Creating New Markets Thomas Bo Joergensen Mikkel M. Krogsgaard Jonas H. Levring Stefan K. Madsen Tietgen Consultancy Inc. A Legacy of Growth
The v. Customer winning formula “Where do we expand? And how does the geography interact with our choices about what services to provide and what verticals to serve? ” Sanjay Kumar Tietgen Consultancy Inc. A Legacy of Growth 2
The v. Customer winning formula Bulgaria will be your launch pad for becoming the market leader of BPO within travel, hospitality, & retailing in Europe. Tietgen Consultancy Inc. A Legacy of Growth 3
The situation today Information Technology Enabled Services Industry Type of business BPO CRM (Business Process Management) (Customer Relations Management) Share of revenue Services 15 % - 85 % Data management Data Mining Data processing Data Validation Data Entry Content Digitalization - Customer Care Solution Contact Center Consulting Technology Help disk Integrated CRM Solution Knowledge Solutions Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 4
You are serving four industries Technology Retailing Telecom Travels & Hospitality Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 5
Finding low cost and stable environment Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 6
Sorting by education and labor regulation Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 7
Over 40 indicators! Doing Business 2006 Ease of Doing Business Rank, Starting a Business: Rank, Procedures (number), Time (days), Cost (% of income per capita), Min. capital (% of income per capita), Employing Workers: Rank, Difficulty of Hiring Index, Rigidity of Hours Index, Difficulty of Firing Index, Rigidity of Employment Index, Nonwage labor cost (% of salary), Firing costs (weeks of wages), Paying Taxes: Rank, Payments (number), Time (hours), Profit tax (%), Labor tax and contributions (%), Other taxes (%), Total tax rate (% profit), Enforcing Contracts: Rank, Procedures (number), Time (days), Cost (% of debt), Economy Characteristics: GNI per capita (US$), Informal economy estimate (% GNP), Population. World Global Competatitiveness Report 05 -06 Macroeconomics: Total GDP 2004 (b. USD), Recession expectations, Business Cost of Terrorism, Impact of Rules on FDI, Goverment Surplus/ defecit 2004, Inflation 2004, Technology: Firm-level Tech Readiness, Quality of Competition in the ISP Sector that insure quality, Extent of Business Internet Use HR: Quality of Educational System, Quality of Math and Science Education, Ease of Hiring Foreign Labour, Life Expectancy, Infrastructure: Overall infrastructure, Phone infrastructure, Government: Judicial independence, Efficiency of Legal Framework, Reliability of police services, Business Cost of Crime and Violence, Business Cost of Corruption, Foreign Ownership Restrictions, Restrictive Labour Regulations Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 8
From twenty to five Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 9
Top five countries Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 10
Top five countries Mexico Avg. monthly Cost of wage living Quality of living L VL $89 L South Africa $750 M H Slovakia $763 M M H Hungary $500 M M H Bulgaria $239 L M H Avg. monthly wage in US dollars Cost of living: Low, Medium, High Quality of living: Very Low, Medium, High Source: Mercer among others Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 11
Finding your client market Billion $ Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 12
Finding your client market Billion $ Total European market value: $ 76 billions Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 13
Covering the languages Total: ~321 mill English Italian ~58 mill ~64 mill Spanish ~41 mill German ~98 mill French ~60. 5 mill Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 14
What can Tietgen Consultancy offer? Tietgen Consultancy will assist you in: • Entering Bulgaria • Developing product portfolio for BPO automation for the new European markets Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 15
How to develop product portfolio Analyze market to fit customer needs in automation Define additional services for vertical automation Create PDRs for cheap programming in India Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 16
Entering Bulgaria can be entered by: • Acquiring partner • Setting up a Bulgarian BPO-joint venture by exploiting existing partnership Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 17
Your choice Go with Tietgen First thing Monday morning: Go to Bulgaria Acquisition Joint venture We will perform a due diligence to decide between the two options Our immediate recommendation Joint venture with existing partner = choice Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 18
Financial assumptions Assumptions • • • CRM revenues: Low growth 5– 6% BPO revenues: High Growth 20 -30% Productivity: Parameter adm expenses/revenues CRM adm exp/rev: Will fall with 2 -3% points BPO adm exp/rev: Will fall with 4 -6% points Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 19
Financial effects Best case: 16. 24% Likely case: 12. 90% 8. 96% Worst case: 8. 60% Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 20
Key Performance Indicators K 1 Establish joint venture K 2 Ensure high quality K 3 Research in new markets and opportunities K 4 Increase brand awareness K 5 Reaching market goal in European BPO Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 21
Key Performance Indicators - Timeline When to measure High K 1 K 2 Emphasis K 2 K 2 K 5 K 3 K 4 09 09 En d/ 20 20 Mi d/ En d/ 20 08 08 Mi d/ 20 07 20 d/ En Mi d/ 2 00 7 Low Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 22
Risk Government Joint venture Acquire 3 2 2 Specifics Go to Bulgaria 3 Infrastructure Risk with Tietgen = 0 Acquire HR Go with Tietgen Joint venture 4 3 Technology 5 5 3. 2 3 Avg. risk Note: Macro-risk is compared to the 3 rd sorting of countries Cost + ? 2 Control - 4 4 Compliance + 5 4 Possible - ? 4 Supplier dependence + 1 = ? Acquisition (? +3. 2) = ? Joint venture (2+3) = 5 1 = low, 5 = high 4 Total risk 2 = choice Tietgen Consultancy Inc. A Legacy of Growth Where to go What to offer How to do it Tomorrow 23
The v. Customer winning formula Bulgaria will be your launch pad for becoming the market leader of BPO within travel, hospitality, & retailing in Europe. Tietgen Consultancy Inc. A Legacy of Growth 24
Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Miscellaneous Tietgen Consultancy Inc. A Legacy of Growth 25
Q&A – Situation Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation Services today Competitors New industries Tietgen Consultancy Inc. A Legacy of Growth 26
Q&A – Countries Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation Over 40 Not China Top five Tietgen Consultancy Inc. A Legacy of Growth 27
Q&A – Markets Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation Client market detail Languages Competitors BPO definition Tietgen Consultancy Inc. A Legacy of Growth 28
Q&A – Offer Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation What can TC Tietgen Consultancy Inc. A Legacy of Growth 29
Q&A – Develop portfolio Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation Develop Tietgen Horz vs. Vert Tietgen Consultancy Inc. A Legacy of Growth 30
Q&A – Entering Bulgaria Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation Options Pros vs. Cons Choice Not China Bulgarian partner Tietgen Consultancy Inc. A Legacy of Growth 31
Q&A – Finance Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation Assumptions in detail Effects Tietgen Consultancy Inc. A Legacy of Growth 32
Q&A – KPI Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation List KPI detail Timeline Tietgen Consultancy Inc. A Legacy of Growth 33
Q&A – Risk Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Presentation Risk Tietgen Consultancy Inc. A Legacy of Growth 34
Q&A – Miscellaneous Q&A Where What How Situation Offer Finance Countries Develop portfolio KPI Markets Entering Bulgaria Risk Backup Miscellaneous Human factor Marketing Service Tietgen Consultancy Inc. A Legacy of Growth 35
Key Performance Indicators KPI no. KPI Title KPI Target Baseline When to be measured How to measure Responsible KPIs related to major business objectivese K 1 Establish joint venture Successful establishment Q 2/ 2007 Q 4/2007 No measurement Executive management K 2 Ensuring high quality within the services offered to clients and within the partners workforce One quality supervisor for every 16 agents Q 2/ 2007 Continuously Conduct random quality checks on employees Middle management K 3 Research in new market opportunities and potential clients within the European market Contracts within $200 $1, 000 mill/month Q 1/2008 Financial control etc. Executive management and Tiegent Consultancy K 4 Increase brand awareness in the European market within the Healthcare, Travel & Hospitality and retailing industries N/A Q 1/2008 Q 3/2008 Marked surveys London sales office K 5 Reaching market goal in European BPO 72 USD Q 3/ 2008 Measure on revenue for the BPO in the Healthcare, Retailing and Treavel & Hospitality Division. The marketing team, should also conduct marketing surveys Marketing team 2010 Tietgen Consultancy Inc. A Legacy of Growth 36
Assumptions in Detail Growth CRM: The market has been fairly exploited and growth has slowed: Hence Low growth 5 – 6% (Bulgaria inflation 4, 1%) BPO: The Offshoring market is expected to grow at 20 - 25%. As CRM growth is assumed insignificant it is especially BPO- offshoring that will grow at this rate. Futhermore we plan to enter the European market where customers pay a premium: Hence High Growth 20 -30% Productivity For productivity we use Adm. expenses/revenues as a parameter. Adm. expenses are considered mostly reliant on labour costs The initial ratios (2007) are estimated using peers within CRM and BPO. By moving to low wage country Bulgaria we expect the productivity to rise and hence the parameter to decline: In CRM: Will fall with 2 -3% points. In BPO: Will fall with 4 -6% points. This decline is catalysed as more and more labour/total labour is moved to Bulgaria. The decline will also rely on the degree of BPO-automation. This will eventually stagnate -> European union will most probably align wages over time as the country matures. Tietgen Consultancy Inc. A Legacy of Growth 37
Competitors - % of firms by region Tietgen Consultancy Inc. A Legacy of Growth 38
Competitors – Revenue group vs. offshore firms Group 1 100 MM - Group 2 100 -500 MM Group 3 500 -999 MM Group 4 1 B+ Group 5 1 -5 B Group 6 5 B+ Tietgen Consultancy Inc. A Legacy of Growth 39
Competitors – East EU offshore firm distribution Tietgen Consultancy Inc. A Legacy of Growth 40
Bulgaria pros and cons Pros 1. 2. 3. 4. 5. 6. 7. 8. 9. Good government economy Few irregular payments in tax collections Medium tax Good technology infrastructure and penetration Easy hiring and firing practises High and available human capital at low cost Regression expected -> will maintain sufficient work pool. Easy to start a business Partnership established Vs Cons 1. 2. 3. 4. 5. 6. 7. 8. 9. High real effective exchange rate and undeveloped financial market. Inflation Credit rating Organized crime Complex tax system Little reliance on pro management Little tradition for authority delegation EU entry will raise wages Negative impact of rules on FDI Tietgen Consultancy Inc. A Legacy of Growth 41
3 reasons not to go to China 1. Lots and lots of red-tape and government intervention. 2. Poor ICT-infrastructure. Most importantly: 3. You believe the cultural differences to differ too much from you. Tietgen Consultancy Inc. A Legacy of Growth 42
Finding your clients market Europe: Regions Factors International - - Austria France Germany Ireland Italy Spain Switzerland United Kingdom Argentina Australia Canada India Mexico New Zealand South Africa USA Venezuela Retailing Million $ 34, 246. 16 Million $ 14, 467. 54 Travel & Hospitality Million $ 41, 867. 11 Million $ 19, 637. 00 Total consumption Million $ 76, 113. 27 Million $ 34, 104. 86 English, French, German, Spanish, Italian English, French, Spanish Languages Source: Euromonitor Tietgen Consultancy Inc. A Legacy of Growth 43
Retailing Customer Service Sales/ Telemarketing Customer queries (BPO) Order processing (BPO) Product info details (BPO) Order management (BPO) Fault management (BPO) Presales (CRM) Billing queries (BPO) Cross-sell / up-sell Change management Telesales for extended warranty (CRM) Warranty returns (BPO) Third party verification Telemarketing of co-branded credit cards (CRM) Back Office / Analytics Customer feedback management Data entry/ processing Forms and rebate processing Inventory planning Demand forecasting Credit card management Inventory management Industry analysis Marketing analysis BPO CRM Tietgen Consultancy Inc. A Legacy of Growth 44
Technology Support Technical troubleshooting/networking support (L 1, L 2, L 3) IT products (desktops, PCs, laptops, PDAs, displays, printers, input/ output cards, routers, hubs, switches, hot spots & storage devices) IT infrastructure (server monitoring, worldwide networks management, server maintenance support for Linux-based email, web, proxy, firewall , VPN, database, LDAP, customized applications) Account activation Order fulfillment Cross selling/up selling Data entry and transaction processing Billing support, inquiries and collections Other support domains Applications maintenance & support (ERP & CRM software) Contact center solutions for process value additions in the areas of IVR, CRM/CTI focused application development & web enablement BPO CRM Tietgen Consultancy Inc. A Legacy of Growth 45
Telecom Operational Support Systems Product and Sales Business Support Systems Activation /Ordering Network Service Management CRM software services - Client /manager CSR monitoring - CSR ID, and performance tracker - CSR desktop call handling software - CSR Recorder and DB search Research and targeting CSR Training Cross-sell / Up-sell Account Maintenance Tech Product Support and troubleshooting - Mobile platforms - Networking devices - Storage Follow-up verification Consulting Services - Regulatory support services - Product management support services - Project management support services Warranty/Replacement Programs Rebate Processing Business Analytics Consulting Services - Computer Telephony Integration Helpdesk - Productivity Apps Escalation Resolution Tietgen Consultancy Inc. A Legacy of Growth 46
Travel & Hospitality Customer Support Passenger Operations Transaction Processing Information calls Reservation processing Loyalty program management Address changes Fares/Rates Loyalty programs Seat allocation Baggage tracking/ Handling Up Sell/ Cross Sell Revenue management Forms processing Schedule changes Deal rate filing Fare refunds Promotions/discounts Onward booking Procurement Collections Departure control Grievance handling Tietgen Consultancy Inc. A Legacy of Growth 47
Tietgen – A Legacy of Growth Analysis Based on quantitative and qualitative methods with a high focus on thought through and practical implications centered around Value-driven profitability. Delivery Written report and/ or presentation. Price policy Project driven. Recent clients Biosonic, Aldi, Brightcove. com. Tietgen Consultancy Inc. A Legacy of Growth 48
Why you should go vertical Vertical • • Long term Higher service offerings Stronger negating position and customer loyalty Unique market position Vs Horizontal • • Short term Lower service offerings Weaker, but faster negation Wide market proposition Tietgen Consultancy Inc. A Legacy of Growth 49
The Human Factor? ”Most clients are trying to eliminate the human factor altogether” – S. Kumar. V as in virtual = transferable and measurable, yet still indispensable The back office worker is a cost – The knowledge worker is an asset => All firms are trying to eliminate cost and increase assets. Tietgen Consultancy Inc. A Legacy of Growth 50
Marketing The London office will be the platform for all marketing coordination in Europe Why: Good location, low cost (centralized marketing structure) Obstacles: The sales department is required to speak all the languages in the offered to the European market Tietgen Consultancy Inc. A Legacy of Growth 51
The meaning of the word ”service” >>…let’s focus on improvement services rather than just services<< Sanjay Kumar Improving the service to v. Customer clients Improving the service within the organisation v. Customers organisation Tietgen Consultancy Inc. A Legacy of Growth 52
Bulgarian Partner • Call Center Bulgaria(callcenterbulgaria. com) • Established 2003 in Sofia • ”Operating in German, English, French and Bulgarian with possibilities for other languages” • ”. . view to develop the main services of a modern contact center: inbound and outbound services for European, East European and domestic (Bulgaria) clients delivered from a multi-language low cost platform in South-Eastern Europe. ” Tietgen Consultancy Inc. A Legacy of Growth 53
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