How to Source Digital Initiatives to Drive Revenue Generation

DIGITAL INITIATIVES & SOURCING DRIVING REVENUE

Yariv Drori, VP Strategy, AY Digital Kevin English, Partner & SVP, Neo Group Atul Vashistha, CEO, Neo Group

March 10, 2015

NEO INSIGHTS SERIES

© 2015 Neo Group Inc. Proprietary

TODAY’S PARTICIPANTS 2

PRESENTERS MODERATOR

Yariv Drori, VP, Strategy at AY Digital, brings 15 years of experience in production and operation management in fast growing high tech companies in the eCommerce and ad tech space. Yariv spearheaded operations efficiencies that relied on globalization trends by leveraging talent pools in APAC and LATAM.

Kevin English, Partner & SVP, Neo Group, focuses on helping the firm grow its “Chief Digital Officer” practice by assisting clients across the full spectrum of strategy, sourcing, governance and organizational management services. Kevin has over 30 years of experience in the global services sector.

Atul Vashistha, CEO, Neo Group, is recognized globally as an author, speaker and leading expert on globalization, outsourcing and governance. Consulting Magazine named Atul one of the “Top 25 Most Influential Consultants” and “Top 6 IT Powerbrokers”. Atul is passionate about helping corporations create competitive advantage by leveraging global services and sourcing.


!   Since 1999, we have been helping clients achieve business objectives and address business challenges by leveraging global services and sourcing.

!   We have a singular focus on the global services supply chain.

!   We achieve outcomes through deep IP, real-time analytics, globally recognized experts, proven methodologies and co-creation with our clients.

!   We deliver results through three distinct and linked solutions and services:

ABOUT NEO GROUP

Our Featured Clients include:

ADVISORY SERVICES

GOVERNANCE SOLUTIONS

SUPPLY MONITORING & ANALYTICS

3


DIGITAL GROWTH IS STRONG 4

Digital Ad Spending Worldwide, 2010-2016 Billions, % change and % of total media ad spending

Note: includes advertising that appears on desktop and laptop computers as well as mobile phones and tablets, and excludes all the various formats of advertising on those platforms; excludes SMS, MMS and P2P messaging-based advertising Source: eMarketer, Dec 2012 148475 www.eMarketer.com

Digital ad spending % change % share

$72.37 $87.27

$102.83 $118.40

$134.65 $149.18

$163.04

2010 2011 2012 2013 2014 2015 2016

17.5% 20.6% 19.8% 21.7% 23.4% 24.8% 25.9%

15.2% 17.7% 17.8% 15.1% 13.7% 10.8% 9.3%


THE SMAC GROWTH IS GLOBAL 5

Ignoring the move to mobile could cost U.S. SMBs $1 trillion this year.


CASE IN POINT: FACEBOOK USERS 6


COMPANIES LAUNCHING DIGITAL PRODUCTS 7

Source: TCS Global Trend Survey, July 2014


Revenue

Staff Line

Policy

Chief Digital Marketing Officer Chief Digital Business Officer

Chief Digital Strategy Officer Chief Digital Champion Officer

The goal of digital technology is to generate new sources of revenue. •  Digital revenues responsibilities rest in the line

organizations w/ memo credit to chief digital officer. •  Digital technology will be incorporated and

coordinated across generate/fulfill demand processes.

The goal of digital technology is to create new organizational capabilities & customer experiences. •  Establishes a digital strategy at headquarters which

defines what it means to ‘be digital’ the direction, resources and relationships.

•  The organization creates digital capability through its existing strategy execution process coordinated by a headquarter staff.

The goal of digital technology is to generate new sources of revenue. •  Direct responsibility for generating digital

revenue rests in a clearly defined and assigned unit, which may be an existing or new unit.

•  Direct responsibility for the resources required to meet digital revenue responsibilities.

The goal of digital technology is to create new organizational capabilities & customer experiences. •  A distinctive group builds and deploys digital

capabilities via disrupting the business from the inside.

•  Digitization of the rest of the organization is managed by transformation programs in support of compliance with new digital policies or imperatives.

RISE OF THE CHIEF DIGITAL OFFICER 8


CDO AND DIGITAL GOVERNANCE 9

Business Intelligence

Social Media Mobile Digital Media

Security E-Commerce Architecture Cost Control

The CDO role has become more complex than a traditional CIO role. The CDO is responsible for Digital Governance. The need to balance rapidly changing business needs with even more rapidly changing technologies requires a broad view of both business and technology, and a sourcing plan that support rapid Time to Market implementation needs.


CDO – TECHNOLOGY AND BUSINESS 10

Techno

logy

Busin

ess

Security Extensibility Global reach

Peak load/Balance

Networks

Security Enterprise Mgmt. Apps. IntegraAon

AnalyAcs

Data CompaAbility E-‐Commerce LocalizaAon

Content rendering

Mobility HolisAc Architectural Approach

Plan, Design, Implement & Support

Project Management

TesAng/HosAng/ Roll-‐out

Resource Availability

Cost Management

Cross-‐funcAonal Impact Business Strategy MarkeAng

Product Launch

Customer Engagement

Revenue GeneraAon

Social Media

•  CDO role merges technology and business imperatives

•  Need for a holistic digital strategy that that supports rapidly changing business parameters

•  Needs include: •  Technology evaluation •  Real-time testing •  Rapid implementation •  Availability of niche or

specialized resources


AND THERE IS TALENT SHORTAGE 11

© 2015 Neo Group Inc. Proprietary Source: GfK

R&D

Senior Management

Sales

Web Design

Business dev

Marketing/PR

Coders & developers

Most in demand skills Most difficult to recruit % that have tried to recruit skill in past 12 months % that have said fairly/very difficult to find

User experience

TALENT GAP POSING CHALLENGES 12


HOW IS LACK OF TALENT HANDLED? 13


ACCESSING GLOBAL RESOURCES: ANSWER TO THE TALENT GAP

0%

20%

40%

60%

80%

100%

ReduceOperating Costs

Gain access tonew skills

Gain access tonew technology

Transform / re-engineer

processes

More effectiveoperations at a

global level

Followingfexample of other

firms

Proven offeringsfrom serviceproviders

Economicdownturn

Enterprise ($3bn+)

Mid-Market ($750m-$3bn)

Source: AMR Research / Global Services Media, 2009 Sample: 127 Enterprises

14


CASE IN POINT: INDIA AND TECHNOLOGY 15

NUMBER OF INDIAN EMPLOYEES (EST) FOR INDIA’S ‘BIG 5,’ IBM, ACCENTURE

250 000

200 000

150 000

100 000

50 000

0

30%-35% of the global workforce of IBM,

Accenture 70%-80% of the global

workforce of ‘big 4’

IBM Accenture TCS #1 Cognizant #2 Infy #3 Wipro #4 HCL #5

Source: Macquarie estimates 2013


HOW DOES ONE LEVERAGE GLOBAL DIGITAL TALENT?


SOURCING KNOWLEDGE IS KEY 17


Vietnam •  Large workforce •  Large # of universities

graduate turnout •  Good IT Skills •  Promising IT labor market

Brazil •  High turnout of IT graduates •  Huge Labor pool •  Good people skills and

availability •  Quality human capital •  Capable for large operation •  Promising IT labor market

Russia •  Excellent programming Skills •  Large universities graduate pool •  Large Tech workforce •  Capable for large operation •  Promising IT labor market

Ukraine •  World class programmers •  Smart & hard worker •  Creative workforce

Czech Republic •  World class IT skills •  Very small IT graduate •  Very limited labor force •  Shortage of IT labor pool

Romania •  Multi-Language Skills •  Highly Skill Worker •  Promising IT O &

BPO labor market

China •  Large IT workforce •  Improving Project Manager Level

Skills •  Good number of colleges &

Universities •  Capable for large operation •  Promising labor market

India •  Large IT workforce •  World class IT skills •  Excellent IT education system •  Capable for large operation •  KPO, BPO, Call Center skills labor pool •  Amazing IT labor market

Uruguay •  Limited IT workforce •  Small Population •  Higher end IT Skills •  Suitable for small operation •  Small IT graduate turnout •  Shortage of IT labor supply

Egypt •  Large labor force •  Good education

system •  Multi-lingual skills •  Potential labor

market

Mexico •  Good education system •  Large IT graduate pool •  World class IT skills set •  Excellent bi-lingual skills •  Capable for large operation •  Promising ITO & BPO labor

Market

Israel •  Highly qualified IT

graduate •  Excellent IT Skills •  Suitable for small

operation •  Limited IT labor supply

Promising labor pool

Belarus •  Excellent Software Skills •  Small Labor Force •  Suitable for Niche Operation •  Smart & hard worker

Poland •  Highest Universities in EE •  Large IT Workforce •  Largest Labor Pool in EE •  Excellent Education System •  Multi-lingual Skills Set •  Promising ITO & BPO labor market

Shortage of labor pool

Canada •  Excellent education system •  Productive IT workforce •  Capable for complex project •  Shortage of Tech labor

supply

United States •  World class IT workforce •  Capable to manage most

complex project •  Excellent education system •  Shortage of IT labor supply

Argentina •  Large labor pool •  Bi-lingual capacity (English & Spanish) •  Good for large contact center operation •  Stable workforce in the long-run

Colombia •  Large graduate pool •  Huge labor force •  Bi-lingual skills •  Promising Labor supply

Guatemala , Panama, Honduras, Costa Rica, Peru, Chile

•  Highly qualified graduate pool •  Good for higher end services •  Excellent bi-lingual •  Small workforce •  Limited labor supply

Philippines •  Large workforce •  Huge graduate pool •  Fluent in English •  Promising labor market

Malaysia •  Excellent IT skills •  Good education

system •  Limited labor supply

KNOW YOUR SUPPLY: CURRENT HOT SPOTS 18


Vietnam •  Embedded Software •  IT Services, R&D •  Software Testing

Brazil •  IT Services •  R&D, ADM •  Software Development •  Engineering Services •  Call Center •  Back Office Operation

Russia •  Embedded Software •  Engineering Services •  Product Development •  R&D, Systems Integration •  Web Development

Ukraine •  Engineering Services, •  IT Services •  Product Development •  Systems Integration

Czech Republic •  Infrastructure

Management •  Multi-Language Call

Center •  IT Services, R&D

Romania • Business Analytics, •  F&A BPO, HRO, •  Financial Analytics, •  IT Services, R&D •  Multilingual Contact Center,

Procurement BPO,

China •  Engineering Services •  F&A BPO •  IT Services, •  Product Development, •  R&D, Software Testing •  Clinical Trial

India •  Software Development •  Product Development •  IT Services •  Engineering Services •  Embedded Software & Services •  Clinical Trial • Medical Transcriptions

Uruguay • Call Center (Spanish) •  Infrastructure Management •  IT Services • Product Development

Egypt • Embedded Software •  IT Services •  Medical Transcription

Multilingual Call Center • Product development • Software Testing

Mexico •  Back Office Operations, •  Call Center (English,

Spanish), •  Embedded Services, •  Engineering Services, •  IT Services, R&D, •  Software Testing

Israel •  Hi-Tech Services •  R&D •  IT Services •  Clinical Trials

Belarus •  Embedded Software •  Engineering Services •  IT Services •  Product Development •  R&D, Systems Integration

Poland •  Multi-Language Call Center •  Shared Services BPO •  F&A BPO •  IT Application Services

Canada •  IT Services •  R&D, ADM •  Medical Transcription •  KPO, BPO Voice and Non-

Voice

United States •  R&D •  Product Development •  Embedded Software •  Engineering Services •  ADM, IT Services etc

Argentina •  Bi-lingual call center services •  F&A BPO •  Digital Services

Colombia •  Back Office Operation •  IT Application •  Bi-Language Contact

Center

Guatemala , Panama, Honduras, Costa Rica, Peru, Chile

•  Call center (English & Spanish) •  Back Office Operation •  F&A BPO •  Financial Analytics

Philippines •  Call Center (English and

some Spanish), •  Contact Center, F&A BPO, •  IT Services, LPO, •  Medical Transcription

Malaysia • Call Center (English, Mandarin), •  F&A BPO, IT Services, •  Technical Helpdesk

CURRENT HOT SPOTS: SPECIALIZED FUNCTIONS 19


80,000

37,180

27,000 26,300 25,638 20,000 18,000 17,000 16,000 15,360

7,000 6,000 6,000 5,000 3,985 3,500 2,569

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

IT Graduate Pool Per Year

•  Colleges and universities in Coimbatore (India) produce one of the largest IT graduate pools per year. Has stable IT labor supply in the long-run.

•  While colleges & universities in Medellin produce the smallest IT graduate pool per year among the emerging cities indicating limited IT labor supply at present and in the future.

KNOW YOUR SUPPLY: TECH GRADUATES 20


190,000

151,200

70,000

51,200 50,000 45,000 44,237 40,000 35,000 31,149 30,000 30,000 28,000 19,923 14,724 11,000

1,500 0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Non-IT Graduate Pool Per Year

•  Most of the colleges and universities in emerging cities have produced large graduate pool per year; indicating stable non-IT labor supply in the long-run.

•  However, colleges & universities in Medellin, Brno and Guadalajara produce the smallest graduate pool per year indicating limited non-IT labor supply at present and in the future.

KNOW YOUR SUPPLY: NON-IT GRADUATES 21


WHAT DO THESE LOCATIONS ENABLE... 22

Good Supply of Digital Labor

ConsultaFve LegislaFve & Regulatory Environment

Time Zone CompaFbility/ Advantage

Priority AQenFon from Government

PoliFcal & Economic Stability

Tax & Other IncenFves

World Class Infrastructure

Favorable PopulaFon Trends

CompeFFve Labor Costs

Capable Local Professional Advisers

Low Telecom Costs

Friendly Work Permit & ImmigraFon Laws


KNOW WHAT TO SOURCE 23

CapabiliAes Cube

Indu

stry

TransformaA

on

Busin

ess P

rocesses

Archite

cture

Business Domain Knowledge

Hot Skills

Mainstream

Commodity

CORE

CORE


DRIVE THE RIGHT INCENTIVES 24

!   MulAple sourcing models !   Most use the following or a combinaAon of these for their operaAons

Governance Based Model

Pricing/SLA Based Model Time & Material

Fixed Price

Managed Capacity

!  As name suggests, the model is Price based !  Guidelines based on pricing of the work order

!  Based on governance strategies deployed for projects

Client Managed

Supplier/GIC Managed Co -‐ Managed

TransacAon Based

Managed Services Engagement Models are typically a Hybrid of these


THE 7 SECRETS OF GLOBAL SOURCING

§  Book released in 2010 based on an 8-Year study of corporate best practices in sourcing services and talent globally

§  Identified 7 practices (secrets) that “Successful Global” market leaders have in common

25


FINALLY, THE 7 SECRETS 26

Embrace Globalization

Welcome It As A Transformation Lever

Align Business And Globalization Objectives

Take a Lifecycle Approach

1 Assign The Best People

Embrace A Continuous Improvement Mind-set Source: Outsourcing Wisdom, Atul Vashistha

Implement a Strong Governance Model

1

2

3

5

4

7

6


THANK YOU 27

NEO GROUP GLOBAL HEADQUARTERS 6200 Stoneridge Mall Road, 3rd Floor Pleasanton, CA 94588, USA ASIA-PACIFIC HEADQUARTERS No.13, B-2, 1st floor, C Block Embassy Heights, Magrath Road Bangalore-560 025, India AMSTERDAM, NETHERLANDS AUSTIN, TEXAS BOGOTA, COLOMBIA LONDON, UK NEW YORK, USA ATLANTA, USA SAO PAOLO, BRAZIL SILICON VALLEY, USA SYDNEY, AUSTRALIA

ATUL VASHISTHA Chairman & CEO [email protected] +1.415.839.8050 KEVIN ENGLISH Senior Vice President [email protected] +1.703.622.7892 www.NeoGroup.com www.SupplyWisdom.com [email protected]

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