BPO in China: Reality and Potential

BPO in China: Reality and Potential Sept. 8, 2006 Xiamen Roc Yang, CDG

A real life example of outsourcing

Contents • BPO Defined • BPO in China: a reality check • BPO in China: What’s in store • BPO in China: a Case Study • CDG Snapshots

BPO Defined “ BPO is the delegation of one or more IT-intensive business processes to an external provider who, in turn, owns, administrates and manages the selected process(es), based upon defined and measurable performance metrics.” Gartner Dataquest

Maturation of worldwide BPO service providers • Emergence of and acceptance of low-cost location delivery models • Improvements in telecommunications and the availability of bandwidth • Technological evolution of the Internet, e-Commerce, imaging, and application service providers The key enablers for BPO Business Process Outsourcing started in the early 90’s, but has recently experienced an increased level of interest and acceptance.

BPO-Some key statistics

Can “World Factory” last forever?

Why China should embrace BPO? • To fully leverage manufacturing expertise • To service world office without having to go abroad • It is a “smoke free” industry • To fully tap China’s human resources pool • To Have facilitate industry migration in China

Value Chain Migration as a country KPO “Created by China” University and above BPO 12 years-University level education “Managed from China” Manufacturing outsourcing 0-9 years education “Made in China”

Absence of country marketing, leaving China out of the radar screen of global BPO players; Lack of industry self discipline; Lack of necessary supportive measures as a long term strategic industry; Incomplete industry value chain not complete BPO in China: a macro perspective

Low end and low value-add services; Business through agents, leaving little or even no margin at all; No industry and process expertise involved; Small workshop or family business without global competitiveness; Purely opportunistic and ad hoc offshore players; Not many visionary companies in the space BPO in China: a micro perspective

MNCs set up captive centers in China; Indian players to leverage on global client base for the Asian pie; Local players grow both in number and service capability and China maturing as both a vendor base and a market China: hotspot for BPO

Set up “country marketing” engine Improve basic infrastructure Polish the relevant policies Build up the vendor base Improve the industry value chain; e.g. language skills and domain knowledge China to vie for the top BPO spot

An IFC Portfolio Bank • The Client's Problem • Back office centralization created new bottlenecks and need for a large staff pool • Unbearable management time and efforts to manage cost and business risks • CDG's Solutions • Took over one key function of the client’s back office to replace about 180 staff • BPR to decompose the existing processes through technology • Concurrent mass processing to meet real time requirements • Insurance coverage for service failure • The Results • Focused on front end customer services • Cut down back office operations cost while making it transparent; • Shortened service delivery time from 15 minutes to 3 minutes； • Reduced operations management complexity and difficulty, particularly during the holidays and at business peaks.

History Founded in 1998 as Cybersky Technologies and had been China’s Top Three Imaging System Integrator for the financial services sector. It was restructured into CDG with financial support from CDH, a leading private equity fund in 2005 to focus on BPO. Industries and Services Leveraging on the 8+ years experience in the banking, financial services and insurance sectors, CDG has established “One-stop Shop” business process outsourcing solutions around its mass production capabilities. Management Team The team came from consulting, System integration, IT outsourcing and the BFSI sectors. Their strength lies in their capability to leverage technology and industry know-how to turn BPO business into a low cost mass production in China. Facilities Network CDG’s main data processing operation is in Beijing with 600+ seating capacity on one shift basis. The Shanghai BPO Center is scheduled to open in June 2006. The third facility in Guangzhou is also on the agenda to serve the South China markets. Technology and Operations CDG has the industry’s leading Data Processing System that processes client’s transactions based on scanned images on a JIT basis. The system supports multiple languages and multiple clients simultaneously in a paperless environment. CDG Snapshots

Thank you!

BPO in China: Reality and Potential