OFFSHORE SERVICES GLOBAL VALUE CHAIN Karina

OFFSHORE SERVICES GLOBAL VALUE CHAIN
Karina Fernandez-Stark
Center on Globalization, Governance & Competitiveness (CGGC)
Duke University
Conferencia Deslocalización de servicios y cadenas globales de valor: ¿Nuevos factores de cambios estructurales en
América Latina y el Caribe?
Santiago, Chile
18-19 de Octubre de 2012
© 2012 Duke CGGC
1
Offshore Services Global Value Chain
Vertical Activities a
Industry specific b
Horizontal Activities
HIGH
ITO
Information Technology Outsourcing
Software R&D
Knowledge Process Outsourcing
Business Consulting
Business Analytics
Market Intelligence
IT Consulting
Value Added
Software
ERP (Enterprise Resource Planning):
manufacturing/operations, supply chain
management, financials & project management
Legal Services
Desktop management
Infrastructure
Applications Management
Network Management
Infrastructure Management
Ex. Industrial Engineering
and sourcing and vendor
management
BPO
Telecommunications
Business Process Outsourcing
ERM
(Enterprise
Resource
Management)
HRM
CRM
(Human Resource
Management)
(Customer
Relationship
Management)
Finance &
Accounting
Training
Marketing &
Sales
Procurement,
Logistics and
Supply Chain
Management
Ex. IP transformation,
Interoperability testing and
DSP and multimedia
Energy
Ex. Energy Trading and Risk
Management , and Digital
oil field solutions
Travel &
Transportation
Revenue management
systems, customer loyalty
solutions
Talent
Management
Health/Pharma
Payroll
Content/
Document
Management
Ex. Investment research,
private equity research,
and risk management
analysis
Manufacturing
Applications Development
Applications Integration
Banking, Financial
Services and
Insurance (BFSI)
KPO
Recruiting
Ex. R&D, clinical trials,
medical transcript
Contact
Centers/Call
Centers
Retail
eComerce and Planning,
merchandising and demand
intelligence
Others
© 2012LOW
Duke CGGC
2
Offshore Services: Global Supply and Demand
45% of the
industry market
2.1% Rest of the World
51.1%
US & Canada
30.6%
EU-15
16.2
%
AsiaPacific
Same number of
call centers
employees than
India
Demand for Offshore Services (%)
50
30
15
2
3
© 2012 Duke CGGC
Source: CGGC based on Everest & Datamonitor
The Size of the Offshore Services Industry
(estimates)
Estimates of the Offshore Services Market Size
BCG
US$ 281,3 bill
300
Billion (US$)
US$ billions
250
OECD
US$ 252.4 bill
200
150
NASSCOM
US$ 117.5 bill
100
50
0
2005
2006
2007
2008
2009
2010
Year
Source: CGGC based on OECD 2008, NASSCOM 2009, Boston Consulting Group 2007.
• Difficult to quantify the industry  no accurate data & limited country level tracking
• Industry growing & evolving rapidly
• New activities -most dynamic not included, such us innovation
© 2012 Duke CGGC
OECD
NASSCOM
BCG
Offshore Services Potential
• Activities previously reserved for rich nations or in-house
• Creating more jobs, specifically in developing countries
• One of the world’s fastest growing industries Reduce company costs and find new talent
• Almost unlimited potential Services from any industry
© 2012 Duke CGGC
Examples of Upgrading Trajectories
Entry into the value chain
Upgrading within the BPO
segment
Upgrading to KPO Activities
Broad Spectrum Services
Industry Specialization
6
© 2012 Duke CGGC
Offshore Services Upgrading: India, Philippines
and Chile
India
1990s – 2010
Early 2000s
Mid to late 2000s
Philippines
Early 2000
Mid 2000s
Late 2000
Chile
2000-2008
2007-2010
2010
7
© 2012 Duke CGGC
Human Capital: Essential Element for Upgrading
in Offshore Services
• Human capital has been found to be a key determinant of
value creation, competitiveness, and success in service exports
from developing countries
• One of the most important factors MNCs take into
consideration when relocating services operations is to ensure
the labor market has cost competitive, qualified workers
• Developing countries must work hard to supply the necessary
human capital to sustain industry growth today while also
preparing the future labor force to upgrade the industry.
8
© 2012 Duke CGGC
Upgrading and Workforce Development
Job Profiles and Upgrading
Value Chain
Segments
Skill Level
ITO
BPO
KPO
Job Profiles
9
© 2012 Duke CGGC
Entry into the
Value Chain
Upgrading Trajectory: Entry into the Value Chain
Call centers hire people with high school
diplomas or Bachelor’s degrees.
Further skills training is provided by the
company or private training institutions.
Skills
Institutions
Preparation
Private sector
Short technical Government
training
10
© 2012 Duke CGGC
GVC Upgrading & Workforce Development:
Select Findings
• Interpersonal and language skills are highly
valued in this sector
• High competition for talent has resulted in shift
from individual spending on education and
training to firm-based training
• Tax incentives and public subsidies for
education are increasingly used to attract
offshore operation centers
11
© 2012 Duke CGGC
THANK YOU FOR YOUR ATTENTION!
Karina Fernandez-Stark
Senior Research Analyst
[email protected]
Center on Globalization, Governance & Competitiveness- Duke University
http://www.cggc.duke.edu
© 2012 Duke CGGC