Overview of Shared Services Globalization in APAC (Executive Summary)

October 2013

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Topics Covered in the report

1 Overview Captive Trends (Available in Full Report)

F&A Landscape & F&A Globalization (Available in Full Report) HR Globalization and Sales Operation (Available in Full Report)
Procurement (Available in Full Report) Business Function Talent Pool Split (Available in Full Report) Case Examples (Available in Full Report) Key Challenges (Available in Full Report)

Overview Cost savings along with enhancing process efficiency are two main factors due to which companies globalize their Shared Services

Insights

Key Drivers for Shared Services Globalization

Impact Level

The key benefits of Globalization are cost

Cost Savings Enhancing efficiencies through standardization of services & processes Support corporate strategy Enable flexible growth Access to talent savings. However, the growing trends suggests the changing perception of Shared Services as strategic business units for service & operational excellence

Create job enrichment & augment skills of

internal support employees and customers of the service

To meet the changing landscape of

business, companies are expanding the use of shared services for processes in more complex and knowledge-oriented areas that have traditionally been closer to business i.e. R&D, Engineering, Sales & Marketing, Analytics etc

Access to new markets

Sources: Talent Neuron Quarterly Events & Talent Neuron Surveys 2012 & 2013

Talent Neuron

Overview Companies have been increasingly off shoring/outsourcing their support functions
Globalization Maturity of various functions

HIGH
F&A IT* R&D* Customer Support Human Resources Today companies have matured globalizing their R&D and IT activities

Globalization Rate

Procurement Sales Operations Marketing Sales

LOW
Laggards

Process such as lead identification, requirement analysis and delivery management are expected to be increasingly globalized

Rapidly Growing MATURITY

Mature

Source: Talent Neuron

Talent Neuron

Overview Countries across APAC, EMEA and LA are preferred locations with their unique advantages and disadvantages

Ireland
Eastern Europe China

Costa Rica

India Egypt Malaysia Philippines

Sri Lanka

Brazil
Argentina

South Africa

Australia
Current hot Global locations Potential alternatives

Key Cities - Metro Manila - Bangalore - Chennai - Gurgaon - Hyderabad - Cebu City - Mumbai - Kuala Lumpur - Selangor - Dalian - Chengdu - Guangzhou - Johannesburg - Krakow - Colombo - Shanghai - Beijing - Glasgow - Wuxi - So Paulo - San Jos
Talent Neuron 6

Source: Talent Neuron

Overview India, Philippines and China lead the pack of countries that are suitable for globalizing Shared Services
Cost Attractiveness Vs Globalization Suitability
HIGH

Canada

India

Globalization Suitability

China

Philippines

MEDIUM

Ireland

Australia Spain

Singapore

Poland

Czech Republic New Zealand Russia Mexico

Chile
Brazil Turkey Ukraine Argentina

Costa Rica

LOW LOW MEDIUM HIGH

Cost Attractiveness

Note: Recent dollar appreciation has enabled India and Philippines to increase the cost arbitrage

Talent Neuron

Captive Trends In the recent past, India has garnered a lions share in terms of number of Global In-house Center setups with diverse set of models
Captive centers (GICs) per geographic region
# of Centers
146 100 90 80 70 60 80 52 52 50 40 30 20 5 India China

Activities per geographic region

India China Rest of Asia CEE+Russia Others

11

9 CEE & Ireland Russia & Wales

10 0 2

22 10 6 6

28

29

Rest of South Africa Asia America

Source: Zinnov Research, Prof. Illan Oshri

Talent Neuron

Key Challenges Attrition and lack of experienced talent with domain knowledge are key challenges companies are facing in the global centers/operations
Attrition in most companies has ranged between 8%-22% in the last 3 years Increased competition for talent from service providers and lower compensation levels are key reasons

Attrition
Lack of domain expertise and proper understanding of regulatory, quality and security compliance processes

Process Adherence

Right Levels of Training

Organizations are not able to determine the right training (process training, spoken/written language training and cultural sensitization training) programs for their staff

Key Challenges
Lack of career progression, low compensation and minimal customer interface lead to low morale amongst shared services employees Employees are not culturally well aligned to the parent organization

Culture and Morale Domain Knowledge

Language Expertise

Hiring talent for translation-related jobs is difficult ,and this in turn hinders the process efficiency Scaling language experts to the required level normally takes time and this impacts the quality of work.

Since the industry is yet to attain maturity, companies find it difficult to hire professionals with about 8-10 years experience
Source: Interviews with key industry stakeholders at leadership levels, Talent Neuron

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