Business process outsourcing (BPO) represents a strategic and efficient life raft for companies striving to stay afloat in these tumultuous times. If implemented appropriately, BPO can be a fast and simple solution to rapidly reduce costs, help companies survive the economic downturn and set the stage for future growth and expansion after the economic tsunami subsides.Read more such articles at http://www.wns.com/Insights/tabid/56/Default.aspx

1. Business Process Outsourcing:
A survival tool for logistics companies in
uncertain times

2. Today's economic climate is clearly causing Business process outsourcing (BPO) represents a
gloom, doom, fear and often panic for the logistics strategic and efficient life raft for companies
industry. A host of factors - the credit crunch, striving to stay afloat in these tumultuous times.
unprecedented economic volatility, deteriorating If implemented appropriately, BPO can be a fast
consumer confidence, yo-yoing fuel costs, and simple solution to rapidly reduce costs, help
increased governmental regulations, declining companies survive the economic downturn and set
revenues, severe earnings and cash flow the stage for future growth and expansion after
pressures, loss of pricing power and excess the economic tsunami subsides.
capacity - together are significantly impacting the
industry's bottom line.
Need evidence of how bleak the state of the
logistics industry really is? The following are just
a few examples which indicate how treacherous
the waters are
Hapag-Lloyd,
n the German container shipping
line, swung to a loss of $302 million in the first
quarter of 2009 from a $24.5 million profit a
year ago on double digit declines in cargo
volumes and freight rates. (Source: Journal of
Commerce)
UPS'
n 1Q09 results showed revenue was off
13.7 percent at $10.9 billion. The continuing
deterioration in global economic activity
resulted in decreased revenue and profitability
in all business segments. (Source: UPS investor
Why BPO for logistics companies?
relations website)
Rapid cost reduction is mandatory for companies
Freight
n traffic on U.S. railroads was down trying to survive the most challenging economic
sharply during April 2009, carload traffic fell by climate in over 60 years. And while they have
23 percent, and intermodal car traffic dropped been laggards in BPO uptake, logistics companies
by 17.9 percent, as compared to April 2008.
can gain significant cost savings value by
Combined cumulative volume for the first
leveraging BPO. For example, approximately
17 weeks of 2009 on 12 reporting U.S. and
Canadian railroads was 5,573,088 carloads, 60 percent of a logistics company's operating
down to 19.0 percent (1,308,561 carloads) costs are attributable to customer service.
from last year. (Source: Association of American Of this, roughly 60 percent is back-office
Railroads) document processing or phone-based customer
contact. Outsourcing these processes to a logistics
Year-over-year
n tonnage freight is expected industry-savvy service provider can deliver cost
to bottom at - 10.3 percent in 2Q09 savings of 40 - 50 percent
before beginning a slow rise to a still stressful
of - 6.6 percent in 4Q09. For truckers, this
promises steadily increasing pressure on rates
into the summer months. (Source: FTR
Associates)
BPO to the rescue
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3. Business Process Outsourcing:
A survival tool for logistics companies in uncertain times
Process In-house, onshore cost range Offshore BPO cost range
Bills of lading processing $5.00 - $8.00 per each $2.00 - $4.00 per each
Airway bill manifesting $0.30 - $0.40 per each $0.10 - $0.20 per each
Accounts payable $0.90 - $1.33 per each $0.52 - $0.83 per each
(Source: WNS)
But BPO delivers benefits which extend far 2. Approach outsourcing with an open mind
beyond cost savings, including moving costs from The BPO industry has moved well beyond
fixed to variable, maintaining focus on the delivery of volume-based voice and data work
customer and retaining them in the face of into highly complex industry and insight
operating cost reductions, placing focus on processes - think freight audit, tariff filing and
knowledge rather than intuition to increase maintenance, claims management, billing,
revenue, consolidating delivery operations to exceptions management and marketing
standardize business processes, getting even more analytics. Therefore, smart companies
out of shared services costs and delivering collaborate with providers to determine 'the art
continuous improvement. Logistics companies of the possible.' They start the outsourcing
which have included BPO in their corporate discussion by saying, "This is where we need to
strategy are better poised to weather this get to, so how do we get there?". In the
economic storm which threatens to sweep even logistics industry, there are
the most established players away. a number of companies that are improving
their operating ratios by moving processes
offshore, either to captive operations or to
Clearing the decks for success -
third-party providers. Ocean carriers including
Seven simple rules for logistics Maersk, APL, Hapag-Lloyd, NYK, MOL and
companies CSAV initially pioneered the move offshore, by
setting up delivery centers in India and other
1. Ensure BPO is a CEO priority
lower cost countries such as Malaysia and
In uncertain times, sponsorship for critical
China. And third-party logistics companies
initiatives such as BPO must come from the very
such as FedEx, Exel, Penske, Ryder, Yellow
top. Only the CEO can deliver the message that
and Bax Global are taking the next step by
there are no other options for survival. Otherwise,
outsourcing to external BPO providers.
the imperative for outsourcing is not taken very
Processes delivered offshore include not only
seriously, and management sees implementation
rules-based work such as export
as optional, easily finding ways to opt out, with
documentation, and time sensitive shipment
arguments ranging from "outsourcing never
updates and tracking, but also more complex
works, we've tried it," to "the process is too
finance processes such as accounts receivable
critical to outsource" to "I have to implement
and consolidation of books. A typical business
new systems first". As many logistics companies
case for logistics companies delivers annual
with a history of private ownership try to stay
savings in the range of $1 million per 50 FTEs
afloat in the current environment and attempt to
when a documentation process is moved to an
reinvent themselves to stay ahead of the
offshore BPO provider, with a payback period
competition, there is clearly no time to lose or
for the initial investment, necessary for
room for 'management by consensus'. This is a
knowledge transfer and transition, of less than
decision for the CEO and no half measures will
9 to 12 months.
work. BPO succeeds for logistics companies
when there is clear visibility of the CEO behind
the wheel.
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4. 3. Keep it simple 4. Move fast
Speed to cost reduction with no diminution of Companies can quickly put in place
quality should be the first and foremost outsourcing programs by mandating that
objective of BPO as a survival tool. This is not aggressive timelines are a must. Truth is, there
the time to radically transform business is no change without urgency. If moving
processes, implement new enterprise quickly to implement BPO is not seen as vital
technology, put in the latest bells and whistles to the basic survival of the company, it will not
or conduct a wholesale overhaul of the logistics produce the desired results. But imposing
industry business model. Keeping it simple deadlines for the development and
means being realistic about the aspirations for implementation of a roadmap including scope,
the program in times of economic uncertainty, provider selection and transition will mobilize
and focusing only on obtaining the benefits the organization. For example, when a multi-
that truly matter now. Thus, logistics billion dollar North American shipping
companies should strongly consider company decided to move its export
outsourcing their simplest, most repetitive documentation process in Europe and the U.S.
documentation processes such as bill of lading to India, the CEO set an internal deadline of
and freight cargo receipt processing, billing, reducing onshore headcount by December 31st
airway bill manifesting, driver logs entry, and of that year to ensure that lower operating
freight bill capture and audit on an 'as is' costs kicked in as of the start of the new fiscal
basis. A BPO service provider with expertise in year. Establishing clear deadlines, especially
these areas can deliver cost savings for their when mandated by the CEO, gets the entire
clients in as little as 90 days. organization focused and moving quickly to
reap the benefits.
Rapidly reducing the cost structure for 5. Develop a realistic deployment plan
a European NVOCC Even when outsourcing is being implemented
for cost savings, many companies push for or
A leading European Non-Vessel Operating buy into an unrealistic transition roadmap in
Common Carrier (NVOCC) looked to reduce their haste to cut out more cost. And when the
its mounting staff costs in Europe, Latin first failure occurs because processes cannot
America and Asia. WNS' deep logistics be thoroughly documented, the network is not
industry knowledge contributed to a ready or work shadowing is insufficient, the
solution which standardized and migrated naysayers come out in force. A deployment
the NVOCC's entire import bill of lading strategy that builds up steam over time after
and import manifest preparation processes the success of initial phases is far more likely
among all its locations to one of WNS' to meet objectives. For example, due to the
offshore delivery centers, resulting in a geographically dispersed nature of the logistics
50 percent cost reduction. Further, the industry, a key initial consideration is which
standardized processing environment operating regions are better suited to
created for them has dramatically improved consolidation via outsourcing benefits than
information dissemination among its others. In many cases, if in-house shared
network of offices. The NVOCC is now services centers (SSC) already exist,
experiencing minimal rework when moving developing an offshoring plan through the SSC
shipments around the globe, and negligible may be the logical place to begin, with other
to no customs delays or fines. regions following suit in a phased approach.
3

5. Business Process Outsourcing:
A survival tool for logistics companies in uncertain times
cost out fast. Truth be told, short of cutting
Moving from fixed to variable costs for
a global express and logistics company staff to the bone, there is rarely another way.
This is particularly true in cost center functions
A global Top 3 express and logistics such as documentation, freight audit, driver
company had to decrease the expenses logs, claims and finance and accounting.
associated with its mission-critical airway A BPO provider with logistics domain expertise
bill manifesting process. With specialist knows the extent of cost savings attainable for
operations centers serving the logistics outsourced processes, and can work with the
industry, WNS was able to establish a client to craft a scope of services specifically
350-person operation for the company in designed to achieve budget goals.
less than 90 days, and is handling an
annual volume of over 9 million airway Advantages logistics companies gain by
bills. WNS not only reduced airway bill
manifesting expenses by 60 percent,
moving to a BPO model
but significantly increased the accuracy of Rapidly reduce cost by sourcing processes
data input to 99+ percent. As the delivery with scale
is priced on a unit transaction basis, the With industry-wide declines in operating margins
client gained the benefit of variable cost in 2008 of between 10 to 40 percent and
pricing, with WNS assuming the pessimistic outlooks for 2009 where flat growth
volume risk. will be considered "success", the need to reduce
the cost base to align with volume and revenue
projections has never been more urgent.
6. Insist on alignment and industry knowledge For example, document processing as part of the
Partnering with a BPO provider who value chain accounts for 35 to 50 percent of total
understands you are the client, and will align personnel costs in the logistics industry.
with your ways of working - rather than impose This people - time - and money-consuming
its own - is vital in good times and bad. process can easily be selected as the first
Alignment refers to understanding the client's candidate for outsourcing to a third-party with the
values and accordingly adjusting its working scale to deliver these processes at a significant
style, designing its deliverables to support the cost savings, leading to a more expansive BPO
client's needs and having the flexibility to meet program to further decrease operating costs.
ever changing business needs in this economic
climate. Equally important is deep industry
knowledge. If a provider isn't highly
experienced in processing bills of lading,
freight bills, driver logs and commodity
classification, and is unfamiliar with the
underlying rules of freight, duties and taxes in
different operating regions, entrusting delivery
of those processes to that third-party can
quickly 'sink a ship.'
7. Debit budgets in advance
This little trick obtains commitment where it
counts - in the budget process. Building BPO
savings into the current year's budget in
advance ensures managers have no excuse but
to be committed to the implementation of the
BPO program or find some other way to get the
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6. Standardize business processes Commercialize the approach to operations
Consolidating business processes offshore in an Most companies cannot put a price on the cost of
effort to reduce cost has a positive by-product - processing a bill of lading, driver log or airway bill,
levels of standardization that are difficult to collecting a receivable or interacting with a
achieve through incremental efforts such as customer. Imposing the discipline of a BPO
process reengineering when times are easier. contract replete with unit cost, turn around times
With standardization, organizations are well- and customer satisfaction levels makes the
positioned to take the next step to transform organization think differently about consumption
processes through technology and quality, which and service levels, making the actual cost to sell a
takes them to the next level of efficiency. product or service transparent. By partnering with
For example, a leading NVOCC successfully a knowledgeable BPO provider and implementing
standardized its import manifest process across a transaction-based pricing model, logistics
13 countries by moving it to an offshore BPO companies can typically reduce their transaction
provider. By standardizing how every single field is processing expenses by as much as
captured with the exception of specific regulatory 30 to 50 percent. Specifically, the in-house cost
or critical local requirements the company now of processing a bill of lading can run
has a more robust MIS capability and a uniform $5.00 - $8.00, while offshoring can reduce the
process across its operating regions, performed expense to $2.00 - $4.00. And processing an
with fewer resources at lower cost. airway bill can cost a logistics company between
$0.30 - $0.40, but an offshorer can deliver at a
Rationalize the delivery model cost in the range of $0.10 - $0.20.
The greatest challenge in moving to a shared
services, or horizontal structure is overcoming
Delivering continuous improvement for
misconceptions and fears about diminution of
a Fortune 500 logistics company
service levels, risk and performance.
By wrenching processes out of the business lines
After reaching steady state, the U.S.-based
in the name of corporate survival, the objections
shared services operations of a Fortune
which delay or derail consolidation and
500 logistics company hit a plateau in its
centralization are, in effect, overcome. In an
ability to optimize its cost structure.
outsourced environment, the scale, expertise,
By engineering a rapid transition to
flexibility and cost savings quickly become
offshore delivery, and seeding the offshore
evident. BPO providers can readily and rapidly tap
operations team with industry and
offshore talent pools to deliver business processes
functional experts, WNS was able to attain
at a significantly reduced cost. Moreover, given
an additional 40 percent cost savings for
enhanced and redundant communications and
the company. And by applying Six Sigma
connectivity infrastructures, shipping documents
and Lean principles to the client's
can just as easily and transparently be processed
processes, productivity gains of 10 percent
in Mumbai, Mexico City or Manila. For example,
were achieved within the first three years of
with 24x7 availability of skilled staff, BPO has
the engagement. Pleased with the results
emerged as one of the only strategies with which
of this partnership, the client is now
logistics companies are able to ensure a turn
tracking business outcomes, as opposed to
around time of less than one hour for bills of
transactional metrics, delivered by WNS,
lading and airway bills with nearly 100 percent
and is poised to weather this economic
accuracy. In fact, some processes such as freight
storm in relation to its competitors.
audit or duplicate payments analysis cannot be
delivered cost-effectively without tapping into
BPO's lower cost base.
5

7. Business Process Outsourcing:
A survival tool for logistics companies in uncertain times
Which logistics processes are ripe for business process outsourcing?
A wide range of transactional and highly complex logistics processes can successfully be outsourced to a
third-party service provider with deep, proven logistics industry domain expertise.
Sales/marketing Operations Finance
Tariff
n updates Import/export
n manifest Accounts
n payable
Marketing
n collateral PO entry
n AR/credit
n and collections
Campaign
n management Drivers
n logs Disbursement
n accounting
Rate
n quotes Fuel
n tickets Agent
n reconciliations
Sales
n reports n gateway
EDI exception General
n ledger
management Bank
n reconciliations
Customer service Tracking
n status updates Management
n reporting
Service/rate
n inquiries Vendor
n performance reports
Customer
n advisory Operations
n planning Origin/destination agent
Pre-advice/arrival
n notification Cargo
n de-stuffing Export
n manifest
Cargo
n tracking Customs
n clearance Collect
n charges
Web
n help Vessel
n performance Invoicing
n
Cargo
n claims Vendor
n contracts Import
n manifest
Complaints
n Import
n charges
Bookings
n
Documentation
BL/AWB/FCR
n processing
Billing
n and invoicing
Freight
n audit
Tariff/contract
n filing
Data
n transmission
Compliance
n checks
Landed
n cost
WNS Global Services
North America United Kingdom India
420 Lexington Avenue The Lodge Gate No. 4, Plant 10
Suite 2515 Harmondsworth Lane Godrej & Boyce Complex
New York, NY 10170 West Drayton, Middlesex Pirojshanagar
UB7 0AB Vikhroli (West)
Mumbai 400 079
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8. Copyright © 2009 WNS Global Services
About WNS
WNS is a leading global business process outsourcing
company. Deep industry and business process
knowledge, a partnership approach, comprehensive
service offering and a proven track record enables
WNS to deliver business value to some of the leading
companies in the world. WNS is passionate about
building a market-leading company valued by our
clients, employees, business partners, investors and
communities.
To learn more, please write to us at info@wnsgs.com
or visit wns.com