Outsourcing as a Competitive Strategy - CIMA · Outsourcing as a Competitive Strategy Mr Chen Theng...
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Chartered Institute of Management Accountants Outsourcing as a Competitive Strategy Mr Chen Theng Aik Senior Vice President & Head AP Finance Operations, DHL Asia Pacific, Malaysia
Transcript of Outsourcing as a Competitive Strategy - CIMA · Outsourcing as a Competitive Strategy Mr Chen Theng...
Chartered Institute of Management Accountants
Outsourcing as a Competitive Strategy
Mr Chen Theng Aik
Senior Vice President & Head AP Finance Operations,
DHL Asia Pacific, Malaysia
CIMA World Conference 2009
13-14 July 2009
Off Shoring/ In-House SSC – A Case Study
An Intro….
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DP DHL – Facts and Figures
DHL is part of DP DHL Group (HQ Bonn, Germany)
2008 Revenue: approx. Euros 60+ billion
500,000 employees worldwide
Presence in more than 220 countries and territories
Shipments: - more than 1 billion per year
Operates under 4 Business Divisions
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Freight Forwarding Supply Chain & WLEXPRESSMAIL
Global Business Services
Corporate HeadquartersGovernance and Selected Head Office Functions
Supply of World-Class Services Across all Business Units Worldwide
All BU specific core
functions such as M&S,
Ops, etc.)
The Structure of DP DHL
DP DHL – Bonn, Germany
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ObjectivesBenefits for Business Partners and DPWN
Leverage economies of scale
� Deliver lower cost and better service and greater value
Enhance flexibility of business
Professionalize service quality
� Help the company grow in a dynamic business environment
� Enable employees/ business units to focus even more on core work
GBS covers currently 9 different Service Lines under one roof:
Why? How?
IT ServicesReal
Estate
Fleet Mgmt. & Specific
Services Germany
Legal
Services
Inhouse
Consulting & TIM
HR Operations
Finance
Operations
Corporate Procure-
ment
Insurance
& RiskMgmt.
The goal of GBS is to enhance the flexibility of the business and professionalize service quality.
Global Business Services (GBS) and its benefits
Why set up the FSSC in Asia Pacific?
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Why set up the AP FSSC?
Our cost of finance as a % of total revenue was close to 2% in 2004
Benchmark studies have shown that best in class for such a high
volume industry is 0.5 to 1% (Hackett)
Project Team identified a combinations of ways to get towards best in
class benchmark as follows:-
• Setting up a SSC in a low cost environment
• Standardization and Harmonization
• Process Simplifications
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The Asia Pacific Finance Shared Services Centre (AP FSSC) was set up to serve as a platform for the Region to achieve significant productivity
improvements and reduce overall operating costs in Asia Pacific.
Objectives of AP FSSC
Specifically, the AP FSSC will provide opportunities to:
� Centralize accounting services and other value added activities for DPWN
divisions in a common location in Asia Pacific
� Provide significant cost savings by leveraging the wage arbitrage
� Achieve economies of scale and synergies
� Faster implementation and execution of Best Practices
� Center of Excellence
� Standardization & Harmonization
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Why Malaysia?
� Malaysia was chosen as the location for the AP FSSC for reasons which include:
- Significant wage arbitrage compared to our key locations
- Close proximity to one of our global IT SSCs (Cyberjaya)
- Availability of skilled resource with diverse language capabilities (English, Mandarin, Cantonese, Japanese, others)
- Stable political & economic environment, infrastructure, technology and communications network
- MSC Incentives
� Recently, HR and Express Asia Customer Service have also selected Malaysia for their SSC and they are now co-
located with AP FSSC
AP FSSC Team - 2008
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Other SSCs located in Malaysia
Companies with Centralized Services in Malaysia
Malaysia is ranked # 3 as a global SSC location by A.T. Kearney
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• With a pilot of less than 40 FTEs end of 2004, we have grown steadily and now provide services to all DPWN
divisions operating in Asia Pacific.
• We gradually increased our scope to become a regional center of excellence for Revenue Leakage program and to
also start to provide services to cover customer facing activities such as query, collections and billings.
Our Journey & Growth
AP FSSC at ~120 FTEs
Incre
asin
g O
pp
ort
un
ity t
o
Red
uce F
inan
ce
Co
sts
2006 2007
AP FSSC at ~195 FTEs
AP FSSC YTD at ~270 FTEs
2008 2009
AP FSSC projected at ~400 FTEs
• Large pool of accounting graduate available in Malaysia job market
• Real estate / office space at reasonably low rental rates are readily available with sufficient notice
Pilot :-
late 2004
with less
than 40
FTEs
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Lessons Learnt & Success Factors
Early Senior Management Buy In
Start with a Pilot & prove the concept (do the simpler tasks first)
Get relevant benchmark KPIs so you know your end game (e.g. CoF)
Do base lining of relevant KPIs & publish your KPIs
This is a “JOINT” effort
Have an agreed “transition period”
There will always be “teething” problems so be realistic and do not over promise
Have SLAs agreed & Signed before G0-LIVE
Have good documentation, process maps and detailed work instructions ready and
signed off
Have business case prepared and agreed up front!
Be prepared for “noise”!
Create and build a “service culture” in your SSC and put in place continuous motivational
initiatives.
Good Luck!
Thank You!
Chartered Institute of Management Accountants
