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JW Marriott Hill CountrySan Antonio, Texas
February 19-22, 2017
The evolution of outsourcing: Or what is it going to look like tomorrow?
© 2017 IAOP. All Rights Reserved.
Introductions
Peter Ankerstjerne CMO and Head, Group Marketing | ISS World Services A/SDavid BrownPrincipal and Global Lead, Shared Services and Outsourcing l KPMG Calvin CrowderSenior Director, Global Real Estate | GoDaddy™Harpreet DuggalSenior Vice President l Genpact
© 2017 IAOP. All Rights Reserved.
The future of outsourcing
More lean and flexible, often
with shared goals and risks
Fewer defined commitments between employees and employers
Closer to core business areas
More agile and flexible organizational structures
Sourcing reasons
Sourcing areas
Sourcing arrangements
Sourcing impact on
employees
© 2017 IAOP. All Rights Reserved.
Critical success factors
Speed is of theessence
Cost effectiveness& documentation is
(still) criticalTrust as an asset
Transparencyforevermore “KISS” wins
© 2017 IAOP. All Rights Reserved.
Emerging options
Network Sourcing
Mesh Sourcing
Crowd Sourcing
Solution Sourcing
Co-sourcing
“WHAT’S IN IT FOR WE?”
“Perverse Incentives”
© 2017 IAOP. All Rights Reserved.
Top 2017 user organization initiatives
Shift back-office operations offshore/into lower cost markets
Optimize global supply chains
Engage in M&A or divestitures
Find, attract and retain talent globally
Improve global governance capabilities; reduce global risk exposure
Deliver new/innovative products and services into the market; increase/improve R&D
Redesign/re-engineer core business processes
Optimize global service delivery channels; excel at global business services
Invest in new/improve information technology
Continue to drive down operating costs
22%
25%
26%
30%
22%
39%
54%
31%
56%
72%
18%
20%
20%
28%
28%
34%
38%
38%
60%
67%
2016 2015 Source: KPMG 2016 Q4 Pulse Survey
© 2017 IAOP. All Rights Reserved.
Transformation is happening fast
“Our view is ‘transform or wither,’ ‘transform or lose pace’. We take the perspective that the concept and the execution of transformation are never complete, because the marketplace changes, and so do the needs of our clients and customers — and the digital era just accelerates all of that.”
Catherine Bessant, Global Technology & Operations Executive, Bank of America
Percent of US-based companies undergoing
business model transformation*
98%*KPMG CEO survey
As a service economy, i.e., Platform as service25% of the world’s energy needs are set to be met by renewables in 2020
Virtual assistants
Cognitive computing and machine learning
Trends in Technology Transformation
The rise of robots will lead to a net loss of over 5 million jobs in 15 major developed and emerging economies by 2020One in three jobs will be converted to software, robots and smart machines by 202565% of today’s grade school children will be employed in jobs that haven’t yet been invented
Trends in Employment Transformation
© 2017 IAOP. All Rights Reserved.
How critical are the following C-Suite directives to your operations strategy?
The C-suite is responding with new imperatives
Source: HfS Research in Conjunction with KPMG, “State of Operations and Outsourcing 2017” Sample: n=454 Enterprise Buyers
Invest in cognitive technologies and machine learning to reduce reliance on mid/high skilled labor
Invest in process automation and robotics to reduce reliance on low-skilled labor
Policies that restrict the hiring of people
Improve the quality of operations talent
Scalable / Flexible services
Accelerate speed to market with new products
Create real-time data that supports predictive, not reactive decisions
Align middle/back office operations to improve customer experiences
Drive down operating costs
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
20%
22%
24%
26%
29%
30%
31%
31%
42%
48%
46%
38%
55%
50%
45%
48%
48%
43%
19%
19%
17%
13%
17%
20%
15%
15%
8%
12%
12%
21%
5%
4%
5%
6%
6%
7%
Mission Critical Increasingly Important Emerging Not a Directive
© 2017 IAOP. All Rights Reserved.
Use of intelligent automation
Cognitive automation
Enhanced process automation
Basic process automation
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
15% 40%
29%
14%
30%
33%
24%
15%
43%
67%
No activity Self-education and planning Experimenting and running pilots Live implementations
© 2017 IAOP. All Rights Reserved.
Organizational and people impacts
Changing Behaviors Adopting and adapting
the new ways of working
Changing Perception
Overcoming the fear factor
Organizational & People Impacts
Leadership Vision Agreeing on future state
vision for the organization
Talent Pipeline Hiring, reskilling and
exiting talent
Culture ShiftNeed for agility and
innovation
© 2017 IAOP. All Rights Reserved.
Benefits of applying digital labor
Cost Reduction
• Enables opportunity to better manage labor costs
• Decouples correlation between labor and revenue growth
• Reduce need for seasonal labor force (during busy seasons etc.)
Process Improvement & Efficiency
• Leverage digitized process data to increase visibility & continuous improvement
• Enable resources to focus on higher value-added activities
• Lower the cost & risk associated with employee turnover
SpeedPrivacy & Compliance
• Limits human exposure to sensitive corporate data
• Reduce human error in compliance tasks
• Increase security & governance tasks without adding new human labor
Quality & Accuracy
• Reduce quality issues associated with manual data entry
• Deploy new “no-labor” data integrity routines
• Reduce the need for re-work
• Can perform tasks 365 days a year at 24/7 availability
• Accelerate completion rates certain tasks, compared to human labor
• Rapidly scale up / scale down for changes in transaction volumes
© 2017 IAOP. All Rights Reserved.
Outsourcing talent maturity
Do you agree that your primary service provider has the right talent to do the following? Provider Talent
Contribute / align with corporate business strategies
Improve quality of customer engagement
Manage internal operating costs
Manage productivity / operating efficiency
Drive innovation into services
Address requirements of digital technologies
Increase scope or scale of outsourcing and shared services
19%
19%
20%
20%
20%
21%
23%
36%
42%
41%
44%
42%
43%
43%
35%
32%
31%
29%
30%
29%
27%
7%
6%
6%
6%
6%
6%
7%
2%
1%
2%
1%
2%
2%
Strongly Agree Agree Neutral Disagree Strongly Disagree
HfS Research in Conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers
© 2017 IAOP. All Rights Reserved.
What does the future look like?
Closer collaboration with the client organization on larger and more strategic projects, delivering
more value-added services and solutions
Engagement in collaborative arrangements as consultants (not just service providers)
Knowledge exchange will be a major enabler of innovation
JW Marriott Hill CountrySan Antonio, Texas
February 19-22, 2017
Thank you!