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Perspectives for Wipro BPO


and introduction to P@C
Leadership Offsite

Discussion document
December 12, 2013
Contents

1 Overview of the market, key drivers and


disruptions

2 The P@C approach to support and drive


Wipro BPO’s growth strategy

3
Program architecture and how we plan
to work with you as part of the P@C
engagement

McKinsey & Company | 1


Facts about the offshore BPO industry
Difference in CAGR growth rates of 3
fastest growing BPOs and the next 7 12% points
in the last 4 years

What is the correlation between sales


and marketing spend and growth rate
No correlation

Proportion of cross-sell in top-10 accounts 1 in 6

Observed time spent by the sales team


with clients
<20%

Y-O-Y cost per FTE reduction achieved by


best performing centres in last 5 years 6-8%

Variance in business impact delivered


(revenue, margin, cash) per agent
Infinite

McKinsey & Company | 2


Given the momentum, offshore BPO market will continue to demonstrate
strong growth and could be a USD 100 bn market by 2017
x% p.a. CAGR

Drivers of future growth Global offshore BPO market

▪ Continued cost pressures make US$ billion


the business case for offshoring 13-14% p.a.
very relevant
▪ Mature offshorers willing to move
+14% p.a. 95-98
new horizontals, more complex
work (e.g., store planogram and 45.0
consumer analytics in Retail) and
new geographies (LatAm and
APAC)
23.5
▪ New verticals embracing
offshoring as a vehicle for
business transformation
▪ Increased sophistication of
vendors on solution development
and commercial models 2006 2011 2017

SOURCE: Nasscom, Gartner, McKinsey analysis McKinsey & Company | 3


F&A, Banking and Healthcare are expected to present the Priority areas

biggest opportunity over the next four years


Current market size, 2011 Estimated market size, 2017 Absolute growth CAGR
USD billion USD billion USD billion Percent

CRM 14.6 25.9 11.3 10.0

F&A 11.5 24.1 12.7 13.1

Banking 9.3 21.5 12.2 15.0

Telecom 2.1 4.3 2.2 12.7

Insurance 1.7 3.9 2.2 14.8

Manufacturing1 1.3 3.2 1.9 16.0

HR 1.2 3.8 2.6 21.1

Healthcare + Pharma 1.1 3.8 2.7 23.0

Retail 1.1 2.4 1.3 14.0

Other Verticals2 0.8 2.3 1.5 19.5

Procurement 0.3 1.1 0.8 24.9

▪ F&A and Banking take the biggest share of growth over the next 4 years
▪ Healthcare and Pharma together are the fastest growing with significant scale

1 Manufacturing includes discrete manufacturing only; 2 Other verticals include Government, Utilities, and Media (Printing & publishing)
3 Primarily includes Banking, Telecom and Insurance

SOURCE: Nasscom, Gartner, McKinsey analysis McKinsey & Company | 4


Financial services sector continues to be attractive given ongoing cost
optimization focus of top financial firms
Company Evidence of cost optimization focus

▪ Expected cost savings of about USD 900 million in in 2013


▪ Expected annual expense savings of more than USD 1.1 billion
beginning in 2014

▪ Expressed sharp focus on cost control in 2013, given


continued pressure from low interest rates and loan competition

▪ Confirmed plans to push ahead with the float of 630 branches


▪ Plans to hive off TSB (bought 18 years ago) to create a
separate bank on the high street

▪ Aims to slash annual costs by EUR 4.5 billion by 2015


▪ Plans to move EUR 125 billion worth of risky assets into a non
core unit that will set out to shed them

▪ Plans to shed 1,000 jobs as part of Chief Executive Officer


Michael Smith’s efforts to offset slumping loan growth

SOURCE: Press search McKinsey & Company | 5


Leaders are demonstrating fundamentally superior 2008
performance, pulling away from the pack . . . 2012

BPO market competitive landscape

4,051 1,449 1,446 546 463 443 402 3872


369 316 287
2,505 833 322
436 182
Revenue
(USD million)

Growth 13 15 35 14 6 25 6 8
(2008-11)
(Percent)
Acquisitions MedAssist Marketics
Aviva’s
Captive JV with captive BPO
HPP Dialog centres in
India

BFSI, BFSI, CRM, Travel Insurance, BFS, Manu- CRM, F&A,


Major F&A,
Banking, Insurance, Utilities, Banking
verticals/ procurement Manufac- Telecom, facturing,
turing, F&A, Retail Healthcare F&A Travel, F&A retail and
horizontals1
Analytics CPG

1 Major verticals by BPO revenues for Genpact, EXL and Firstsource while those for others are based on overall revenues
2 Wipro BPO revenues as reported by Gartner
SOURCE: Secondary research
McKinsey & Company | 6
Gold standard accounts are changing the game on three dimensions
▪ Systematically identifying growth slivers (cells of US$
200-500 million) to build service lines of scale (e.g.,
Strategic EXL focusing on P&C insurance in USA)
focus ▪ Establishing a differentiated value proposition that is
believable (e.g., SEP, lean-six sigma at GENPACT)

▪ Clinical efficiency in mining and cross-selling in


accounts; > 50% accounts have presence of 3
Commercial service lines
excellence and ▪ Debottleneck frontline sales productivity to By driving initiatives
non-linearity spend more time with customers across the three
▪ Building practices, platforms and service lines dimensions, companies
around a few core verticals/ horizontals for non- can uplift sales by 5-7%
linearity in the revenue model points and improve
▪ 7-10% higher pricing by stronger upfront solution margins by 4-6% points
design (e.g., sequencing 6-7 levers to capture
the full efficiencies, pricing switches)
▪ Systematic approach of driving customer excellence –
in the 4 walls, upstream and down stream processes,
Operations and through business outcomes
excellence ▪ Continued drive and rigour to reduce cost of delivery
year-on-year

McKinsey & Company | 7


STRATEGIC FOCUS
There are high pay-offs in carefully selecting the slivers; leaders do it
consistently
Strategic slivers/choices Impact
▪ >US$ 200 million deals in F&A ▪ Estimated 4000+ FTEs in pharma
in Pharma F&A; ~US$ 100 million in
revenues growing at 30% CAGR
for last 5 years

▪ Policy issuance, customer ▪ #1 player in offshoring; more than


service and claims 15 clients
management support in motor, ▪ US$ 175 million in revenues;
P&C and Life insurance CAGR of 20%+; EBITDA of ~30%

▪ <US$ 50 million deals in F&A ▪ 50% share of deals


in CPG ▪ US$ 50 million service line in 3
years
▪ 23% CAGR of the service lines;
25%+ EBITDA

McKinsey & Company | 8


STRATEGIC FOCUS
Clients are placing increasing importance on Key Strengths

differentiated capabilities
Key reasons for selecting vendor Comments about winning provider in interviews
% respondents quoting dimension as top 3 differentiator
n = 21
Weighting1 “We believe that XXX has strong capabilities in F&A.
Percent Therefore we gave them relatively more complex work”
– Sr. Executive, Retail Bank
Business case/ Pricing 30 100

Capabilities/ Expertise 67 73
“We almost gave our contract to another vendor. The
Process improvements 50 36 depth of talent and commitment of the senior
management team impressed us during the site visit”
Connect with 27 – Sr. Executive, Healthcare Co.
50
senior management
Cultural fit 17 27

Global delivery footprint 17 27 “Of course their business case was strong. But above
that they impressed us with their willingness to invest in
Investment by the vendor/
25 27 long term partnership”
scale of operations
– Sr. Executive, Pharmaceutical Co.
Reputation 17 9
Relationship with the sales
17 9
team/on shore team

1 Percentage of respondents naming the criteria as an important factor for selection

SOURCE: Customer interviews McKinsey & Company | 9


STRATEGIC FOCUS
Genpact has created differentiated proposition by building
multi-sector and multi-functional capabilities
Genpact SEP suites
Heavy Mfg. Light Mfg. Pharma

Consumer Commercial
finance finance

Insurance
Demand, Demand, Healthcare Retail
Sales force
sales & sales &
effective-
operations operations
ness
planning planning
Credit Loan
risk origination CPG
Direct Direct Store
Pharmaco Cash flow
sourcing & sourcing & opening
Application vigilance
procurement procurement
to
issuance Clinical data
Loan Credit Inquiry Inquiry Patient Logistics
manage-
origination risk to order to order flow planning
ment
Trade
Unsecured Disbursal promotions
Claim Aftermarket Aftermarket Trade Material Ware-
Lending and
processing services services promotions flow housing
origination servicing

CFO suite Source to pay Order to cash Record to report

IT suite IT helpdesk Infrastructure management

Enterprise suite Collections Customer service Hire to retire

SOURCE: IDC, Team analysis McKinsey & Company | 10


STRATEGIC FOCUS
CTS has taken a programmatic approach to M&A and built a
USD 350 million BPO business 4 years CASE STUDY
NOT EXHAUSTIVE

BPO deals
Year Target Rationale Price Link to BU/corporate strategy
2011 ▪ Capabilities in analytics and business services in mortgage US$50 million ▪ Plugging the gap in mortgage
value chain offerings of FS
2009 ▪ Domain knowledge in investment banking, asset Large (2000 ▪ Expanding into new areas in
management and wealth management employees) FS; Strengthen horizontal
India service centre ▪ Strengthen BPO and KPO capabilities capabilities
2007 ▪ Strengthen CTS’s full suite of offerings across all areas of Life US$135 ▪ Access to key customers
Sciences value chain million ▪ Strengthen capabilities
▪ Access of 75 customers of target, including largest 20
pharma cos and 4 out of top 5 biotech companies

Non BPO deals


Year Target Rationale Price Link to BU/corporate strategy
2010 Galileo performance SAS ▪ Adding to testing capabilities & strengthening presence in Small (29 ▪ Strengthening geo presence
France professionals)
2010 ▪ Program management and consulting capabilities Small (29 ▪ Expand geographic footprint
▪ Expand geo footprint in Australia, New Zealand, and UK professionals) ▪ Acquire delivery capabilities

2009 ▪ Strategic consulting capability in ITSM and ITAM Small ▪ Strengthening capabilities in
▪ Talent and IP in Infrastructure process consulting a BU

2009 ▪ Consulting and SI capability in Oracle retail, merchandising, Small ▪ Acquiring capabilities in a
planning and optimisation suite growth area in a vertical
2008 ▪ Expanding consulting capabilities into media and Small (60 ▪ Expanding into a fast growing
entertainment industry, leverage relationships of target employees) vertical
2006 ▪ Increase the depth of infrastructure practice by acquiring high Small (100 ▪ Access to key customers
end network and infrastructure consulting capabilities and employees) ▪ Strengthen capabilities
delivery platform

SOURCE: Dealogic; McKinsey analysis McKinsey & Company | 11


COMMERCIAL EXCELLENCE
Significant variation in ROI on sales and marketing spend; leaders
get 2X the return than the average

S&M spend, company C Return per dollar


indexed to 100 spent on sales

Company A 17 -0.4

Company B 42 0.6

Company C 100 1.4

Company D 56 1.7

Company E 4 2.9

SOURCE: Press search, team analysis McKinsey & Company | 12


COMMERCIAL EXCELLENCE
Case example: Infosys is developing capabilities to drive growth
through non-linear model
Strategy to drive revenue growth “We are continuing to invest in a
few BPO platforms, which would
▪ Building platform business: though in-house development or
drive the future growth and margins”
acquisitions
– In house development: Developed platforms in HR, - CEO, Infosys BPO
procurement, media and entertainment such as
Newspaper-in-a-box (NiaB), Shopping Trip 360 (retail “We are going big on platforms,
analytics solution). today, >50% deals we sign has a
platform component to it”
– Acquisition: Acquired McCamish Systems, a platform-
based insurance processing solution provider
- Senior VP, Infosys BPO

“Recent acquisitions have helped


▪ Shift to high end services: Embedding analytics offerings to our BPO business offer value-
all accounts
added services and win new clients.
Today, 30 per cent of our revenues
▪ Outcome based pricing: Gradually shifting to this pricing are coming from the platform
model. Multiple deals in “Procurement” service line signed business”
under this model
- CFO on FY12 results
FY12 financial results:
▪ Revenue grew by ~16% in FY12 while headcount grew by ~10% in the same period
▪ EBITDA margin grew by 400 BPS to 22% in FY12. EBITDA margin (%) in Q4 FY12 was ~30%

SOURCE: Press articles McKinsey & Company | 13


OPERATIONS EXCELLENCE
Leaders systematically transform accounts to be ‘gold standard’ CASE
EXAMPLE
through excellence in operations

Scale seekers Gold standard

Increase client’s revenue


by converting service calls
Year 3
to sales

Year 2 Improve pricing by creating


Year 2 utilities (e.g., combining L2
and L1 desks)

Variabalize cost for clients


Year 1 by moving to transaction
Year 0 based pricing

Year 0 Year 1
Laggards Value hunters

SOURCE: McKinsey P360º benchmarking McKinsey & Company | 14


OPERATIONS EXCELLENCE
Suppliers, in general, are more cost focussed and Provider 1
Provider 2
have been able to reduce cost year-on-year

Cost per FTE (for like to like F&A processes in India)


2008 cost indexed to 100

118
114
100
98

95 22%

91

88
▪ Optimized work force mix
▪ Tight capacity (e.g., part timers)
planning ▪ Reduced bench through
▪ Increase span of shorter recruitment and ▪ Increased seat
controls training cycle utilization

2008 2009 2010 2011

SOURCE: McKinsey P360º benchmarking McKinsey & Company | 15


OPERATIONS EXCELLENCE
What centres typically focus on does not seem to matter

What we focus on What actually matters

Middle Business
SLA performance Attrition management context and
strength understanding

Granular
Location (tier-1 vs. Speed of
Scale of the site performance
tier-2) execution
measurement

Business context
Upfront End-to-end Entrepreneurial
and
investments ownership top leadership
understanding

Differentiated
Technology/IT Insights and
Control of process talent
know-how analytics
proposition

McKinsey & Company | 16


Contents

1 Overview of the market, key drivers


and disruptions

2 The P@C approach to support and drive


Wipro BPO’s growth strategy

3
Program architecture and how we plan
to work with you as part of the P@C
engagement

McKinsey & Company | 17


Our understanding of Wipro BPO’s current situation and priorities

Your priorities

▪ Achieve industry beating growth, through leadership in 3-4


market segments

▪ Create a differentiated competitive positioning on the back of


‘next-generation’ and proprietary organisational framework (the
“Wipro BPO Way”)

▪ Improve share of wallet and deliver distinctive client


experience by reorienting delivery teams to drive business
impact consistently

▪ Align the support functions (e.g., transitions, talent acquisition)


to help deliver to the “Wipro BPO Way”

SOURCE: McKinsey analysis, Discussions with Wipro BPO leadership McKinsey & Company | 18
Objectives of the proposed Process @ core engagement to re-ignite
growth

1 Design the structured organisation-wide Business Process


Management (BPM) framework (the “Wipro BPO Way”)
that enables market differentiation and facilitates successful
introduction of new services lines/processes

2 Deploy the BPM framework in two areas (one existing and


one new process) to
2a Accelerate growth (e.g., create new solutions, increase
win-ratio and expand order book)
2b Enhance client experience by delivering greater
business value (for existing process)
3 Create institutionalised infrastructure to roll-out “Wipro
BPO Way” consistently through-out the organisation (e.g.,
by providing clarity on roles for support functions, creating
change management teams and developing appropriate
dashboards)

SOURCE: Discussions with Wipro BPO leadership McKinsey & Company | 19


We have jointly developed three cornerstones of Wipro BPO’s industry-
beating growth strategy

Identification of 8-10
“granular” market cells to
compete in and sharp
articulation of why Wipro
Targeted BPO should win in those
dominance and
differentiation
Comprehensive
framework to Embedded
deliver superior capabilities in
business value the organisation
Winning to create and
through-out the
growth deliver value in
customer life-cycle Distinctive Best-in-
strategy a consistent
in any given value class
market cell fashion for all
assurance institutional
chosen market
model capabilities
cells

SOURCE: McKinsey analysis, Discussions with Wipro BPO leadership McKinsey & Company | 20
Our outside-in hypotheses for accelerating growth for the BPO business
1▪ Over the next 3-4 years, Wipro BPO should focus on 8-10 (of the ~30 potential) granular
Targeted growth cells to accelerate growth; Outside-in, cells in the retail banking (particularly
dominance and deposits), insurance (both P&C and life) healthcare (particularly payor) and F&A
differentiation (particularly Manufacturing, Retail and CPG verticals) areas appear most promising
2▪ Wipro BPO should position itself as a provider focused on delivering “business value
through insights and analytics” to differentiate itself vis-à-vis competition
3▪ To capture a disproportionate share of growth, Wipro BPO should develop each of its offerings
along a standardised BPM framework that encompasses the following five elements:
– Articulation of business value drivers: Define the primary ‘value dimension’ for the
process (e.g., cost per medical claim in healthcare payor claims offering, DSO for order to
cash in F&A offering)
– Proprietary value capture approach: Develop an approach that builds upon combination of
benchmarks/analytics, domain insights, IT tools/platforms and experts that underwrites value
Distinctive for the client (e.g., analytics around auto-adjudication of healthcare payor claims)
value – Rigorous execution framework: Develop the “best-in-class” operating environment
assurance covering process-maps, analytics, job-aids and performance management tools to enable the
model operations teams to systematically identify and capture value (e.g., treatment analyser for
collections, onboarding experience management analytics for retail banking customers)
– Reputation building approach: Craft a reputation building approach (e.g., through white-
papers, analyst coverage, client meets) to create “top of the mind recall” for Wipro BPO
offering
– Customised commercialisation approach: Tailor-made pricing model (e.g., ‘carve-outs’ for
onshore GBS, cost per transaction for routine processes) that ensures value delivery to
clients and drives the right behaviours at Wipro BPO

Best-in-class 4▪ Institute/Strengthen 5 organisational functions/capabilities - Central “Wipro BPO way”


cockpit, Solutions-led business building, Support functions goaled on BPM targets, Wipro BPO
institutional
GTM aligned to BU salesforce and Wipro BPM learning academy - to ensure consistency in
capabilities
developing offerings and uniformity in executing “Wipro BPO way”

SOURCE: Team analysis McKinsey & Company | 21


1 Number of cells >0.5 billion in revenues are expected to grow from 17
today to 30 in 2016 – Opportunity for granular opportunities Color scheme
US$ 0.5 to 1.5 billion
Market size for GDC
xx US$ 1.5 to 3.0 billion
(exc captives)$ billion
2012 market size for offshore delivery > US$ 3.0 billion

Natural
Banking and financial Tele- TTL &
Insurance Healthcare Life Sciences Manufacturing CPG Retail Reso- MPE Public services Others Total
services com Infra
urces
Service-
line Aero-
Medi- Pro- Indus-
space Natural
Comm- Capital Pro- Pha- cal cess trial Hi- Auto- Tele- TTL & Gover-
Retail P&C Life Payor & CPG Retail Reso- MPE Utilities Others Total
ercial market vider rma Devi- Indus- Mach- tech motive com Infra nment
defen- urces
ces tries inery
se
Core ops 11.0
Custo-
18.8
mer care
F&A 11.0

SCM 0.5

HRO 1.1

Total 9.9 1.3 3.0 1.2 0.9 1.0 0.8 1.4 0.4 0.8 0.7 1.4 0.5 0.1 0.5 3.5 9.5 0.6 0.3 0.5 0.5 3.0 0.8 42.4

2016 expected market size for offshore delivery


Natural
Banking and financial Tele- TTL &
Insurance Healthcare Life Sciences Manufacturing CPG Retail Reso- MPE Public services Others Total
services com Infra
urces
Service-
line Aero-
Medi- Pro- Indus-
space Natural
Comm- Capital Pro- Pha- cal cess trial Hi- Auto- Tele- TTL & Gover-
Retail P&C Life Payor & CPG Retail Reso- MPE Utilities Others Total
ercial market vider rma Devi- Indus- Mach- tech motive com Infra nment
defen- urces
ces tries inery
se
Core ops 16.1
Custo-
26.8
mer care
F&A 15.7

SCM 0.4

HRO 1.3

Total 14.4 1.9 4.4 1.8 1.3 1.8 1.4 2.5 0.7 1.1 1.1 2.1 0.7 0.0 0.7 4.8 13.1 0.7 0.3 0.6 0.6 3.8 1.0 60.3

SOURCE: McKinsey Proprietary TAM analysis and expert interviews McKinsey & Company | 22
2 Wipro should aspire to position itself as a analytics/insights TPO EXAMPLE
led business outcomes enabler to differentiate in the market place
Core offering
Applicability depends on service offering

▪ Improve ▪ Return on trade spend ▪ Average profit uplift


Outcomes
performance in ▪ Average post-promo residual ▪ % of promotions with negative
6 key business volume incremental profit
KPIs ▪ Promotions managed per annum ▪ Average volume uplift

Process ▪ Embed Objectives


Promotions Promotions Promotions Performance
management analytics in 5 & strategy
planning execution monitoring Management
core processes building

A
▪ Deliver cutting
Core analytics/ edge advanced
Performance
modelling analytics Planning Analytics Predictive Analytics
monitoring
across 3
modules

D
Manage TPO datamart
Clean and integrate data
Integrated data ▪ Integrate and
management manage data Promotions Shipment Product Customer Category
Sales Data
from 6 sources Library Data Data Data Data

SOURCE: Team analysis McKinsey & Company | 23


3 We have developed a customized framework for Wipro BPO O2C EXAMPLE
SUMMARY PAGE
to develop distinctive offerings for each of the growth cells
Define the primary ‘value dimension’ Deploy a ‘Proprietary value capture approach’
 There are 4 ‘mother metrics’ for order-to-  Benchmarks on 15+ metrics (e.g., time to bill)
cash process – cost per O2C transaction,  8 specific insights on world-class operations
order fill rates, DSO and bad debt (e.g., pricing errors contribute to ~50% delays)
 DSO typically carries the greatest  3 proprietary tools (e.g., treatment analyser,
mind share of CFOs smart collector’s desktop)

1 2
 3-4 external experts (e.g., former
CFO of retail chain in UK with
significant offshoring

Commercialization approach Rigorous execution

5
 Lift out deals for onshore
3
framework tailored to process
Finance - GBS centres  Account prioritization and
 Per FTE pricing for first time workflow
offshorers and extended  Contact strategies
enterprise model for
specialist roles
 Transaction
4  Job aids, tools and coaching
 Performance management

based for
External reputation building
large P2P
 Investments with clients
processes
 Convening and network at events (e.g., web seminar on
generation performance management in O2C for back-offices)
 Publishing industry insights (e.g., white paper in ‘CFO Magazine’

SOURCE: Team analysis McKinsey & Company | 24


IDENTIFY PRIMARY VALUE DIMENSION
3 DSO is the top priority for CFOs and should be a key
value dimension of order to cash F&A O2C EXAMPLE

Top
Mother metrics Median quartile

Cost per Order to Cash transaction


$16 $8.7
(support cost)

48 34
Overall Days Sales Outstanding (DSO)
days days
Order
to Cash
Cycle Average bad debt rate as a
0.55% 0.26%
percentage of revenue

Percent complete on time shipments 88% 97%

SOURCE: McKinsey BSF-OBI and Finance 360 database, external reports McKinsey & Company | 25
PROPRIETARY VALUE CAPTURE APPROACH
3 Value capture approach should consist of four elements and
brings elements like technology and analytics together F&A O2C
EXAMPLE

▪ A structured O2C issue identification framework


(by vertical) to benchmark performance – DSO value tree broken into 18
Benchmarks and sub metrics (e.g., PO creation time, billing errors)
problem solving ▪ Framework should identify gap against the benchmark (e.g., billing
framework errors are 25% more than best-in-class levels)

▪ Combine domain richness and analytics to push clients to partner to


make the changes (e.g., PO requirements at a professional services
Distinctive firm lacked rigour leading to ~30% invoices generated with a PO)
domain ▪ Codify insights across accounts to (e.g., account segmentation
insights approach) in W-BPO
Service
lines ▪ IT tools and analytics models that help resolve billing disputes for a
CPG client and helps the collector to prioritise
IT tools and – Web interface for AP department to resolve disputes
platforms – Treatment analyser and prediction model (e.g., self-pay vs.
reminders requiring customers )
– Intelligent desktop for agents to prioritise invoices to collect
▪ Panel of 3-4 external advisors and experts to help guide the O2C
Panel of
practice and shape the client’s thinking (e.g., Collections leader from a
experts
large CPG company like P&G, finance and accounting controller of a
retail major like Tesco)
▪ Internal experts – Practice leader of F&A, who was formerly head of
GBS for a company like Walgreens in US
SOURCE: Team analysis McKinsey & Company | 26
RIGOROUS EXECUTION FRAMEWORK
3 On the supply side, WIPRO BPO will deliver distinctive impact
by focusing on eleven delivery principles, specific to O2C F&A O2C EXAMPLE
1 Revise account prioritization criteria – both for individual collectors and across the entire
Account book (e.g., quantitatively assess and prioritise by risk and value)
prioritization
and workflow 2 Adopt “account ownership” to help ensure collectors thoroughly work accounts over time
(e.g., defined book of accounts per collector per month)

3 Increase breadth and effectiveness of inbound contact strategies (e.g., escalated letter and
Contact FedEx campaigns for high value accounts, using marketing best practices)
strategies Expand account research capabilities significantly, both for individual collectors and overall
4
tools

5 Increase granularity of guidelines governing loss mitigation and disposal options to prevent
leakage and increase consistency of outcomes across collectors (e.g., rules for settlement)

Contact 6 Standardise scripts and call flows with talking points and tactics to handle challenging
strategies customer situations (e.g., how to overcome customer objections)
aids, tools, 7 Develop standardized job aids that integrate regulatory compliance with performance
and coaching drivers (e.g., skip tracing practices and tools, “words that work”, settlement calculator)
8 Upskill supervisors and managers to be more effective coaches and leaders (e.g., managers
spend >50% of time coaching); re-define manager role as pivotal in ongoing capability building)

9 Institutionalise management routines and renew rigor around performance management


(e.g., conduct true daily huddles with focus on performance metrics and bite-sized learning)
Performance
management 10 Revise incentives to balance economic objectives and increase simplicity for collectors

11 Simplify management reporting and increase transparency into collector practices

SOURCE: Team analysis McKinsey & Company | 27


EXTERNAL REPUTATION BUILDING
F&A O2C EXAMPLE
3 Reach and Relevance building efforts for O2C service
Summary of ideas
line ‘Wipro Cash++’ should target five segments on the next page

Segments Objectives Activities


▪ Establish the brand ‘Wipro Cash++’ with both ▪ Detail out annual communication and reach-out
existing and potential clients calendar
Clients
▪ Position Wipro BPO as a thought leader on ▪ Make a focused effort through publications,
O2C in the finance and accounting community industry events and social media

▪ Develop conviction in the sales team to put ▪ 2-day immersion sessions and coaching on the
significant effort behind ‘Wipro Cash++” tools and capabilities
Sales team
▪ Enable the front end teams to have 5-7% ▪ Realign incentive system contributing to
higher pricing relative to the peers strengthen brand values

▪ Ensure delivery teams across accounts ▪ Consistent metrics and KPIs measured across
Delivery communicate the same brand values and accounts
teams positions Wipro BPO as a leader in O2C ▪ Establish O2C core curriculum and training for
space agents and team leaders

▪ Create a dynamic cell that transforms delivery ▪ Regular process level benchmarking across all
O2C on O2C outcomes and helps build external accounts
practice reputation ▪ Publishing performance dashboards and
newsletters to clients on ‘Wipro Cash++’

▪ Define recruiting criteria that help select ▪ Marketing collaterals targeting candidates (e.g.,
candidates, including middle and senior incentives, fun-at-work, impact)
HR and managers to make a career in O2C vertical at ▪ Communication on O2C career track and
potential Wipro BPO trainings
talent
▪ Wipro BPO wide O2C rewards and recognition
program

SOURCE: Team analysis McKinsey & Company | 28


COMMERCIALIZATION APPROACH
3 Pricing models need to be customised to client situation – we have
seen potentially six situations
Deal
Client situation sophistication Commercialisation approach

Clients with large onshore


▪ Lift-out deals involving re-badging, upfront cash flow
out
GBS operations

New client (enterprises


▪ FTE based – extended enterprise model for
multiple client’s BUs/functions
offshoring for the first time)

Clients with sophisticated ▪ Highly competitive unit pricing, model likely


sourcing process (e.g., decided by the client. Focus on high gain sharing
use of sourcing consultants) on outcomes

Single-sourced situations
▪ Invest in clients to own end-to-end process and build
CoE. Multiple models (e.g., per transaction for cash
(new or existing)
application, partial outcome based for collections)

Existing clients on FTE


▪ Gradually move to transaction based pricing for
transactional activities to expand margins
based pricing

Existing clients on per


▪ Move clients towards gain sharing on outcomes
(for stable processes). Invest to get into
transaction pricing
adjacencies (e.g., credit management)

SOURCE: McKinsey McKinsey & Company | 29


4 Scaling up the new ‘Wipro BPO way’ will require five distinct
capabilities to be embedded in the organisation
2 4

Solutions led Well-oiled GTM


1 business building 3 interface with WT 5

BPM academy to
Capabilities “Wipro BPO way” Responsive WBPO
coach change agents/
cockpit support functions
operations team

▪ Be custodians of the ▪ Develop the IP for ▪ Redesign processes ▪ Define rules of ▪ Develop
design of the ‘Wipro every process of critical support engagement between institutionalised way
BPO way’ category – definition functions to enable the offering SMEs of training BUs,
▪ Define the guiding of the value the ‘Wipro BPO Way’ and GTM sales-force practices and
principles for dimension, creation – Transition and (or account support functions in
development of IP of the differentiated solutions managers) across the BPO way
including offering, adapting the – Recruitment the entire sales and ▪ Lead certification of
execution framework, delivery life-cycle
Description and
benchmarks, – On-floor employees and
cookbooks and creation of tools change agents, e.g.,
characteristics performance
expertise management BPM navigators
▪ Program manage the – Middle
change, e.g., own and management
drive the project plan, capability
track deliverables, building
escalate and resolve
– Lean & six-
issues, measure and
sigma
track impact ▪ Cross-functional
team, sourced from
▪ Central, core team ▪ Distributed, within ▪ Cross-functional
the important ▪ Within every unit in ▪ Separate BPO
of 4-5 senior every unit (Retail team,
support sourced from
functions WBPO Academy with 1-2
Where it is practitioners Banking, the important dedicated Academy
embedded Healthcare) and support functions leaders, program
horizontal service managers
line (FAO, HRO)

SOURCE: Team analysis McKinsey & Company | 30


We will measure impact along 10-15 performance and health metrics
(metrics and goals to be jointly agreed in first 4 weeks) FOR THE SELECTED
PROCESS GROUPS ONLY

End of 6 months End of 12 months End of 24 months


• Growth rate in the chosen • – • At industry average • 3-5% higher than
Growth
service lines (%) industry
Financial
perfor- • Confirmed order-book ($) • ACV of 1-2 million • ACV of 10-15 million • ACV of 60-70 million
mance (can be more, based
Revenue
on the current
pipeline)

Sales • Revenue productivity • – • 8-10% in selected • 12-15% in selected


Performance

productivity increase farmer/ hunter (%) process process

• # of conversations initiated • ~10 • ~30 • 75-100


Sales • Qualified leads • 3-4 leads • 10-15 leads • 40-50 leads
perfor-
Sales • Win rates in the chosen • ~30% • ~40% • ~50%
mance
performance service lines (%)
• Increase in probability- • 6-8 million • 15-20 million • 60-80 million
adjusted annualised pipeline
revenue ($)
• Increase in NPS score (%) • 2-3% points for the • 5-8% across all • 5-8% improvement
Client Satisfaction pilot processes accounts in pilot across all accounts
processes for focus processes
• BPM framework • Agreed and fleshed • Deployed in 2-4 • Deployed in 15-20
Positioning out, rolled out in 1 accounts accounts
accounts

Solution • # of service line established • 1-2 • 2-4 • 8-10


Institu-
Health

tional offerings • # of SME/experts • 2-4 • 10-12 • 25-30


capabi- • Sales resourcing • – • ~40% on the focus • ~60% on the focus
lities Coverage
service lines service lines
• BPM academy • Established • – • -
Capability
• Sales team trained • 6-10 • 15-20 • 80-100
Building
• Change leaders trained • 6-10 • 12-15 • 20-30

SOURCE: Team analysis McKinsey & Company | 31


Contents

1 Overview of the market, key drivers


and disruptions

2 The P@C approach to support and drive


Wipro BPO’s growth strategy

3
Program architecture and how we plan
to work with you as part of the P@C
engagement

McKinsey & Company | 32


Proposed deliverables from our engagement Out of formal scope

▪ Prioritise the growth areas for


Wipro BPO (i.e., match market
attractiveness with Wipro BPO
▪ Design and detail out a starting position)
proprietary BPM ▪ Define differentiated positioning
framework in context of for WBPO
Targeted
2 processes
dominance and
▪ Deploy the framework
differentiation
▪ Design the blue-print
end-to-end for 1 and staff the BPM
process academy
▪ Design and implement ▪ Establish the core
the go-to-market transformation office
approach for the ▪ Develop the scale-up
selected processes Winning plan for service lines
growth ▪ Codify the solution
strategy development approach
Distinctive
Best-in-class
value
institutional
assurance
capabilities
model

SOURCE: McKinsey McKinsey & Company | 33


Proposed program architecture Up-front diagnostic

Phase 0 Phase 1 Phase 2

M0 M1 M2 M3 M4 M5 M6 M7…………... M12

▪ Prioritise
Project setup – offerings
and ▪ High level ▪ Establish governance and tracking mechanisms – ‘WIPRO BPO Way’ cockpit
1 establishing size of the
the size of the prize
▪ Own overall project timelines and staffing of resources
prize ▪ Staff the
core team

▪ Define and agree


Develop blue- on the framework
print along 5 ▪ Detail out the blue- ▪ Refine the framework
2 dimensions of book (e.g., metrics, ▪ Establish brand and external reputation
the BPM benchmarks) in the
framework context of the two
processes

▪ Develop
collaterals Roll-out changes to generate the pipeline
Develop and ▪ Account plans
implement the
▪ Staff sales
3 teams and ▪ Lead generation activities (e.g., events)
go-to-market train them ▪ Discussions and pipeline tracking
plan ▪ Identify peo- ▪ Solutioning and pricing support
ple gaps
Roll-out changes to demonstrate
▪ Design solutions
Demonstrate ▪ Baseline and gain customer
impact Implementing the scale
value capture and
approvals
▪ Track metrics and process up roadmap across other
4 in 2-3 accounts establish changes process categories
for 1 process ‘from-to’ ▪ Initiate proprietary ▪ Coach managers and teams
group tool development ▪ Visual management changes
▪ Codify solution
design process ▪ Staff BPM academy
Embed
▪ Design and staff ▪ Define KPIs
5 capability for
BPM academy ▪ Detail-out scale-up
scale-up
▪ Redesign support plan for next wave
functions processes

SOURCE: McKinsey McKinsey & Company | 34


Key deliverables from the engagement – at the end of Phase 1
Key deliverables

1.1 Prioritization of the cells/ arrowheads and 2 processes – 1 existing and 1 emerging
1 Project setup
1.2 Quantified opportunity at stake for the project: well-defined metrics and outcomes
2.1 Refined BPM framework that will be applicable across all process categories

Designing the 2.2 BPM Delivery Cookbook comprising (i) Diagnostic toolkit – defined analyses,
2 templates and tools (ii) Solution design for value dimensions, proprietary value
Wipro BPO way
capture approach, rigorous execution framework and (iii) Tactical implementation
plan, process dashboards with KPIs
3.1 List of prioritized accounts and existing deals
Develop and
3.2 Customer collateral, for both process categories
3 implement the
GTM plan 3.3 BPM Sales cookbook comprising (i) Customer engagement collateral (ii) GTM &
reputation building, commercialization (pricing models and performance mgmt)
4.1 Baselining and target setting of business process and operational metrics for the
Ensure value prioritized 2 process categories
4 capture in pilot 3-4
accounts 4.2 Solution design of all key levers to build world-class process, along with detailed
Tactical Implementation Plan for rollout
5.1 Design of key organizational levers to build 5 capabilities for sustenance
5.2 Design of key support processes at the interface including transition, TA, middle
Embed capability
5 management capability, Process excellence
for scale up
5.3 Academy design to train and certify Wipro BPO employees on the business process
delivery framework, certify a cadre of change agents

SOURCE: McKinsey McKinsey & Company | 35


Proposed team structure and support required for this effort

Steering Committee Wipro support required Time commitment expected


Wipro BPO McKinsey ▪ Provide direction/guide problem- ▪ 5-10% per week (1-2
▪ CEO ▪ Ramesh Mangaleswaran solving discussions every 15
▪ Additional members (TBD) ▪ Shailesh Kekre ▪ Guide communication / change days)
▪ Prashant Gandhi Management to the organisation
▪ Meet regularly with joint core
team; participate in workshops
Leadership team

Wipro BPO McKinsey ▪ Help shape project direction, t ▪ 15-20% per week through
▪ BU heads (50%+ of time) ▪ Sameer Khetarpal
quality and time-lines – Reviews
▪ Additional members (50%+ of ▪ Indy Banerjee ▪ Participate in problem solving, – Working sessions
time) Co-developing – Brain-stroming
recommendations, and workshops
communicating results across
Core team teams

Wipro BPO McKinsey ▪ Joint team rresponsible to ▪ 100%


▪ Project manager ▪ Project Manager execute agreed program plan
▪ 2-3 experienced people with deep ▪ 2 consultants ▪ Ensure data quality, help
sector/function knowledge ▪ 1-2 experts for the chosen areas facilitate analyses and co-
▪ Functional leaders as required create end products
▪ 1 research analyst ▪ Leverage inputs from
▪ 1 implementation resource as leadership inputs to shape
required direction / progress

+
Global Network of McKinsey experts, available on-demand

▪ Outsourcing & offshoring ▪ Client Industry specific Sameer – pls


▪ Branding ▪ Market/Region-specific check ; have
▪ Sales, Channel, Distribution
edited RHS

SOURCE: McKinsey McKinsey & Company | 36


BACK-UP

McKinsey & Company | 37


Core McKinsey leadership team that will be on this journey with you
Sameer Khetarpal Indy Banerjee
Expert Principal (BPO), New Delhi Senior Expert (BPO), Bangalore
▪ Leads P360 service line for BPOs; lead 40+ ▪ 15+ years of experience of working with BPO
benchmarking exercises in 15+ countries providers
▪ Extensively worked with 20+ clients on their ▪ Consulted over 35 global firms in global
offshoring journeys across banking, sourcing strategy, transactions, transition to
insurance and telecom players low cost locations and service delivery models

▪ Prior to joining McKinsey, Sameer spent nearly five Prior to joining McKinsey, Indy’s career highlights include
years leading global operations in finance and ▪ TPI – Partner for South Asia
accounting at GENPACT ▪ Shared services leader at General Motors
▪ Vice President (operations) at GECIS (now GENPACT)

Shailesh Kekre Ramesh Mangaleswaran Prashant Gandhi

Principal, Bangalore Director, Chennai Principal, New York


▪ Core leader of the Firm’s ▪ Core Leader of ▪ Part of the core
global outsourcing and McKinsey’s Indian leadership for
offshoring practice office leadership technology practice in
team.
▪ Leads the Process 360 North America
service line that has been
rolled out to over
▪ Part of the leadership team for WIPRO ▪ Engaged with Wipro for the last ▪ Part of the leadership for WIPRO in
▪ 70 enterprises and providers several years and across North America
▪ Has led 10+ business building engagements; Deeply familiar with ▪ Extensively served outsourcing
engagements for BPO and ITplayers the context, strengths and providers and financial services
globally challenges of executing a companies on strategy, operations
successful transformation and organisation topics

SOURCE: McKinsey McKinsey & Company | 38


Our beliefs on why we are well placed to serve you on this journey
Extensive offshoring • 380 engagements across 157 clients on Outsourcing & Offshoring (O&O) topics in the last 5
and operations years on 4 focus areas – banking (retail and capital markets), healthcare payor and F&A
1
improvement expertise • 1,420 engagements across 200+ clients on Operations & Technology (O&T) topics in the last 5
in the 4 focus areas years
• Access to 100+ senior partners /experts/ external advisors with deep domain knowledge in 4
focus areas and on marketing & sales

Deep understanding of • Served/analysed leading BPO providers through direct effort (7 out of top 10 BPO providers in
2 and experience in India) as well as indirect efforts (involved in 8 out of 10 BPO due diligences)
building provider value • Supported 3 out of the top 5 players in developing and scaling BPM offerings
propositions • Supported nearly 20 clients on their partner selection process in the last 5 years

• Proprietary Target Addressable Model (TAM) with current and projected market sizes
3
Proprietary assets and • Proprietary process-level benchmarks for all 4 in-scope areas (26 companies for retail banking;
partnerships to drive 18 for capital markets, 20+ for Healthcare payor; 60+ for F&A)
organic growth • Partnership with RevenueStorm, a leading sales training firm with 30+ experienced trainers, for
sales capability building

• Largest leadership development firm in the country


Extensive experience • Extensive infrastructure and executive coaches to support clients on capability building (e.g.,
4 in client capability through McKinsey Capability Centre, McKinsey Leadership Institute)
building • Demonstrated track record of client capability building programmes across sectors

Deep understanding of • Worked with Wipro on several key priorities in last 3 years – 9 engagements in the last 3 years
Wipro and proven track • Proven track-record in serving Wipro on service offering development and scaling up (e.g.,
5 Service management with MHT BU, Analytics for RCTG BU)
record of delivering
value

• 4-week upfront investment to help Wipro BPO shortlist the high potential growth areas and
6 Willingness to invest develop differentiated positioning (additionally margin enhancement diagnostic optional)
for Wipro BPO success

SOURCE: McKinsey McKinsey & Company | 39


Program activities in Phases 0 and Phase 1 (1/2)
Designing the Wipro BPO way Develop and Implement the go-
Project setup1
for 2 process categories1 to-market plan1
(1 month) (1.5 months) (5 months)
▪ Conduct interviews with key stakeholders to (i) Value definition Preparation for GTM
develop a nuanced understanding of the issues ▪ Assess and quantify drivers of ▪ Build collaterals for the 2 process
and challenges (ii) seek input on the maturity of value across revenue, cost, capex categories
top 4-5 process categories and create as-is maps for the ▪ Conduct training of the sales force
▪ Identify the most attractive cells to operate in existing process category in the Wipro BPO way
based on market attractiveness and Wipro BPO ▪
strategy and prioritise the arrowheads/ offerings in
For new process category, define ▪ Identify and prioritise accounts for
targets based on external the relevant process categories
those cells benchmarks and desired
▪ Analyse historical performance to assess process performance ▪ Staff the GTM team
readiness along multiple dimensions – (i)
customer relationship (ii) people maturity Solution Design and buildout: Customer reachout
including solution experts, account engagement ▪ Conduct solutioning workshops ▪ Launch targeted customer
managers (iii) infrastructure readiness in tools and with industry experts and the campaigns to generate leads
benchmarks (iv) scope for impact (e.g., headroom process teams to create best-in- ▪ Partner with select clients to jointly
for growth) class to-be process maps create the solutions
▪ Based on all of the above, finalize 2 process ▪ Design the solution and cookbook ▪ Prioritise existing deals in pipeline
categories for the pilot for the specific process category with a focus to increase win rate
▪ Quantify the potential opportunity (size of the along the value capture approach
prize) for Wipro BPO including benchmarks, tools, Commercialisation approach
domain insights and distinguished ▪
▪ Assemble a high performing team to form the core
panel of experts
Design pricing models based on
of the BPM change organisation – (i) core team nature of account along with tightly
(ii) Solutioning team (iii) Change agents (iv) PMO Stakeholder buy-in linked sales performance
teams management
▪ Align stakeholders across
▪ Setup MIS for ongoing monitoring and tracking functional teams to the cookbook
and design

1 The phases overlap with each other

SOURCE: McKinsey McKinsey & Company | 40


Program activities in Phases 0 and Phase 1 (2/2)
Ensure value capture in pilot 3-4 accounts1 Embed capability for scale up

(5 months) (3 months)
Baselining & target setting ▪ Conduct interviews with key stakeholders to define the solution
design areas for each of the 5 distinctive capabilities that are
▪ Define baselines for the 3-4 chosen accounts, for needed for sustainability
the 2 process categories
▪ Design the organizational changes required to setup the Central
▪ Define targets and desired ‘From-To’ state team, Practice team and Change management team – including
identification of people, definition of career tracks
Solution design ▪ Create the blueprint for the BPM academy including training
modules, certification, trainers and rollout
▪ For the key gaps identified in From-To, design the
end-state solution as per the Wipro BPO way ▪ For the BPM framework rollout, design the changes required to
cookbook enhance the effectiveness of the support functions

▪ Define the solution areas for delivery for each ▪ Design the change management initiatives around (i)
process category, creating a TIP for Monday- communication and branding (ii) role modeling (iii) rewards and
morning implementation recognition setup with changes to incentives, G&Os (iv) systems
enablement
▪ Post-design, the change agents will work closely
with the account teams to launch implementation ▪ Create an implementation plan for launching the initiatives

▪ Closely monitor progress – along deliverables and ▪ Launch tracking and monitoring
impact

Scale up
▪ Roll out the new Wipro BPO way in the 2 process
categories across all accounts in wave-like
fashion

1 The phases overlap with each other

SOURCE: McKinsey McKinsey & Company | 41

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