European Outsourcing Opportunity for Growth and Investment

Yvonne Emmerson-Peirce

European OutsourcingEuropean Outsourcing

Opportunity for Growth and InvestmentOpportunity for Growth and Investment

ADDERLEYFEATHERSTONE plc

Executive Search Management Selection Human Resource Consultancy

Yvonne Emmerson-PeirceYvonne Emmerson-Peirce

Individual Professional Training DirectorUK National Outsourcing Associationwww.noa.co.uk

Regional Director and Head of Global Strategic Sourcing Practice. Adderley Featherstone PLC a premier Recruitment Search and Selection company located in the UK with representation across Europe and Asia which operates globallywww.adderleyfeatherstone.com

Accredited Associate International Institute for Independent Businesswww.iib.wsADDERLEYFEATHERSTONE plc


http://www.noa.co.uk/

http://www.adderleyfeatherstone.com/

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The Global Outsourcing MarketThe Global Outsourcing MarketBPO market:

2004: $300 billion 2006: $1.2 trillion (IDC)

Global IT outsourcing market: $18 billion by 2008; 20% growth year on year (IDC)

Source: The Economic Times, 2005ADDERLEYFEATHERSTONE plc


The Offshoring MarketThe Offshoring Market Offshore will more than double from 3% to

6 or 7% of overall IT services spend by 2008 (Gartner and IDC)

By 2008, nearly 25% of U.S. spending on applications development, integration and management services will go to offshore providers (IDC)

The European market represents 25% of the Global total (Gartner)

Source: The Economic Times, 2005ADDERLEYFEATHERSTONE plc


The 1The 1stst wave : Global Market wave : Global Market

Source: The Economic Times, 2005

1980 – early 90s Led by US, closely followed by UK Corporations originally looked for cost

reductions Management and development limited by

tools and bandwidth New finance vehicles PFI/PPP Freeing up of capital on world markets Typical 10 year deals



The 2nd wave : Global MarketThe 2nd wave : Global Market

Source: The Economic Times, 2005

Move into Western EuropeIndividual country agreementsRise and rise of call centresWorld Trade Organisation rules

changed, allowing increases in - ITO/BPO, manufacturing, commodities etc



The 3rd wave : Global MarketThe 3rd wave : Global Market Extension of EU (to include former soviet controlled

countries e.g Poland, Czech Republic,Hungary etc.) Integration of EU tax breaks in Ireland, Slovenia etc.

soon to add Bulgaria and Romania Created additional direct competition with India, China

and other offshore destinations Improved centralised control and improved bandwidth Maturation of contracts = renegotiate, in-house (part or

a whole), termination, competitive re-bid, move to smaller discrete packages or consortia.

Improved CRM (customer relationship management) in local end user countries



Share of European Outsourcing Market 2006

42%

26%

18%

10%7%

UK Germany France Italy Spain

Based on Gartner Dataquest, November 2005

The European Outsourcing MarketThe European Outsourcing Market

The UK is the most “mature” IT service market in Europe and remains the largest and fastest growing with the greatest level of expertise in legal, financial, programme management and consultancy.

The UK is also the largest market for offshore services which in part can be attributed to the significant number of large scale Public Sector deals: NHS,e- government, CJIT etc

Germany follows with an emphasis on BPO offshore especially call centres utilising the former Eastern European countries for their language skills.



What is the European view on the impact of What is the European view on the impact of offshoring?offshoring?

NOA research has demonstrated attitudes of U.K. organisations towards the impact of offshore services on both their organisations and the overall economy are positive: >90% of respondents perceived that use of offshore

services helps maintain the competitive position of UK/EU companies

>85% of respondents perceived that use of offshore services makes a positive contribution to the Euro economy.

>80% perceived that use of offshore services has a net job-creating impact on organisations

EOA colleagues report a buoyant and expanding market

NOA Offshore Research 2005ADDERLEYFEATHERSTONE plc


Supply Chain ManagementSupply Chain Management

CustomerOffshore Supplier

Supplier with Local presence

Conclusion: establish a local presence!

Direct route creates problems

Using Global Sourcing Suppliercan often result in lack of control



Customer Procurement PreferencesCustomer Procurement Preferences

Supplier operating in the UK 50%Captive (own or JV) facility offshore 29%Design Build Transfer back 11%Supplier in local country 11%

NOA BPO Offshore Research 2005

Conclusion: Offshoring supplier needs a local presence!



UK Business OpportunitiesUK Business Opportunities Corporations and Public Sector

Well established, with commitment to outsourcing and offshoring: opportunities to form alliances and partnerships and for dual/multi-shoring to spread and/or share risk

Small and medium sized enterprises account for 95% of all business and 60% of GDP Many are aware of the advantages of offshore supply Most do not have the capability to source an offshore supplier The SME market is a great growth opportunity SME’s are more vulnerable to incorrect strategic decisions Demands confidence in a LOCAL partner

ADDERLEYFEATHERSTONE plcExecutive Search Management Selection Human Resource Consultancy

From NOA research

Expertise in the particular function to be outsourced Compatible culture (especially at Governance and

Compliance level) Meeting service targets (operational benefits) Technological innovation Value for money – (price and added value) Achieving smooth transition and change

What do users seeWhat do users see as most important when as most important when

choosing an Outsourcing supplier? choosing an Outsourcing supplier?


Boardroom ConcernsBoardroom Concernswhen considering Chinawhen considering China

• English Language Capabilities• Intellectual Property Rights • Data Protection Issues• Information Security • Quality of technology and standards of education • Staff Loyalty/ Turnover • Innovation• Business Continuity• Supply Chain Management and ControlADDERLEYFEATHERSTONE plc


Top influencers for the futureTop influencers for the future Shared development Cost savings inadequate needs

added value such as innovation More risk reward /gain sharing Increased global mergers and

acquisitions Make more manageable e.g

transition and transformation and measurable limited KPI’s not SLA’s ad nauseam

Data protection Taxation Acquired rights law Sarbannes Oxley and tightened

European standards

Foreign exchange More complex contracts Compliance and Governance of

Private and Public institutions Move from procurement to

partnership mentality Improved professionalism and

standard NOA/EOA Better training Main board experience and

knowledge improvement in decision process

Unions and politicians (protectionism)

BenchmarkingADDERLEYFEATHERSTONE plc


Recognise you will be operating in a mature market:

Cost advantage may not be enough

Give added value in technology, systems and delivery

Map Western employment practices and standards

Expect tougher shorter term contracts slewed against offshored agents as service provider

Discrete work packages assigned to principle service provider to provide turnkey solutions

Investment in good management and personnel, intellect and culture

Invest in local presence

Use specialist professional services in the target country

For Future Success…For Future Success…




Adderley Featherstone is one of the leading Search and Selection companies base in the UK with representation throughout Europe and Asia.

Strong multi-disciplined industry knowledge of IT and BPO markets covering executive and mid-managements positions globally

Experience in successfully managing manufacturing recruitment campaigns across Asia, including China

Consultative approach to clients to help business grow and enter new markets and countries

The NOA is a World LeaderThe NOA is a World Leader

The NOA/EOA is Europe’s leading independent body thatrepresents the interests of outsourcing end-users and globalservice companies.

The NOA/EOA is the leading provider for:

Market Intelligence

Impartial advice and information

Outsourcing professionals to meet and discuss industry news, opportunities and trends

Promoting best global practices and standards

www.noa.co.ukADDERLEYFEATHERSTONE plcExecutive Search Management Selection Human Resource Consultancy

NOA Sample MembershipNOA Sample Membership Corporate End Users

Abbey Alliance & Leicester American Express Barclays Bank Boots British Gas BUPA Lloyds TSB National Grid NatWest Bank OGC Prudential Royal & Sun Alliance Royal Bank of Scotland Southern Water Services Thomas Cook Transco Viacom Whitbread

Suppliers & Services

Adderley Featherstone plc Blue Arrow BT Cable & Wireless Compass Digital Fuel Gartner HCL Technologies IT Net Line Management Group Logicom Paymaster Project Office Telelogic Technologies Unisys Vanco Vertex Visteon Wirebird

NOA Sample MembershipNOA Sample Membership Consultants

• Analysis Limited• Cap Gemini• Capita Business Services• Charles Douglas Organisation• CT Consulting• Deloitte & Touche• EDS• Flex Contact Centres• IBM• JGL Applied Systems• KPMG• Mason Communications• Xansa

Legal Firms

• Bird & Bird• Burges Salmon• Baker Mackenzie• Dundas & Wilson• Freshfields• Morgan Cole• Osborne Clarke• Sidley Austin• Simmons & Simmons

*Extract

Key events 2006Key events 2006 France Germany Holland Austria Interest from Benolux, Spain, Switzerland, Canada, Australia &

New Zealand More than 2 seminars organised per month New and ongoing Market Research Two major €OA/NOA summits in November 2006 Code of Practice, Toolkit, Benchmarking, etc. New initiatives such as Individual Professional Training

How the NOA worksHow the NOA works

Volunteer Board All have real jobs with users, suppliers, legal etc. Example: the Chairman Martyn Hart, Consulting

Director with Gartner Outsourced support

PR Membership Accounts Conferences Publications Research

Useful ContactsUseful Contacts

NOAChairman : Martyn Hartwww.noa.co.ukTel: +44 (0) 7976 750 925

Adderley Featherstone PLCRegional Director:Yvonne Emmerson-Peircewww.adderleyfeatherstone.comTel: +44(0)20 7317 3116

Or e-mail: [email protected]

[email protected]

http://www.noa.co.uk/

http://www.adderleyfeatherstone.com/

mailto:[email protected]

mailto:[email protected]

European Outsourcing Opportunity for Growth and Investment

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