麦肯锡-价值链的提升McKinsey

,*,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,Unit of measure,*Footnote,Source:Source,ITES/BPO Opportunity to move up the value chain?,January 13, 2004,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 it is not a complete record of the discussion.,Presentation at iTECH 2004,Source:Gartner; Dataquest; Aberdeen group; McKinsey analysis,Supply-side enablers,Telecom costs down by 90% in the last 3 years; world-class reliability,Over 2.5 million low-cost talented workers in countries such as India and Philippines,Emergence of a credible vendor community,0.0,0.2,0.4,0.6,0.8,1.0,1.2,1.4,1.6,1.8,2.0,1992,1993,1994,1995,1996,1997,1998,1999,2000,2001,2002,2003E,BPO total revenues- India example*,$ billion,CONTEXT: BUSINESS PROCESS OFFSHORING HAS EXPLODED IN THE LAST FEW YEARS,Encouraging track record of early movers,Demanding U.S market environment,Successful track record of I/T offshoring,Demand side forces,1,“,Tech jobs leave U.S. for India, Russia. Whos to blame?”, July 2003,“Is your job next?”, February 2003,BUT HAS ALSO CREATED GREAT ANXIETY IN PRIMARY MARKETS,“,American legislators are accusing India of stealing jobs”, June 2003,“Americas pain, Indias gain”, 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 2003,U.S. House Sub-business Committee,2,IN THIS CONTEXT, SEVERAL DOUBTS HAVE ARISEN ABOUT THE FUNDAMENTAL LONGEVITY AND EVOLUTION OF BPO AS AN INDUSTRY,Will 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 too high?,3,IN THIS CONTEXT, SEVERAL DOUBTS HAVE ARISEN ABOUT THE FUNDAMENTAL LONGEVITY AND EVOLUTION OF BPO AS AN INDUSTRY,Will 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 too high?,4,0.33,*Estimate based on historical U.S. reemployment trends,Source:McKinsey Global Institute,1. OFFSHORING ACTUALLY GENERATES GREATER VALUE FOR THE GLOBAL ECONOMY,Taxes ($0.04),Revenues ($0.20),Local suppliers ($0.09),. . . deliversvalue to India . . .,0.67,Cost savings ($0.58),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 bigger,0.45-0.47,. . . creates new value from re-employing U.S. labor* . . .,$1 previouslyspent in U.S.,now offshored to India . . .,$1.00,5,0.03,0.33,0.10,0.09,0.10,0.01,Profits retained in India,INDIA CAPTURES 33 CENTS FROM EACH DOLLAR OF SPEND OFFSHORED BY THE U.S.,Value accrued from $1 of U.S. spend offshored,1,Dollars; 2002,Central govern-ment,3,State govern-ment,4,Total value accrued to India,Labor,Suppliers,2,Offshoring sector,1 Estimated using the India offshored services industry case,2Includes revenue accrued to the supplier industries less sales taxes, income taxes to employees and corporate taxes,3Includes income tax from labor employed in the offshored services sector and the supplier industries and corporate taxon the supplier industries,4 Includes sales tax on the supplier industries and revenue from the sale of power to offshored service providers,Source:McKinsey Global Institute,6,JOBS 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,Jobs projected to go offshore,Decline in working population due to aging,7,JOBS OFFSHORED ARE A FRACTION OF ALL MASS LAYOFFS,1Bureau 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 period,2Average 1996-99,3Average 1989-2000,4Average 2003-13,Source:NBER; BLS; Kletzer; McKinsey Global Institute,Average annual mass layoffs,1,Millions,All mass layoffs,2,Offshoring projection,4,Trade-related layoffs,3,8,Economic value of off-shoring real,Off-shoring creates 40-50% greater value for the global economy,India captures 33% of every off-shored dollar while the US retains 67% and the incremental 40-50% value creation,Off-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 COMPASSION,Negative emotional impact at the customer equally real,Real people and communities are effected,Re-training takes time,Manufacturing hang-over still felt,9,IN THIS CONTEXT, SEVERAL DOUBTS HAVE ARISEN ABOUT THE FUNDAMENTAL LONGEVITY AND EVOLUTION OF BPO AS AN INDUSTRY,Will 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 too high?,10,Completed the first round of off-shoring successfully,Built substantial scale in operations in India,Penetrated 1-2 businesses in depth,Started capturing labour cost savings,Base,A: “Accelerate, extend breadth and depth”,Increase breadth and depth of services,Strengthen and stabilize architecture,Insource,-outsource, onshore-offshore architecture,Global hub architecture,Strategic outsourcing,B: “Re-engineer”,Drive towards operational improvement,Task level and process level reengineering,Consolidation and aggregation of functions,Leverage low cost position to start offering new services to customers and improve competitive position in home markets,C: “Externalize”,Take robust platforms external and create value out of the shared services utility,Specialized service bureau,Generic third party BPO provider,D: Tackle tough (but large) industries,FOUR POSSIBLE VALUE CHAIN MOVES POSSIBLE,11,Simple, standardized activities,Advanced technical skill and some judgment required,Extensive judgment and analytical skill required,A. MOVES UP THE VALUE CHAIN ALREADY HAPPENING IN TERMS OF BREADTH AND DEPTH OF PROCESSES OFF-SHORED,AXA,Insurance claims processing,Citibank,Check processing, account application processing, loan processing by a subsidiary (e-Serve),HSBC,Account opening and closing, retail loan processing, mortgage processing,American Express,Live 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 analyses,GE Capital Business Solutions,Risk modeling, actuarial services, underwriting,Citibank,Credit card processing, collection calls, inbound and outbound service centers,HSBC,Inbound customer service center for mortgage,Capital One,Inbound customer service center, outbound telemarketing (MSourcE),Citibank,Finance and accounting,GE Capital,Insurance claims processing,Outbound telemarketing, inbound customer service,MBNA,Processing of online applications (TransWorks),GE Capital,Payroll accounting,Invoice and payment processing,McKinsey & Company,Research and knowledge management for world-wide offices in Gurgaon,GE Capital,Risk analysis, strategic planning and forecasting,Financial statement analysis,Examples of sector-specific (“vertical”) processes,Examples of corporate center (“horizontal”) processes,GE,UK auto applications data entry,12,IN FIs, VENDORS AT POINT OF SERVICING THE WHOLE RANGE OF CORE BANKING AND SUPPORT PROCESSES,Source:Vendor interviews, literature searches, vendor websites, McKinsey analysis,Sample processes,Telesales,Customer service,Technical support help desk,E-mail support,Fax responses,Live interaction (chat room customer service),Customer,facing,Voice,Non-voice,Inbound,Outbound,Telemarketing,Collections (bucket one),Business process off-shoring services,Benefits administration,Payroll processing,Retail banking (account maintenance, opening, check processing),Fund administration,Reference data management,Claims processing,Database integration & analytical services,Secondary research,A/R and A/P management,Reconciliation,Back office,Core business,Support,HR/ Admin,Consumer banking,Wholesale banking,Insurance,Research,Finance & Acctg.,Illustrative vendors,13,B. REENGINEERING AND PROCESS IMPROVEMENT CAN PROVIDE ADDITIONAL GAINS OF 30-40%,100,Original costbase,Factorcostsavings,Additi-onal telecom & manag-ement costs,Off-shore location cost,Consoli-dation, standar-dization & superior skills,Taskreengi-neering,Econo-mies of scale,Process reengine-ering,New cost base,60-65,10-15,45-55,8-13,5-7,3-5,15,30-35,Does notinclude gains from revenue enhancement,Task aggregation and process level improvement,Task migration,Task levelimprovement,Factor cost benefits (45-55% savings),Additional benefits (30-40% savings),14,Productivity and process re-engineering,Economies of scale,Aggregated cheque order processing tasks and bought-in cross-trained agents, which has significantly increased staff utilisation,Decreased time taken for month-end closing from 5 to 2 days by modifying and eliminating tasks,Re-engineering (end-to-end),IN FACT, OVER TIME COMPANIES HAVE CAPTURED ADDITIONAL PRODUCTIVITY GAINS,Reduced 40 FTEs by digitising the back lining process in the contact centre,Technology application,Efficiency,Source:Expert interviews; literature searches,Reduced average call centre talk time from 180 to 100 seconds through use of more qualified agents,Improved total customer satisfaction score from 85% to 92% after offshoring call centre services to India,Better talent and training,Efficiency,Increased 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 $2million per annum,15,C. F-1000 INSTITUTIONS HAVE INCREASINGLY BEGUN TO REALISE OPPORTUNITIES FOR REVENUE ENHANCEMENT,Live 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 tickets,Ability to price insurance policies at significantly below competition leading to 5-7% market share improvement in home markets,Research platform to service customers for a fee offer customized research for strategic customers,Develop modeling platform to provide fee-based analytical capabilities to SME financial services customers offer customized services to large financial institutions,Offer trade finance services to SME customers that are otherwise uneconomical to serve,Offshore R&D (pharma, chemicals) using collaborations,Knowledge on call services for core clients customized research and analytics,Revenue opportunities created through offshoring,Potential ideas for F-1000 institutions,Customised research for global customers potential to create platform to service other banks,16,Columbia Bank & Trust (later Synovus) transitions internal credit-card processing business into third-party company (1982),CB&T sells 19% of company in IPO (1983),TSYS grows to become the second largest processor in the world,SIGNIFICANT VALUE CAN BE CAPTURED BY TRANSFORMING INTERNAL CAPABILITIES INTO THIRD-PARTY BUSINESSES,AmEx transitions internal processing unit into third-party company (FDR) and sells off majority ownership stake (1992),FDR merges with largest competitor and grows to become global leader in transaction processing,Parent,New business,Transition,*March 1, 2002,Sources: Hoovers; analyst reports; McKinsey analysis,Management buyout of Midland Bank processing unit following merger with First Bank System (1984),IPO in 1986,Grown to become leading provider of technology and processing services for financial institutions,Midland 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 years,Value creation,U.S. $,billion,17,D. NEW INDUSTRIES THAT HAVE PLAYED “WAIT AND WATCH” GAME TRADITIONALLY NOW ACTIVELY EXPLORING AND COMMENCING OFFSHORING PHARMACEUTICAL EXAMPLE,Area,IT offshoring,Support functions,Attitude towards outsourcing/offshoring,Key factors driving increasing momentum,“Wait and watch” towards offshoring until late 2001,Significantly higher acceptance in 2002,“Triggers pulled” in 2003 by several players including BMS, Novartis, Abbott,Mainstreaming of IT offshoring and emergence of credible success stories on cost and quality improvements,Solid vendor base (e.g., Infosys, Satyam, TCS) with proven track record,Observed actions of competing players!,“Wait and watch” towards outsourcing of business process through 2002 and early 2003,Numerous ongoing discussions in 2003 with vendors on finance & accounting and HR offshoring,Increasing focus on rationalizing support function costs,Emergence of credible success stories and vendors for F&A and HR,Observed actions of competing players,Many companies articulating “overall aspiration” cutting across numerous opportunities such as IT, BPO, R&D,R&D,Concerns around IP and quality of medical infrastructure,Positive experience of first movers in addressing concerns and benefiting significantly e.g., AZ and BMS in R Novartis & Pfizer in data management,Improved medical infrastructure and favorable regulatory environment,18,OPPORTUNITIES FOR OFFSHORING EXIST ACROSS THE PHARMACEUTICAL VALUE CHAIN,R&D,Support Functions,Industrial Operations,Strategic and commercial busi-ness planning (pre-launch),Product development and life cycle management,Pricing and health economics,Market a product (new and legacy),Customer relationship management,Customer and consumer services,Sales management,Logistics & distribution,After sales services,Finance & Accounting,Information Technology,Human resources,Legal,Legal counseling advocacy and litigation,Intellectual property counseling,Sales force support,Target identification & validation,Lead generation & optimization,Preclinical/ Toxicology,Clinical Development & Trials,Data Management,New production development,Procurement,Planning and manufacturing,Plant maintenance,Quality management,Process control,Supply chain management,Performance monitoring and control,Commercial Operations,Source: Interviews; McKinsey analysis,Focus of document,Offshore potential,19,RECENT ACTIVITY POINTS TO GROWING INTEREST OF PHARMACOS IN OFFSHORING DATA MANAGEMENT EXAMPLE,Source:Interviews,Global statistical operations business system,Savings of around 40-60% vis-vis global CROs within first year,Targeting 80-100 global trials in 2003,Plans to start related areas of filing and report writing, efficacy reporting and statistical design for Phase IV studies,Entering into Phase I reporting for complex oncology trials and traditionally outsourced, Phase IV trials,Statistical study design,Statistical programming,Document management,Database locking,Report writing and filing to medical authorities,Operations in India,Started operations in 2001,Approximately 30 statisticians out of global team of 250 located in India,Focus on standard safety reporting for Phase II and III trials,Reports focused on US FDA and EMEA,Over 40 global trials supported in first year of operation,Supporting 2 mega trials of over 10,000 patient records each,Conduct several short turn-around analyses for clinical pharmacology studies,NOVARTIS EXAMPLE,20,OFFSHORING CAN RAPIDLY MOVE UP THE PHARMA VALUE CHAIN,Support functions,Finance and accounting,Information technology,Human resources,R&D,Clinical development,Data management, including bio-stats,Contract manufacturing,Drug manufacturing (TBD),Formulations development,Custom chemical synthesis,R&D,Bio-informatics,Analog generation,Support functions,Sales force support,Contract manufacturing,New product development,R&D,Lead generation and optimisation,Phase 1: “Early wins”,Phase 2: Minimal risk move,Phase 3: High-end activities,Rationale,Significant experience across other industries,Strong vendor base,Pharmas already doing it,Significant bottom line impact potential visible,Emerging vendor base,IPR issues need to be clarified,Comfort around Asia needs to be established,Opportunity,1,2,3,4,5,21,IN THIS CONTEXT, SEVERAL DOUBTS HAVE ARISEN ABOUT THE FUNDAMENTAL LONGEVITY AND EVOLUTION OF BPO AS AN INDUSTRY,Will 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 too high?,22,IN THE END STATE, LARGE INSTITUTIONS WILL USE A COMBINATION OF CAPTIVE AND VENDOR FACILITIES,Examples,Started off handling all processes in-house,Now outsources call centre services to multiple third party vendors,Started offshoring operations by outsourcing,In addition to outsourcing, now also runs a captive centre,JV/ Alliance,Indian best-of-breed vendor,Delay,Outsource to Global brand,Captive,JV/ Alliance,Indian best-of-breed vendor,Delay,Captive,From primarily captive,to hybrid model,Feasibility of outsourc-ing the process,Cross-border operation sophistication,Outsource to Global brand,23,IN FACT, MATURE OFFSHORERS HAVE DEVELOPED AN INTEGRATED ARCHITECTURE OVER TIME,Started with 150 person completely captive unit in 1994 primarily for back end processing,Entry into knowledge intensive activities in 2000-01,Significant expansion of head count and service line in 2001,Geographical diversification into Philippines in 2001,Model,Third party Philippines,Reduces country risk,Provides BCP,Third party India,Exclusive support to AMEX,Creates scale with minimal investment,Diversifies risk,Competes with captive and provides BCP,Captive operations,Leverages brand,Important for regulatory issues,Preserves proprietary process knowledge,% of total off shored services,700 FTEs,Voice based customer support for credit card operations,Over 2000 FTEs across vendors such as Spectramind, Daksh, EFunds,Voice based customer support for credit card operations,Over 1600 FTEs,Involved in high-end and low-medium-end, proprietary/non proprietary services (e.g., A/C reconciliation,A/C opening and closing, Ledger activities for credit cards, A/C planning and forecasting, Fraud and risk modeling),Scale, scope and management model,30%,50%,20%,24,DELETED PAGES,25,Rigorous analytic approach,Sponsor-led approach,Outside-in approach,F-1000 PLAYERS HAVE ADOPTED THREE APPROACHES TO SELECT PROCESSES FOR OFFSHORING,Detailed analysis to identify high potential processes, percent,Identify 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),Low reputation/service quality risk,Use external benchmarks (activities and phasing) to identify and prio-ritize the corresponding candidate process in your organization,Use benchmark information on off-shore-onshore split and internal FTE mapping (for identified candidate processes) to size the opportunity,Filter activities by offshorability,Identify processes/ activities offshored by existing players,Build and they will come allow other parts of the organization to decide on offshoring at their own pace,26,Retail banking,Merchant acquiring,Financial services sectors with high potential for offshoring*,Retail banking,Mortgages,Servicing,Origination,Life and health,Personal,Group and heal