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Technology for better business outcomes
Off shoring – In shoring cosa conviene decentrare?
Giorgio Capellani HP EMEA
2 April 10, 2023
Contents• Business Process Outsourcing• Data Center Transformation
Off shoring: BPO
4 HP Confidential-Subject to use restriction
Background
HP’s Business Process Outsourcing
Service
• Consulting: Strategic Business Assessment, BPO and Shared Service Center assessments and set-ups
• BPO solutions:− Finance & Administration− Order-to-Cash− Procure-to-Pay− Acquire-to-Retire− Record-to-Report− Buy-Sell Services− Decision Support/ Analytics
Heritage/ Background
• Over 10 years F&A outsourcing experience, starting with Strategic Outsourcing
• Over 15 years global shared services experience in F&A
• Commercialized shared service assets
• Strategic outsourcer for various large multinational/global enterprises from multiple industries
Customer Focus
• Large, Global Enterprises• Core industry verticals:
− Consumer Packaged Goods (CPG) / Retail
− Manufacturing / Automotive
− Financial Services− Hi- Tech
Quick Facts
• Global Delivery Operations: − 10 Global Delivery Centers− 56 Regional/ Local Centers
• All operations ISO9000-2001 certified
• World class Operations led by deep domain experts
− Quality: ~100 Black Belts, ~3000 Green Belts
− 22 dedicated Industrial engineers that lead process standardization/re-engineering
− Team of 26 experts that design and monitor Business Continuity & Controls
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Integrated Financial Supply Chain
F&A transformation delivered through HP BPO’s transformation drivers
5
Value delivery
4
Technology enablement
3Operational excellence
2
Economies of location 1
Economies of scale
HP BPO Transformati
on Levers
• Lower per unit cost• Subject Matter Specialists• Better Labor Utilization• Investment Amortization
• Co-location• Centralization• Labor Arbitrage• Languages• Disaster Recovery• Talent Pool
• Standardization• Business Process
Reengineering• Six Sigma Plus• Straight through
Processing• Compliance/
Business Controls
• Metrics/KPIs
• Paperless/Digitization• Automation• Self Service• Data communication• Service Oriented
Architecture• Innovative Apps
• Analytics/ Business Intelligence
• Reporting• Business consulting
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Our F&A BPO services PortfolioEnd to End Finance & Administration
• Accounts Payable• Accounts Receivable
Order-to-Cash CRM Support
• Travel and Expense Administration
• Fixed Asset Management
• General Ledger• Treasury Accounting• Tax Accounting
• Customer Administration
• Order Processing• Billing• Invoicing
Order-to-CashRevenue Cycle
• Revenue Collections and Dispute Resolution
• Credit Analysis & Approvals
• Cash Application• Reconciliation &
Reporting
Procure-to-PayProcurement
Support• Supplier
Administration• Requisition Creation• PO Processing• P-Card
Administration• Error Correction
Procure-to-PayPayment Cycle
• Master Data Maintenance• Invoice Processing and
Approval Routing• Goods and Services PO
Matching (Two & Three Way)
• Payments Administration• GL Accounts Settlement
Acquire-to-Retire
• Capital Budgeting• Leasing• Purchasing
Administration• Fixed Assets• Physical Inventory• Project Accounting
Record-to-Report• General Ledger• Bank Operations• Treasury Accounting• Consolidations• Inter-Company
Accounting & Oversight• Management Reporting
Buy Sell
• Price masking for strategic commodities
• Adherence to contractual agreements
• Allocation Management during market shortages
• Managing price volatility
Decision Support/ Analytics
• Business research and market intelligence
• Modeling & optimization• Performance analysis
and reporting• Data and design support
C
ore
Serv
ices
En
d-t
o-E
nd
Serv
ice
Exte
nded S
erv
ices
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HP BPO Global Delivery Footprint
America Centers [Colorado Springs & Houston]
Global Delivery HubsLow-Cost, Transaction Processing Center[Bangalore (2), Chennai, Costa Rica, Wroclaw]
Global Delivery/ Support CentersSpecialized Language Transaction Processing [Guadalajara, Barcelona, Bucharest, Singapore, Dalian]
Scale of Operations:~10375 professionals
Presence: 10 Global Business Centers56 Regional/Local Centers
Language capabilities: Expertise in 30 languages
LegendsSupport Centers Onshore Centers
Main Global Hub
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HP’s Fifteen-Year Shared Services BPO Journey
1990s 1995s 20052000
1990
Decentralized
2005
CommercializationDigitization
1995
RegionalConsolidation
2000
Off-Shore Global Consolidation
Consolidated general accounting processes into country-based shared services
• Consolidated regional service centers into four regional centers
• Focused on improving, standardizing processes
• Focus on improving transaction processing automation and self-service
• Focus on taking expertise to the market
Consolidated regional centers into a global trans-action processing model with centers in low-wage locations
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About India• Well functioning , vibrant
democracy; Largest in the world (1.05 bn)
• Second largest pool of scientists and engineers in the world after the U.S.
• Third largest investor base in the world
• Well developed economic, capital & legal framework; Over 6000 companies listed on the stock exchange
• Real GDP Growth over 6% for last 4 years
5.7
3.32.7
0.8 0.7 0.4 0.3 0.2 0.2 0.1
0
1
2
3
4
5
6
7
Chin
a
Japan
India
Kore
a
Indonesia
Thaila
nd
Phili
ppin
es
Mala
ysia
Hong
Sin
gapore
PPP Adjusted GDP, US$trillion
9.1
6.2 5.94.6 4.4 3.9
3.22.4 2.1 1.7
0
2
4
6
8
10
12
Chin
a
India
Phili
ppin
es
South
USA
Costa R
ica
UK
Canada
France
Germ
any
Real GDP growth rate
PPP Adjusted GDP (USD trillion)
2004 estimates – SOURCE: CIA World FactBook
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Indian Economy – some key numbers • Services, largest component
of GDP and growing• A growing working
population (500 million)− Reduced dependant ratio
− Favorable Urbanization trends; 35% urban population by 2020
− Incomes increasing across the board
• Shift towards younger population− Under 25 will go up as a
percent of total population
Shift in GDP Composition
0% 20% 40% 60% 80% 100%
FY80
FY05E
Agriculture Manufacturing Services
SOURCE: India Economics Report, Citigroup
Demographic Shift
-10%
10%
30%
50%
<10 10-19 20-49 50-69 >69
Age group
SOURCE: Industry Sources
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India continues to be an important destination
Factors India China Malaysia Czech Republic
Singapore
Philippines
Financial Structure (Scale: 1-4; 4 is the Best)
Compensation 3.19 3 2.5 2.24 0.91 3.14
Infrastructure cost 0.23 0.23 0.33 0.27 0.22 0.22
Tax and regulatory 0.3 0.09 0.26 0.13 0.34 0.23
Sub Total 3.72 3.32 3.09 2.64 1.47 3.59
People Skills and Availability (Scale: 1-3; 3 is the Best)
BPO experience 1.03 0.48 0.19 0.23 0.61 0.42
Size & availability of labour 0.47 0.6 0.02 0.01 - 0.08
Education 0.25 0.21 0.27 0.33 0.33 0.19
Language 0.21 0.07 0.14 0.17 0.25 0.14
Employee retention 0.13 - 0.11 0.18 0.17 0.11
Sub Total 2.09 1.36 0.73 0.92 1.36 0.94
Business Environment (Scale: 1-3; 3 is the Best)
Country risk 0.83 0.68 1.03 1.06 1.41 0.57
Country infrastructure 0.2 0.15 0.24 0.28 0.4 0.13
Culture adaptability 0.1 - 0.28 0.38 0.43 0.05
Security of Intellectual Property 0.18 0.1 0.22 0.3 0.39 0.17
Sub Total 1.31 0.93 1.77 2.02 2.63 0.92
Total 7.12 5.61 5.59 5.58 5.46 5.45SOUCRE: NASSCOM 2005
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Bangalore, Capital of Karnataka
Background
IT / ITES Destination
Infrastructure
With over 33% of the world’s SEI-CMM Level 5 companies having a presence in Bangalore, it has gained the epithet of the ‘Silicon Valley’ of India and was ranked 4th as a global hub of technological innovation by the UN Human Development Report
The presence of top-end technology institutions such as the IISc., IIIT and ISRO, coupled with a pleasing climate, active policy incentives, and manpower availability are the other strengths of Bangalore
Bangalore is located on the southern Deccan Plateau is India’s fifth largest city
The city is famed for its excellent climate with pleasant weather conditions round the year
Well connected by land and air
Strong educational infrastructure with 4 universities, 42 engineering colleges, 64 science colleges, 209 pre-university schools and 1,177 high schools
Among the largest real estate market in the country for office space during with over four million square feet of A-grade office space ready for possession
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Chennai, Capital of Tamil Nadu
Background
IT / ITES Destination
Infrastructure
Chennai has about 8.8% of the BPO-ITeS facilities operating in India employing around 30,000 people directly
Based on success of remote IT services (largely for banks) , Chennai has attracted attention for back-office processing support for companies in the financial services, healthcare and consumer goods sector
The government of Tamil Nadu has now identified Chennai as the hub for the IT / ITeS industry in Chennai
Chennai is located on the eastern coast of IndiaIt enjoys tropical maritime climate (warm, humid) Chennai city covers 172 sq km and has a population of over 6.4 million
Chennai has a population of approximately 6.4 million with over 100 colleges
According to the UNIDO, Chennai has the highest density of software professionals in India
Chennai has a large concentration of Chartered Accountants required for high-end finance and accounting work
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HP’s Presence in India
*Source: NDTV Profit Leadership Awards, Business Today and Hewitt Associates Survey
HP leverages over 28,000 people in India
• •India is HP’s 2nd
largest employee base
in the world
•HP voted the
number 1 IT Company
in India*
•HP ranked as 3rd Best
Employer in India*
Domestic
Global Services
Others9,200
HP India1,500+
Product Engineering
Services 2,500
IT Services 18,500
BPO 6,000+
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Overview of HP BPO in IndiaWind Tunnel Center, Bangalore
HP Prime, Bangalore
Business Center, Chennai
Processes delivered – HR services, Supply chain management, Sales & marketing operations
Key characteristics−Houses HR Services−Language Center of Excellence
Processes delivered - supply chain management, sales & marketing operations
Key characteristics
−Handling business critical processes directly impacting company revenue
−Houses the Language Center of Excellence
Processes delivered – finance & administration Key characteristics
− Main finance & accounting processing center; end to end finance & accounting processes
− Key commercial client delivery center in India
− First center to be BS7799 certified
1862
2005
2221
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Size and Scale of Operations
Purchase Order Administration
Claims mgmt
Rebates mgmt
Contract Admin
Order Fulfillment
Channel Partner Operations
TreasuryAccounting
AccountsPayable
Fixed AssetsInventory & Revenue
Accounting
Account Receivables
Customer ResponseCenter
Master Data Maintenance
Intra CompanyAccounting
7.5 M invoices processed $56.2 B
payout
Asset Base - $6 B 1.8M invoices processed
$50.4 B applied
487K queries handled
150K accounts/locations updated
360 K transactions annually
Orders entered - $30 B
$600M rebates paid to channel partners
$69B applied to Netting entries
$ 6 B of claims processed
Maintain 32000 partner contracts
and profiles
POs for 244,500 orders
Payroll /HR
Lead Gen.
96,000 pay-slips per annum
Global Business Centers India
4M work units per annum
$ 210M of lead value
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Talentrecruitme
nt90% of hires have recent
accounting or finance degrees
HP culture orientation
Fun @ WorkMotivated Workplace
Learning & Development
Personal Growth
AndA Learning
Organization
Performance Driven CultureRewards & Recognition
Perf. IncentivesLeadership
Advancement Program
Solution
Result More than 100% growth every year,
lowest attrition rate in the
industry – 20%
New Employee Orientation
“Metamorphosis”
Buddy SystemSocial
Committee
E-LearningStretch
assignmentsBPO University
Key employee attrition rate is less than
5%
Our people - “ Making a Difference”
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BPO is a strategic component of the Adaptive Enterprise vision
Driv
ing b
usin
ess p
roce
ss innovatio
n
Adaptive Enterprise
Infrastructure
Applications
Transformation Strategy
Business Processes
Finance &
Admin
HumanResources
Demand Mgmt
Supply Mgmt
Dri
vin
g o
pera
tional effi
cienci
es
Network
Rationale
• Customers who want to optimize
business processes require
increasingly tight integration with
applications and infrastructure
• Leverage all of HP’s capabilities,
from infrastructure through
transformation strategy
• Business process level serves as
strategic control point for
applications and infrastructure
levels
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Information Security & Privacy
Business Continuity
World class operations
Quality
(1) National Institute of Quality & Reliability, India: “Best Six Sigma Project Award” in 2002, 2003; International Quality & Productivity Center: “European Six Sigma Excellence Award” in 2004
• All Global Business Centers ISO certified
• Six Sigma philosophy fully embraced (in most centers 75%+ employees are trained in Six Sigma)
–4 out of 5 managers quality trained
–Black belt trained and certified - 110, Green belt trained and certified - 3882
• Recipient of several quality awards(1)
• Over $20 M USD in preventive savings
• ~99% first pass accuracy
• Confidentiality agreements to protect information
• Dedicated area with separate access control
• Dedicated IT network with firewall
• Regular 3rd party audit• Dedicated resources to
maintain and update
• Industry standard, tested BCPs
• Strategies plan for different risks (fire, war, SARS, earthquake, computer viruses, etc.)
• Maximum allowable downtimes
• Maintain business critical operations during crisis
• ISO 17779 Certification
Statutory Compliance Intellectual Property Fortified Infrastructure
Operational Excellence Program
5
Value added service
5
Value added service
4
Technology enablement
4
Technology enablement
3Operational effectiveness
3Operational effectiveness
2
Economies of location
2
Economies of location 1
Economies of scale
1
Economies of scale
HP BPOTransformation
Levers
Operations Excellence…
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World class operations
Business Controls & Compliance Industrial Engineering
• Manage operational, branding and financial risks due to both external & internal factors
• External regulatory requirements – Sarbanes-Oxley– Basel II– SAS 70 certification
• Internal process standards requirements
– Business ethics– Periodic audits and reviews– Self assessments
• Optimal scheduling of resources to standardize processes & optimize costs
– Over USD 2 million annualized saving
• Uses various techniques like process mapping, volumetric studies, efficiency and utilization tracking etc.
– Covered over 80% processes within BPO
• Experienced team of industrial engineers at each center
– 24 dedicated Industrial engineers across delivery centers
Minimized Risk Business Agility
Operational Excellence Program
5
Value added service
5
Value added service
4
Technology enablement
4
Technology enablement
3Operational effectiveness
3Operational effectiveness
2
Economies of location
2
Economies of location 1
Economies of scale
1
Economies of scale
HP BPOTransformation
Levers
Operations Excellence…
In shoring: Data Center Transformation
22 April 10, 2023
The IT Challenge
32 Million2006 worldwide IT labor force
65%of IT budgets to operations
Not enough investment in innovation ; too much in maintaining legacy infrastructure
23 April 10, 2023
The HP IT mission• Provide good information to
enable better business decisions• Significantly reduce the cost of
IT while delivering more to the business
• Lower risk to the enterprise with better control of the infrastructure
• Be a showcase for enterprise customers
24 April 10, 2023
HP IT 2005: Large scale and scattered
IT 4+% IT 4+% of of
revenuerevenue
<50% of <50% of resources resources
time time dedicated dedicated
to to innovationinnovation
750+ 750+ data data
martsmarts
100+ HP 100+ HP IT sites IT sites
in 53 in 53 countriecountrie
ss
5,7005,700applicatioapplicatio
nsns
85+ 85+ data data
centers centers in 29 in 29
countriecountriess
Under-Under-managed managed networknetwork
>1,240 >1,240 active IT active IT projectsprojects
30% IT 30% IT managmanaged by ITed by IT
~19,000 IT ~19,000 IT professionaprofessiona
lslsincluding including
contingent contingent workforceworkforce
25 April 10, 2023
HP top 5 IT initiatives
DataCenters
PortfolioManagement
World-ClassIT
ITWorkforce
Effectiveness
Enterprise Data
Warehouse
26 April 10, 2023
HP data center transformation strategy• Enable IT to be more nimble and provide better information • Provide more dependable, simplified operations• Enable faster delivery of new technologies, services, and
information• Accommodate growth • Provide for improved business continuity• Significantly reduce IT costs
27 April 10, 2023
HP data center transformation includes…
• Technology refresh• Standardized technology
environment• Retirement of legacy
applications • Next-generation data center
build out −State-of-the-art infrastructure
for today and tomorrow
−Automated monitoring and control
• HP Dynamic Smart Cooling• Real business
continuity/disaster recovery
28 April 10, 2023
HP IT mission: Streamlined and focused
~500 active ~500 active business business
projects at any projects at any given timegiven time
90% HP 90% HP employeesemployees
10% CWF10% CWF
~1500~1500applicationapplication
ss
< 30 HP IT core < 30 HP IT core collaboration collaboration
sites WW sites WW
80% of 80% of resources’ resources’
time time dedicated dedicated
to to innovationinnovation
Optimized,Optimized,cost-cost-
effective & effective & secure secure
networknetwork
% of % of revenue revenue
cut in halfcut in half
6 NGDCs in 6 NGDCs in 3 zones3 zones
1 EDW1 EDW100% IT 100% IT
managed managed by ITby IT
29 April 10, 2023
HP IT steps to success• Simplify through standardization: Standard & consistent data
center architecture and design; standard hardware, tools, and infrastructure
• Establish PMO for governance: Provides framework for how effort will be structured, who will make decisions
• Go modular: Allows for fast build, flexibility, scalability, and efficiencies; isolates and separates risk
• Break plan into bite-size chunks: Divide into cycles, engage proper expertise, identify clear goals & deliverables by quarter
• Synchronize—timing is everything: Facilities must be ready to receive servers; servers must be ready to receive applications
• Define one set of processes: A properly documented single set of processes aligned to ITIL V3 model ensures desired outcomes, allows for automation
• Actively manage and communicate change: Change management and well-executed communication strategy critical for success
30 April 10, 2023
Can HP’s experiences help you?• What percentage of your resources are spent on
innovation vs. support?• How many IT sites and data centers do you have? • How many next generation switches are you running?• How many applications do you support?• What is the availability of your business critical
applications?• Are your IT sites VOIP-enabled?• How much does your IT cost?
We can help. Let’s get started.