BPO challenges and opportunities for Romania and your career.

BPO challenges and opportunities for Romania and your career.
The World is Flat: Is business process outsourcing (BPO) more than just low-cost resourcing? BPO challenges and opportunities for Romania and your career. The World Is Flat: A Brief History of the Twenty-first Century is a best-selling book by Thomas L. Friedman analyzing the progress of globalization with an emphasis on the early 21st century. 1

Economic forces behind BPO Global forces behind BPO
Overview Introduction into BPO Economic forces behind BPO Global forces behind BPO Market forces behind BPO Sourcing considerations BPO development: from low-end to high-end services BPO market BPO countries and their skills Romania’s value proposition for BPO SBsol BPO vision and strategy for market penetration Career opportunities for students and graduates

Introduction into BPO

What about you? Offshore Value chain Insourcing ITES Onshore
Vertical industries SSC Global delivery BPO FPO LPO MPO Global sourcing Outsourcing ASP KPO Captives ITO Nearshore Supply chain

Outsourcing Definitions
Outsourcing became part of the business lexicon during the 1980s and refers to the delegation of non-core operations from internal production to an external entity specializing in the management of that operation. Outsourcing is utilizing experts from outside the entity to perform specific tasks that the entity once performed itself.

Business Process Outsourcing
Definitions Business Process Outsourcing The transfer of management and execution of an entire business process to an external service provider, including technology, people, and process. In engaging BPO services, clients are buying access to executed business processes and business outcomes from their BPO providers. (IDC) The delegation of one or more IT-intensive business processes to an external provider that owns, administrates and manages the selected processes that are based on defined and measurable performance metrics. (Gartner) The transfer of a function previously performed (or considered to be performed) in-house to an outside provider.

Information technology enabled services (ITES)
Definitions Information technology enabled services (ITES) BPO is a part of the Outsourcing Industry. It is dependent on Information Technology, hence it is also referred to as Information Technology Enabled Services or ITES. a form of outsourced service which has emerged due to involvement of IT in various fields such as banking and finance, telecommunication, insurance, etc. Some of the examples of ITES are medical transcription, back-office accounting, insurance claim, credit card processing and many more.

Definitions BPO is often divided into two categories:
back office outsourcing, which includes internal business functions such as billing or purchasing, and; front office outsourcing, which includes customer-related services such as marketing or tech support. The most common examples of BPO are call centers, human resources, accounting and payroll outsourcing.

Definitions Use of a BPO as opposed to an application service provider (ASP) usually also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. BPO includes the software, the process management, and the people to operate the service. ASP includes only the provision of access to functionalities and features provided or 'served up' through the use of software, usually via web browser to the customer.

Knowledge Process Outsourcing
Definitions Knowledge Process Outsourcing Knowledge Process Outsourcing is a sub set of Business Process Outsourcing. Legal Process Outsourcing Financial Process Outsourcing Medical Process Outsourcing

…..shore Outsourcing Definitions
BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called nearshore outsourcing, and BPO that is contracted within the company's own country is sometimes called onshore outsourcing (also called domestic outsourcing). Offshore simply means: "any country other than your own." The Internet and high-speed Internet connections make it possible for outsourcing to be carried out anywhere in the world, a business trend economists call globalisation (also termed global sourcing or global delivery). Global sourcing: a corporate sourcing strategy that identifies and leverages those human resources and assets, regardless of geographic location, most appropriate for meeting the organization’s needs, often coming from both nearshore and offshore locations.

Captive centre / Shared Services centre
Definitions Captive centre / Shared Services centre Captives (centres), also known as offshore insourcing or offshore shared services centres, help organisations lower operating cost and improve overall performance. Shared Service Centres: shared services pull together scattered, autonomously run, internal services operations of an organisation into mega-service centres, which are structured as independent business with their own budgets and bottom-line accountability.

Supply Chain Definitions
A supply chain, logistics network, or supply network is a coordinated system of organizations, people, activities, information and resources involved in moving a product or service in physical or virtual manner from supplier to customer. Supply chain activities (value chains or life cycle processes) transform raw materials and components into a finished product that is delivered to the end customer. Supply chains link value chains.

Economic forces behind BPO

Where should we focus our resources?
Economic factors How much should we do ourselves and how much should we buy from others? Ronald Coase 1991 Nobel Laureate, Economics Where should we focus our resources? David Ricardo 19th Century Economist

Organisational Boundaries and Efficiency
Economic factors Organisational Boundaries and Efficiency Ronald Coase asked, “…why is there any organisation?,” in other words, why do firms exist? - Firms exist because the cost of a central authority organising transactions internally costs less than organising them externally in the marketplace Ronald Coase also asked, “Why is not all production carried on by one big firm?” - Because, at some point the cost of organising the next transaction internally will be greater than the cost of organising that same transaction in the marketplace Thus, Ronald Coase defined the limit of the size of the firm using the concepts of transaction, or interaction, costs * Coase, Ronald, The Nature of the Firm, Economica, 1937

Organisational Boundaries and Specialisation
Economic factors Organisational Boundaries and Specialisation Adam Smith stated, “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them…..” (The Theory of Absolute Advantage) David Ricardo replied that it’s more than absolute advantage; it’s the comparative advantage of focusing on the commodity in which a nation has a differential advantage and relying upon trade to obtain other goods * Even if a nation has an absolute advantage in commodities that it acquires through trade It’s a trade-off of opportunity costs, focusing on what you do best Thus, David Ricardo defined the benefits of specialization and the need to focus on core competencies * Ricardo, David, On the Principles of Political Economy and Taxation, 1817

Expanding the Boundaries of Business
Economic factors Expanding the Boundaries of Business 21st century Networked Organization Disaggregated Specialized 20th century Machine Bureaucracy Integrated Diversified Sawhney, Mohanbir, Kellogg School of Management, 2001

The real economics of offshoring
Economic factors The real economics of offshoring Cost savings($0.58) Goods/services sold to India ($0.05) Profits from India Ventures($0.04) $ 0.45- $1.00 0.47 0.67 Taxes($0.04) Revenues($0.20) Local suppliers($0.09) 0.33 …delivers value to India $1 previously Spent in US, now offshored to India… …brings savings and returns to US… …creates new value from reemploying Us Labor.. ...and makes the global pie that much bigger The McKinsey Global Institute finds that off shoring not only produces value for the countries that gain the jobs but also frees up capital in the United States for more productive uses. Most displaced workers find new positions within six months—possibly even in new ventures financed with money saved by off shoring work to cheaper labour markets.

Policy dialogue: Pro’s
Economic factors Policy dialogue: Pro’s The arguments in most of such studies follow the logic of mainstream economics and are quite straightforward. By moving work offshore, firms are able to lower their production costs. Some domestic workers will be displaced but the benefits from lowering production costs, captured by the firms and customers, far outweigh any costs to displaced workers. Many of the displaced workers will actually be net beneficiaries because they will be “freed up” to do more interesting and lucrative work.

Policy dialogue: Contra’s
Economic factors Policy dialogue: Contra’s While these studies have some merit, they are incomplete in some respects: they assume a very optimistic re-employment scenario for “freed up” workers, predicting short durations of unemployment and higher wages in their new positions. most do not account for the lost wages due to unemployment in their models. the studies do not capture difficult to measure effects such as the impact on future innovation and security. (For instance, evidence is already surfacing that many of our best and brightest college students are avoiding technology majors because of outsourcing.) they ignore the downward pressure on domestic wages for jobs that are competed across borders.

Global forces behind BPO

Global forces Trends that are changing the rules in today’s business environment The shift from domestic to global economy The shift from manpower to technopower The shift from company-led to consumer-driven market forces The shift from an industrial economy to a knowledge economy The transformation of the employer/employee relationship New relationships and governance structures concerning vendors and supplier Shortage of skilled labour in development nations

Market forces behind BPO

Why do companies outsource?
Market forces Why do companies outsource? Cost Effectiveness Access to High Quality Resources Focus on Core Competencies Drivers of Outsourcing Technology Expertise Higher productivity & Better service levels Domain Expertise

Main reasons for BPO Market forces
Reduce costs through simplification and standardization 93% Increase productivity and service excellence to customers 63% Enhance focus on business unit operations vs. back office processing 58% Support new business process capabilities 37% Reduce costs through wage and labour arbitrage 31% Improve capability to integrate new business 26% Other 5% Source: SBPOA online survey, 77 respondents, 2005

Perceived benefits of BPO
Market forces Perceived benefits of BPO Lower cost 75% Improve service quality 64% Greater business flexibility 54% Lower capital investments 70% Fewer people in function 45% Predictable outcome 42% Increased accountability 32% Source: SBPOA online survey, 172 respondents, 2005

From low-end to high-end services
BPO development From low-end to high-end services

A trend with a long history
BPO development A trend with a long history Phase I 1980s Evolution of the BPO market Advanced financial analysis and accountancy processes Call centres and data processing IT jobs and functions Phase II 1990s Phase III current Manufacturing operations have been relocating to reduce costs for over 50 years Improvements in telecoms, IT and reductions in the cost of computing enabled the service sector to develop new operational models Customer focus and direct channel acceptance fuelled the growth of call centres Cost reduction was the primary driver predominantly through relocation and better wage deals in country BPO goes beyond technology and applications -delivering integrated processes and outcomes

Outsourcing: historical context BPO
BPO development Outsourcing: historical context BPO Increasing complexity of legal and regulatory environment Competition drives companies to seek more cost effective ways to perform internal process w/o sacrificing quality Intense competition from foreign automakers Need to install ERP systems on time and within budget Mainframe computing allows for timesharing 1960 s 1980 s 1990 s 1970 s 2000 s Banking & brokerage outsourcing IT outsourcing Customer Care, Human Resources Supply Chain outsourcing Auto manufacturing outsourcing Pay roll outsourcing

Offshoring opportunities across the organisation
BPO development Offshoring opportunities across the organisation Past Current & Near Future IT Application Development & Maintenance Simple coding and porting from one language to another Fixing the Y2K problem IT Consulting Product Development R & D Engineering Design Services Non -IT Customer Contact Services Transaction Services HR Data Processing Medical Transcription Insurance underwriting, risk assessment and equity research Intellectual Property Research Data cleaning, Financial Analytics Business and Market research

Information Technology
BPO development The offshore ITES/BPO marketplace can be segmented into two distinct pieces: transactional and full service/transformational relationships Stragegy Core Process Non-core Process Transformational BPO Transactional BPO Information Technology

KPO offers unlimited services
Insurance Consulting I-Banking Industry Telecom/FS/Retail Underwriting & Asset Management Synthesized Reports Equities Research IP Portfolio Analytics Strategy Research KPOSM Global Research Financial Analytics Patent Design Analytics Claims Analysis Contact Centers & Customer Support BPO for clients Settlement Contact Centers & Customer Support Contact Centers & Customer Support BPO

BPO market

Global offshoring of services is growing rapidly
BPO market Global offshoring of services is growing rapidly

Offshore BPO service market
BPO market Offshore BPO service market ($ in billions) CAGR 61% $ 42.9 Romania’s Value Proposition - Competitive labour cost - Valuable human capital - Multilingual Reliable Infrastructure Low risk Solid economic fundamentals Competitive taxation $ 30.2 $ 20.1 $ 12.6 $ 6.4 In 2005 Offshore BPO represented 5% of the total global BPO market, but is expected to represent 25% by 2009.

involves significant numbers of jobs from the source countries
BPO market Sales & marketing is the smallest BPO market segment The growth of call centre outsourcing has attracted most of the attention because it involves significant numbers of jobs from the source countries

BPO countries

BPO & Outsourcing destinations worldwide
BPO countries BPO & Outsourcing destinations worldwide

BPO locations by stage of growth
BPO countries BPO locations by stage of growth Pakistan South Korea Bulgaria Romania Canada Mexico Jamaica Brazil Chile Venezuela China Philippines Malaysia Thailand Vietnam Australia India Singapore Russia Ukraine Czech Republic Hungary Poland South Africa Ireland Israel UK Infancy Emerging Escalating Established Europe, Middle East and Africa (EMEA) Americas Asia Pacific

Competing countries BPO countries High Singapore
Size of circle corresponds to number of qualified workers Ireland Australia Hong Kong Holland Location attractiveness Infrastructure - Communication - Basic infrastructure Country risks/FDI incentives - Attractive incentives - Political environment Time zone attractiveness U.K. Romania ? India Philippines Mexico China Low Low High Capabilities of workers Qualifications/capabilities Foreign languages (primarily English) Quality of work/work ethic Cost differential

Country specialisation by niche
BPO countries Country specialisation by niche China: Embedded Software Hardware Services Localization Application Development Russia: High-End Software Engineering Philippines: BPO Contact Centers Animation Application Development Ireland: Packaged Applications Localization Product Development India: Application Outsourcing ITO BPO Product Development Contact Centers Canada: Application Development BPO Contact Centers Israel: High-End Software Learning Systems Romania: Application Development Contact Centers BPO

BPO landscape in India BPO countries Indian BPO Industry Segments
Large Multinational Corporations EDS Accenture IBM HP Pure Play Indian BPO companies WNS EXL Service ICICI One Source 24/7 Companies with Captive Facilities AMEX Fidelity DELL Microsoft Indian Integrated IT-BPO providers Infosys BPO Wipro BPO HCL Nipuna (Satyam) Indian BPO Industry Segments

Eastern Europe focusing on Near-Shore Off-shoring…
BPO countries Eastern Europe focusing on Near-Shore Off-shoring… Highly talented pool of engineers and scientists Robust education system with ample supply of professionals for analytical work Moderate, but increasing labor costs Non-English languages Proximity to European markets

BPO (incl. R&D) landscape in Romania
BPO countries BPO (incl. R&D) landscape in Romania Large Multinational Corporations Pure Play BPO companies Conectys EasyCall Wipro Genpact ContactLine Companies with Captive Facilities Microsoft Romanian Integrated IT-BPO providers Romanian BPO Industry Segments Accenture HP Siemens Alcatel Intel Infineon Oracle Freescale ACI Techteam Sistec-SBsol XL World Siveco Softwin Intrarom Romsys iQuest

Romania’s value proposition for BPO

The cost of a skilled professional = 1/3 in US and Europe
BPO value proposition Romania Romanian competitiveness on the global ITO & BPO market Romania’s location is an advantage in itself - major multinational IT companies are present in Romania Romania has a long history of education and research in all fields of engineering and software: 116 universities, 36 have a computer science related faculty Romanian graduates are multi-lingual (1st place in the Certificate of Proficiency in English exam at Cambridge University) and world class concerning their competencies Made in Romania Romania’s legal system and culture - similar to those in Europe and US. Romania’s density of software graduates per thousand inhabitants is significantly higher than in USA, five times higher than in Russia and nearly seven times bigger than in India. The cost of a skilled professional = 1/3 in US and Europe

Total number of University graduates in 2003/2004: 110,533
BPO value proposition Romania University graduates in Romania (by education field) high performances in international competitions high percentage of economic & technically competent professionals strong language skills: English, French, German, Italian, Spanish, Russian, etc. highest growth rate of IT specialists in the region large skilled labor force at comparatively low wage rates Arts 2% Engineering 21% Education 32% Medicine 6% Law 12% Economy 27% Total number of University graduates in 2003/2004: 110,533 Source: National Institute of Statistics

SBsol BPO vision & strategy

“Our Business Is To Improve Other People’s Business”
SBsol BPO vision & strategy Vision “Our Business Is To Improve Other People’s Business” Sistec-SBsol Constantly tailor our services to the needs of our clients Assure the right people at the right place Provide high quality services using latest technology Market leader provider of BPO services in Central and Eastern Europe

SBsol’s value proposition goes beyond costs
SBsol BPO vision & strategy SBsol’s value proposition goes beyond costs Proven business knowledge and capability to implement successful business solutions Organized according to international standards of methodology and procedures SBsol’s Value Proposition Stable technology infrastructure Access to a low cost, large and high quality labor market

Strategy SBsol BPO vision & strategy Our potential Our goals Grow
Expand Specialize our offer and concentrate sales efforts Build customer awareness abroad Focus on markets in which we are successful Add new features to our services tailored to clients’ ever-changing needs Experience in retail & logistics business ( B2B, B2C), member of RTC Holding Focus on adding competitive value for companies who expect high quality services

Growth and development opportunities
SBsol BPO vision & strategy Growth and development opportunities Penetrate a new market Increase business development momentum High potential due to a thorough IT background (sales & distribution on Romanian market) Easy to access, low-cost and multilingual services Meaningful top management involvement Quality reviews Recruit local professionals Target at decision making level Tailored value propositions Invest in marketing growth strategy Strong growth of outsourcing market Promote our competitive edge Step up marketing and brand building efforts Increase visibility on the market Focused reputation building Create consistency in delivering services Networking via events/forums Build customer loyalty (action) existing customers (Romanian market)

Our focus SBsol BPO vision & strategy
Functional (Horizontal) Solutions Customer Interaction Services Order Management Knowledge Services Finance & Accounting HR Outsourcing Industry (Vertical) Solutions Retail & Distribution Transportation & Storage Telecommunication Travel & Accommodation Banking Insurance Healthcare & Pharmaceuticals

INDUSTRY SPECIFIC KNOWLEDGE
SBsol BPO vision & strategy INDUSTRY SPECIFIC KNOWLEDGE PROCESS EXPERTISE HIGH PERFORMANCE Travel & Consumer Financial Services & Insurance Consumer Technology & Telecommunication 􀂄Travel planning 􀂄Reservations 􀂄Airline schedule changes 􀂄Air ticket exchanges 􀂄Frequent flyer benefits & promotions 􀂄Car rental 􀂄Hotel reservations 􀂄Limousine reservations 􀂄Order processing 􀂄Product inquiries 􀂄Account billing 􀂄Technical support 􀂄 Application processing 􀂄Balance transfers 􀂄Credit verification 􀂄Fund transfers 􀂄Identity verification 􀂄Loan origination 􀂄Loan maintenance 􀂄Check ordering 􀂄Customer retention 􀂄Credit scoring 􀂄Insurance transcription 􀂄Back office processing 􀂄Change management 􀂄Customer service 􀂄Sales 􀂄Account activation 􀂄Cross-selling 􀂄Conference calling 􀂄B2B service 􀂄Back office services 􀂄Provisioning 􀂄Low and High-delinquency collections 􀂄Tech support 􀂄Account activation 􀂄Remote PC troubleshooting 􀂄Web domain maintenance 􀂄Retention

Sistec-SBsol’s career opportunities for students and graduates

Start your career here! Career opportunities
Junior business development managers (marketing & sales) Account managers Sales managers Customer service representatives Customer sales representatives Team leaders Operational managers

What we offer Career opportunities Competitive salary
Personal development plan Coaching on the job CRM training Sales training Customer contact training Job rotation Inspiring management team Encouraging of self development 300 professional colleagues with IT & business competencies International work environment

Career opportunities Start for Success Traineeship Program

Start for Success Traineeship Program
Career opportunities Start for Success Traineeship Program If you … … are dynamic, determined and flexible … communicate and socialize easily … have positive attitude and result-orientation START now your career in IT solutions business development! Join now the Start for Success Traineeship Program and you’ll get: ... professional training in IT solutions sales ... membership in a team of over 300 specialists ... work experience in an important IT company

Start for Success Traineeship Program
Career opportunities Start for Success Traineeship Program Apply now! Send your CV at Or leave your CV at our stand to Angajatori de Top job fare (Palace Hall, ) Every CV received till 27th of October will participate to a tombola. You can win: Ist prize: HP Notebook Dual Core IInd prize: PC Desktop with TFT monitor IIIrd prize: Fujitsu Siemens PDA Details on

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