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1Confidential. All trademarks appearing herein belong to their respective owners.
Making the shift – Moving from transactional service provider to end-to-end process transformation
Harpreet DuggalSenior Vice President, Genpact
NASSCOM BPO Strategy Summit10 June, 2009 – Bangalore, India
2Confidential. All trademarks appearing herein belong to their respective owners.
The Natural Evolution of Globalization - The Move Towards Value-Added Services
Labor Arbitrage
Productivity
Capacity
Competitiveness
u 25-50% cost savings u Leverage global talent pool
u Turn fixed costs into variable to support expansion & growthu Onshore capital expenditure avoidance
u Benefit from Six Sigma and Lean expertise u Margin expansion
u Enable companies to become better at Core to grow top lineu Preservation of cash & improved working capitalu Take Processes to Best-in-classu Minimize capital investment
All of us Want to Travel to Best-in-Class
1990s
Early 2000s
Mid2000s
Today
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Corporations Are Facing A New Competitiveness
u Escalating pressures on enterprises…§ global competition§ demand for innovation§ speed to market§ productivity pressures§ risk mitigation & compliance§ shareholder scrutiny
u are leading to a shift in corporate strategy§ focus on core§ global sourcing§ variable cost models§ minimize capital investment§ improve productivity
u There are fundamental shifts in the corporate landscape…
Demanding a new breed of
Business Partner
4Confidential. All trademarks appearing herein belong to their respective owners.
Globalization is About More than Cost Reduction .. but Getting Full Value is Easier Said than Done
§ Narrow focus on short term cost takeout & contracted SLAs
§ Not getting into full partnership mode early
§ Reluctance to change/re-design processes significantly-Perception of “unique processes”, “we are the best” and “operational disruption”
§ Clients’ saving commitment to street and budget limitations delay the right level of upfront investments required
The Full potential: Road-blocks:
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u Deep expertise in specific industries – Banking, Insurance, Automotive, Healthcare ….
u Deep Expertise by Domain – F&A, Supply Chain, Collections, Risk Management ….
u Define what is the standard for Best in Class, by industry and by Domain… and deliver those to customers.
u Research & Development into Optimum processes and enabling technologies– e.g. invoice exchange, translation, task
dis-aggregation, core vs. non-core
1. Process Expertise / Best In Class Services
Need to Demonstrate True Process Expertise & Domain Knowledge to Create Value
Domestic Outsourcing...not about Cost Arbitrage
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2. Delivering Business Solutions – Moving from Transactions to Solutions
u Bundling of Services
u Delivering specific value
u Linkages between Services & Technology
u Delivering Cost & Productivity
u Delivering Total Services
− Procure to pay (sourcing + AP + cash management)
− Sales Force Effectiveness− Risk Management− Working Capital Improvement− Credit Card Operations
− Sales Force.com? − SOX.com?− Hospitals.com?
− Well beyond labor arbitrage… through process improvements, re-engineering
− Pricing based on results
− Complete back office “to support expansion”− Tax, Infrastructure, Accounting, Admin
Domestic Outsourcing...not about Cost Arbitrage
Integrated Process & Technology Solutions
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3. Unleashing Disruptive Virtual Companies
u Utilize Intellectual Talent & Virtual Expertise to dramatically shift costs and compete in existing businesses.
u Ideally focused on service industries/ knowledge based
u Utilize the power of the internet & telecommunications− Virtual Investment Bank?− Virtual Market Research?− Virtual Insurance Co?− Virtual Bank?− Virtual Architect, Law Firm, Advertising?
u Huge Potential – current Services work is helping build up the Domain Knowledge to compete
Focus On Core Competencies… Revolutionize Biz ModelsIndia More Likely To Adopt Disruptive Models
Domestic Outsourcing...not about Cost Arbitrage
8Confidential. All trademarks appearing herein belong to their respective owners.
Driving Performance on Business Outcomes requires an End to End Process View
End to End allows a Process view that can transcend the functional silos in an organization
Benchmarks at sub processes level allow detailed characterization of potential for improvement in each step... and its subsequent impact at a business Level
End-to-end approach can enable companies drive step improvement in process performance through focused and flawless execution
Significant process variability across companies drives large variances in similar processes
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u 60/70% of common processes
across industries are similar
u Measuring Process Efficiency
alone misses the real benefits
u Driving real improvements
requires Process Expertise +
Technology + Analytics + Insight
u Clients will require different levels
of interface at different times
Key Elements of End to End
Some Obvious Questions – Need An Expert To Answer Them
u Build a common framework for
comparison
u Measurements focused on
Effectiveness and Efficiency
u Huge potential impact of
combining skills, solves real
business issues
u Implement in Modules, no “Big
Bang” required
Key Hypothesis Key Elements
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End-to-End Process
Efficiency Effectiveness
Originations § Time to key in an invoice§ Cost per loan application
§Conversion rates on applications… ? Volumes§Cycle time to open a new customer account
Bill to Cash § Collection efficiency % (Cash collected / Total AR)
§ Past due %
§Eliminate billing leakage§Days Sales Outstanding
Account Payable
§ Invoices actioned on time§ Total AP cycle time
§Paid on Time %§Vendor queries§#Vendor discounts
Key Business Outcome Improvement Drivers
u Insights – Technology only solves part of the problem:
§ E.g., only 40% of transactions in the Accounts Payable process are “first pass, straight through”
§ Typically only 5-10% of the end-to-end cycle time of a process is “value-added time”
u The E2E approach also leads to higher employee engagement
u Will facilitate the move from FTE-based pricing to outcome-based pricing models
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Our Learnings from work with multiple customers/processes
u No one customer is Best-in-Class across metrics… pockets of brilliance
u As wide a variation within a company as across companies
u Granular, practical insight is the key to continuous improvement
u Technology is just one potential lever… process expertise, analytics and ability to drive behavior are often bigger levers
u Unique roadmaps are required for each client based on their view on priorities, risk, investment and appetite for change
Unlock 2X – 3X value, in addition to the traditional 30-40% process efficiency
12Confidential. All trademarks appearing herein belong to their respective owners.
Contact Information
Harpreet Duggal – Senior Vice President & Business [email protected]
www.genpact.com
Thank You
Confidential. All trademarks appearing herein belong to their respective owners.