CH&Cie explains offshoring opportunities with a description of the business drivers and of the methodology to achieve a successful offshoring program

1. Offshoring
Relocation opportunity study, execution and oversight
Stephane Eyraud
Clivana Khalilckhalil@chappuishalder.com
seyraud@chappuishalder.com

2. AGENDA
1
2
3
4
Business Drivers of an Offshoring Program
High level approach
Key Challenges and Success Factors
Appendix: Focus on the methodology

3. Benefits
Business drivers
Reduce significantly salaries (up to 55% depending on location) and premises costs (up to 60% depending on location)
Being granted with specific Tax incentives
Achieve economies of scale
Cost reduction
1
Business Drivers of an Off-shoring Program
Take advantage of the program to homogenize and standardize processes in both locations
Improve efficiency of the processes and redeploy workforce in onshore location
Process standardization
and improvement
2
Focus on core competencies in the onshore location: retained staff focus on “value-add”activities
Establish or reinforce a local presence
Implement a “multi-tasking”resources pool and create synergies in the offshore location
Create a shared services center able to assist several countries & business lines and more flexible/ agile if volumes increase
Optimization
of competencies
3
Set up a “Follow The Sun”organization with overnight coverage
Comply with specific BCP requirements (According to the FED US bond settlements activity has to be able to settle, clear & close out from a location >100 miles from the main processing center)
Ensure constant back up and full business continuity
Coverage extension
4
3

4. Partial off/near
shoring potential
Partial off/near
shoring potential
Off/near shoring potential
Overview of Functions Potentially Transferrable within an Operations Department
Sensitivity vs. Proximity matrix
Methodology used
Based on this analysis teams are identified as fully or partially near/off-shorable
10%
0%
30%
20%
50%
40%
70%
60%
90%
80%
100%
10%
0%
30%
20%
50%
40%
70%
60%
90%
80%
100%
Sensitivity
Proximity
Sensitivity
Proximity
Team were categorized according to several aspects indicating proximity needs:
Client facing
Physical proximity
Shared time-zone
Language skills
Cultural Proximity
4
Teams were categorized according to several aspects indicating business sensitivity:
Legal/regulatory restriction
Specific stakeholders requirements
Specific staff skill requirement/labor market offering at off/near- shoring location
Application sensitivity
Operational risk level
Complexity of tasks
Capital Market Ops
Corporate Banking Ops

5. AGENDA
1
2
3
4
Business Drivers of an Offshoring Program
High level approach
Key Challenges and Success Factors
Appendix: Focus on the methodology

6. High Level Approach of an Off-shoring Program
6
Business Case
Target location choice
Near vs. Off location
Pool of resources availability (specific expertise…)
Savings (base salaries, premises, tax incentives…)
Expected savings & ROI
Cost reduction target
Return on Investment
Strategy definition
Global vs. Regional
Coverage strategy (Same time zone vs. worldwide coverage: ”Follow The Sun”)
Hub/ Regionalization
Number of waves to be implemented
Affected perimeter
1
6 weeks*
Transfer Opportunities
Study
Identification of transfer constraints
Operational risks (process stability, automation level, function sensitivity)
Specific expertise required and related recruitment issues
Critical size
Regulatory constraints
Proximity needs with other units/departments or clients
Business case validation
Synthesis of the functions to be transferred
Scenario building and target set up choice:
•Functions to transfer
•Choice between near shoring or offshoring
•Estimation of the overlap period required
•Calculation of the project costs and related savings
Definition of different Implementation phases
2
3-4 months*
Implementation Follow-up, Optimization & Oversight
HR strategy definition
Onshore location: retention of top performers
Offshore location: assessment of the staff turnover and identification of retention strategy
HR policy review (Holiday policy…)
TOM optimization
Improvement of communication between off shore and on shore location
Workload optimization: as-is analysis and identification of opportunities for process improvements
Workflows and systems enhancement
Optimization of synergies in both on and offshore locations
Performance monitoring
Satisfaction study: evaluation of team performance on a regular basis and identification of potential issues , quick wins and long term remediation actions
Define the escalation process
Track the realization of the business case
4
>>>
Execution/Transition
Phase
Target organization
Definition of Target Operating Model (Governance, org. charts, P&P, SLAs…)
Definition of TOM KPIs
Project Management
Project Monitoring
Savings & costs monitoring
External & internal communication
Dedicated meetings with affected staff, HR & Managers (and design of RIF matrix)
Press release
Recruitment
Posting of job offers (internal & external)
Hiring process (rounds of interviews, final approver ...)
Regional organization charts (solid vs. doted reporting lines)
On-boarding
Task force set-up including Logistics, BCP, IT, Security and HR
Training
Definition of a training plan for each department (e.g. specific content, active/ passive shadowing) & training material
3
1 year*
* Timing for information only as it may vary depending on the project’scope

7. AGENDA
1
2
3
4
Business Drivers of an Offshoring Program
High level approach
Key Challenges and Success Factors
Appendix: Focus on the methodology

8. Key challenges and success factors
Business Case
8
Challenges Shortfalls Key Success Factors identified and proposed by CH&Cie
 Deeply analyze key indicators of the country: staff cost, O&P cost
political stability, level of workforce education, languages spoken,
quality of infrastructures, difficulty to travel (visa…)
 Have a good overview of regulatory and legal constraints
 Analyze work market depth
 List the key competencies and specific required expertise
Target location
choice
• Difficulty in finding candidates with desirable
background and skills
• Salaries ending up higher than expected
• Legal issues due to cultural differences (max.
working hours…)
• Additional constraints due to very high data
protection (Singapore)
• Training issue due to specific visa requirements
Business Case
1
Transfer Opportunities
Study
2
Execution/Transition
Phase
3
Implementation Follow-up,
Optimization & Oversight
4
 Ensure that offshoring strategy to be established is a real leaver
of the whole business strategy
 Have a very clear overview of the offshoring strategy to be
implemented
Strategy assessment
• Offshoring strategy not in line with overall
business approach
• Lack of clear strategy overview
 Ensure a proper current state assessment
 Define appropriate performance measures
 Assess qualitative & quantitative benefits
 Check the organization “readiness “
Feasibility study
• Organization which is not ready to support a
significant transformation initiative
A
B
C

9. Key challenges and success factors
Transfer Opportunities Study
9
Business Case
1
Transfer Opportunities
Study
2
Execution/Transition
Phase
3
Implementation Follow-up,
Optimization & Oversight
4
Key Success Factors identified Challenges Shortfalls and proposed by CH&Cie
 Spend time to design the overall target operating model and get the
buy-in of all key stakeholders
 Take advantage of time zone differences (‘Follow The Sun’)
 Push end-to-end processes instead of tasks
Consistency and
efficiency of the target
operating model
• Offshore teams performing a multitude of
micro-tasks with no connection between them
• Onshore teams placing orders on a ad-hoc basis
to offshore teams
 Communicate only with Heads of department and middle mgmt
until the transfer opportunities are identified and validated
 On-board team leaders at the beginning of the project and
implement follow-up on a regular basis
Confidentiality and
Communication
• Resistance and lack of cooperation from Middle
Management
 Analyze the existing process entirely to identify potential
stickiness with other departments
 Ensure critical size is reached for each unit, global consistency
and leverage on potential synergies among transferred units
Transfer opportunities
identification
• Constraints not properly identified
A
B
C

10. Key challenges and success factors
Execution/Transition Phase
10
Business Case
1
Transfer Opportunities
Study
2
Execution/Transition
Phase
3
Implementation Follow-up,
Optimization & Oversight
4
Key Success Factors identified Challenges Shortfalls and proposed by CH&Cie
 Explain the various stages of the governance model
 Communicate the criteria to move from one step to another
 Establish clear RACI and kill potential redundancies
Process ownership &
understanding of the
new organization
• A-team vs. B-team syndrome creating de-motivation
• Difficulty to apprehend who is in charge of what
• Offshore teams perceived as a separate entity
B
 Draft transition check-list for communication between teams
 Test the readiness of IT systems and assess the quality of the
process documentation early in the project
 Design a transversal training plan
Transitioning processes
without compromising
on risks
• Delays in the roadmap due to unforeseen logistical
issues (visa, space planning, IT connectivity…)
• Lack of documentation & training materials
C
 Build brand awareness through corporate events (buzz)
 Invest in premises and quality of the working environment
 Secure a pool of ‘multi-tasking’ resources
Recruiting & retaining
CIB-skilled resources
• Limited brand image in the local market to attract
talents
• Inappropriate planning of the recruitments leading
to delays in the roadmap
D
 Structure with HR a well-structured, open mobility plan and
anticipate/preempt open positions in advance
 Explain what is going to happen and how you plan to handle it
Changing mindset
• Senior executive delivering conflicting messages
• Fear of losing the job and inability to call into
question (acquisition of new skills)
E
 Negotiation and dialogue with working councils and adaptation of
the communication plan
 Focus change management efforts on middle managers / team
leaders
Keeping the
communication under
control
• Project going public unexpectedly, reputation &
media risks not anticipated
F
 Monitor dependencies with other projects
 Define a unique sponsor to ensure the lead of the project
 Set up a project structure with frequent committees,
comprehensive project tools & an escalation process to ensure
alerts are quickly identified
Suitable governance
• All dimensions of the project (process,
organization, time, cost, HR, communication, IS,
etc.) not properly monitored
• Issues not escalated
A

11. Key challenges and success factors
Implementation Follow-up, Optimization
& Oversight
11
Business Case
1
Transfer Opportunities
Study
2
Execution/Transition
Phase
3
Implementation Follow-up,
Optimization & Oversight
4
Key Success Factors identified Challenges Shortfalls and proposed by CH&Cie
 Plan in the project a reorganization of onshore and offshore teams
after the transfers (optimization phase)
 Strengthen the headcount monitoring process globally
 Agree on conversion ratio (Offshoring In – Productivity Gain) and
monitor their evolution over time (underlying action plan)
Delivering the business
case ROI
• Return On Investment not delivered in many
cases
• Late detection of hidden project costs
• Underestimation of exit costs
• Project changes (de-scoping) not factored in
A
 Assess teams performance on a regular basis (off shore location)
 Ensure that off shore location set-up is fully up & running (no
duplicated tasks between locations or tasks still performed by on
shore site)
Assessment of strategy
effectiveness
• Under performance compared to initial
expectation
• Poor level of services quality (complaints from
clients)
• Onshore set-up overwhelmed due to partial
take over from new platform
C
 Review on shore and off shore HR strategy (retention packages,
review of working conditions if conflict with local culture…)
Appropriate
HR Strategy
• High turnover in off shore location (cultural
issue…)
• Resignation of high potential staff in on shore
location
B

12. AGENDA
1
2
3
4
Business Drivers of an Offshoring Program
High level approach
Key Challenges and Success Factors
Appendix: Focus on the methodology