
0,3
Madagascar 0,7
3,0
Algeria 3,4
1,7
Morocco 3,9
Hungary
Czech Republic 4,6
Romania 5,0
Botswana
6,0
Mauritius
Nigeria
Poland
2,0
0,1 Namibia
Ghana
0,3
12,7
15,7
Egypt
South Africa
12,0
82
38
20
11
33
39
10
94
1
2
2
Size of local labour pool for SSC/GBD type profiles (estimate based on numbers for administrative, professional, and technical professional staff, in millions)
53
Population
23
174
21
FDI inflow into Africa (in billion $ at current prices and exchange rates)
0
1980 2010 1970 1990 2000 1995 1985 2005 2015 1975
60
25
15
30
35
5
40
50
55
45
20
10
Sources: GLS analysis based on UNCTAD, ILO data
Africa as next destination for GBS?
Spectrum of options, though few mature ecosystems
First observations
• Cost arbitrage
• Many competitors
• PanAfrica countries positioning throughout
the spectrum
• For language skills only French might lead
to competitive advantage
Key cities
• Accra, Alexandria, Antananarivo, Cairo,
Cape Town, Durban, Ebene, Jo’burg,
Maputo, Nairobi,
Deloitte Shared Services, GBS & BPO Conference 2015 18
W-EU Apac Latam Meneat C&EE
IN
CN
MY
MX
ID
TH
PH
BG
EG
PL
VN
CL
US
LK
RO
AE
LV
CR
UK
TN GH PA
HU
CZ
MA
SK
MU
TR
SN
CO
PT
JM
FR ZA
0
1
2
3
4
5
6
7
8
9
10
0 1 2 3 4 5 6 7 8 9 10
Bu
sin
ess S
erv
ice
s A
ttra
ctive
ne
ss
Financial Attractiveness
Financial attractiveness vs. Business services climate
Lessons from the trenches
Typical mistakes made by companies in their location selection
Deloitte Shared Services, GBS & BPO Conference 2015 19
Inexperienced in-house resources
Stakeholders involvement
Politics and emotions
Confidentiality
People
Single factor / unidimensional focus
Quick investigation
Follow the crowd
Process
Generic open source data
Outdated data
Insufficient criticism / calibration of data
Biased local government data
Data
Local business environment
Local labour, tax, business permitting, environmental, data protection regulations
Regional/local regulatory variations
Regulations
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Deloitte LLP is the United Kingdom member firm of DTTL.
This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will
depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of
the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific
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20 Deloitte Shared Services, GBS & BPO Conference 2015