offshore services global value chain
DESCRIPTION
OFFSHORE SERVICES GLOBAL VALUE CHAIN. Karina Fernandez-Stark Center on Globalization, Governance & Competitiveness (CGGC) Duke University. Conferencia Deslocalización de servicios y cadenas globales de valor: ¿Nuevos factores de cambios estructurales en América Latina y el Caribe? - PowerPoint PPT PresentationTRANSCRIPT
© 2012 Duke CGGC
OFFSHORE SERVICES GLOBAL VALUE CHAIN
Conferencia Deslocalización de servicios y cadenas globales de valor: ¿Nuevos factores de cambios estructurales en América Latina y el Caribe?
Santiago, Chile18-19 de Octubre de 2012 1
Karina Fernandez-Stark Center on Globalization, Governance & Competitiveness (CGGC)
Duke University
© 2012 Duke CGGC
Duke University Center on Globalization Governance &
Competitiveness
OFFSHORE SERVICES
•Offshore Services Global Value Chain: Costa Rica Upgrading
•Regional Competitiveness in the Latin America Offshore Services Value Chain. In The Oxford Handbook of Offshoring and Global Employment. Oxford: Oxford University Press.
•"The Offshore Services Value Chain: Upgrading Trajectories in Developing Countries." International Journal of Technological Learning, Innovation and Development.
•The Offshore Services Value Chain: Developing Countries and the Crisis. In Global Value Chains in a Postcrisis World. Washington DC: World Bank.
•Engineering Services in the Americas.
•The Offshore Services Industry: A Global Value Chain Approach.
•The Offshore Services Industry: Upgrading Through Workforce Development.
•Workforce Development in Chile's Offshore Services Industry.
•The Offshore Services Industry: A New Opportunity for Latin America. Durham: Center on Globalization, Governance & Competitiveness. Report for the Inter-American Development Bank.
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Global Value Chain analysis understand the dynamic of global industries and how countries can capture higher value (Upgrading)
Global Value Chain analysis understand the dynamic of global industries and how countries can capture higher value (Upgrading)
© 2012 Duke CGGC
Infrastructure
Software
Network ManagementNetwork Management
Applications ManagementApplications Management
Applications DevelopmentApplications Development
Applications IntegrationApplications Integration
Desktop managementDesktop management
CRM (Customer
Relationship Management
)
HRM(Human
Resource Management
)
ERM (Enterprise Resource
Management)
Marketing & Sales
Marketing & Sales
Finance & AccountingFinance & Accounting
Procurement, Logistics
and Supply Chain
Management
Procurement, Logistics
and Supply Chain
Management
TrainingTraining
PayrollPayroll
RecruitingRecruiting Contact Centers/Call
Centers
Contact Centers/Call
Centers
Talent Management
Talent Management
Content/Document
Management
Content/Document
Management
ITO Information Technology
Outsourcing
BPOBusiness Process Outsourcing
KPOKnowledge Process Outsourcing
Horizontal ActivitiesVertical Activities a
Industry specific bBanking, Financial
Services and Insurance (BFSI)
Ex. Investment research, private
equity research, and risk management
analysis
Banking, Financial
Services and Insurance (BFSI)
Ex. Investment research, private
equity research, and risk management
analysis
Telecommunications
Ex. IP transformation, Interoperability
testing and DSP and multimedia
Telecommunications
Ex. IP transformation, Interoperability
testing and DSP and multimedia
ManufacturingEx. Industrial
Engineering and sourcing and vendor
management
ManufacturingEx. Industrial
Engineering and sourcing and vendor
management
Retail eComerce and
Planning, merchandising and demand intelligence
Retail eComerce and
Planning, merchandising and demand intelligence
Health/Pharma
Ex. R&D, clinical trials, medical
transcript
Health/Pharma
Ex. R&D, clinical trials, medical
transcript
Others Others
Travel & Transportation
Revenue management
systems, customer loyalty solutions
Travel & Transportation
Revenue management
systems, customer loyalty solutions
Business Consulting
Business AnalyticsMarket Intelligence
Business Consulting
Business AnalyticsMarket Intelligence
Legal Services Legal Services
EnergyEx. Energy Trading
and Risk Management , and Digital oil field
solutions
EnergyEx. Energy Trading
and Risk Management , and Digital oil field
solutions
ERP (Enterprise Resource Planning): manufacturing/operations, supply chain management, financials &
project management
ERP (Enterprise Resource Planning): manufacturing/operations, supply chain management, financials &
project management
Infrastructure ManagementInfrastructure Management
IT Consulting
Software R&D
Valu
e A
dd
ed
LOW
HIGH
Offshore Services Global Value Chain
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© 2012 Duke CGGC
Offshore Services: Global Supply and Demand
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Demand for Offshore Services (%)
51.1%US &
Canada30.6%EU-15
16.2%
Asia-Pacif
ic
50
3015
2
2.1% Rest of the World
Source: CGGC based on Everest & Datamonitor
45% of the industry market
Same number of call centers
employees than India
© 2012 Duke CGGC
The Size of the Offshore Services Industry (estimates)
Estimates of the Offshore Services Market Size
0
50
100
150
200
250
300
2005 2006 2007 2008 2009 2010
Year
Billion (
US$)
• Difficult to quantify the industry no accurate data & limited country level tracking• Industry growing & evolving rapidly
• New activities -most dynamic not included, such us innovation
OECDUS$ 252.4 bill
BCGUS$ 281,3 bill
NASSCOMUS$ 117.5 bill
Source: CGGC based on OECD 2008, NASSCOM 2009, Boston Consulting Group 2007.
© 2012 Duke CGGC
Offshore Services Potential
• Activities previously reserved for rich nations or in-house • Creating more jobs, specifically in developing countries
• One of the world’s fastest growing industries Reduce company costs and find new talent• Almost unlimited potential Services from any industry
© 2012 Duke CGGC
Examples of Upgrading Trajectories
7
Entry into the value chain
Upgrading within the BPO segment
Broad Spectrum Services
Upgrading to KPO Activities
Industry Specialization
© 2012 Duke CGGC
Offshore Services Upgrading: India, Philippines and Chile
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India
1990s – 2010 Early 2000s Mid to late 2000s
Philippines Early 2000 Mid 2000s Late 2000
Chile 2000-2008 2007-2010 2010
© 2012 Duke CGGC
Human Capital: Essential Element for Upgrading in Offshore Services
• Human capital has been found to be a key determinant of value creation, competitiveness, and success in service exports from developing countries
• One of the most important factors MNCs take into consideration when relocating services operations is to ensure the labor market has cost competitive, qualified workers
• Developing countries must work hard to supply the necessary human capital to sustain industry growth today while also preparing the future labor force to upgrade the industry.
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© 2012 Duke CGGC
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Upgrading and Workforce Development
BPO KPO
IT
TECH
NIC
IAN
SOFT
WARE
PRO
GRAM
MER
IT
CO
NSU
LTAN
T
SOFT
WARE
R&
D
ENG
INEE
RCALL
CEN
TER
OPE
RATO
R F&A
AN
ALY
ST
MARKE
TIN
G &
SALE
S
AN
ALY
STQ
UALI
TY A
SSURAN
CE
MAN
AG
ER
LEG
AL
AN
ALY
ST
BUSI
NES
S
AN
ALY
ST
FIN
AN
CE
AN
ALY
ST
ITO
Skill Level
Value Chain Segments
Job Profiles
Job Profiles and Upgrading
© 2012 Duke CGGC
Upgrading Trajectory: Entry into the Value Chain
11
En
try
into
th
e V
alu
e C
hai
n
Call centers hire people with high school diplomas or Bachelor’s degrees. Further skills training is provided by the company or private training institutions.
Skills Preparation
Short technical training
Institutions Private sector Government
© 2012 Duke CGGC
• Interpersonal and language skills are highly valued in this sector
• High competition for talent has resulted in shift from individual spending on education and training to firm-based training
• Tax incentives and public subsidies for education are increasingly used to attract offshore operation centers
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GVC Upgrading & Workforce Development: Select Findings
© 2012 Duke CGGC
Center on Globalization, Governance & Competitiveness- Duke University
http://www.cggc.duke.edu
Karina Fernandez-StarkSenior Research [email protected]
THANK YOU FOR YOUR ATTENTION!