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DELL CONFIDENTIAL 1 Off-Shoring in Central and Eastern Europe 4 th Vienna Economic Forum – VEIT V....
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Transcript of DELL CONFIDENTIAL 1 Off-Shoring in Central and Eastern Europe 4 th Vienna Economic Forum – VEIT V....
DELL CONFIDENTIAL 1
Off-Shoring in Central and Eastern Europe
4th Vienna Economic Forum – VEIT V. DENGLERVienna, November 5th, 2007
DELL CONFIDENTIAL 2
Executive summary
OFFSHORING TO CENTRAL AND EASTERN EUROPE IS A KEY BUSINESS IMPROVEMENT LEVER
DELL IS A GOOD EXAMPLE OF MOVE OF KNOWLEDGE JOBS TO NEW LOCATIONS
DELL CONFIDENTIAL 3
Off-shoring to Central and Eastern Europe countries
Recent
Announce-
ments
NEW CAPTIVE SETUPS
EXPANSION OF OUT-SOURCING PROVIDERS
LARGE OUT-SOURCING DEALS
Center of excellence for banking back office in Wroclaw
CREDIT SUISSE UPS INBEV
F&A center in Wroclaw
F&a/converged services centers in Prague and Budapest
New service center in Bucharest
WIPRO LOGICACMG CONVERGYS
New call center in Brno
Billing, customer support service from Budapest
F&A out-sourcing to Genpact Bucharest and Kolkata
NOVARTIS
Almost 80 new centers announced in 2006/07, ~40,000 additional FTE off-shored to Eastern Europe, of which 10,000 in new centers, 30,000 in existing centers
DELL CONFIDENTIAL 4
"Came for cost, stayed for quality"
TRANSACTION FACTORY
KNOWLEDGE HUB
CORPORATE/REGIONAL HEADQUARTERS
TRANSACTION CENTER FOR WESTERN EUROPE
EUROPEAN/GLOBAL CENTER FOR CORE COMPETENCIES
EUROPEAN/GLOBAL CENTER FOR CORE COMPETENCIES
Examples Lufthansa (Cracow) Zurich/Capgemini
(Cracow) P&G/HP (Bucharest)
Delphi (Cracow) Siemens (Wroclaw) SAP Labs (Sofia)
Dell (Bratislava) JCI (Bratislava)
FASTER MOVE TO KNOWLEDGE-INTENSIVESERVICES DRIVEN BY COMBINATION OF FACTORS
Talented workforce with good functional knowledge Cultural proximity/accessibility/timezone
overlap Language capabilities
DELL CONFIDENTIAL 5
DELL Evolution in Bratislava
Technical Support with up to 300 FTE for German language area
Dell launched operations in Slovakia in November 2002
Center with up to 900 FTE to support full range of customer-facing functions
Expanded by 2004 to include German-language Sales and Customer Care
Over 1600 FTE by end 2007 covering a wide range of front and back office functions
Grew to a European Business Center by 2006, w/ num. headquarter functions
1
2
3
DELL CONFIDENTIAL 6
DELL Finance in BratislavaValue
Time
Front Office
BACK OFFICE MID OFFICE FRONT OFFICE
Financial Planning &Analysis
Pricing
CreditCollections
Channel Controlling
FunctionalAccounting
Reporting
OPEX Mgmt
Commission Targets
VAT
GL Accounting
AP
Business Controls
Business Analytics
FY’05 FY’07 FY’08FY’06
Back-office Mid-office
DELL CONFIDENTIAL 7
Executive summary
OFFSHORING TO CENTRAL AND EASTERN EUROPE IS A KEY BUSINESS IMPROVEMENT LEVER
DELL IS A GOOD EXAMPLE OF MOVE OF KNOWLEDGE JOBS TO NEW LOCATIONS
CHALLENGES OF OFFSHORING ARE LARGELY EXAGGERATED
DELL CONFIDENTIAL 8
( )
Challenges of off-shoring are largely exaggerated
Activity spectrum and value
ONLY TRANSACTIONAL ACTIVITIES CAN BE OFFSHORED
SAVINGS EXPECTATIONS IN BUSINESS CASES ARE INFLATED
EASTERN EUROPE HAS PLATEAUED, THERE IS NO MORE VALUE TO BE EXTRACTED
SOURCE: MCKINSEY
Location
TALENT AVAILABILITY IS A MAJOR CONCERN
EVOLUTION OF COST LEVELS IS A MAJOR CONCERN
EASTERN EUROPEAN CENTERS END UP HAVING TOO MANY EXPATRIATES
Organization and operations
RAMP-UP SPEED IS USUALLY OVERESTIMATED
TRANSITION IS COMPLEX AND ERROR-PRONE
OFFSHORE CENTERS HAVE POOR PERFORMANCE
DELL CONFIDENTIAL 9
Wage differences will persist
SOURCE: MCKINSEY
DELL CONFIDENTIAL 10
Executive summary
OFFSHORING TO CENTRAL AND EASTERN EUROPE IS A KEY BUSINESS IMPROVEMENT LEVER
DELL IS A GOOD EXAMPLE OF MOVE OF KNOWLEDGE JOBS TO NEW LOCATIONS
CHALLENGES OF OFFSHORING ARE LARGELY EXAGGERATED
WESTERN EUROPE LIVES OFF THE PAST – NEEDS TO DEVELOP NEW VALUE PROPOSITION FOR ATTRACTING BUSINESS