TRENDS, TRAPS AND

EMERGING
OPPORTUNITIES
Rethinking Outsourcing

Atul Vashistha Chairman & CEO

2 2
 About Neo Advisory
A consulting firm singularly focused on helping organizations Consulting
capitalize on
Outsourcing and Services Globalization Risk Monitoring

Research

Since 1999

Silicon Valley • Bangalore • New York • Chicago • Sao Paulo • Monterrey • Manila • Amsterdam • Prague
3
TRENDS
Q2 Insights

  Revenue
  Pricing

  Spend

  Utilization

  Talent

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Trend: New Roles Emerging

  Integrator
  Chief Transformation Officer

  Head of Shared Services

Altering organization
structure to aggregate
and buy services
•  A business model that
centralizes common
business services
•  Leveraging economies of
scale and scope

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Trend: Vehicle for Operational Transformation

Source: AMR Research / Global Services Media, 2009

Sample: 127 Enterprises

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 Trend: Convergence of ITO/BPO

Source: Horses for Sources, 2010

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Trend: Attractiveness of Rural Sourcing

  Cost of doing business in low cost locations rising

  Interruptionsin supply
  Cost of sourcing
  Cost of management
  Inflation

  Locations like Omaha, Ann Arbor etc. becoming more

attractive supplementary centers
  Ease of doing business
  Productivity enhancements
  Managing political risk

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Trend: Relationship Models Evolve

  Staff Augmentation to Managed Services

  Focus on SLAs and not resources
  Increased focus on leading indicators
  Benefits accrue to both

  Transaction pricing
  Performance rewards

  Gain sharing

  Suppliers want this. Do you know how to manage this?

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Trend: Collaborative Sourcing

  Time to Sourcing: 12 weeks or less

  Negotiation Process
  Non-negotiable term sheet
  Solution design
  Pricing benchmarks

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Trend: Services Supply Chain: Demand Focus

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Trend: Better Monitoring of Risk

Macro-economic Risk Infrastructure Risk

COUNTRY Financial Risk Business Environment Risk
RISKS Geopolitical Risk Human Resources Risk
Industry Risk Legal Risk

Financial Risk Infrastructure Risk

CITY RISKS Geopolitical Risk Business Environment Risk
Industry Risk Human Resources Risk

Strategy Risk Legal Risk

PROVIDER Financial Risk Client & Service Mix Risk
RISKS
Service Capability Risk

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TRAPS
Trap: All Suppliers Are Created Equal
  Asia for scale
  Geographic clusters for time zone/special needs

  Domain Knowledge vs Processing Skills

•  Revenue: $22.33 B •  Revenue: $6 B

•  Market Cap: $26 Billion •  Market Cap: $32 B
•  Revenue Growth (yoy): -2.1 % •  Revenue Growth (yoy): 6.2%
•  Profit Margin%: 6.91% •  Profit Margin%: 16.94%
• Total Cash: $4B • Total Cash: $2B

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Trap: Not Investing In The Retained Organization
  Strategic Planning
  Architects
  Business Analysts
  Trainers
  Program Leaders
  Vendor Management
  Supply Chain Monitoring

  Single Labor Pool

  Career Movements
  Knowledge Management

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EMERGING OPPORTUNITIES
Regional Operations

Beyond U.S.A.   Scouting locations and suppliers to

Operations
service MNC regional operations
  Asia Pacific
  Europe

  South America

  J&J, SAP
  Colombia

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Driving Innovation: Knowledge Management

  Collective Intelligence
  Enabling Collaboration
  Driving Innovation

  Predictive, real time

  Leverage best practices

  Novartis – Cognizant
  UPMC – Accenture - Microsoft

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 Vendor Optimization

Making Strategic Partners

responsible for success
New
• 

Multi-source
Expanding scope of

Strategic
Partners
existing partners;
Add Scope &
negotiating better terms Re-negotiate
and pricing Current

•  Selecting new partners Incremental

New

that can deliver results

Globalization Portfolio
•  Identifying vendor
optimization
opportunities

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 Expansion of Global Operations
Institutionalizing an enterprise view for
cost reduction and globalization Global
Location 1
Global
Location 2
Business Unit
1
Business Unit
2
  Finding early adopters
  Ensuring buy-in from business Finance & Accounting

units and globally dispersed

Human Resources
units
  CEO/CFO breaking down silos Procurement

Sales & Marketing

Expanding globalization footprint Engineering/Product

Development
•  Globalization continues to be
Legal Services
one of the most viable cost
optimization levers
•  Evaluating globalization
potential for all common
Currently Potential to Retain
services Globalized Globalize
•  Enabling the early adopters
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 Leverage Technology To Better Integrate Partners
23

  Learn to manage complex SLAs, outcomes

  Convergence of portfolio, program, project, resource
and performance management

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Atul Vashistha
Chairman [email protected]
Globalization Wisdom Group [email protected]
Neo Group [email protected]
Neo Advisory
Best Outsourcing Jobs
4000 Pimlico Dr., 114-108
Pleasanton, CA 94588
www.globalizationwisdom.com