Location strategies, trends, developments & tips for Shared - - PowerPoint PPT Presentation

Buck Consultants International P.O. Box 1456 6501 BL Nijmegen The Netherlands P: +31 24 379 0222 F: +31 24 379 0120 E: johan.beukema@bciglobal.com E: josefien,glaudemans@bciglobal.com

Location strategies, trends, developments & tips for Shared Services Centers

Johan Beukema Managing Partner Josefien Glaudemans Partner 12 May 2016

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Partner

Buck Consultants International

Josefien Glaudemans

Your presenters today

Welcome!

Managing Partner

Buck Consultants International

Johan Beukema

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1 Short profile Buck Consultants International 2 Strategic questions for your global footprint 3 Location selection methodology 4 Geographic locations: positioning & trends 5 Some selected tips & tricks 6 Q&A

Agenda

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1 Short profile Buck Consultants International

Founded in 1985, Buck Consultants International is a worldwide operating leading, independent location advisor & supply chain specialist  Location studies for new operations (sites/buildings) for headquarters, shared services center, R&D, manufacturing & warehousing  Developing a comprehensive strategic corporate real estate plan, including

• bjectives, trend analyses and

identification of regions  Supply chain strategy, network design and optimization  International business planning (including market research, industry analysis, and competitor analysis)  Project management and implementation

Atlanta, GA Shanghai, CN

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Profile Buck Consultants International (BCI)

 Extensive track record in thirty years: 2,000 projects for 1,500 clients in 40 countries  Tailor-made approach  Cost-effective  Businesswise & result oriented  Independent/unbiased  Fixed time frame  Global reach  High customer satisfaction degree  60 professionals

BCI’s Corporate Consulting Services

Delivering Strategic Solutions to Corporations

International Business Strategy Corporate Real Estate Supply Chain Site Selection

BCI ‘s consultancy services

 International Business Strategy  Business Case Scenarios  International Footprint Modelling  Investment Decision Making Support  Location Strategies & Site Selection  Market Research & Labor Market Analysis  Hands-on Support: incl. Site Visits  Investment Incentives Support

BCI’s Characteristics

Focused on adding value

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Clients in High Tech, ICT & Electronics (sample)

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Clients in Life Sciences (sample)

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Clients in Fashion and Apparel (sample)

OAKLEY

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Office projects: headquarters & shared services centers

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Sample clients in other industries

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 What are your business drivers for your SSC/back office organization?  What can be gained from implementing new solutions and/or locations?  What are the strategic objectives that play a role?  What are the functions (high level) to be included in your new support organization?  Will we do this ourselves or do we outsource (parts) of the support functionality?  What is the ideal concept? Multi-functional center versus function-specfic?  What is the right scope & scale for these activities?  Do we have a business case?

2 Strategic questions for your global footprint

Benefits from optimising your Shared Services organisation

Cost savings/ROI Quality improvement Effectiveness of people

• Headcount reduction
• Efficient use of space
• Cross-selling, up-selling, etc.
• Decrease in working capital
• Better access to support
• Global connectivity (24/7)
• Standardisation of systems
• Business processes refined
• Consolidation of functions
• Concentration of know-how
• Productivity improvement (KPI)
• In-company training

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Possible footprint configurations

X

H Q

Consolidated Configuration Functional Groups

Strategic IT, Operations, Shared Services, Customer Services

Cluster Configuration Functional Groups

Strategic Shared Services, Customer Services IT, Operations

Distributed Configuration Functional Groups

Strategic Shared Services IT

X

H Q

X

H Q

Y Z Y A

Operations Customer Services

Consolidate multi functions to one

• r very few locations

Utilize locations most optimal for each function’s profile, skills and cost objectives Cluster functions with more similar work for profiles and level

• f skills in a network of

corresponding locations

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National markets have national centers

1 National markets have national centers 2 Regional markets served by various own/

• utsourced regional centers
• wn/outsourced regional centers

Captive SSC Outsourced SSC

3 Regional markets served by centralized centers 4 Regional markets served by own/

• utsourced off-shored centers
• wn/outsourced off-shored centers

Captive SSC Outsourced SSC

Geographical business models

Finding the balance in centralization or decentralization is key

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3 Location selection methodology

Each back office project has its own requirements

Customer Care Center Shared Services Center

Software Development Center

Legal Support Center Innovation Center Center of Excellence … Call Center HR Support Center Finance Support Center Business Support Center Technical Support Center

Reservations Center

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Phase 2 In-depth assessment selected target areas Phase 3 Site visits and identification of sites

Site visits to top 3-5 locations*) Detail analysis of top 10 locations*) Profile, location requirements & all location options

Phase 1 Start up: Definition investment profile, skills sets, location requirements, geographical scope Selection of long list of locations Phase 5 Recommendation: preferred & back up location

1 location

*) Indicative number

Short listing process: Kick off & Project brief Desk research & Reporting Site visits & Reporting Conclusions & Recommendations

Methodology Step by step approach

Phase 4 First negotiations

Site selection process: narrowing down from global to site level

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Project specific location criteria

In general, the Buck Consultants International approach focuses on the location specific costs, quality and risk factors of the new location

+

 Running cost: employment, occupancy cost, transportation  Cost to achieve: start up (building, travel, recruitment, training), relocation & exit cost 

• /- investment subsidies

& grants  Labor availability & quality  Experience & competition  Labour flexibility  Language skills  Accessibility  IT reliability  Strategic alignment  Business environment

Cost factors Quality factors +

 Political risk  Economic risk  Financial risk  Transparency risk  Legal risk  Natural disaster risk

Risk factors Total inflated 3-5 year cost

(in Mln US $)

Total weighted attractiveness score

(1 = negative, 5 = positive)

Total weighted risk score

(Low / Medium / High)

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Detailed cost location factors example

Running cost 1 Total employer’s cost

1.1 Function x 1.2 Function y 1.3 Function z 1.4 Management

Running cost 2 Real estate costs

2.1 Total cost (rent & charges) 2.2 Transition cost 2.3 Other cost

Cost to Achieve 6 Exit cost

6.1 Severance cost 6.2 Loyalty premiums 6.3 Other costs

One time -/- 7 Investment Incentives

7.1 Capital grants 7.2 Recruitment grants 7.3 Training grants 7.4 Tax & other incentives

Cost

Cost to Achieve 5 Build out cost

5.1 Design cost 5.2 Build out cost 5.3 Transition cost 5.4 -/- Rent free period 4.1 Recruitment cost 4.2 Training cost 4.3 Dual running cost 4.4 Travel cost & expenses 4.5 Relocation / Expat cost

Cost to Achieve 4 Labour Related Running cost 3 Other YoY cost

3.1 Telecom cost 3.2 Management time 3.3 Travel & transportation 3.4 Other cost

Cost are presented as total inflated 3-5 year cost in preferred currency

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A

Other Investments Energy & environment Import/ export Technology/ R&D Taxes Personnel/ talent

F E D C B

Investments Land/sites Technology/R&D Taxes Personnel/talent Energy & environment

Incentives/grants/taxes

 Different tax rates/tax regimes in each country  Varies not only per country but also per region  In Europe: Large influence

• f European Commission

for EU-28 member states

Framework for incentives/grants/taxes

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 capital investment incentives (initial)  capital investment incentives (follow-up investments)  interest free loans  subsidy for modernisation of capital assets  investment related job grants  (re)investment allowances  specific industry grants  matching investment subsidies of competing regions  regional/enterprise zone grants  strategic investment subsidies

A Investments

 land subsidy  subsidy for improvement of site/industrial estate  subsidy for infrastructure on site  subsidy for infrastructure to site  reduction/exemption property tax  exemption of building taxes  subsidy for temporary building  R&D grants-upfront  R&D grants-shared risk  regional technology risk loan  match with national R&D programmes  match with international R&D programmes  R&D tax credit scheme  industry-university link programmes  sharing of facilities  suppliers scheme  quality improvement scheme  venture capital

B Land/sites C Technology/R&D

Framework for incentives/grants/taxes

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 job grants  grants for safeguarded jobs  reduction of social security contribution costs  training grants (start, continuous)  subsidy for training/testing facilities  recruitment assistance  subsidy for hiring specific job seekers (e.g. unskilled, disabled)

D Personnel & talent

 tax concession/allowance  tax ruling  depreciation allowance  sales/value added corporate income tax reduction  currency risk insurance  local business tax concession

E Taxes F Energy & environment

 subsidy for utility costs  subsidy for energy saving programmes/equipment  subsidies for re-use of heat  subsidies for environment quality enhancing programs/equipment

Framework for incentives/grants/taxes

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A Availability of qualified labour

A1 Size of the labour pool A2 Skill sets A3 Unemployment levels A4 Competition on the market

B Competition on labour market

B1 Other employers in market B2 Saturation rate B3 Turnover & loyalty

D Labour flexibility

D1 Worker motivation D2 Flexibility D3 Working schedule flexibility

E Labour relations

E1 Labour relations (including unions) E2 Firing regulations E3 Works councils E4 Strikes

H Quality of life

H1 Quality of life H2 International schools H3 Visa regulations H4 Cultural fit

Quality

Detailed quality location factors example

C Language skills

C1 Quality & availability C2 Writing & speaking C3 Accents / Natives

F Real estate

F1 Quality of real estate F2 Availability of real estate F3 Flexibility/lease terms/ F4 Timing

G Accessibility

G1 Local/regional accessibility by public transport or car G2 International accessibility

Quality is presented as a total weighted quality score based on relative weightings for all factors and subfactors and a score between 1 = negative and 5 = positive for all factors

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Detailed risk location factors example

A Political Risk

A1 Government stability/democracy A2 Geopolitical conflicts A3 Religions/ethnic tensions

B Economic Risk

B1 GDP per Capita B2 Development economy B3 Inflation B4 Budget balance C1 Financial Risk rating C2 Exchange rate C3 Exchange rate stability C4 Total (foreign) debt C5 Banking system

E Legal Risk

E1 Permits E2 Red tape E3 Patent Infringements

F Natural Disaster Risk

F1 Climatic catastrophes F2 Hydrological catastrophes F3 Meteorological events F4 Geophysical events

Risk

D Transparency Risk

D1 Corruption D2 Bureaucracy D3 Bribery of public officials

C Financial Risk

Risk is presented as a total risk score (Low/Medium/High) based on relative weightings for all factors and a score between Low/Medium/High for all factors

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Example: C-Q-R positioning of locations

Risk Score

Weighted quality scores Euro (first 5 years) 2.5 4.5 3 120 80 110 100 4 90 3.5 Location 3 Location 2 Location 4 Theoretic

• ptimum

J L

Low Medium High Weighted quality scores Total cost in US $ million 2.5 4.5 3 4 3.5 Theoretic

• ptimum

J L

Location 1 Location 5

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4 Geographic locations: positioning & trends

Changing location drivers

Targeted Geographies Location Drivers

Consolidation Right Sizing Operational Efficiencies Geographic Diversification Disaster Recovery Late 90’s

USA Western Europe

Globalization Labor Arbitrage Offshoring Geo-Political Concerns Dot Com Era

India Philippines Central Europe

Wage Inflation Labor Saturation Labor Market Longevity Nearshoring Reshoring Risk Aversion Home Agents Post Great Recession

Philippines Eastern Europe Northern Africa Latin America UK/Ireland USA

Source: BCI & SSG, 2016

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High level positioning of global regions

Different drivers and strategies per geography

Americas Asia-Pacific (APAC) Europe, Africa, Middle East (EMEA)

Mainly country

• nly or
• ffshored

National solutions Mature Market Upcoming ‘China for China’ Mature + upcoming Upcoming ‘Russia for Russia’

• Maturing market
• Upcoming new locations
• US Nearshoring
• Mature market
• 2nd & 3rd tier

cities

• Reshoring
• Mature Market
• Upcoming

locations

• 2nd & 3rd tier cities
• Re- & Nearshoring
• Mature Market
• Further growth

Upcoming

Source: BCI, 2016

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Sample: Companies operating across LATAM

Mexico Brazil Costa Rica Jamaica Dominican Republic Colombia

Especially for or US based multinationals, LATAM offers interesting

• pportunities near shore, many BPO players active

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LATAM Hotspots

Current & future locations for international Support Centers

Montego Bay, Jamaica Heredia, Costa Rica Guadalajara , Mexico Montevideo, Uruguay San Pedro Sula, Honduras Managua, Nicaragua Guatemala City

CURRENT HOTSPOTS FUTURE HOTSPOTS

Curitiba, Brazil Santo Domingo, Dom. Rep. Panamá City, Panamá Bogota, Columbia Mexico City, Mexico Sao Paulo, Brazil Monterrey, Mexico Querétaro, Mexico San Jose, Costa Rica Lima, Peru

Current hotspot National capital Future hotspot

Source: BCI, 2016

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Sample: Companies operating across APAC

India Philippines Singapore Malaysia China Thailand Vietnam

Especially for or English speaking services many multinationals have already benefited from the interesting opportunities in APAC

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APAC Hotspots

Current & future locations for international Support Centers

Bangkok, Thailand Ho Chi Min City, Vietnam Cebu City, Philippines Shenzhen, China Johor Bahru, Malaysia

CURRENT HOTSPOTS FUTURE HOTSPOTS

Colombo, Sri Lanka Kuala Lumpur, Malaysia Shanghai, China Singapore Bangalore, India Manila, Philippines Chennai, India Jakarta, Indonesia Hong Kong, China

Current hotspot National capital Future hotspot

Source: BCI, 2016

Kerala, India

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European Hotspots

Current & future locations for pan-European Support Centers

Sofia, Bulgaria Timisoara & Cluj-Napoca, Romania Gdansk & Lodz, Poland Belfast, UK Lisbon, Portugal Baltic States Zagreb, Croatia Istanbul, Turkey

CURRENT HOTSPOTS FUTURE HOTSPOTS

Debrecen, Hungary Bratislava, Slovakia Budapest, Hungary Prague, Czech Republic Warsaw & Krakow, Poland Glasgow/Edinburgh, UK Cork, Ireland Manchester, UK Leeds, UK Barcelona, Spain Bucharest, Romania Belgrade, Serbia

Current hotspot National capital Future hotspot

Source: BCI, 2016

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Companies operating across CEE

Poland Czech Republic Slovakia Hungary Romania Baltics

at&t

As mature market CEE still offers attractive SSC locations

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Are you prepared for a potential Brexit?

Center of Gravity

Before Brexit After Brexit?

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Western Europe Location Strategies

Onshore & Offshore Strategies Differ from the U.S.

UK Spain France Germany Italy Benelux Nordics On- Shore

Scotland, Wales, N.Ireland Lower cost cities Lower cost cities Lower cost cities (East) Lower cost cities (South) Lower cost cities Lower cost cities

Near- Shore

• Malta/ CEE
• Egypt
• South Africa
• Ghana
• Morocco
• Tunisia
• Romania
• Morocco
• Tunisia
• Romania
• Turkey
• Egypt
• Poland/

Czech Rep./ Slovakia

• Romania/

Croatia

• Turkey
• Egypt
• Romania
• Croatia
• Egypt /

Lybia limited

• Turkey
• Morocco
• Baltic

States

Off- Shore

• India
• Philippines
• LATAM
• Argentina
• Mauritius • Namibia
• South Africa
• LATAM but

very limited

• South Africa
• Surinam
• NA

Source: FirstSource, completed with experiences BCI, 2016

 CEE is often regarded for pan-European activities, as European language skills are more available nearshore then offshore  Lower cost options in (Northern) Africa with language skills available, however political unrest in the region still hinders full potential

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Labor arbitrage strategies

Wage reduction of 20% to 60% are feasible

• 10.000

20.000 30.000 40.000 50.000 L

• n

d

• n

F r a n k f u r t B e l f a s t B e r l i n B u d a p e s t B u c h a r e s t C a i r

• C

a s a b l a n c a M a n i l l a B a n g a l

• r

e Western European benchmark locations Onshore Nearshore Central & Eastern Europe Nearshore North Africa Offshore Asia

Average annual total employers cost for a basic BPO agent speaking English + another European language (in USD)

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Regional review of Africa

Some facts & figures

Africa in Headlines

Rainbow Nation

 Inhabitants > 1 bln  Size economy > 2 trillion $  Countries 54  Land mass: China, India, Japan, America, Mexico and Europe combined  GDP growth: 11 of the world’s 20 fastest- growing economies until 2017 in Africa

GDP current prices

(in US$)

Source: IMF , 2015 Source: BCI, 2016

Largest Cities in Africa

Cities with about 1 mln+ inhabitants

North Africa Sub-Sahara Africa

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The African potential

Strategic language groups present

Source: MT Magazine, October 2013, adjusted by BCI, 2015

World languages spoken

English Spanish Arabic Arab and English French

English 335 million speakers in 101 countries French 338 million speakers in 29 countries Arabic 223 million speakers in 59 countries

Large diversity in languages & cultures due to ‘colonial’ legacy:

• Anglophone countries (English)
• Francophone countries (French)
• Lusaphone countries (Portuguese)
• Innumerable ethnic and social groups
• > 2,000 languages in total

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African Country Comparison

Many Emerging Markets with Potential Scalability

Language skills/ former colonies1 Size BPO/SSC/CC Community Employers Cost Per Month for Language Speaking Agent

South Africa

English, German Mature: Large Market Est: ~100,000 seats Euro 900 - 1,100

Mauritius

English, French Mature: Small Market Est: ~10,000-15,000 seats Euro 800 - 1,000

Morocco

Arabic, French, Spanish Mature: Medium Market Est: ~20,000- 25.000 seats Euro 800 – 950

Tunisia

Arabic, French, Italian Mature: Medium Market Est: ~15,000 -20,000 seats Euro 800 – 950

Egypt

Arabic, English, French, German, Italian Emerging: Large Market Est: ~20,000-30,000 seats Euro 650 – 850

Senegal

French Upcoming: Small Market Est: < 10,000 seats Euro 650 - 850

Kenya

Swahili, English Upcoming: Small Market Est: < 10,000 seats Euro 650 – 850

Ghana

English Upcoming: Small/Medium Market Est: < 10,000 seats Euro 300 – 500

Ethiopia

Amharic, English Immature: Very Small Market Euro 300 - 500

1 The first language is the official language, followed by the second and/or third language spoken in a country

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Companies Operating in Africa

Mixture of Captives & Oursourcers

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Commentary on Africa’s Conditions

Things to Know about Africa

 Labor regulations: longer working weeks,

more flexibility, less women employment, weekly & summer working times (and in case relevant Ramadan)

 Accessibility: road & air connections in

Northern Africa comparable to CEE, public transport less developed (organized by companies for staff)

 IT infrastructure: is of average quality in

Northern Africa, poor in Sub-Saharan regions (Ghana, Kenya, Botswana), high quality (at decreasing cost) in South Africa

 Real estate: relative expensive & availability is

not everywhere guaranteed

 Demographics: strong urbanization & very

young population, in some countries (like Tanzania) more than half of the population is below 15 years of

• age. Life expectancy is relatively short (~50 – 55

years)

 Ease of doing business: bureaucracy &

corruption

 Risks: political, social, safety, other hazards

Source: United Nations World Population Prospect; McKinsey Global Institute, 2013

Size of the working-age population 1

Africa’s workforce will become the world’s largest by 2040

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A Information is not intelligence B Never rely on one source C Do not underestimate the impact of historical background D Keep in mind local practicalities E Different perspectives

5 Some selected Tips & Tricks

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A Information is not intelligence Gross or base salaries versus total employer’s costs

Example BPO Project Total employers’ cost for a university graduate speaking (European) languages in Manchester (UK) and Brno (Czech Rep.)

Manchester Min. Max. Base salary 16.360 31.460 Bonus Language Bonus Social Security 7.5% Euro 1.500 12.8% Total employers’ cost 21.500 39.900 Difference with base salary +31% +27%

Source: Buck Consultants International

Brno Min. Max. Base salary 12.400 17.350 Performance bonus Social Security Pension Plan 10% 35.0 3% Lunch Euro 435 Total employers’ cost 19.400 26.970 Difference with base salary +56% +55%

Conclusions

 Based on Gross Salary: cost savings potential of about 40%  Based on Fully Loaded Employers’ cost: cost savings potential of about 20%

Cost

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Example: total add up on top of gross annual salary to come to the total fully loaded (employers’) cost in support industry

Source: Buck Consultants International, based on projects 2014/2015

In general, total add ups to come to fully loaded employer’s cost include:

 Social security and employers taxes  Pension plans on top of social security  Medical plans on top of social security  Bonuses (e.g. additional month)  Performance bonus  Other permanent allowances such as food or lunch, transportation, housing, school allowance, language or seniority premiums etc.

Country Social security & employers tax Pension Plan Medical Plan Performance bonus Other Total South Africa

• 7,5%
• 10,0%

2,0% +19,5% UK 13,8% 7,0% 3,0% 5,0%

• +28,8%

Philippines 3,0%

• 1,8%

8,0% 16,3% +29,1% USA, Chicago 8,2% 5,0% 9,0% 8,2%

• +30,4%

Slovakia 35,8% 5,0% 0,6% +41,2% Argentina 27% 7,5% 7,5% 10,5% 7,5% +60,0% UAE ~40% in total 10-40%

• +50-90%

Overview excluding: visa cost, lease cars, hardship bonuses, night shift premiums etc. (when applicable)

Cost

A Information is not intelligence

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Average national salaries versus regional differences

• 30-40%
• 20-30%

Paris Lille Munich Halle

• 10-20%
• 20-30%

Cost

The differences within countries can be larger than between countries

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Dubai

+15-20%

+15-30%

Abu Dhabi

Average national salaries versus regional differences

Cost Capitals are not always most expensive

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B Never rely on one source Always work with ranges

Euro 25.000 Euro 40.000 Regional development agency Recruitment agency Similar investor

Cost Example: input on salaries during site visits from different sources

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C Do not underestimate the impact

• f historical backgrounds

TUNISIA MOROCCO SAHARA

ALGERIA MAURITANIA MALI NIGER LIBYA CHAD Mediterranean Sea Sea EGYPT SUDAN ETHIOPIA

ERITREA

SOMALIA

KENYA TANZANIA

DEMOCRATIC (ZAIRE) CENTRAL RWANDA GABON EQUATORIAL ANGOLA CONGO

NIGERIA

BENIN DTVOIRE SIERRA SENEGAL GHANA THE GUINEA LIBERIA SOUTH AFRICA

MALAWI ZAMBIA MOZAMBIQUE MADAGASCAR ZIMBABWE BOTSWANA SWAZILAND

Indian Ocean Indian Ocean

LESOTHO NAMIBIA

ANGOLA

South Atlantic Ocean

WESTERN

Red

UGANDA OF THE CONGO REPUBLIC BURUNDI GUINEA

• REP. OF

TOGO COTE BURKINA GUINEA LEONE GAMBIA BISSAU Walvis Bay

SOUTH

REPUBLIC AFRICAN THE

AFRICA

DJIBOUTI

British French Italian Portuguese German Belgium Spanish Independent

CAMEROON

TUNISIA MOROCCO SAHARA

ALGERIA MAURITANIA MALI NIGER LIBYA CHAD Mediterranean Sea Sea EGYPT SUDAN ETHIOPIA

ERITREA

SOMALIA

KENYA TANZANIA

DEMOCRATIC (ZAIRE) CENTRAL RWANDA GABON EQUATORIAL ANGOLA CONGO

NIGERIA

BENIN DTVOIRE SIERRA SENEGAL GHANA THE GUINEA LIBERIA SOUTH AFRICA

MALAWI ZAMBIA MOZAMBIQUE MADAGASCAR ZIMBABWE BOTSWANA SWAZILAND

Indian Ocean Indian Ocean

LESOTHO NAMIBIA

ANGOLA

South Atlantic Ocean

WESTERN

Red

UGANDA OF THE CONGO REPUBLIC BURUNDI GUINEA

• REP. OF

TOGO COTE BURKINA GUINEA LEONE GAMBIA BISSAU Walvis Bay

SOUTH

REPUBLIC AFRICAN THE

AFRICA

DJIBOUTI

British French Italian Portuguese German Belgium Spanish Independent

CAMEROON

Example: Availability of language skills & colonial heritage Quality

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Example: Historical heritage, differences in jurisdiction & legal system

Source: University of Berkeley, 2013

Common versus Civil law countries

Quality

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Example: working schedule flexibility & religion

Ramadan dates between 2010-2020 (the 9th lunar month of the year)

CE/AD AH First day Last day 2010 1431 11 August 10 September 2011 1432 1 August 30 August 2012 1433 20 July 19 August 2013 1434 9 July 8 August 2014 1435 28 June 28 July 2015 1436 18 June 17 July 2016 1437 6 June 5 July 2017 1438 27 May 24 June 2018 1439 16 May 14 June 2019 1440 6 May 4 June 2020 1441 24 April 23 May

 Working days from 8 to 6 hours during the holy month % of Muslim population

Source: Pew Research Center, 2014

Quality

D Keep in mind local practicalities

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Quality Example: Working schedule flexibility European working week Islamic working week

Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun

Working days Days of rest

D Keep in mind local practicalities

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E Different perspectives

Risk Example: Competition on the labour market

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1 Decreasing labour arbitrage 2 Limitations of scalability and growth due to unfavourable labour market 3 Offshore location does not meet the

• riginal objectives & requirements

anymore 4 Upcoming locations from 10 years ago become mature and saturation effects are visible 5 Social & political unrest is hindering daily business 6 Productivity and customer satisfaction levels lag behind due to cultural issues

Risks

1 Focus on value added activities 2 Model possible functional and geographical footprint 3 Develop the right strategy for the right shore 4 Shift to newer and smaller locations (2nd & 3rd tier cities) 5 Take risk assessments into account 6 Use our tips & tricks or come talk to us in more detail

Rewards

Selected SSCs Risks & Rewards

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 Link the location decision process with the overall corporate strategy  Take a longer term corporate view  Escape from a narrow scope  Verify and record all assumptions of the process  Set clear priorities in location requirements  Focus on regions, not countries  Feelings can be fact too

Site Selection - Lessons learned

 Anticipate future regional developments (forecast costs)  Search for excellence in terms of region, site & building  Develop an exit scenario (flexibility)  Challenge all information you get  Plan the project’s process thoroughly  Always negotiate a better deal

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6 Q&A

Thank you for your attention! Feel free to ask your questions now…

Alternatively contact us at: Buck Consultants International Kerkenbos 10-31 P.O. Box 1456 6501 BL Nijmegen, the Netherlands Telephone: +31-24-3790222 www.bciglobal.com Email Johan Beukema Johan.Beukema@bciglobal.com Email Josefien Glaudemans Josefien.Glaudemans@bciglobal.com

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Please also note that Josefien will be present during the 16th Annual European Shared Services & Outsourcing Week 2016, May 24-26 in Dublin and would be pleased to meet with you there & then to discuss things in more detail! Please reach out via Josefien.Glaudemans@bciglobal.com

16th Annual European Shared Services & Outsourcing Week 2016, May 24-26 in Dublin