offshoring in insurance industry - an overview -...

CONFIDENTIAL

Offshoring in Insurance Industry - An Overview

Snippets from Zinnov report

To obtain a copy of the full report, please send your requests to Zinnov LLC [email protected]

September, 2007

This report is solely for the use of Zinnov clients, Zinnov Prospects and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the organization without prior written approval from Zinnov LLC.

mailto:[email protected]

1Zinnov Confidential

AGENDA

Offshoring LandscapeOffshoring Landscape

1

Processes OffshoredProcesses Offshored

2

Offshoring: Models AdoptedOffshoring: Models Adopted

3

Case Study &RecommendationCase Study &Recommendation

4

• Models Adopted– Captive /

Vendor/BOT• BOT Benefits and

Challenges• Cost comparisons

– Engagement models of key Insurance Companies

– Location Analysis

• Insurance Processes Offshored– P&C Insurance– Life Insurance– Health Insurance– Annuities– Mortgage Insurance

• IT & Shared Services– IT – Infrastructure

Management– HR– F&A– KPO

• Industry Analysis– Global Market– Growth trends in

India– Driver– Challenges

• Insurance Offshoring & India– Evolution of

Insurance Offshoring– Market Size– Drivers– Restraint

• Case Study– Aviva BOT

Model with WNS EXL and 24/7

– Evolution inception-2007

• Recommendation

• Appendix

• About Zinnov


AGENDA


1


2


3

Case Study &RecommendationCase Study &Recommendation

4
















• Recommendation

• Appendix

• About Zinnov


Global insurance outsourcing is expected to grow comfortably at a CAGR of 8 percent to become a US$ 24.5 Billion industry by 2010

Tapped Offshored IT Industry

11%13.8 14.9 16.2 17.5 18.9 20.3 21.7

0.91

1.31.5

1.92.3

2.8

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010

Onshore Outsourcing Offshore Outsourcing

Growth trend of Insurance Outsourcing (2004 – 2010)

Siz

e (in

US

D B

illion

)

CAGR ~8 %

Insurance Outsourcing Landscape - 2006Insurance Outsourcing Landscape - 2006

• Currently global insurance outsourcing is worth US$ 17.5 Billion Industry, with a large piece of business still done onshore– Onshore Outsourcing

• It accounts for roughly 92.6 percent of the total outsourcing pie, which stand at USD 16.2 Billion

– Offshore Outsourcing• On the other hand, this segment

account for roughly 7.4 percent of the total outsourcing pie, which stands at USD 1.3 Billion

• Driver for Outsourcing by Insurance industry– Reduce Costs & Improve efficiencies– Enhance customer services– Help enable Business Transformation– Focus more on core-competency

Sources: Gartner, 2005; Nelson-Hall, 2005; Forrester Research, 2006; Zinnov analysis


Key structural changes in the Insurance industry are creating new opportunities for Offshoring …

TrendsIn

Global Insurance

• Increased focus on financials• Profit Margins, Earnings per

share, and looming share prices• Low interest rates becoming

order of the day

• Increased complexity in managing risks

• Focus on multiple distribution channels

• Business transformation gaining strength

• Matured premium growth• Increasing globalization• Changing risks with

geographies• Cost reduction

• Consolidation in the industry• Outsourcing various function so

as to increase core-competency

Source: Secondary research and Zinnov Analysis


… and further, these changes can become a key differentiator for technology initiatives

Mapping Trends in Insurance Industry with its probable impact on technology initiatives


Decrease non-core activity expenditure and focus on core processes

TrendsTrends

• IT solutions for re-engineering of knowledge base, integration, and scalability to improve savings

• It will lead to global sourcing initiatives

“ Impact on Technology “

Shift from product based to customer-centric solutions

• Process and service oriented solutions facilitating effective business transformation

Multiple distribution channels need for greater IT support

• Process automation and better workflow management

Greater regulatory compliance • Lesser Control on IT spend


In spite of having so many benefits, the current scenario in the industry is playing a restraint for the growth of Offshoring

Current SituationCurrent Situation

• High levels of IT expenditure

• Cautious approach towards Outsourcing

• Lack of skilled workforce

• Lack of clear and sufficient regulations

• Service-oriented architecture (SOA) systems

Restraints for Offshoring Restraints for Offshoring

• Compliance requirements

• Impact on customer/supplier and employee relationships

• Complexity of managing risks

• Language and cultural barriers

• Structural limitations

• Customer and Provider privacy issues

• Policies and regulatory compliance

• Time-zone differences

The Present Scenario

The Present Scenario

• Currently, there is hesitation from insurance providers to pursue outsourcing initiatives• Lack of skilled workforce, and insufficient regulations have led insurance providers to

rely on onshore initiatives rather than offshoring despite cost advantages provided by low-cost offshore locations

• Currently, there is hesitation from insurance providers to pursue outsourcing initiatives• Lack of skilled workforce, and insufficient regulations have led insurance providers to

rely on onshore initiatives rather than offshoring despite cost advantages provided by low-cost offshore locations



… and there are challenges spread across both short term and long term time periods, inhibiting the prospects for offshoring

• Risk and asset management• Profitability from core insurance

activities• Efficient product development and

distribution initiatives• Cost reduction• Maintaining organic growth and

integrating mergers/acquisitions and alliances

• Resolve workforce issues• Increase capability to handle global

economic and industrial fluctuations• Reduce losses

• Effective capital management for long-term visibility and smoother operations

• Streamline sales and distribution networks

• Competition from new entrants

• Customer-specific products and services

• Maintaining profitability and operating margins

• Expansion of business

• Lack of skilled workforce

Short Term Long Term



AGENDA


1


2


3Case Study &RecommendationCase Study &Recommendation

4












Insurance Offshoring

– Market Size– Drivers– Restraint




• Recommendation

• Appendix

• About Zinnov


Insurance Offshoring though a late starter, going ahead is bound to grow at a CAGR of 30 percent to become a USD 2 Billion industry by 2010

0.50.6

0.7

0.9

1.2

1.5

2.0

0

0.5

1

1.5

2

2.5

2004 2005 2006 2007 2008 2009 2010

Growth trend of Insurance Offshoring to India(2004 – 2010)

Siz

e (in

US

D B

illion

)

CAGR ~23.4 %

CAGR ~30 %

US64%

Total = USD 0.7 BillionTotal = USD 0.7 Billion

Revenue Breakup Insurance Outsourcing in India 2006

Europe28%

Rest Of the World

8%

Source: Nasscom; Zinnov Analysis


Factor such as a vast supply of graduates, supported by a good number of Institutions has become a major driver for the Offshoring initiatives…

Cumulative – Total graduates and science graduates Total Engineering graduates passing out annually

In 2005, 450,000 Engineering graduates passed out annually from Indian universities

milli

ons

0.070.10

0.230.26

0.280.31

0.34

0.45

0.0

0.1

0.2

0.3

0.4

0.5

1991 1995 2000 2001 2002 2003 2004 2005

Number of Engineers passing out annually

Year

3.1 3.6 4.6 5.6 6.2 7 8.7 11.2

30.5

37.5

26.424.622.5

19.717.317.4

0

10

20

30

40

50

60

1991 1995 2000 2001 2002 2003 2004 2005

Science Graduates Other

Year

milli

ons

48.7

39.2

33.430.8

28.124.3

20.920.5

Source: NCAER, Education Ministry, Country labor and graduation statistics; Watson Wyatt, Zinnov analysis


…currently India has the largest supply of talent pool for the ITO and BPO sectors among its peer nations

727

654

514

427

293285

242232

210

1029

6386

1773

India China Russia Phillippines Turkey*** Thailand*** Poland Brazil Mexico Indonesia 18 other Lowwage

countries

Total supplyof suitablelow wagetalent (28countries)

28%

11%

10%

8%

7%5%

4%4%

4%3%

16%

Aggregate suitable* graduate talent pool for offshore IT & BPOThousands (‘000)

Source: NASSCOM, Zinnov


Skill Set (Installed Base) – IT; India has the biggest talent pool in mainframes, Java/J2EE …

Datawarehousing/BIDBA

SAP-allC, C++/Unix

Telecom

Oracle Application DBAOracle Apps-Func & Tech

People SoftPortal and content management

RetekJava/J2EEMainframe

SiebelQuality- SQA and SEPG

EAIABAP

TestingMicrosoft technologies

IT infrastructure

• Details of talent pool size/ breakup are captured in the full report, please send your requests to [email protected]

Source: Zinnov research



Bangalore has considerable talent pool available in the IT infrastructure arena compared to other cities in India …..

Datawarehousing/BIDBA

SAP-allC, C++/Unix

TelecomOracle Application DBA

Oracle Apps-Func & TechPeople Soft

Portal and content management

RetekJava/J2EEMainframe

SiebelQuality- SQA and SEPG

EAIABAP

TestingMicrosoft technologies

IT infrastructure





While, looking from the installed talent point of view, India has the biggest talent pool in traditional BPO functions

Finance and accounting

Outbound Sales ( Voice)

Insurance

HR back office

Tech Help desk

Content development

Clinical Data Management

Procurement





Offshoring also proves beneficial due to increase in efficiency, triggered by factors like 24x7 operations and access to large talent pool

Access to larger talent

pool

Legal Compliance

Focus Area

24x7 operations

• India produces 3 million graduates every year, who provide the base for the immense growth in this industry

• Time difference between Indian and US enables Insurance providers to run on a day 24x7 basis

• Vendors’/ Captive units’core activity is the process offshored unlike an Insurance provider.

• Offshoring to India helps providers to deal with Insurance Regulation and Statutory documentary requirements



Given huge benefits, more and more companies are recognizing thebenefits of operating global shared service centers

BenefitsBenefits

The number of global centers is expected to increase dramatically in the next several years, as companies recognize the benefits of operating globally

Key Benefits include :

– Consistency of practices

– Time-zone utilization

– Wage-rate advantage

– Increased critical mass

– Reduced duplication

– Potential tax benefits

– Coordination of intra-group transactions

The number of global centers is expected to increase dramatically in the next several years, as companies recognize the benefits of operating globally

Key Benefits include :

– Consistency of practices

– Time-zone utilization

– Wage-rate advantage

– Increased critical mass

– Reduced duplication

– Potential tax benefits

– Coordination of intra-group transactions

Source: Zinnov analysis

Experience LevelAverage CTC Per

Annum, USD

0 - 2 Yrs Entry Level 4,500 – 6,700

2 - 4 Yrs Specialist Level 7,700 – 11,500

4 - 6 Yrs Supervisor 12,500 – 15,500

6 - 8 YrsSr. Supervisor\Deputy Manager 14,500 – 20,000

8 - 10 Yrs

Manager 20,000 – 27,000

10 – 12 YrsSr. Manager\Function Head 27,000 – 45,000

Compensation Levels for F&A services, India (2005 – 2006)


The cost reduction potential from a BPO services is a combination of multiple factors

Geographic Savings: Conducting business in a region such as India and China where real estate cost, labor costs and taxes are lower than the national average

Scale Benefits: Leveraging system platforms and management structures, optimizing workforce utilization, and increasing productivity in existing captive operations

Process Reengineering: Best practice policies and processes that include eliminating steps and bottlenecks, simplifying processes, reducing exceptions, prioritizing processing, and automating steps

Geographic Savings: Conducting business in a region such as India and China where real estate cost, labor costs and taxes are lower than the national average

Scale Benefits: Leveraging system platforms and management structures, optimizing workforce utilization, and increasing productivity in existing captive operations

Process Reengineering: Best practice policies and processes that include eliminating steps and bottlenecks, simplifying processes, reducing exceptions, prioritizing processing, and automating steps

DiscussionDiscussion

GeographicSavings

Economies ofScale

Process Re-engineering

Total

35 - 40%

30 - 35%

20 - 25% 100%

Key factors for Successful Offshoring

Source : Zinnov Interviews, Zinnov Analysis


… and due to this significant cost reductions and higher efficiency potential, Offshoring is becoming lucrative

Risk of Data Security

Significant Cost Reductions

Increased Efficiency

Costs Reductions

• Insurance providers can save up to 40-45% of costs by offshoring work to India

• This is primarily due to low labor costs in India

• To achieve significant cost reductions, Insurance providers need to scale of processes offshored

Data Security

• There have been recent examples of data threat both from Captive and Vendors

• This is primarily due to lack of effective laws and implementation

• This puts the industry under the scrutiny

Increased Efficiency

• Insurance providers need to compete at all levels to maintain customers’ loyalty

• Offshoring provides a good platform to increase efficiency

• Also various compliance issues have pushed the offshoring trends

Threat

Benefits


Illustrative List


Thereby it is critical to understand the key challenges and address them before the setup of the offshore initiative

Lack of buy-in at different levels in the

organization

Rapid changes to the dynamics of the ODC

location

Resistance to change across the

organization

Difficulty in accessing data points that

allows better decision making

Complexities involved in quantifying the vision for the ODC

Difficulty in allocating dedicated

management time

Key Challenges in planning and

setting up an ODC

Source: Zinnov Analysis


AGENDA


1


2



4





Vendor/BOT– BOT Benefits and

Challenges– Cost comparisons










• Recommendation

• Appendix

• About Zinnov


P&C Insurance

Sales, Policy Servicing & Claims Processing were among the initial few processes to be Offshored…

Policy Acquisition

Focus Areas

Policy Administration

• Sales• Conversion• Quote Acceptance• Cross & Up-selling • Customer Enquiries• Actuarial Services• Exposure Assessment

Functions Offshored

Sales

• Manual Remittance Exception Processing

• Policy Quotes & Changes• Inbound Customer Service• Endorsement • Policy Renewals

Policy Servicing

• Notification of Loss• Customer Service (Policy

holder & Broker Claim Enquiries)

• Claim Notification Processing

• Adjustments, Endorsements & Renewals

• Claims Assessment• Claims Settlement• Claims Negotiations &

Litigations• Claims Subrogation

Claim Processing



P&C Insurance

… which were closely followed by processes such as Underwriting and Asset Management

Policy Acquisition

Focus Areas

Asset Management

Functions Offshored

Underwriting & Policy Issuance

Asset Administration & Investment Management

• Details of these processes offshored are captured in the full report, please send your requests for the report to [email protected]




Life Insurance

In Life Insurance, corporations are Offshoring a whole gamut of services largely driven by cost imperatives (1/2)

“ Recent spate of Calamities over the last decade has triggered Insurance providers to look to decrease cost to stabilize the ratio of losses to income “

Policy Acquisition

Focus Areas

Payout

Functions Offshored

Sales Policy Benefits Policy Set Up Death Claims





Life Insurance

In Life Insurance, corporations are Offshoring a whole gamut of services largely driven by cost imperatives (2/2)

“ Recent spate of Calamities over the last decade has triggered Insurance providers to look to decrease cost to stabilize the ratio of losses to income “

Agent Services

Focus Areas

Premiums Administration

Functions Offshored

Agency Administration

Premium





Healthcare Insurance

Offshoring Healthcare Insurance processes emerged in 2002 with Aetna tasting success in offshoring its claims processing (1/2)

Contract Set Up

Focus Areas

Contract Delivery

Functions Offshored

Medical Summaries

Policy Issue

Claims

Agency Administration






Offshoring Healthcare Insurance processes emerged in 2002 with Aetna tasting success in offshoring its claims processing (2/2)

Premium Processing

Focus Areas

Contract Servicing

Functions Offshored

New Business Data Entry

Policy Benefits Application Digitization





Mortgage Insurance

Processes such as Sales & Marketing, Underwriting and collections are being Offshored by mortgage Insurers

Illustrative List

• Target Marketing• Campaign Management• Sales Force Support• Lead Generation• Customer Enquiries

• Loan Application Processing

• Loan disbursement• New loan setup• Tax and escrow setup• Insurance setup• Property valuation

1. Sales & Marketing 1. Sales & Marketing

2. Servicing & Administration

2. Servicing & Administration

3. Loan Approval & Issuance

3. Loan Approval & Issuance

DescriptionDescriptionMortgage Insurance Functions

4. Risk Management

& Underwriting

4. Risk Management

& Underwriting

5. Collections5. Collections

6. Policy Origination6. Policy

Origination

DescriptionDescriptionMortgage Insurance Functions (contd’)

• Risk profiling• Portfolio management• Investor repurchase

requests• Exceptions management• Held offering management

• Escrow analysis• Tax payments & audit• Insurance deficiency • follow up• Draws processing• Real estate surveillance

• Early stage collections• Late stage collections• Tracing• High risk collections• Charge offs• Customer follow up letters• Dispute escalation support



Annuities & Pensions

Annuities & Pension providers too have been offshoring functions such as Receive & Distribute, Cashier & Reconcile funds etc (1/2)

Premium Processing

Focus Areas

Contract Servicing

• Indexing• Correspondence

& funds• Applications• Checks• Wires• Emails• Phone calls• Document Review• Licensing &

Follow up

Functions Offshored

Receive & Distribute

Post Issue Servicing

Cashier & Reconcile

Funds

Client RelationshipManagement






Annuities & Pension providers too have been offshoring functions such as Receive & Distribute, Cashier & Reconcile funds etc (1/2)

Problem Resolution

Focus Areas

Contract Set Up

• Receive & distribute• Benefit payment mode• Client info changes• Termination of contract• Resolve customer

issues• Deliver checks and

corrections

Functions Offshored

Resolve Customer

Issues

Submit & Invest

Contract Delivery

Deliver Policy or Transfer LoA





AGENDA


1


2



4
















• Recommendation

• Appendix

• About Zinnov


Companies have moved from offshoring less complex work like maintenance to high-end complex services such as product development

Illustrative List

IT Services OffshoredIT Services Offshored

• New Application– Prototype– Development– Testing

• Infrastructure– Management – Monitoring– Maintenance

• EnhancementProjects– Feature

enhancement– Conversion – Porting– Version

enhancement

• Application Mgmt– Legacy Migration– eBusiness Solutions– Web Services– Enterprise Solutions

• Maintenance– Management – Monitoring– Maintenance

• Business Intelligence – Data Porting– Data Mining

Value Chain of the IT Offshored Activities

Maintenance

Enhancement Projects

Valu

e

Application Management

Business Intelligence

New

Application

Infrastructure Support



IT Infrastructure operations have emerged as the fastest growing activities outsourced by the large corporations in US and Europe

IT Infrastructure Operations

IT Infrastructure Operations

Information Security

Information Security

Illustrative List

ServerServer Application Services

Application Services

Network Infrastructure

Network Infrastructure DesktopDesktop

Commonly Offshored Processes

• Installing and configuring operating system

• Fault monitoring and management

• Job scheduling/ monitoring

• Performance Monitoring

• Service pack installation

• Disk / swap/ backup space management

• Domain policies and security management

• Applications running on the server

• Fine tuning• Database creation and

maintenance • User account

management • Clean up of file systems • Automated schema

analysis• Partition maintenance• Database/ application

packaging and realizing• Performance tuning

• Management of network devices (Routers / switches)

• Monitoring of network traffic in LAN

• Monitor VLAN• Monitor of network

servers • Bandwidth

management • Network policy

Enforcement• Management of

User access to network

• Backup• Personal firewall• Application access

setup• Running onsite and

remote help desks to cater to desktop and server issues

• Creating and maintaining a knowledge base for help desk users

• Supporting users on desktop applications

• Creation of policy of software deployment on user desktops

• Peering• Gatekeeper• Firewall Intrusion• Installation and

upgrade of antivirus software

• Deployment and upgrade of anti virus software on user desktops

• Security Policies• Remote Access• PKI

Source: Zinnov Analysis, Literature Search, Primary research

33Zinnov ConfidentialComplexity of Interaction

HR Policy Administration

Overall HR Strategy

Integrated Disability Care Management

International Service Personal Administration

Compensation & Benefit Policy Design

HRIS

Employment Changes

Job Posting

Training AdministrationPolicy Inquiries & Resolution

Benefits Administration

Payroll

Benefits Sign UpForm Submission

Employee Record keeping

Recruitment, Assessment & Selection

Labor Relations Strategy

In-Business HR

Strategic Workforce Planning & Analysis

HR Policy

Labor Relations

Vendor ManagementChange Management ConsultingLearning Management

Performance Management

Processes not likely to be offshoredHigh

LowHigh Low

Valu

e A

dded

A myriad of services are outsourced in the Human Resource vertical, however companies do not offshore complex HR process



Overview of range of F&A related offshored services catered by Indian based operations

Illustrative List

General Accounting

• Maintain chart of accounts• Maintain general ledger• Monthly, quarterly and year-end

reporting• Consolidations• Inter-company accounts

Revenue Process

• Sales order processing• Credit and bad debt collection• Customer invoicing• Accounts receivable• Contract accounting

Vendor and Payment Process

• Purchasing• Accounts payable• Freight payment processing• Travel and entertainment expense

Tax Compliance

• Calculate and record taxes• Tax returns, refund and reports• Tax accounting

Cost and Inventory Accounting

• Inventory records• Develop and update costs• Variance analysis• Inter-company transfer pricing

Fixed Asset and Capital Accounting

• Calculate depreciate tables• Write-offs and valuation

adjustments• Work-in-progress accounts• Reconcile fixed asset accounts

and ledger entries

Management Reporting

• Assemble reports• Management reports• Risk and financial analysis

Regulatory Compliance and Reporting

• Compile information for SEC and other regulatory bodies

• Regulatory filings, requests and reports

• Regulatory audits

Financial Reporting

• Financial analysis• Prepare financial results• Presentations for Board,

Committees, and Auditors

Low Complexity Medium Complexity High Complexity

Processes not likely to be offshoredSource: Secondary research and Zinnov Analysis


BPO ServicesBPO Services

IT ActivitiesThere is a whole gamut of BPO and KPO services that Financial Institutions are offshoring/ outsourcing to India

Transaction Processing Accounting

Application Receipt Payables/

Account Opening Receivables

Data Input Reconciliation

System Operation Expense Accounting

Statement Generation Journal Accounting

Account Administration Account Consolidation

Database Maintenance Cost Center Accounting

Budgeting/ MIS

Customer Service Credit UnderwritingInbound Calls Credit Decisions

Outbound Calls Risk Assessment

Telemarketing Scoring Models

Price Quotes Credit Policy

Query Handling Compliance

Complaints Documentation

KPO ServicesKPO Services

• SWOT Analysis• M&A Analysis• Era Analysis• Executive Movement• Projections• Best Practice Analysis• Business Strategy/Plans

Analysis

Business Research

• Industry Dynamics• Competitive

Benchmarking• Competitor

Intelligence• Growth Forecast• Go-To-Market Strategy• Analytics• Market Mapping

Market Research

• Patent Searches• Product profiling (cost,

feature analysis)• Influencer Identification• Target Market studies

Technical Research• Financial Statements• Market Valuations• Company Performance

Valuations• Profitability, Turnover,

Liquidity, Solvency Analysis

Financial Analysis

• Venture Capital• Private Equity• Investment Banking

Investment Analysis

Illustrative List



AGENDA


1


2



4






Challenges– Cost

comparisons










• Recommendation

• Appendix

• About Zinnov


Companies can choose either between the Captive Set-Up, 3rd Party Vendor or the hybrid model to offshore work to India

Captive Set - Up Vendor Model• Costs

– Capital Intensive– Initial resource costs high as training is

also involved– Payback period between 3 to 5 years of

operation

• Key Benefits– Ability to attract high end talent – Data Security levels are high– Economies of Scale– Decision taking authority lies within the

company – Can train staff on company specific

processes

• Major Disadvantages– Legal & compliance rules– Capital & time intensive while setting up– Sourcing and training of talent Pool– Higher management commitment

• Costs– Unit costs high (includes vendor’s

margin)– Shorter payback period (12-18 months)

• Key Benefits– No capital / infrastructure costs involved– Vendor has expertise in doing similar

jobs for other clients– Can move to another vendor if work

unsatisfactory or any other situation arises

– Ability to ramp up and down quickly

• Major Disadvantages– Risk of Data security– Vendors inability to attract high end

talent limits offshoring activities – Higher attrition as vendors typically

move resources to provide career growth

Inspite of the Capital intensiveness of the captive models , companies prefer it due to the control over data security and economies of scale over a period of time. Most companies inspite of having captives also offshore low security processes such as outbound sales and non core activities such as HR & IT Development & Support to competent vendors



BOT Model – BOT has not been tried by many companies because of varied level of complexities involved across various stages

• The vendor selected may not understand the BOT model and their role to make it a success

• The vendor might use the model to entice new clients and cause problems during transfer phase

• The skill set of offshore team might vary with that on the onsite team causing frustrations

• Risks can be covered across the chain on BOT, i.e– Build (B) – Issues with regard to ownership of IP created by Offshore vendor,

Ownership of infrastructure (software /hardware) purchased for engagement– Operate (O) – The resources working with offshore vendor might be in constant

dilemma if they belong to vendor or the client organization– Transfer (T) – The resources might not be willing to move to the subsidiary and

might want to remain with the vendor

• Provide companies the ability to ramp up fast with low initial investment • Provide enough time to understand government and cultural issues• Provides an option to pilot a variety of projects before setting on the project that provide

the maximum benefit when executed offshore• Vendors local presence is utilized to easily hire talents • Vendors process capabilities are utilized to setup Offshore vendor partnership's

BOT (Build Operate Transfer) – Discussion

The Pros

The Cons

The Risks

Illustrative List



Implementation of key best practices will reduce the risks involved in BOT model (1/2)

IBuild Phase

Vendor Selection Contact negotiation Resource setup

• Work with medium sized vendors (tier II)

• Select vendors with relevant experience

• Select vendors with good brand name in selected location


• BOT best practices are captured in the full report, please send your requests for the report to [email protected]



Implementation of key best practices will reduce the risks involved in BOT model (2/2)

IITransfer Phase

Infrastructure transfer Resource transfer

• Decide between using the vendor infrastructure vs. own infrastructure

• New infrastructure will require Custom de-bonding of the existing facility

• Decide on hardware transfer vs. new hardware

Process transfer


• BOT best practices are captured in the full report, please send your requests for the report to [email protected]



AGENDA


1


2



4




• Recommendation

• Appendix

• About Zinnov







– Engagement models of key Insurance Companies– Aviva– AXA– Prudential– Allianz– Principal– Aetna







Most of the Insurance providers having an offshoring presence in India have a captive centre, complimented by vendor services

Insurance Company Captive Vendor Hybrid Location Discussion

Aviva

AXA

Prudential

Allianz

Principal

Aetna

• Details of captive locations, their evolution etc. are captured in the full report, please send your requests for the report to [email protected]




AGENDA


1


2



4
















• Recommendation

• Appendix

• About Zinnov


NCR is the leader in ITES while Bangalore tops the IT landscape

ITES Landscape IT Landscape

Hyderabad

Chennai

Cochin

Bangalore

NCR

Chandigarh

Pune

Ahmedabad

Mumbai

Hyderabad

Chennai

Cochin

Bangalore

NCR

Chandigarh

Pune

Ahmedabad

Mumbai

21.52

23.33

11.6

1215.2

7.4

3.8

.78

Kolkata

1.24

3.13Kolkata

4.81

27.18 16.7

14.513.3

12.2

8.43

1.74

.54

.41

Note: Bubble represents percentage breakup of talent pool availability across India



Bangalore

Similar pattern is followed by Insurance companies with the Tier 1 & 2 Cities as the popular destinations for setting up Captives or Vendors tie ups

Chennai

◘ Company A

◙ Company B

♦ Company C

א Company D

Mumbai

Delhi

Pune ◘

Tier 1 City

Tier 2 & 3 Cities

◘ ◘

◘

◙

◙♦

א●

♠

♠

∞∞

• List of companies in each location are captured in the full report , please send your requests for the report to [email protected]

Source: Zinnov - Primary Research



Bangalore

… and the same is true for Banks with captive centers in India

Chennai

Hyderabad◘ Company A

◙ Company B

♦ Company C

© Company D

Vishakapatnam

Kolkata

Delhi

◙

◙Pune

♦

♦◘

©

©

א

▲

▲●

● ●

●

♠

∞

Tier 1 City

Tier 2 & 3 Cities

Insurance Outsourcing Landscape - 2006Insurance Outsourcing Landscape - 2006

• Tier 1 Cities such as Chennai, NCR & Mumbai have been popular destinations for Banks to set up their Captives

• Chennai , Mumbai & Pune have been popular destinations for IT Support & Software Development captive teams to be situated

• Banks are now looking at Tier 3 Cities such as Vishakapatnam to set up their captives due to the low cost of Setting Up and availability of Talent PoolMumbai

• List of companies in each location are captured in the full report , please send your requests for the report to [email protected]

Source: Zinnov - Primary Research



AGENDA


1


2



4
















• Recommendation

• Appendix

• About Zinnov

• Comprehensive case studies are captured in the full report. To obtain a copy, please send your requests to [email protected]



With its inception in early 2003, Zinnov has had successful evolution in terms of the entire lifecycle of offshore advisory and market expansion

2004

2005

2006

• Sourcing strategy• Captive Setup• Marquee Clients

– 4 NASDAQ Listed– 2 Fortune 1000

• 12 engagements• 10 employees

• Expanded services within Market Expansion Consulting

• Added six “Fortune 1000’customers

• Grew to 40 employees by end of 2006

• 62+ engagements till date• Sourcing Assessment• Market Expansion

Consulting• HR Consulting• Added five “Fortune

1000” customers• 25 engagements• 20 employees

2003• Outsourcing research• Vendor partnerships• Added start-up

Technology companies• 2 clients• 3 employees 2

12

25

48

2003 2004 2005 2006

Num

ber of Client Engagem

ents

CAGR: 121%

Zinnov has created deep expertise with the end to end lifecycle of market expansion & offshore

advisory


Zinnov offers offshore advisory services (offshore strategy, offshore setup and assessment of existing setups)

Assessment of Existing SetupsSetupStrategy

Business case

Outsourcing vendor Selection

India center setup

Performance and efficiency reviews

Knowledge workshop

Governance framework

Compliance and process audits

Offshoring roadmap

Portfolio analysis

Geographic analysis

Organization design

Benchmarking


…as well as market expansion consulting to help clients in a variety of areas to penetrate the emerging markets

Market Engineering and Analysis

BenchmarkingMarket

ExpansionConsulting

M&A Target Identification

Growth modeling

Localization Strategy

Competitive intelligence


Zinnov hosts a quarterly India Development Center (IDC) Forum for the executive management teams of companies, which enables Zinnov to get first hand information on challenges and best practices

Limited Decision making power with offshore management teams

Lack of requirement sharing from Customers

Lack of technical and managerial resource allocation from US

Others

Various Organizational Challenges

47%

27%20%20%

73%

53%

7%7%

Product Management Talent shortage Technical Architect Talent shortageEngineering Talent shortageOthers

Talent shortage a big challenge

Percentage Respondents

Topics of Discussions (sample)

• Productivity• Human Resources• Intellectual Property• Infrastructure • Technology Deployment

• Optimal Processes• Engagement Models• Improving Customer

Satisfaction• Government initiatives • Experiences at IDC


Zinnov’s unique value proposition lies in its extensive experience withOffshoring

Illustrative

Zinnov – Unique Value Proposition (USP) besides ‘Objectivity’, which most Consulting Firms would bring in

Extensive experience with Offshoring

Significant presence in offshore location compared with other similar companies

Zinnov has helped multiple clients across domain to optimally strategize their offshore operations and to overcome organizational challenges across phases of offshoringOnly consulting companies to

host forum designed for MNC captive centers

Follows a low-touch consulting model to reduce the total cost of consulting to our customers


Thank You !

Zinnov Contactwww.zinnov.com [email protected]

29/4, 3Rd Floor H M Strafford7th cross, Vasanth Nagar Bangalore, KA 560052India

Phone: +91-80- 41127925/6

575 N. Pastoria AveSuite JSunnyvaleCA – 94085

Phone: 408-716-8432

21, Waterway Ave, Suite 300The WoodlandsTX-77380

Phone: 281-362-2773

http://www.zinnov.com/


offshoring in insurance industry - an overview -...

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