Preliminary Study. Corporate Services Segment. IT-BPO Industry

Transcription

1 Preliminary Study for the Corporate Services Segment of the IT-BPO Industry Caesar Parlade 3 April 2013

2 A Report on the CSS Survey, Focus Group Discussions, and the 14 November 2012 Workshop By George Francisco & Caesar Parlade Published by Information and Communication Technology Office With the support of the Business Processing Association of the Philippines

3 Survey and Focus Group Results

4 Profile of survey participants Average number of years in business: 9 years Average Headcount: 2,200 staff Geographical regions served 36% 64% Business model Captive 3rd Party USA Philippines UK Asia Europe ANZ India Others

5 Value added Horizontal Activities Vertical Activities Information Technology Outsourcing Software R&D IT Consulting Knowledge Process Outsourcing Business Consulting Business Analytics Market Intelligence Legal Services Business Process Outsourcing Banking, Financial Services, & Insurance Manufacturing Telecommunications Software Enterprise Resource Planning Applications Development Application Integration Desktop Management Infrastructure Applications Management Network Management Infrastructure Management Enterprise Resource Management Finance & Accounting Procurement, Logistics & Supply Chain Management Content/ Document Management Human Resource Management Training Talent management Payroll Recruitment Customer Relationship Management Marketing & Sales Contact Centers/ Call Centers Energy Travel & Transportation Health/ Pharma Retail Others Source: Gary Gereffi and Karina Fernandez-Stark, Duke University

6 Profile of survey participants Other Retail Health & pharma Travel and transportation Energy Telecommunications Manufacturing Financial services Infrastructure management Network management Application management Desktop management Applications integration Applications development Enterprise resource planning IT Consulting Software R&D Legal Services Market Intelligence Business Analytics Business consulting Marketing & sales Recruitment Payroll Talent management Training Document management Procuremet & logistics Finance & accounting Key Services Offered

7 Significance of location decision factors Parent company developments Experience in the country Expatriate friendliness First-rate CBDs Telecoms & connectivity Effective industry associations Risk management & BCP Cultural adaptation Cost arbitrage Tax & customs incentives Gov't policies Skills availability Talent availability is paramount but government policies, tax and customs incentives and cost figure highly

8 Challenges that can reverse gains Geography & time zone Global rationalization & consolidation Natural calamities Physical infrastructure Global quality standards Support services Corruption and government bureaucracy Risk management & business continuity Incentives & policies in other host countries Cost & Philippine currency trends Data privacy & regulation Legal & contractual enforcement Skills availability Challenges stem from many areas contracts, data privacy, currency, incentives, corruption but dependable talent supply is the biggest concern

9 Philippine operations outlook Geographical challenge 2.85 Parent-company strategy 3.18 Industry associations 3.33 Home legal, regulatory & governance 3.50 ICT infrastructure 3.67 Host legal, regulatory & governance Salaries & personnel cost trends Managerial talent availability Facilities & utilities cost trends Philippine peso appreciation Technical staff availability Technical and managerial talent, currency appreciation and facilities are medium- to long-term concerns

10 Opportunities in 2013 Healthy headcount growth Broader service offering Increasing complexity Higher value work More clients

11 Navigating Roadmap 2016 Focus on talent pool Training, training, training! Stable policies, incentives, and currency

12 Offshoring and Outsourcing Trends

13 Maturing offshoring solutions The offshored segment of the value chain is increasing in value-add, complexity, and geographical spread Business Process (Support) Business Process (Core) Knowledge Process Third party Captive

14 Clouds in the outsourcing sky Total value of large contracts is levelling off o TCV is down 13% in the 1 st half of 2012 Legal disputes rising Some work is coming back in-house Fewer long-term deals Weakest growth in Europe

15 Offshore service delivery Countries have begun specializing in different parts of the service production ecosystem

16 The population factor City City Population State State Population Bangalore 8,730,000 Karnataka 61,130,000 Mumbai 12,480,000 Maharashtra 112,373,000 Delhi 11,008,000 National Capital Region 22,200,000 Chennai 8,696,000 Tamil nadu 72,140,000 Hyderabad 7,750,000 Andra Pradesh 84,656,000 Pune 5,050,000 Maharashtra 112,373,000 Chandigarh 1,025,000 Punjab 27,704,000 Kolkata 14,618,000 West Bengal 88,800,000 Makati, Taguig & Mandaluyong 1,504,500 Metro Manila 21,050,000 Cebu City 2,551,000 Cebu Province 4,170,000 Davao City 2,275,000 Davao del Sur 3,152,000 Sta. Rosa 285,000 Laguna Province 2,670,000 Iloilo City 425,000 Iloilo Province 1,806,000 Bacolod City 730,400 Negros Occidental 2,396,000

17 Demographic dividend

18 BPOs do not bring inclusive growth BPOs provide jobs, but the impact is limited given the scale of the workforce utilized, and its bias toward educated labor. The huge employment needs of the unskilled labor cannot be met. Norio Usui Asian Development Bank

19 Strategy Framework

20 Talent Development Strategy Framework Objectives Quality Immediacy Sustainability Scalability Sourcing efficiency Sourcing Higher recruitment rate Shorter hiring time Lower attrition Overcome problem in hiring managers and specialists Standards & communication Teachers Students Schools Industry programs Information network Industry academe partnership Student internships Teacher immersion programs Curriculum redesign BPO Leaders career day Expressed Needs Development Areas Training & development Improved generic skills Language proficiency Problem solving Office behavior & values, productivity Cultural intelligence Negotiation skills Project & quality management Timely professional updates Finishing school/ Continuing Professional Education Public courses Online courses Custom/ in-house courses Cultivating employability skills in secondary and tertiary education Competitive conditions Diversity of companies Appreciating peso Graveyard shift Call center stigma Fixed statutory incentives Satisfactory telecoms infra Disparate quality of universities High proportion of GICs Weak global demand

21 Talent development strategy Adaptable Broad Integrated Scalable Sustainable

22 Talent development is urgent Adaptable Broad Integrated Scalable Stop-gap measures needed Sustainable Current

23 Current and emergent needs Improve the employability of graduates Broadening near hire training options

24 Current and emergent needs Better functioning recruitment markets Establishing and publishing standards

25 Current and emergent needs Arresting a worsening attrition rate Non-cash incentives, career planning, geographical dispersion

26 Current and emergent needs Training in employability skills

27 Current and emergent needs Continuing professional education Upgrading the skills of current staff recognizing current market demands

28 Competitive conditions Heterogeneity Graveyard shift High proportion of GICs

29 Competitive conditions Appreciating Peso Stable incentives Talent concentration in NCR Telecommunications infrastructure Weak global demand Chronic shortage in teachers

30 Development areas Public Sector Tripartite Partnership Academe CS Segment

31 Development areas Public Sector Academe CS Segment Public private partnership council Student internship programs Teacher immersion programs BPO Leaders career day Curriculum redesign

32 Development areas Public Sector Academe CS Segment Near hire finishing schools Continuing professional education Employability skills in secondary and tertiary education

33 Standards and communication Talent management, skills and performance standards Talent development chain metrics Publication through BPAP Program metrics

34 Next wave cities Specialization Branding Load balancing with NCR Optimized resource commitments

35 Scale vs. specialization City Rank City Population State State Population Bangalore 1 8,730,000 Karnataka 61,130,000 Mumbai 2 12,480,000 Maharashtra 112,373,000 Delhi 4 11,008,000 National Capital Region 22,200,000 Chennai 5 8,696,000 Tamil nadu 72,140,000 Hyderabad 6 7,750,000 Andra Pradesh 84,656,000 Pune 7 5,050,000 Maharashtra 112,373,000 Chandigarh 25 1,025,000 Punjab 27,704,000 Kolkata 26 14,618,000 West Bengal 88,800,000 MTM 3 1,504,500 Metro Manila 21,050,000 Cebu City 8 2,551,000 Cebu Province 4,170,000 Davao City 70 2,275,000 Davao del Sur 3,152,000 Sta. Rosa ,000 Laguna Province 2,670,000 Iloilo City ,000 Iloilo Province 1,806,000 Bacolod City ,400 Negros Occidental 2,396,000 Dublin 9 1,804,000 Leinster 2,505,000 Krakow 10 1,400,000 Lesser Poland Voivodeship 3,268,000 Shanghai 11 23,020,000 Shanghai Municipality 23,020,000

36 Next wave cities More ideas!

37 Which idea exactly?

38 Product space New products develop from common building blocks as existing products

39

40 Your comments are welcome Does the report capture the current state of the Corporate Services Segment of the IT-BPO industry? How should a Strategy particular to the Corporate Services Segment be developed vis-a-vis an overall IT-BPO Strategy for the country? Does the report describe the key issues, resources, and stakeholder interests that need to be addressed in a Strategy for the Corporate Services industry? Are the elements of a Strategy complete and organized in a clear Framework? Does the proposed Framework serve as a workable starting point for the discussion and formulation of a Corporate Services industry Strategy?

41 Thank you!