mckinsey关于商业流程外包的presentation

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1、ITES/BPO Opportunity to move up the value chain?This report is solely for the use of client personnel.No part of it may be circulated,quoted,or reproduced for distribution outside the client organization without prior written approval from McKinsey&Company.This material was used by McKinsey&Company

2、during an oral presentation;it is not a complete record of the discussion.Source:Gartner;Dataquest;Aberdeen group;McKinsey analysisTelecom costs down by 90%in the last 3 years;world-class reliabilityOver 2.5 million low-cost talented workers in countries such as India and PhilippinesEmergence of a c

3、redible vendor community0.00.20.40.60.81.01.21.41.61.82.0199219931994199519961997199819992000200120022003EBPO total revenues-India example*$billionCONTEXT:BUSINESS PROCESS OFFSHORING HAS EXPLODED IN THE LAST FEW YEARSEncouraging track record of early movers Demanding U.S market environmentSuccessful

4、 track record of I/T offshoring1030918 Offshoring workshop v2“Tech jobs leave U.S.for India,Russia.Whos to blame?”July 2003“Is your job next?”February 2003BUT HAS ALSO CREATED GREAT ANXIETY IN PRIMARY MARKETS“American legislators are accusing India of stealing jobs”June 2003“Americas pain,Indias gai

5、n”January 2003“3.3 million U.S.service jobs to go offshore by 2015”November 2002“Can America Lose These Jobs and Still Prosper?”July 2003U.S.House Sub-business Committee2IN THIS CONTEXT,SEVERAL DOUBTS HAVE ARISEN ABOUT THE FUNDAMENTAL LONGEVITY AND EVOLUTION OF BPO AS AN INDUSTRYWill the BPO phenome

6、non plateau out in the next few years?Even if it survives,moving up the value chain will be difficult and will take several years?Value chain moves will be the domain of captives because the trust required is too high?320030520DL-ZXE332(ITES,Board Pres.)(JS)-7IN THIS CONTEXT,SEVERAL DOUBTS HAVE ARIS

7、EN ABOUT THE FUNDAMENTAL LONGEVITY AND EVOLUTION OF BPO AS AN INDUSTRYWill the BPO phenomenon plateau out in the next few years?Even if it survives,moving up the value chain will be difficult and will take several years?Value chain moves will be the domain of captives because the trust required is t

8、oo high?420030520DL-ZXE332(ITES,Board Pres.)(JS)-70.33*Estimate based on historical U.S.reemployment trendsSource:McKinsey Global Institute1.OFFSHORING ACTUALLY GENERATES GREATER VALUE FOR THE GLOBAL ECONOMYTaxes($0.04)Revenues($0.20)Local suppliers($0.09).deliversvalue to India.0.67Cost savings($0.

9、58)Goods sold($0.05)Profits from Indian ventures($0.04).brings returnsto U.S.1.45-1.47.and makes the global pie that much bigger0.45-0.47.creates new value from re-employing U.S.labor*.$1 previouslyspent in U.S.,now offshored to India.$1.0050.030.330.100.090.100.01Profits retained in IndiaINDIA CAPT

10、URES 33 CENTS FROM EACH DOLLAR OF SPEND OFFSHORED BY THE U.S.Value accrued from$1 of U.S.spend offshored1Dollars;2002Central govern-ment3State govern-ment4Total value accrued to IndiaLaborSuppliers2Offshoring sector1 Estimated using the India offshored services industry case 2 Includes revenue accru

11、ed to the supplier industries less sales taxes,income taxes to employees and corporate taxes 3 Includes income tax from labor employed in the offshored services sector and the supplier industries and corporate tax on the supplier industries4 Includes sales tax on the supplier industries and revenue

12、from the sale of power to offshored service providers Source:McKinsey Global Institute6JOBS OFFSHORED WILL BE A SMALL FRACTION OF THE SHORTAGE IN ELIGIBLE WORKERS Number of workers Millions,2000-2015 Source:U.S.Census;McKinsey Global Institute 3.315.6Jobs projected to go offshoreDecline in working p

13、opulation due to aging71.170.270.21JOBS OFFSHORED ARE A FRACTION OF ALL MASS LAYOFFS1 Bureau of labor statistics defines mass layoffs as job loss actions leading to the displacement of 50 or more workers by a given establishment during a 5-week period2 Average 1996-993 Average 1989-20004 Average 200

14、3-13Source:NBER;BLS;Kletzer;McKinsey Global InstituteAverage annual mass layoffs1Millions All mass layoffs2Offshoring projection4Trade-related layoffs38Economic value of off-shoring realOff-shoring creates 40-50%greater value for the global economyIndia captures 33%of every off-shored dollar while t

15、he US retains 67%and the incremental 40-50%value creationOff-shored jobs small fraction of expected retirements/lay-offs THEREFORE,BUSINESS LOGIC WOULD INDICATE THAT BPO HERE TO STAY BUT WILL REQUIRE HANDLING CUSTOMER CONCERNS WITH COMPASSIONNegative emotional impact at the customer equally realReal

16、 people and communities are effectedRe-training takes timeManufacturing hang-over still felt920030520DL-ZXE332(ITES,Board Pres.)(JS)-7IN THIS CONTEXT,SEVERAL DOUBTS HAVE ARISEN ABOUT THE FUNDAMENTAL LONGEVITY AND EVOLUTION OF BPO AS AN INDUSTRYWill the BPO phenomenon plateau out in the next few year

17、s?Even if it survives,moving up the value chain will be difficult and will take several years?Value chain moves will be the domain of captives because the trust required is too high?1020030520DL-ZXE332(ITES,Board Pres.)(JS)-7Completed the first round of off-shoring successfullyBuilt substantial scal

18、e in operations in IndiaPenetrated 1-2 businesses in depthStarted capturing labour cost savingsBase A:“Accelerate,extend breadth and depth”Increase breadth and depth of services Strengthen and stabilize architectureInsource-outsource,onshore-offshore architectureGlobal hub architectureStrategic outs

19、ourcingB:“Re-engineer”Drive towards operational improvementTask level and process level reengineeringConsolidation and aggregation of functions Leverage low cost position to start offering new services to customers and improve competitive position in home marketsC:“Externalize”Take robust platforms

20、external and create value out of the shared services utilitySpecialized service bureauGeneric third party BPO providerD:Tackle tough(but large)industriesFOUR POSSIBLE VALUE CHAIN MOVES POSSIBLE1120030520DL-ZXE332(ITES,Board Pres.)(JS)-7Simple,standardized activitiesAdvanced technical skill and some

21、judgment requiredExtensive judgment and analytical skill requiredA.MOVES UP THE VALUE CHAIN ALREADY HAPPENING IN TERMS OF BREADTH AND DEPTH OF PROCESSES OFF-SHOREDAXAInsurance claims processingCitibankCheck processing,account application processing,loan processing by a subsidiary(e-Serve)HSBCAccount

22、 opening and closing,retail loan processing,mortgage processingAmerican ExpressLive brokerage advice from qualified agents through a vendor in the Philippines(eTelecare)Extensive offshoring of credit card services(including risk modeling and credit evaluation)Extensive financial analysesGE Capital B

23、usiness SolutionsRisk modeling,actuarial services,underwritingCitibankCredit card processing,collection calls,inbound and outbound service centersHSBCInbound customer service center for mortgageCapital OneInbound customer service center,outbound telemarketing(MSourcE)CitibankFinance and accountingGE

24、 CapitalInsurance claims processing Outbound telemarketing,inbound customer serviceMBNAProcessing of online applications(TransWorks)GE CapitalPayroll accountingInvoice and payment processingMcKinsey&CompanyResearch and knowledge management for world-wide offices in GurgaonGE CapitalRisk analysis,str

25、ategic planning and forecastingFinancial statement analysisExamples of sector-specific(“vertical”)processesExamples of corporate center(“horizontal”)processesGEUK auto applications data entry1220030520DL-ZXE332(ITES,Board Pres.)(JS)-7IN FIs,VENDORS AT POINT OF SERVICING THE WHOLE RANGE OF CORE BANKI

26、NG AND SUPPORT PROCESSESSource:Vendor interviews,literature searches,vendor websites,McKinsey analysisSample processesTelesalesCustomer serviceTechnical support help deskE-mail supportFax responsesLive interaction(chat room customer service)Customerfacing VoiceNon-voice InboundOutboundTelemarketing

27、Collections(bucket one)Business process off-shoring servicesBenefits administrationPayroll processingRetail banking(account maintenance,opening,check processing)Fund administrationReference data managementClaims processingDatabase integration&analytical servicesSecondary researchA/R and A/P manageme

28、ntReconciliationBack office Core businessSupportHR/AdminConsumer bankingWholesale bankingInsuranceResearchFinance&Acctg.Illustrative vendors1320030520DL-ZXE332(ITES,Board Pres.)(JS)-7B.REENGINEERING AND PROCESS IMPROVEMENT CAN PROVIDE ADDITIONAL GAINS OF 30-40%100Original costbaseFactorcostsavingsAd

29、diti-onal telecom&manag-ement costs Off-shore location costConsoli-dation,standar-dization&superior skills Taskreengi-neeringEcono-mies of scaleProcess reengine-eringNew cost base60-6510-1545-558-135-73-51530-35Does notinclude gains from revenue enhancementTask aggregation and process level improvem

30、entTask migrationTask levelimprovementFactor cost benefits(45-55%savings)Additional benefits(30-40%savings)1420030520DL-ZXE332(ITES,Board Pres.)(JS)-7Productivity and process re-engineeringEconomies of scaleAggregated cheque order processing tasks and bought-in cross-trained agents,which has signifi

31、cantly increased staff utilisationDecreased time taken for month-end closing from 5 to 2 days by modifying and eliminating tasksRe-engineering(end-to-end)IN FACT,OVER TIME COMPANIES HAVE CAPTURED ADDITIONAL PRODUCTIVITY GAINSReduced 40 FTEs by digitising the back lining process in the contact centre

32、 Technology applicationEfficiencySource:Expert interviews;literature searchesReduced average call centre talk time from 180 to 100 seconds through use of more qualified agentsImproved total customer satisfaction score from 85%to 92%after offshoring call centre services to IndiaBetter talent and trai

33、ningEfficiencyIncreased first time resolution rates from US benchmark of 59%to 74%resulting in reduction in repeat support calls and on-site dispatch calls leading to savings of$2 million per annum1520030520DL-ZXE332(ITES,Board Pres.)(JS)-7C.F-1000 INSTITUTIONS HAVE INCREASINGLY BEGUN TO REALISE OPP

34、ORTUNITIES FOR REVENUE ENHANCEMENTLive brokerage advice for mass affluent customers from Series 7 qualified agents through vendor in the Philippines(eTelecare)50 million/year gained through revenue audits interline,agent,and used ticketsAbility to price insurance policies at significantly below comp

35、etition leading to 5-7%market share improvement in home marketsResearch platform to service customers for a fee offer customized research for strategic customersDevelop modeling platform to provide fee-based analytical capabilities to SME financial services customers offer customized services to lar

36、ge financial institutionsOffer trade finance services to SME customers that are otherwise uneconomical to serveOffshore R&D(pharma,chemicals)using collaborationsKnowledge on call services for core clients customized research and analyticsRevenue opportunities created through offshoringPotential idea

37、s for F-1000 institutionsCustomised research for global customers potential to create platform to service other banks1620030520DL-ZXE332(ITES,Board Pres.)(JS)-7Columbia Bank&Trust(later Synovus)transitions internal credit-card processing business into third-party company(1982)CB&T sells 19%of compan

38、y in IPO(1983)TSYS grows to become the second largest processor in the worldSIGNIFICANT VALUE CAN BE CAPTURED BY TRANSFORMING INTERNAL CAPABILITIES INTO THIRD-PARTY BUSINESSESAmEx transitions internal processing unit into third-party company(FDR)and sells off majority ownership stake(1992)FDR merges

39、 with largest competitor and grows to become global leader in transaction processingParentNew businessTransition*March 1,2002Sources:Hoovers;analyst reports;McKinsey analysisManagement buyout of Midland Bank processing unit following merger with First Bank System(1984)IPO in 1986Grown to become lead

40、ing provider of technology and processing services for financial institutionsMidland Bank$5 billion in market cap*,growing at 5%CAGR in the last 5 years$8 billion in market cap*,growing at 31%CAGR in the last 5 years$17 billion in market cap*,growing at 26%CAGR in the last 5 yearsValue creation U.S.

41、$billion1720030520DL-ZXE332(ITES,Board Pres.)(JS)-7D.NEW INDUSTRIES THAT HAVE PLAYED“WAIT AND WATCH”GAME TRADITIONALLY NOW ACTIVELY EXPLORING AND COMMENCING OFFSHORING PHARMACEUTICAL EXAMPLEArea IT offshoringSupport functionsAttitude towards outsourcing/offshoringKey factors driving increasing momen

42、tum“Wait and watch”towards offshoring until late 2001Significantly higher acceptance in 2002“Triggers pulled”in 2003 by several players including BMS,Novartis,AbbottMainstreaming of IT offshoring and emergence of credible success stories on cost and quality improvementsSolid vendor base(e.g.,Infosys

43、,Satyam,TCS)with proven track recordObserved actions of competing players!“Wait and watch”towards outsourcing of business process through 2002 and early 2003Numerous ongoing discussions in 2003 with vendors on finance&accounting and HR offshoringIncreasing focus on rationalizing support function cos

44、tsEmergence of credible success stories and vendors for F&A and HR Observed actions of competing playersMany companies articulating“overall aspiration”cutting across numerous opportunities such as IT,BPO,R&DR&DConcerns around IP and quality of medical infrastructurePositive experience of first mover

45、s in addressing concerns and benefiting significantly e.g.,AZ and BMS in R&D;Pfizer&Eli Lily in clinical development;Novartis&Pfizer in data management Improved medical infrastructure and favorable regulatory environment1820030520DL-ZXE332(ITES,Board Pres.)(JS)-7OPPORTUNITIES FOR OFFSHORING EXIST AC

46、ROSS THE PHARMACEUTICAL VALUE CHAIN R&DSupport FunctionsIndustrial OperationsStrategic and commercial busi-ness planning(pre-launch)Product development and life cycle managementPricing and health economicsMarket a product(new and legacy)Customer relationship managementCustomer and consumer servicesS

47、ales managementLogistics&distributionAfter sales servicesFinance&AccountingInformation TechnologyHuman resourcesLegal Legal counseling advocacy and litigation Intellectual property counselingSales force supportTarget identification&validationLead generation&optimizationPreclinical/ToxicologyClinical

48、 Development&TrialsData ManagementNew production developmentProcurementPlanning and manufacturing Plant maintenance Quality management Process controlSupply chain managementPerformance monitoring and controlCommercial OperationsSource:Interviews;McKinsey analysisFocus of documentOffshore potential19

49、Business process modelRECENT ACTIVITY POINTS TO GROWING INTEREST OF PHARMACOS IN OFFSHORING DATA MANAGEMENT EXAMPLESource:InterviewsGlobal statistical operations business systemSavings of around 40-60%vis-vis global CROs within first yearTargeting 80-100 global trials in 2003Plans to start related a

50、reas of filing and report writing,efficacy reporting and statistical design for Phase IV studiesEntering into Phase I reporting for complex oncology trials and traditionally outsourced,Phase IV trialsStatistical study designStatistical programmingDocument managementDatabase lockingReport writing and

51、 filing to medical authorities Operations in IndiaStarted operations in 2001Approximately 30 statisticians out of global team of 250 located in IndiaFocus on standard safety reporting for Phase II and III trialsReports focused on US FDA and EMEAOver 40 global trials supported in first year of operat

52、ionSupporting 2 mega trials of over 10,000 patient records eachConduct several short turn-around analyses for clinical pharmacology studiesNOVARTIS EXAMPLE2020030520DL-ZXE332(ITES,Board Pres.)(JS)-7OFFSHORING CAN RAPIDLY MOVE UP THE PHARMA VALUE CHAINSupport functionsFinance and accountingInformatio

53、n technologyHuman resourcesR&DClinical developmentData management,including bio-statsContract manufacturingDrug manufacturing(TBD)Formulations developmentCustom chemical synthesisR&DBio-informaticsAnalog generationSupport functionsSales force supportContract manufacturingNew product developmentR&DLe

54、ad generation and optimisationPhase 1:“Early wins”Phase 2:Minimal risk movePhase 3:High-end activitiesRationaleSignificant experience across other industriesStrong vendor basePharmas already doing itSignificant bottom line impact potential visibleEmerging vendor baseIPR issues need to be clarifiedCo

55、mfort around Asia needs to be establishedOpportunity123452120030520DL-ZXE332(ITES,Board Pres.)(JS)-7IN THIS CONTEXT,SEVERAL DOUBTS HAVE ARISEN ABOUT THE FUNDAMENTAL LONGEVITY AND EVOLUTION OF BPO AS AN INDUSTRYWill the BPO phenomenon plateau out in the next few years?Even if it survives,moving up th

56、e value chain will be difficult and will take several years?Value chain moves will be the domain of captives because the trust required is too high?2220030520DL-ZXE332(ITES,Board Pres.)(JS)-7IN THE END STATE,LARGE INSTITUTIONS WILL USE A COMBINATION OF CAPTIVE AND VENDOR FACILITIESExamplesStarted of

57、f handling all processes in-house Now outsources call centre services to multiple third party vendorsStarted offshoring operations by outsourcing In addition to outsourcing,now also runs a captive centreJV/Alliance Indian best-of-breed vendorDelayOutsource to Global brandCaptiveJV/Alliance Indian be

58、st-of-breed vendorDelayCaptiveFrom primarily captiveto hybrid modelFeasibility of outsourc-ing the processCross-border operation sophisticationOutsource to Global brand2320030520DL-ZXE332(ITES,Board Pres.)(JS)-7IN FACT,MATURE OFFSHORERS HAVE DEVELOPED AN INTEGRATED ARCHITECTURE OVER TIMEStarted with

59、 150 person completely captive unit in 1994 primarily for back end processingEntry into knowledge intensive activities in 2000-01Significant expansion of head count and service line in 2001Geographical diversification into Philippines in 2001ModelThird party Philippines Reduces country risk Provides

60、 BCPThird party India Exclusive support to AMEX Creates scale with minimal investment Diversifies risk Competes with captive and provides BCPCaptive operations Leverages brand,Important for regulatory issues Preserves proprietary process knowledge%of total off shored services700 FTEsVoice based cust

61、omer support for credit card operationsOver 2000 FTEs across vendors such as Spectramind,Daksh,EFundsVoice based customer support for credit card operationsOver 1600 FTEs Involved in high-end and low-medium-end,proprietary/non proprietary services(e.g.,A/C reconciliation,A/C opening and closing,Ledg

62、er activities for credit cards,A/C planning and forecasting,Fraud and risk modeling)Scale,scope and management model30%50%20%2420030520DL-ZXE332(ITES,Board Pres.)(JS)-7DELETED PAGES2520030520DL-ZXE332(ITES,Board Pres.)(JS)-7Rigorous analytic approachSponsor-led approachOutside-in approachF-1000 PLAY

63、ERS HAVE ADOPTED THREE APPROACHES TO SELECT PROCESSES FOR OFFSHORINGDetailed analysis to identify high potential processes,percentIdentify processes for offshoring based on simple criteria Sponsorship from process owner(e.g.,inside Group Ops.in LTSB)Least organizational resistance(e.g.,overflow work

64、)Low reputation/service quality riskUse external benchmarks(activities and phasing)to identify and prio-ritize the corresponding candidate process in your organizationUse benchmark information on off-shore-onshore split and internal FTE mapping(for identified candidate processes)to size the opportun

65、ityFilter activities by offshorabilityIdentify processes/activities offshored by existing playersBuild and they will come allow other parts of the organization to decide on offshoring at their own pace26030918 Offshoring workshop v2Retail banking Merchant acquiringFinancial services sectors with hig

66、h potential for offshoring*Retail bankingMortgages Servicing OriginationLife and health Personal Group and healthProperty and casualty Deposit products Consumer loans Credit cards Card issuance&servicingInvestment banking Research7-1110-158-157-125-1010-205-105-125-128-15Per cent of cost base offshorable15-2020-2525-3020-2510-1530-4010-1520-3020-2525-30THIS HAS PRIMARILY BEEN DRIVEN BY THE SIGNIFICANT 35-50%COST SAVINGS OPPORTUNITY *Asset management module including retail brokerage to be comple