1© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
2016 Q1 China Shared Services and OutsourcingSurvey Results
2© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
Table of Contents1. KPMG SSOA Practice Pg. 3
2. About this Survey Pg. 4
3. Business Outlook Pg. 5
4. Captive Centre Pg. 11
5. Outsourcing Pg. 17
6. Robotics Process Automation (RPA) Pg. 23
7. KPMG Contacts Pg. 29
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Swiss entity. All rights reserved.
KPMG’s Shared Services and Outsourcing Advisory PracticeKPMG has the ability to help member firms’ clients transform enterprise services to help improve
value, increase agility and create sustainable business performance.
How
we do
it
What
we do
Who
we are
The Shared Services and Outsourcing Advisory practice brings a specialized
global team of more than 1,000 professionals within KPMG’s global network of
independent member firms operating in 155 countries. Our professionals help
clients design, build, and manage information technology (IT) and business
processes across the enterprise.
We help clients align their business strategy, organization and execution
to enable them to manage the entire IT and business process life cycle,
improving business performance, and laying the groundwork for genuine
business transformation.
We apply focused research, automating tools, proprietary data, clear
business acumen, and a forward-thinking mind-set to provide timely,
objective, actionable advice and practical approaches for clients.
4© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
About this SurveyKPMG China Shared Service and Outsourcing SurveysKPMG China is proud to present the results of our 2016 Q1 China Shared Services and Outsourcing Survey.
Input sources: Topics evaluated: Primary functional focus:
— KPMG sourcing advisors
throughout China and Hong
Kong
— Companies (MNC ,SOE ,POE)
— Leading global business, IT,
and cloud service providers
— KPMG thought leadership
China Overview
— Business Outlook, growth and
overall enablers
— Shared Services
— Internal Captive
— Outsourcing
Robotic Process Automation (RPA)
and overall observations
— Finance and Accounting
— Human Resources
— Information Technology
— Customer Care
— Data & Analytics
— Procurement
New for 2016!— Starting this quarter, we have added new survey questions to address the global
trend of Robotic Process Automation (RPA)
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Swiss entity. All rights reserved.
Business Outlook
6© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
China Overview 70% of companies surveyed viewed internal captive centres as critical to reaching their goals and
objectives
“People experience” at a leadership & team level are key challenges when setting up and maintaining an
efficient internal captive center
Companies look to third parties for assistance in Process design, benchmarking and risk management
Internal captive centres continue to focus on operational efficiency and effectiveness improvements helping
the business to focus on revenue growth and outpacing local market competitors
Outsourcing is growing slightly in acceptance with the main challenges being funding and change
management
Growth expectations continue to be a key company challenge with 60% predicting less than 10% revenue
growth
Robotics Process Automation (RPA) technologies have not gained sufficient visibility and momentum
amongst China organizations, whereas globally this is a very hot trend
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Swiss entity. All rights reserved.
Growth ExpectationsQ: What are your Organization growth expectations within the next 1 - 2 years?
Company Advisor
Over 20%Growth
10%t o 20%Growth
0% to 10% Growth
Negative Growth
0% 10% 20% 30% 40% 50% 40% 20% 10% 0%30%50% 60%
Company Advisor
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Swiss entity. All rights reserved.
EnablersQ: What do you feel are the biggest enablers of growth for your Organization over the next 1 to 2 years?
Company Advisor
0% 10% 20% 10% 0%
Improved access to capital and funding
Better execution of sales and marketing efforts
Innovation in products/services improved return on
research and development
Improved operational efficiency — reduced operating
cost, reduced investment costs
Improved operational effectiveness—improved process
performance, greater
Growth via mergers/acquisitions
Export growth for good/services
Domestic market growth for goods/services
Improving regulatory environment
Company Advisor
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Swiss entity. All rights reserved.
ChallengesQ: What is the biggest challenge for your Organization within the next 1 to 2 years?
Revenue Growth
Increasing Net Income
Finding and Retaining Talent
Merger Execution and Integration
Managing Wage Inflation
Developing and Executing a Competitive…
Managing Supply Chain
Leveraging Technology
Restrictive Regulatory Environmnent
Increased Competition
Growing Exports
Slowing Business Demand
Access to Capital and funding
Slowing Demand for Core Products & Services
New Local Market Competitors
Reducing SG&A Costs
5% 0%10%5%0% 10% 15%Company Advisor
Company Advisor
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Swiss entity. All rights reserved.
Shared Services CriticalityQ:
How important and critical is the usage of Shared Services (Internal Captive Centre / Outsourcing)
to helping your Organization achieve its goals and objectives over the next 2 years?
Criticality of Internal Captive Centre Criticality of Outsourcing
Not important 1
2
3
4
Very important 5
30% 20%40%10%0% 20% 30% 10% 0%
Criticality of Internal Captive Centre Criticality of Outsourcing
Not important 1
2
3
4
Very important 5
Co
mp
an
yA
dvis
ors
45% 30%60%15%0% 30% 45% 15% 0%
Internal captive centre Outsourcing
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Swiss entity. All rights reserved.
Captive Centre
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Swiss entity. All rights reserved.
Management ExpectationsQ:
What is top expectation from the executive management for your / your clients’ Internal Captive
Centres efforts for the coming 2-3 years?
Company Advisor
Company Advisor
Drive down ongoing costs
Improve in-scope process performanceand operations
Greater use of data analytics
Greater use of cloud
Greater of commercial enterprise software
Greater efficiencies gained(harmonization)
Increase scope of efforts
Improve talent/skills of resources
Improve governance of efforts
25% 20%20%5%0% 10% 15% 15% 10% 5% 0%
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Swiss entity. All rights reserved.
Adoption DriversQ:
What do you think are the most important drivers to your clients adoption or expansion of Internal
Captive Centre?
Advisor
0% 5% 10% 15%
Gain access to external skills/talent/resources
Gain economies of scale
Productivity and efficiency gains
Improve financial flexibility/create more variable cost model
Improve global delivery & operating models
Improve process performance
No specific reasons/many competing reasons
Redirect resources to more strategic activities
Reduce future investment costs (CapEx)
Reduce operating costs (OpEx)
Support business growth/expansion agendas
Standardization, simplification and harmonization
Advisor
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Swiss entity. All rights reserved.
Current ChallengesQ:
What are the top challenges your organization faces with your current shared service center (internal
captive center)?
Company Advisor
Company Advisor
Lack of Executive Leadership
Lack of funding
Lack of Leadership Team Experience tomanage the center / relationship
Lack of operational team experience tomanage efforts/weak governance
Change Management Challenges
Lack of a viable business case,assumptions have changed
Inability to drive improvements andefficiencies
Inexperienced Governance Organization
Use of technology
Organizational structure design
20%5%0% 10% 15% 15% 10% 5% 0%
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Swiss entity. All rights reserved.
Third Party AssistanceQ:
In which of the following areas do you feel your organization / your clients would seek third party
assistance regarding shared services (internal captive center)?
Company Advisor
Company Advisor
Project Management
Stakeholder alignment
Stakeholder management
People and change management
Scope Assessment
Process design
Business case
Risk assessment and mitigation
Location assessment
Retained organization design
Transition support
Governance structure and design
Continuous improvement
Benchmarking / health check
5% 0%10%5%0% 10% 15%
16© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
DemandQ:
What do you feel are the major demand areas for Internal Captive Centre for your clients today [next
24 months?] ?
0% 5% 10% 15%
Administrative services
Customer care / Customer Service
Data and analytics
Documentation services (scanning, print, mail)
Finance & accounting
Human resources
Industry specific services
Information technology
Real estate & facilities management
Research & development
Supply Chain - Sourcing & Procurement
Sales Support & Marketing Research
Advisor
Advisor
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Swiss entity. All rights reserved.
Outsourcing
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Swiss entity. All rights reserved.
Management ExpectationsQ:
What is top expectation from the executive management for your / your clients’ Outsourcing efforts for
the coming 2-3 years?
Company Advisor
Company Advisor
Drive down ongoing costs
Improve in-scope process performance andoperations
Greater use of data analytics
Greater use of cloud
Greater of commercial enterprise software
Greater efficiencies gained (harmonization)
Increase scope of efforts
Improve talent/skills of resources
Improve governance of efforts
25% 20%20%5%0% 10% 15% 15% 10% 5% 0%
19© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
Adoption DriversQ:
What do you think are the most important drivers to your clients adoption or expansion of
Outsourcing?
Advisor
0% 5% 10% 15%
Gain access to external skills/talent/resources
Gain economies of scale
Productivity and efficiency gains
Improve financial flexibility/create more variable cost model
Improve global delivery & operating models
Improve process performance
No specific reasons/many competing reasons
Redirect resources to more strategic activities
Reduce future investment costs (CapEx)
Reduce operating costs (OpEx)
Support business growth/expansion agendas
Standardization, simplification and harmonization
Advisor
20© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
Current ChallengesQ:
What are the top challenges your organization faces with your current shared service center
(outsourcing)?
Company Advisor
Company Advisor
Lack of Executive Leadership
Lack of funding
Lack of Leadership Team Experience tomanage the center / relationship
Lack of operational team experience to manageefforts/weak governance
Change Management Challenges
Lack of a viable business case, assumptionshave changed
Inability to drive improvements and efficiencies
Inexperienced Governance Organization
Use of technology
Organizational structure design
20%5%0% 10% 15% 15% 10% 5% 0%
21© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
Third Party AssistanceQ:
In which of the following areas do you feel your organization / your clients would seek third party
assistance regarding shared services (outsourcing)?
Company Advisor
Company Advisor
Service provider identification and assessment
RFP development / Management
Opportunity case / Business case
Scope definition
Service level / reporting requirements
Site selections
Retained organizational design / restructuring
Negotiations support
Transition project management office support
Governance structure design
Benchmarking
20%5%0% 10% 15% 15% 10% 5% 0%
22© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
DemandQ:
What do you feel are the major demand areas for Outsourcing for your clients today [next 24
months?] ?
Advisor
Advisor
0% 5% 10% 15%
Administrative services
Customer care / Customer Service
Data and analytics
Documentation services (scanning, print, mail)
Finance & accounting
Human resources
Industry specific services
Information technology
Real estate & facilities management
Research & development
Supply Chain - Sourcing & Procurement
Sales Support & Marketing Research
23© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
Robotics Process Automation (RPA)
24© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
Digital Labor (a.k.a. Robotic and Cognitive Automation) is a range of technologies that
companies can use to automate both business processes and operations. It includes
automation of transactional parts of a business process through the application of
technologies such as workflow, screen scraping and rules engines, up through automating
more strategic business operations by leveraging more sophisticated technologies involving
cognitive machine processing and elements of artificial intelligence. .
These types of technologies will drive exponential and unparalleled transformation of
business models. Their use is set to enable a progressive digitization of labor. Their
development has been driven by significant advancements in natural language processing,
machine intelligence, digital engagement, analytics, big data, social, mobile, and cloud.
Ranging from basic optical character recognition (OCR)/screen scraping technologies, these
technologies sit on top of existing IT architecture components. In their most advanced form,
they interpret data from multiple sources to make decisions like a human would.
Changing How Business is DoneShifting to a digital labour force
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Swiss entity. All rights reserved.
Benefits of a Digital Labor Force
Source: The Outsourcing Institute, Three Secrets Your Traditional Service Providers Are Not Telling You, June 2014
WAVE 2:
LABOR AUTOMATION
WAVE 1:
LABOR ARBITRAGE
40 - 75 percent15 - 30 percent
Cost take out for relevant functionsCost take out
Model is scalable to the extent that
you can scale labor
Custom/complex, legacy:
“Your Mess for Less”
Ongoing access to low cost labor necessary
to provide continuous value
Revenue/profit correlated to people
Model is scalable through technology, and is
largely independent of labor growth
Transformative – new way of doing business
One-Time (and limited ongoing) access
to analysts who can codify
manual processes
Revenue/profit not correlated to people
DigitalBusiness Models
CloudMobileSocial Data/Analytics
Cognitive
26© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
RULES
ENGINES
WORK
FLOWSCREEN
SCRAPING
Machine
Learning
Large-scale
Processing
Adaptive
Alteratio
n
Artificial
Intelligence
“Big Data”
Analytics
Natural
Language
Processin
g
Processing of
Unstructured
Data & Base Knowledge
» Macro-based applets
» Screen scrapping data collection
» Workflow
» Visio-type building blocks
» Process mapping
» Business process management “BPM”
Basic Robotic Process
Automation (RPA)1» Built-in knowledge repository
» Learning capabilities (e.g. ‘learning assist’)
» Ability to work with unstructured data
» Pattern recognition
» “Reading” source data manuals (e.g. NLP)
Enhanced Process
Automation2» Artificial intelligence
» ‘Teaching’ versus ‘programming’
» Natural language recognition & processing
» Self-optimization / self-learning
» Digestion of super data sets
» Predictive analytics
» Hypothesis generation
» Evidence-based learning
Autonomic/Cognitive3
Digital Labor Automation (DLA)
» Customer On-Boarding
» Account Opening
» Fund Payments
» Cross check multiple systems, with
structured and unstructured data, to
ensure compliance
» An intelligent virtual personal assistant
can rapidly solve customer problems and
help users navigate and connect to the
correct information
High value use cases across key financial service providers
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Swiss entity. All rights reserved.
RPA Deployment – Global SurveyQ:
What is your organization’s level of activity relative to the deployment of robotics process
automation and cognitive automation technologies?
43%
36%
15%
5%
1%
Basic Process Automation
38%
32%
19%
9%
2%
Enhanced Process Automation
28%
28%
22%
14%
8%
Cognitive Automation
Source: KPMG Global Pulse Survey 2015Q4
28© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
RPA Deployment – China SurveyQ:
What is your / your clients’ current level of activity relative to the deployment of Robotic Process
Automation (RPA) technologies and systems?
Company Advisor
Company Advisor
No activity
Self-education andplanning
Experimenting andrunning pilots
Live implementations
60% 40%80%20%0% 40% 60% 20% 0%
Process areas involving RPA techniques Level of activity relative to the deployment of RPA
0% 20% 40%
Source to Procure
Procure to Pay
Quote to Cash
Record to Report
Finance & accounting - Other
Supply chain/procurement -Other
Human resources
Information technology
Customer care
KPMG observed large scale cross functional RPA deployment globally, while China has
limited awareness and almost no activity
Source: KPMG China SSOA Survey 2016Q1
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Swiss entity. All rights reserved.
Key KPMG Contacts
30© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a
Swiss entity. All rights reserved.
KPMG Contacts
Partner-in-Charge
Shanghai Office
Gary P. Nowak
Partner
Beijing Office
Kai Cui
Partner
Hong Kong Office
James O’Callaghan
Director
Shanghai Office
Yong Zhu
Director
Guangzhou Office
Max YangWebster Shao
Director
Beijing Office
© 2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The information contained herein is of a general nature and is not intended to address the circumstances of any
particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no
guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the
future. No one should act on such information without appropriate professional advice after a thorough examination of
the particular situation.
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