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Building an Optimal Global Footprint for vCustomer Expansion

Explore key offshore countries, analyze end markets, and recommend implementation strategies to boost vCustomer's global presence.

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Building an Optimal Global Footprint for vCustomer Expansion

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  1. vCustomer:Optimizing a Global Footprint Christian Bonneau Daniel ByrneStefanie JonesLindsay Rosenthal

  2. Objective Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Establish the most attractive market for: • Offshore operations • Potential clients • Design the implementation plan for the international expansion • Recommend additional services

  3. Key Issues Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Changing customer demands • Near-shoring • Single sourcing • Higher value-added BPO • Changing cost structures • Rising wages in traditional low cost regions • vCustomer’s goals & competencies • Commitment to quality • Best-in-class technology • Low cost structure

  4. Recommendation Offshore Country End market Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A United States Thailand Malaysia Japan China India Western Europe Bulgaria

  5. Offshore Criteria • Financial Attractiveness • -Compensation • -Infrastructure • -Tax & Regulatory Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A 36% Thailand Malaysia • People skills & availability • -Labour force • -Education • -Attrition Risk 36% China India • Business Environment • -Infrastructure • -Cultural exposure • -Initiatives in intellectual • property • -Ease of doing business Bulgaria 28% AT Kearney “Building the Optimal Global Footprint” World Bank “Doing Business Economy Rankings”

  6. Drivers of Offshore Demand Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A -High wage costs • -Inefficient • labour High Potential Economic Gains From Outsourcing High Outsourcing Demand

  7. End-market Analysis Wages (high wages) Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A EU $ 127 B Efficiency (high output) (low output) Market size: Japan $ <42 B US $277 B $ 50 B USD (low wages) $ 100 B USD US department of Labor $ 200 B USD

  8. Most Attractive End Market: Western Europe Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Europe is the fastest growing consumer of BPO services

  9. Top 5 Offshore Countries Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A Bulgaria Western Europe China Japan Thailand UnitedStates Malaysia India

  10. Fit with vCustomer’s Competencies Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A Commitment to Quality • Educated in Sofia, speak many languages • Excellent transportation time to market • IT Infrastructure risk is moderate but improving • Privatization of BTC should lead to improved telecom network • Internet connection per capita has more than tripled over the past two years Best in Class Technology • Wages similar to India • Inflation is moderate (<10%) Low Cost Structure

  11. Recommendation Offshore Country End market Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A United States Thailand Malaysia Japan China India Western Europe Bulgaria

  12. Critical Implementation Issues Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Issues related to maintaining vCustomer’s core competencies • Maintaining low-cost structure as Bulgaria’s labour market becomes more mobile • Best in class technology – guarantee reliable access to broadband • Dedication to quality

  13. Low Cost Structure Implementation Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Very limited short-term wage pressures • Labour force mobility effecting long-term wage pressure • EU labour mobility agreements (2011) • Offer programs to retain employees

  14. Best in Class Technology Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Bulgaria Telecom being privatized • Long-term increase in quality of infrastructure • Meet with Mayor of Sofia and Telecom head to reach access agreement • Potential for 1000+ job creation powerful bargaining tool

  15. Commitment to Quality Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Critical to client relationships • Competence of employees key to consistent service • Large # unemployed university grads • Continual training and quality monitoring

  16. Implementation Timeline – Functional Analysis Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A Logistics Human Resources Marketing

  17. Logistics Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Timeframe: 0-6 Months • Analyze and execute entry method • Continued partnership, acquisition, go it alone • Site identification and secure leasing • Starting with 11,500 sq. ft, • Expandable to 23,000 sq. ft. • Regulatory Approval (32 days) • Establishment and testing of telecom services • Install first 200 workstations

  18. Logistics Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Timeframe: 6-12 Months • Install 450 workstations • Evaluate operations • Timeframe: 18-24 months • Install 450 workstations (total 1100) • Increase proportion of BPO trained CSRs

  19. Human Resources Strategy Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Sales consultants (20 initial, 5 annually subsequent) • On-campus recruitment of European MBA-graduates • Headhunting of established professionals • CSRs, BPO clerks, admin staff (1100 by year 3) • Recruit through universities • Screen for language, personality and aptitude

  20. HR Strategy Continued Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Hands-on training for sales consultants in India • Work in service centres and on site with clients • CSRs and BPO clerks will receive language and technical training • Career evolution • CSR → BPO Clerk → Sales Consultant

  21. Marketing Plan Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Pitch Euro divisions of current clients • Target market for sales staff: • Medium sized international companies • European based multinationals • France, Germany and Spain • Concentrate on established verticals • Upsell CRM customers to BPO

  22. Timeline Logistics HR Marketing

  23. Financial Projections Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A

  24. Product Differentiation Strategies Process Specialization Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A Present situation Payment services Billing CRM Vertical Specialization CRM Retail Tele Travel Health IT CRM Capitalizing on customer demand for a single source solution

  25. Vertical Analysis Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Present verticals: • Telecom • Retail/ eCommerce • Technology (IT) • Travel & Hospitality • Health • Recommended to expand one vertical at a time

  26. Vertical market decision criteria Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • How many process within the vertical does vCustomer currently serve? • Ex: 80% of Healthcare processes • Employee compatibility • In-house expertise • Client evaluation • Client characteristics, company size • Survey current clients to establish needs

  27. Additional Consulting Services:General Off-shoring Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A Determine optimal entry strategy • Require more in-depth information about partner and current agreement Contract Design • Termination and buy-out clauses Off-shore location monitoring • Labour mobility and rapid wage adjustment • Bi-Annual tailored reporting indicating trends

  28. Decision Overview Production Country End market Product Differentiation Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A United States Thailand Malaysia Japan China India Process Specialization Western Europe Bulgaria Vertical Specialization

  29. Key Issues Revisited Objectives Key Issues Decision Overview Off-Shoring End Market Implementation Additional Recommendations Q&A • Changing customer demands • Near-shoring • Single sourcing • Higher value-added BPO • Changing cost structures • Rising wages in traditional low cost regions • vCustomer’s goals & competencies • Commitment to quality • Best-in-class technology • Low cost structure

  30. Question & Answer LindsayStefanie DanielChristian

  31. Appendix slides

  32. Appendix: End Market Analysis

  33. End-Market Analysis – Raw Numbers Wages (high wages) 101 EU $ 127 M 99 97 Efficiency (high output) (low output) 95 133 131 129 127 125 123 121 119 93 Market size: APAC $ 42 M 91 US $277 M $ 50 M USD 89 (low wages) $ 100 M USD $ 200 M USD

  34. BPO Overall Market Size

  35. BPO contracts by region Source: PwC, Morgan Stanley

  36. Appendix: Financial Analysis

  37. vCustomer’s Financial Projections

  38. EBITDA Margins of Comparable Companies

  39. Sample BPO Contract Lengths & Value Source: Merrill Lynch

  40. Precedent Transactions in the IT Industry Source: Merrill Lynch

  41. vCustomer’s Profile • Emphasis on call centres • 85% call centres • 15% BPO • Several locations in India • Strategy • High quality, great customer retention • Best-in-class technology • Low cost, but not lowest price Source: VCustomer case

  42. Target Acquisition Profile • Emphasis on quality & customer service • Excellent technology • Good reputation • Extension of BPO opportunity • Small to Mid sized firm within our price range Source: VCustomer case

  43. WebHelp - Profile • Located in Algeria & Eastern Europe • Strong client base in Europe • Same business model • Potential candidate for merger • Average price/sales of precedent transactions: 1.22 Source: Merrill Lynch, VCustomer Case

  44. Appendix: Country Analysis

  45. ATKearney Inc. GSL Metrics

  46. ATKearney Inc. GSL Metrics

  47. ATKearney Inc. GSL Metrics

  48. Additional countries to GSL report • Albania, Belarus, Bosnia & Herzegovina, Croatia, Lithuania, Macedonia, Moldova, Serbia • People: World Bank indexes difficulty of firing, hiring, etc • Financial: Tax rate as % of profit, cost as % property value, (world bank) • Business Environment: Corruption Index

  49. Augmented weighting to Offshore Country Analysis • GSL categories: Financial (40%), People (40%), Business environment (20%) • Total weight (90%) • World Bank: Ease of doing business rank • Total weight (10%) • Overall weights: • Financial 36% • People 36% • Environment 18% • Ease of business 10%

  50. Top Offshore Country rankings

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