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Discussion document
December 12, 2013
Contents
3
Program architecture and how we plan
to work with you as part of the P@C
engagement
▪ F&A and Banking take the biggest share of growth over the next 4 years
▪ Healthcare and Pharma together are the fastest growing with significant scale
1 Manufacturing includes discrete manufacturing only; 2 Other verticals include Government, Utilities, and Media (Printing & publishing)
3 Primarily includes Banking, Telecom and Insurance
Growth 13 15 35 14 6 25 6 8
(2008-11)
(Percent)
Acquisitions MedAssist Marketics
Aviva’s
Captive JV with captive BPO
HPP Dialog centres in
India
1 Major verticals by BPO revenues for Genpact, EXL and Firstsource while those for others are based on overall revenues
2 Wipro BPO revenues as reported by Gartner
SOURCE: Secondary research
McKinsey & Company | 6
Gold standard accounts are changing the game on three dimensions
▪ Systematically identifying growth slivers (cells of US$
200-500 million) to build service lines of scale (e.g.,
Strategic EXL focusing on P&C insurance in USA)
focus ▪ Establishing a differentiated value proposition that is
believable (e.g., SEP, lean-six sigma at GENPACT)
differentiated capabilities
Key reasons for selecting vendor Comments about winning provider in interviews
% respondents quoting dimension as top 3 differentiator
n = 21
Weighting1 “We believe that XXX has strong capabilities in F&A.
Percent Therefore we gave them relatively more complex work”
– Sr. Executive, Retail Bank
Business case/ Pricing 30 100
Capabilities/ Expertise 67 73
“We almost gave our contract to another vendor. The
Process improvements 50 36 depth of talent and commitment of the senior
management team impressed us during the site visit”
Connect with 27 – Sr. Executive, Healthcare Co.
50
senior management
Cultural fit 17 27
Global delivery footprint 17 27 “Of course their business case was strong. But above
that they impressed us with their willingness to invest in
Investment by the vendor/
25 27 long term partnership”
scale of operations
– Sr. Executive, Pharmaceutical Co.
Reputation 17 9
Relationship with the sales
17 9
team/on shore team
Consumer Commercial
finance finance
Insurance
Demand, Demand, Healthcare Retail
Sales force
sales & sales &
effective-
operations operations
ness
planning planning
Credit Loan
risk origination CPG
Direct Direct Store
Pharmaco Cash flow
sourcing & sourcing & opening
Application vigilance
procurement procurement
to
issuance Clinical data
Loan Credit Inquiry Inquiry Patient Logistics
manage-
origination risk to order to order flow planning
ment
Trade
Unsecured Disbursal promotions
Claim Aftermarket Aftermarket Trade Material Ware-
Lending and
processing services services promotions flow housing
origination servicing
BPO deals
Year Target Rationale Price Link to BU/corporate strategy
2011 ▪ Capabilities in analytics and business services in mortgage US$50 million ▪ Plugging the gap in mortgage
value chain offerings of FS
2009 ▪ Domain knowledge in investment banking, asset Large (2000 ▪ Expanding into new areas in
management and wealth management employees) FS; Strengthen horizontal
India service centre ▪ Strengthen BPO and KPO capabilities capabilities
2007 ▪ Strengthen CTS’s full suite of offerings across all areas of Life US$135 ▪ Access to key customers
Sciences value chain million ▪ Strengthen capabilities
▪ Access of 75 customers of target, including largest 20
pharma cos and 4 out of top 5 biotech companies
2009 ▪ Strategic consulting capability in ITSM and ITAM Small ▪ Strengthening capabilities in
▪ Talent and IP in Infrastructure process consulting a BU
2009 ▪ Consulting and SI capability in Oracle retail, merchandising, Small ▪ Acquiring capabilities in a
planning and optimisation suite growth area in a vertical
2008 ▪ Expanding consulting capabilities into media and Small (60 ▪ Expanding into a fast growing
entertainment industry, leverage relationships of target employees) vertical
2006 ▪ Increase the depth of infrastructure practice by acquiring high Small (100 ▪ Access to key customers
end network and infrastructure consulting capabilities and employees) ▪ Strengthen capabilities
delivery platform
Company A 17 -0.4
Company B 42 0.6
Company D 56 1.7
Company E 4 2.9
Year 0 Year 1
Laggards Value hunters
118
114
100
98
95 22%
91
88
▪ Optimized work force mix
▪ Tight capacity (e.g., part timers)
planning ▪ Reduced bench through
▪ Increase span of shorter recruitment and ▪ Increased seat
controls training cycle utilization
Middle Business
SLA performance Attrition management context and
strength understanding
Granular
Location (tier-1 vs. Speed of
Scale of the site performance
tier-2) execution
measurement
Business context
Upfront End-to-end Entrepreneurial
and
investments ownership top leadership
understanding
Differentiated
Technology/IT Insights and
Control of process talent
know-how analytics
proposition
3
Program architecture and how we plan
to work with you as part of the P@C
engagement
Your priorities
SOURCE: McKinsey analysis, Discussions with Wipro BPO leadership McKinsey & Company | 18
Objectives of the proposed Process @ core engagement to re-ignite
growth
Identification of 8-10
“granular” market cells to
compete in and sharp
articulation of why Wipro
Targeted BPO should win in those
dominance and
differentiation
Comprehensive
framework to Embedded
deliver superior capabilities in
business value the organisation
Winning to create and
through-out the
growth deliver value in
customer life-cycle Distinctive Best-in-
strategy a consistent
in any given value class
market cell fashion for all
assurance institutional
chosen market
model capabilities
cells
SOURCE: McKinsey analysis, Discussions with Wipro BPO leadership McKinsey & Company | 20
Our outside-in hypotheses for accelerating growth for the BPO business
1▪ Over the next 3-4 years, Wipro BPO should focus on 8-10 (of the ~30 potential) granular
Targeted growth cells to accelerate growth; Outside-in, cells in the retail banking (particularly
dominance and deposits), insurance (both P&C and life) healthcare (particularly payor) and F&A
differentiation (particularly Manufacturing, Retail and CPG verticals) areas appear most promising
2▪ Wipro BPO should position itself as a provider focused on delivering “business value
through insights and analytics” to differentiate itself vis-à-vis competition
3▪ To capture a disproportionate share of growth, Wipro BPO should develop each of its offerings
along a standardised BPM framework that encompasses the following five elements:
– Articulation of business value drivers: Define the primary ‘value dimension’ for the
process (e.g., cost per medical claim in healthcare payor claims offering, DSO for order to
cash in F&A offering)
– Proprietary value capture approach: Develop an approach that builds upon combination of
benchmarks/analytics, domain insights, IT tools/platforms and experts that underwrites value
Distinctive for the client (e.g., analytics around auto-adjudication of healthcare payor claims)
value – Rigorous execution framework: Develop the “best-in-class” operating environment
assurance covering process-maps, analytics, job-aids and performance management tools to enable the
model operations teams to systematically identify and capture value (e.g., treatment analyser for
collections, onboarding experience management analytics for retail banking customers)
– Reputation building approach: Craft a reputation building approach (e.g., through white-
papers, analyst coverage, client meets) to create “top of the mind recall” for Wipro BPO
offering
– Customised commercialisation approach: Tailor-made pricing model (e.g., ‘carve-outs’ for
onshore GBS, cost per transaction for routine processes) that ensures value delivery to
clients and drives the right behaviours at Wipro BPO
Natural
Banking and financial Tele- TTL &
Insurance Healthcare Life Sciences Manufacturing CPG Retail Reso- MPE Public services Others Total
services com Infra
urces
Service-
line Aero-
Medi- Pro- Indus-
space Natural
Comm- Capital Pro- Pha- cal cess trial Hi- Auto- Tele- TTL & Gover-
Retail P&C Life Payor & CPG Retail Reso- MPE Utilities Others Total
ercial market vider rma Devi- Indus- Mach- tech motive com Infra nment
defen- urces
ces tries inery
se
Core ops 11.0
Custo-
18.8
mer care
F&A 11.0
SCM 0.5
HRO 1.1
Total 9.9 1.3 3.0 1.2 0.9 1.0 0.8 1.4 0.4 0.8 0.7 1.4 0.5 0.1 0.5 3.5 9.5 0.6 0.3 0.5 0.5 3.0 0.8 42.4
SCM 0.4
HRO 1.3
Total 14.4 1.9 4.4 1.8 1.3 1.8 1.4 2.5 0.7 1.1 1.1 2.1 0.7 0.0 0.7 4.8 13.1 0.7 0.3 0.6 0.6 3.8 1.0 60.3
SOURCE: McKinsey Proprietary TAM analysis and expert interviews McKinsey & Company | 22
2 Wipro should aspire to position itself as a analytics/insights TPO EXAMPLE
led business outcomes enabler to differentiate in the market place
Core offering
Applicability depends on service offering
A
▪ Deliver cutting
Core analytics/ edge advanced
Performance
modelling analytics Planning Analytics Predictive Analytics
monitoring
across 3
modules
D
Manage TPO datamart
Clean and integrate data
Integrated data ▪ Integrate and
management manage data Promotions Shipment Product Customer Category
Sales Data
from 6 sources Library Data Data Data Data
1 2
3-4 external experts (e.g., former
CFO of retail chain in UK with
significant offshoring
5
Lift out deals for onshore
3
framework tailored to process
Finance - GBS centres Account prioritization and
Per FTE pricing for first time workflow
offshorers and extended Contact strategies
enterprise model for
specialist roles
Transaction
4 Job aids, tools and coaching
Performance management
based for
External reputation building
large P2P
Investments with clients
processes
Convening and network at events (e.g., web seminar on
generation performance management in O2C for back-offices)
Publishing industry insights (e.g., white paper in ‘CFO Magazine’
Top
Mother metrics Median quartile
48 34
Overall Days Sales Outstanding (DSO)
days days
Order
to Cash
Cycle Average bad debt rate as a
0.55% 0.26%
percentage of revenue
SOURCE: McKinsey BSF-OBI and Finance 360 database, external reports McKinsey & Company | 25
PROPRIETARY VALUE CAPTURE APPROACH
3 Value capture approach should consist of four elements and
brings elements like technology and analytics together F&A O2C
EXAMPLE
3 Increase breadth and effectiveness of inbound contact strategies (e.g., escalated letter and
Contact FedEx campaigns for high value accounts, using marketing best practices)
strategies Expand account research capabilities significantly, both for individual collectors and overall
4
tools
5 Increase granularity of guidelines governing loss mitigation and disposal options to prevent
leakage and increase consistency of outcomes across collectors (e.g., rules for settlement)
Contact 6 Standardise scripts and call flows with talking points and tactics to handle challenging
strategies customer situations (e.g., how to overcome customer objections)
aids, tools, 7 Develop standardized job aids that integrate regulatory compliance with performance
and coaching drivers (e.g., skip tracing practices and tools, “words that work”, settlement calculator)
8 Upskill supervisors and managers to be more effective coaches and leaders (e.g., managers
spend >50% of time coaching); re-define manager role as pivotal in ongoing capability building)
▪ Develop conviction in the sales team to put ▪ 2-day immersion sessions and coaching on the
significant effort behind ‘Wipro Cash++” tools and capabilities
Sales team
▪ Enable the front end teams to have 5-7% ▪ Realign incentive system contributing to
higher pricing relative to the peers strengthen brand values
▪ Ensure delivery teams across accounts ▪ Consistent metrics and KPIs measured across
Delivery communicate the same brand values and accounts
teams positions Wipro BPO as a leader in O2C ▪ Establish O2C core curriculum and training for
space agents and team leaders
▪ Create a dynamic cell that transforms delivery ▪ Regular process level benchmarking across all
O2C on O2C outcomes and helps build external accounts
practice reputation ▪ Publishing performance dashboards and
newsletters to clients on ‘Wipro Cash++’
▪ Define recruiting criteria that help select ▪ Marketing collaterals targeting candidates (e.g.,
candidates, including middle and senior incentives, fun-at-work, impact)
HR and managers to make a career in O2C vertical at ▪ Communication on O2C career track and
potential Wipro BPO trainings
talent
▪ Wipro BPO wide O2C rewards and recognition
program
Single-sourced situations
▪ Invest in clients to own end-to-end process and build
CoE. Multiple models (e.g., per transaction for cash
(new or existing)
application, partial outcome based for collections)
BPM academy to
Capabilities “Wipro BPO way” Responsive WBPO
coach change agents/
cockpit support functions
operations team
▪ Be custodians of the ▪ Develop the IP for ▪ Redesign processes ▪ Define rules of ▪ Develop
design of the ‘Wipro every process of critical support engagement between institutionalised way
BPO way’ category – definition functions to enable the offering SMEs of training BUs,
▪ Define the guiding of the value the ‘Wipro BPO Way’ and GTM sales-force practices and
principles for dimension, creation – Transition and (or account support functions in
development of IP of the differentiated solutions managers) across the BPO way
including offering, adapting the – Recruitment the entire sales and ▪ Lead certification of
execution framework, delivery life-cycle
Description and
benchmarks, – On-floor employees and
cookbooks and creation of tools change agents, e.g.,
characteristics performance
expertise management BPM navigators
▪ Program manage the – Middle
change, e.g., own and management
drive the project plan, capability
track deliverables, building
escalate and resolve
– Lean & six-
issues, measure and
sigma
track impact ▪ Cross-functional
team, sourced from
▪ Central, core team ▪ Distributed, within ▪ Cross-functional
the important ▪ Within every unit in ▪ Separate BPO
of 4-5 senior every unit (Retail team,
support sourced from
functions WBPO Academy with 1-2
Where it is practitioners Banking, the important dedicated Academy
embedded Healthcare) and support functions leaders, program
horizontal service managers
line (FAO, HRO)
3
Program architecture and how we plan
to work with you as part of the P@C
engagement
M0 M1 M2 M3 M4 M5 M6 M7…………... M12
▪ Prioritise
Project setup – offerings
and ▪ High level ▪ Establish governance and tracking mechanisms – ‘WIPRO BPO Way’ cockpit
1 establishing size of the
the size of the prize
▪ Own overall project timelines and staffing of resources
prize ▪ Staff the
core team
▪ Develop
collaterals Roll-out changes to generate the pipeline
Develop and ▪ Account plans
implement the
▪ Staff sales
3 teams and ▪ Lead generation activities (e.g., events)
go-to-market train them ▪ Discussions and pipeline tracking
plan ▪ Identify peo- ▪ Solutioning and pricing support
ple gaps
Roll-out changes to demonstrate
▪ Design solutions
Demonstrate ▪ Baseline and gain customer
impact Implementing the scale
value capture and
approvals
▪ Track metrics and process up roadmap across other
4 in 2-3 accounts establish changes process categories
for 1 process ‘from-to’ ▪ Initiate proprietary ▪ Coach managers and teams
group tool development ▪ Visual management changes
▪ Codify solution
design process ▪ Staff BPM academy
Embed
▪ Design and staff ▪ Define KPIs
5 capability for
BPM academy ▪ Detail-out scale-up
scale-up
▪ Redesign support plan for next wave
functions processes
1.1 Prioritization of the cells/ arrowheads and 2 processes – 1 existing and 1 emerging
1 Project setup
1.2 Quantified opportunity at stake for the project: well-defined metrics and outcomes
2.1 Refined BPM framework that will be applicable across all process categories
Designing the 2.2 BPM Delivery Cookbook comprising (i) Diagnostic toolkit – defined analyses,
2 templates and tools (ii) Solution design for value dimensions, proprietary value
Wipro BPO way
capture approach, rigorous execution framework and (iii) Tactical implementation
plan, process dashboards with KPIs
3.1 List of prioritized accounts and existing deals
Develop and
3.2 Customer collateral, for both process categories
3 implement the
GTM plan 3.3 BPM Sales cookbook comprising (i) Customer engagement collateral (ii) GTM &
reputation building, commercialization (pricing models and performance mgmt)
4.1 Baselining and target setting of business process and operational metrics for the
Ensure value prioritized 2 process categories
4 capture in pilot 3-4
accounts 4.2 Solution design of all key levers to build world-class process, along with detailed
Tactical Implementation Plan for rollout
5.1 Design of key organizational levers to build 5 capabilities for sustenance
5.2 Design of key support processes at the interface including transition, TA, middle
Embed capability
5 management capability, Process excellence
for scale up
5.3 Academy design to train and certify Wipro BPO employees on the business process
delivery framework, certify a cadre of change agents
Wipro BPO McKinsey ▪ Help shape project direction, t ▪ 15-20% per week through
▪ BU heads (50%+ of time) ▪ Sameer Khetarpal
quality and time-lines – Reviews
▪ Additional members (50%+ of ▪ Indy Banerjee ▪ Participate in problem solving, – Working sessions
time) Co-developing – Brain-stroming
recommendations, and workshops
communicating results across
Core team teams
+
Global Network of McKinsey experts, available on-demand
▪ Prior to joining McKinsey, Sameer spent nearly five Prior to joining McKinsey, Indy’s career highlights include
years leading global operations in finance and ▪ TPI – Partner for South Asia
accounting at GENPACT ▪ Shared services leader at General Motors
▪ Vice President (operations) at GECIS (now GENPACT)
Deep understanding of • Served/analysed leading BPO providers through direct effort (7 out of top 10 BPO providers in
2 and experience in India) as well as indirect efforts (involved in 8 out of 10 BPO due diligences)
building provider value • Supported 3 out of the top 5 players in developing and scaling BPM offerings
propositions • Supported nearly 20 clients on their partner selection process in the last 5 years
• Proprietary Target Addressable Model (TAM) with current and projected market sizes
3
Proprietary assets and • Proprietary process-level benchmarks for all 4 in-scope areas (26 companies for retail banking;
partnerships to drive 18 for capital markets, 20+ for Healthcare payor; 60+ for F&A)
organic growth • Partnership with RevenueStorm, a leading sales training firm with 30+ experienced trainers, for
sales capability building
Deep understanding of • Worked with Wipro on several key priorities in last 3 years – 9 engagements in the last 3 years
Wipro and proven track • Proven track-record in serving Wipro on service offering development and scaling up (e.g.,
5 Service management with MHT BU, Analytics for RCTG BU)
record of delivering
value
• 4-week upfront investment to help Wipro BPO shortlist the high potential growth areas and
6 Willingness to invest develop differentiated positioning (additionally margin enhancement diagnostic optional)
for Wipro BPO success
(5 months) (3 months)
Baselining & target setting ▪ Conduct interviews with key stakeholders to define the solution
design areas for each of the 5 distinctive capabilities that are
▪ Define baselines for the 3-4 chosen accounts, for needed for sustainability
the 2 process categories
▪ Design the organizational changes required to setup the Central
▪ Define targets and desired ‘From-To’ state team, Practice team and Change management team – including
identification of people, definition of career tracks
Solution design ▪ Create the blueprint for the BPM academy including training
modules, certification, trainers and rollout
▪ For the key gaps identified in From-To, design the
end-state solution as per the Wipro BPO way ▪ For the BPM framework rollout, design the changes required to
cookbook enhance the effectiveness of the support functions
▪ Define the solution areas for delivery for each ▪ Design the change management initiatives around (i)
process category, creating a TIP for Monday- communication and branding (ii) role modeling (iii) rewards and
morning implementation recognition setup with changes to incentives, G&Os (iv) systems
enablement
▪ Post-design, the change agents will work closely
with the account teams to launch implementation ▪ Create an implementation plan for launching the initiatives
▪ Closely monitor progress – along deliverables and ▪ Launch tracking and monitoring
impact
Scale up
▪ Roll out the new Wipro BPO way in the 2 process
categories across all accounts in wave-like
fashion