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GLOBAL BUSINESS SERVICES: AGILITY IN VOLATILE MARKETS & OPPORTUNITY FOR GLOBALIZED ECONOMIES

Finance Estonia International Forum, Tallinn

Tom Olavi Bangemann

SVP Business Transformation , The Hackett Group

June, 2013

Statement of Confidentiality and Usage Restrictions

This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would

provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein,

in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.

Copyright © 2012 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.

Global business services (GBS) Overview & Trends | 3 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.

The world remains full of potential disruptions

Inflation Sovereign Debt Crises Social Unrest

Revolts and Uprisings Potential Conflicts Natural and Environmental

Disasters


Focus on Bottom Line Exceeds Top Line Growth for 2013,… Agility is required to meet profit goals when revenue falls short

49%

68%

74%

77%

77%

82%

82%

83%

88%

88%

90%

Achieve non-financial, social responsibility andsustainability-related objectives

Grow emerging market presence

Manage enterprise risk

Reduce total supply chain cost

Improve cash flow/working capital

Enhance employee/talent retention anddevelopment

Increase operational agility and flexibility

Reduce overhead cost

Improve customer service/satisfaction

Accelerate revenue growth

Improve operating margin

% of respondents indicating the objective is “Extremely Important or Important” strategy for 2013 What is the importance of each of the following objectives in your enterprise strategy for 2013?

New

Largest

increase

+/- 3% Change from 2012


GBS is the preferred service delivery model - the GBS scope of Top Quartile companies covers more than 50% of activities

To compare, across all G&A functions (Finance, HR, IT, Procurement) ,GBS only have a third of services in scope on average for median companies

12%

56%

32%

Finance

44%

46%

10%

HR

11%

68%

20%

IT

14%

40%

46% Procure’t

Corporate

Business Units

GBS


Relationship between strategy for service delivery globalisation and overall business strategy

11%

67%

22%

67%

78%

16%

22%

27%

27%

38%

Allows for the establishment of delivery centersonly in low-cost geographies where the company

already has sales, distribution and/ormanufacturing operations

Has explicit goals to transfer work out ofexpensive, rigid, highly regulated labor markets

Is primarily driven by short-term cost-structureoptimization objectives

Aims to establish a presence in strategic growthareas of the business

Is integral to our move toward a more globaloperating model of the business

Current In 2-3 years

11%

56%

22%

78%

89%

19%

29%

21%

38%

59%

% of Companies Indicating Agreement with Statement

Top Performers Peer Group


80%

67%

100%

100%

44%

46%

55%

81%

Gain access to skills and talent thatis scarce domestically

Improve relationship betweenservice provisioning organization

and internal customers

Improve agility through operationsin geographies with more flexible

hiring/firing regime

Gain access to large pool of laborcapacity

Peer Group Top Performers

70%

89%

90%

90%

38%

38%

55%

75%

Peer Group Top Performers

Anticipated benefits Average realised benefits 2 years after

transfer of work

Percentage of companies considering “improvement “ or “drastic improvement “

Anticipated vs. actual qualitative business value driver realisation


Ireland

United Kingdom

Netherlands

Belgium

Portugal

Spain

Bulgaria

Romania

Poland

Czech Republic

Slovakia

Hungary

Estonia

Latvia

Lithuania

GBS Growth in Europe has been represented by a consistent migration Eastward

WAVE 1

British Isles 1980s

WAVE 2

Benelux Early 1990s

WAVE 3

Iberia 1995

WAVE 4

Central, Eastern Europe

2000

WAVE 5

Eastern Europe 2005


Europe Americas Asia Oceania Africa Others

Over 4.900 shared service centres operate globally

SSC-BPO Distribution

in the Database

Top 5 Global Destinations with BPOs Top 5 Global Destinations with SSCs

Regional Distribution of SSCs

1381;

29%

3378;

71%

60; 2% 41; 1%

117; 3%

SSC BPO

1512;

30%

3471;

70%

274

158

106 96 90

India Poland Philippines United States China

562

401

236 182 166

United States United Kingdom Poland India Germany

1815; 52%

898; 26%

540; 16%


236

158

SSC/BPO distribution in CEE

SSC BPO

Poland Czech Republic Hungary

Slovakia Romania Lithuania

Latvia Bulgaria Estonia

93

24

101

26

7

32

14

26

19

11

49

8

28

24

6

30


Offshoring is half way through – but still 1.8 million jobs to move


Statement of Confidentiality and Usage Restrictions

This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the

reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.

www.thehackettgroup.com

Corporate Headquarters

1001 Brickell Bay Drive

30th Floor

Miami, Florida 33131

TEL: +1 305 375 8005

Amsterdam

Camerastraat 25

1322 BB Almere Amsterdam

TEL: + 31 36 535 00 82

Atlanta

1000 Abernathy Road NW

Suite 1400

Atlanta, GA 30328

TEL: +1 770 225 3600

Chicago

525 W. Monroe Street

Suite 1550

Chicago, IL 60661

TEL: +1 312 325 2900

Frankfurt

Torhaus Westhafen

Speicherstrasse 59

60327 Frankfurt am Main

TEL: +49 69 900 217 0

Hyderabad

8-2-120/112/88&89

1st Floor, Aparna Crest

Road #2, Banjara Hills

Hyderabad 500034

TEL: +91 40 66544000

London

Martin House

5 Martin Lane

London EC4R 0DP

TEL: +44 20 7398 9100

New York

110 Wall Street

17th Floor

New York, NY 10005

TEL: +1 646 354 4400

Paris

8, rue de Port Mahon

75002 Paris

TEL: +33 1 53 43 0400

Philadelphia

225 Washington Street

Conshohocken, PA 19428

TEL: +1 610 234 5500

San Francisco

100 Montgomery Street

Suite 2225

San Francisco, CA 94104

TEL: +1 415 249 3500

Sydney

Suite 403

35 Lime Street

Sydney, NSW2000

Australia

TEL: 1300 457 779 (within Australia)

TEL: +61 2 9299 8830

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