The document discusses how businesses are shifting from viewing outsourcing providers as transactional service providers to partners that can help transform entire end-to-end business processes. It argues that outsourcing providers need to move beyond simple labor arbitrage by developing expertise in specific industries and business functions. This allows them to help clients optimize processes, drive better business outcomes, and unlock 2-3 times more value than traditional cost savings approaches alone. Taking an end-to-end view of processes across functions and using insights from data analytics are presented as key to continuously improving effectiveness and efficiency.

1. Making the shift – Moving from transactional service
provider to end-to-end process transformation
Harpreet Duggal
Senior Vice President, Genpact
NASSCOM BPO Strategy Summit
10 June, 2009 – Bangalore, India
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2. The Natural Evolution of Globalization - The Move
Towards Value-Added Services
u Enable companies to become better at Core to grow top line
u Preservation of cash & improved working capital
Today Competitiveness
u Take Processes to Best-in-class
u Minimize capital investment
Mid u Benefit from Six Sigma and Lean expertise
2000s Capacity u Margin expansion
Early u Turn fixed costs into variable to support expansion & growth
2000s Productivity
u Onshore capital expenditure avoidance
u 25-50% cost savings
1990s Labor Arbitrage u Leverage global talent pool
All of us Want to Travel to Best-in-Class
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3. Corporations Are Facing A New Competitiveness
u There are fundamental shifts in the corporate landscape…
u Escalating pressures on enterprises…
§ global competition
§ demand for innovation
§ speed to market
§ productivity pressures
§ risk mitigation & compliance Demanding a
§ shareholder scrutiny
u are leading to a shift in corporate strategy
new breed of
§ focus on core Business Partner
§ global sourcing
§ variable cost models
§ minimize capital investment
§ improve productivity
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4. Globalization is About More than Cost Reduction
.. but Getting Full Value is Easier Said than Done
The Full potential: Road-blocks:
§ 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
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5. Domestic Outsourcing...not about Cost Arbitrage
1. Process Expertise / Best In Class Services
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
Need to Demonstrate True Process Expertise & Domain
Knowledge to Create Value
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6. Domestic Outsourcing...not about Cost Arbitrage
2. Delivering Business Solutions – Moving from Transactions to Solutions
u Bundling of Services − Procure to pay (sourcing + AP + cash management)
− Sales Force Effectiveness
u Delivering specific value − Risk Management
− Working Capital Improvement
− Credit Card Operations
− Sales Force.com?
u Linkages between Services − SOX.com?
& Technology − Hospitals.com?
− Well beyond labor arbitrage… through process
u Delivering Cost & improvements, re-engineering
Productivity − Pricing based on results
− Complete back office “to support expansion”
u Delivering Total Services − Tax, Infrastructure, Accounting, Admin
Integrated Process & Technology Solutions 6
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7. Domestic Outsourcing...not about Cost Arbitrage
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 Models
India More Likely To Adopt Disruptive Models
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8. Driving Performance on Business Outcomes requires
an End to End Process View
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
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 allows a Process view that can transcend the
functional silos in an organization
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9. Key Elements of End to End
Key Hypothesis Key Elements
u 60/70% of common processes u Build a common framework for
across industries are similar comparison
u Measuring Process Efficiency u Measurements focused on
alone misses the real benefits Effectiveness and Efficiency
u Driving real improvements u Huge potential impact of
requires Process Expertise + combining skills, solves real
Technology + Analytics + Insight business issues
u Clients will require different levels u Implement in Modules, no “Big
of interface at different times Bang” required
Some Obvious Questions – Need An Expert To Answer Them
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10. Key Business Outcome Improvement Drivers
End-to-End Efficiency Effectiveness
Process
Originations § Time to key in an invoice §Conversion rates on applications… ?Volumes
§ Cost per loan application §Cycle time to open a new customer account
Bill to Cash § Collection efficiency % (Cash §Eliminate billing leakage
collected / Total AR) §Days Sales Outstanding
§ Past due %
Account § Invoices actioned on time §Paid on Time %
Payable § Total AP cycle time §Vendor queries
§# Vendor discounts
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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11. 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
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12. Thank You
Contact Information
Harpreet Duggal – Senior Vice President & Business Leader
harpreet.duggal@genpact.com
www.genpact.com
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