global offshore global in-house center (gic) landscape and trendsfocus geography – poland

Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0747

Topic: Global Offshore Global In-house Center (GIC) Landscape and Trends Focus Geography – Poland

Global Sourcing Report: August 2012 – Preview Deck


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Terminology | Global In-house Center (GIC) replacing “captive”

Context

Historically, the term “captive” has referred to service delivery operations in lower cost geographies, which are owned and operated by the same company receiving the services (i.e., not third-party outsourcing)

Although the term has become widely used, it has a perceived negative tone and is not self-explanatory, causing confusion for those new to the global services space

Furthermore, many organizations, for which captive is intended to describe, do not use the term themselves

What has changed Everest Group has adopted “Global In-house

Center” or “GIC” as the preferred term to replace “captive”

This will appear in all of our reports and content beginning in July 2012

Growing industry-wide shift Both NASSCOM (India) and BPAP (Philippines) are championing the change in terminology

http://www.prlog.org/10326486-bpap-logo.jpg


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Background and scope of research

The global sourcing market evolved and grew rapidly to reach a size of ~US$116 billion in 2011. GICs were a core component of this evolution with companies such as Texas Instruments and GE setting up offshore GIC units in the late 1980s and early 1990s

The last 15 to 20 years witnessed increased adoption of the GIC model with a large number of companies setting up / expanding their GICs. While India continues to remain a leading geography, companies also explored and successfully established GIC operations in China, the Philippines, Central and Eastern Europe, and Latin America. Recently, Middle East and North Africa (MENA) has emerged as attractive offshoring destination

However, significant growth of third-party service providers and selective divestitures during the economic crisis led to the perception that the GIC model is under threat. Stated reasons include GIC not delivering value and being significantly more expensive than third-party service providers

At the same time, mature users of the GIC model articulate their commitment to it and reinforce its importance in their sourcing strategy and portfolio. Additionally, our discussions with global sourcing offices of large companies and GIC leadership reveal imperatives under way to expand the role of GIC and its value proposition

This research provides an in-depth analysis of the global offshore GIC landscape across leading locations. The report is based on Everest Group’s proprietary GIC database and is updated every six months. Besides providing details on global GIC landscape trends and analysis, the report also contains a focus section that provides a deep-dive into the GIC landscape in a select geography. This edition features Poland as the focus geography


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Buyer organizations have a range of options for capturing value from offshoring, with GIC and third-party outsourcing as the primary models

Strategic alliance / Joint Venture model

Offshore business models

Third-party outsourcing model

GIC model

Managed third-party offshoring Full- / part-time resources on the

ground to facilitate transition, relationship management, and transfer of organization and domain knowledge to third-party providers

Example: Greenpoint-Infosys BPO

Pure GIC model An internal cost center or a

100% subsidiary company to cater exclusively to the parent company

Examples: American Express, HSBC

Inverted BOT Offshore service providers

provide only implementation support initially and are allowed to buy into the entity at a later date

Examples: AIG-Polaris, BA-WNS

Build Operate Transfer (BOT) / Joint Venture (JV) Provider-owned / joint

operations that can be transferred back to the customer

Example: eServe-Citigroup

Pure third-party offshoring Use of an offshore provider to

outsource business processes or IT services

Examples: Alcoa-Infosys, Rio Tinto - Wipro

Source: Everest Group analysis

The focus of this report is on the GIC model


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This research leverages Everest Group’s proprietary GIC database that tracks offshore GICs of leading companies

Key dimensions tracked Scale (FTE range)

Industry verticals

Functions offered (e.g., IT, BP, ES / R&D)

Parent geographies

Parent size (revenue range)

Location of delivery centers

Unique characteristics

Industry’s most comprehensive database of global GICs located across India, Rest of Asia, Europe, Latin America, and Africa

Tracks GICs of leading firms (e.g., Forbes 2000 and Fortune 500 companies)

Database covers more than 1,200 GICs

Focus on GICs providing offshore delivery of global services – excludes shared services centers serving the domestic market

Everest Group’s proprietary GIC database


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Table of contents (page 1 of 2)

Section I: Executive summary 9 Section II: Overview of the global GIC landscape 13 Summary 14 Global offshore services and GIC market: Size and growth 15 Distribution of the global offshore GIC landscape by:

– Parent revenue 18 – Parent geography 19 – Industry vertical 20 – Functions supported 21 – Offshore delivery locations 23

Section III: Deep-dive into key industry verticals 26 Summary 27 Banking, Financial Services, and Insurance (BFSI ) 28 Energy and Utilities (E&U) 31 Healthcare 34 Manufacturing, Distribution, and Retail (MDR) 37 Technology 40 Telecom 43 Section IV: Recent trends in the global GIC landscape (Jan 2010- Jun 2012) 46 Summary 47 Recent trends in GIC set-ups and divestitures 48

Topic Page no.


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Table of contents (page 2 of 2)

Topic Page no.

Section IV: Recent trends in the global GIC landscape (2009-2011) (continued…) Recent trends in offshore GIC landscape (2009-2011) by:

– Parent revenue 49 – Parent geography 50 – Industry verticals 51 – Functions supported 52 – Key GIC locations 53

List of offshore GIC divestitures (2009-2011) 58

Section V: Focus geography: GIC landscape in Poland 61 Summary 62 Poland global services market: size and growth 63 Distribution of offshore GICs in Poland by:

– Headcount 67 – Parent revenue 68 – Parent geography 69 – Industry vertical 70 – Functions supported 71 – Locations 72

Deep-dive into key industry verticals 74 Appendix 80 Recent offshore GIC set-ups (H2 2011 and H1 2012) 82 Glossary of key terms 103 Additional research recommendations 104


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This research report provides an in-depth analysis of the global GIC landscape and trends

Number of leading offshore GICs Distribution of offshore GICs by parent geography

2012; Percentage

GIC activity | Market activity heatmap

Source: Everest Group (2012)

Distribution of offshore GICs by functions 2012; Percentage

2007 2008 2009 2010 2011 H1 2012

100% = 1,251

U.S.

UK

Rest of Europe (ROE)

APAC ROW

43%

43%

40% IT

ES / R&D

BP

Comments

High adoption in the technology vertical, followed by MDR

High adoption in technology, followed by BFSI and MDR industry verticals

High adoption in the BFSI vertical Gaining traction in MDR and

technology verticals

100% = 1,251


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The report analyzes the GIC market across six key industry verticals

BFSI

Energy and Utilities (E&U) Telecom

Technology Healthcare

Key industry verticals

MDR


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This study also provides an analysis of the recent trend (2010 to H1 2012) within the global GIC landscape

Number of offshore GIC divestitures Distribution of offshore GICs by parent revenue Percentage

Distribution of offshore GICs by industry vertical Percentage


Distribution of offshore GICs by functions

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2

0

2010 2011 H12012 Up to H1 2012 2010 2011 H1 2012

US$10-50 billion

>US$50 billion

US$5-10 billion

<US$1 billion

US$1-5 billion

100% = 1,251

Up to H1 2012 2010 2011 H1 2012

100% = 1,251

Technology

MDR

BFSI

Telecom E&U Healthcare

Others

Others

IT

ES / R&D

BP

Up to 2012; Percentage 2010; Percentage 2011; Percentage H1 2012; Percentage

100% = 1,251 100% = 1,251 100% = 1,251 100% = 1,251


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The report also covers a detailed analysis of the focus geography – Poland


Poland IT-BPO export revenue by service segments 2011; US$ billion

Distribution of market by delivery models 2011; Number of FTEs

Number of leading offshore GICs in Poland Distribution of offshore GICs by headcount – range of FTEs 20121; Percentage

100% = 1,251

BPO

ITO

Shared services

Third-party

R&D

100% = 1,251

2,001-5,000

<500

500-1,000

1,001-2,000

100% = 1,251

2004 2005-06 2007-08 2009-10 2011-12 2012

New GIC set-ups


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Appendix: Additional research recommendations

For more information on this and other research published by Everest Group, please contact us: Salil Dani, Research Director: Anurag Srivastava, Senior Analyst Ritika Dhingra, Knowledge Associate :

[email protected] [email protected] [email protected]

Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240

Phone: +1-214-451-3110 E-mail: [email protected]

The following documents are recommended for additional insight into the topic covered in this research. The recommended documents either provide additional details on the topic or complementary content that may be of interest 1. Global Offshore Captive Landscape and Trends: Focus Geography - The Philippines (EGR-2011-2-R-0661); 2012. This

report analyzes the global offshore GIC landscape and key trends for the last three years (2009-2011). The report also provides a deep-dive analysis of the offshore GIC landscape in the Philippines, covering market size and growth and distribution of GIC landscape. It deep-dives into industry verticals

2. Global Locations Compass – China (EGR-2011-2-R-0606); 2011. The report provides detailed data and analysis on the global services landscape in China

3. Global Locations Compass - The Philippines (EGR-2012-2-R-0637); 2011. The report provides detailed data and analysis on the global services landscape in the Philippines






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