BPO Opportunities in the Retail & CPG Sector ~~~

Transcription

1 BPO Opportunities in the Retail & CPG Sector ~~~ Market Assessment January 2010

2 About provides buy-side and sell-side organizations with deeper research and analyses in front office, mid-office and back office BPO than any other research firm in the world. The company s subscription-based model provides subscribers with robust market analyses, case studies, vendor assessments, contract analyses, market reports and access to a content-rich BPO contracts database. The firm covers a wide range of industries including financial services, government and utilities sectors, and tracks worldwide and regional BPO activity. s home page is The company tracks business services activity. In particular, focuses on the following business services and process areas: Front-office customer management services Middle office industry-specific processing services such as policy administration, claims processing services, and payment processing Back office support services such as HR services, finance & accounting services, and procurement services provides information to its clients in a variety of forms, including within: s BPO subscription services, to assist organizations in developing sourcing strategies and in supporting individual sourcing projects including vendor short-list development Workshops, to assist organizations in identifying the most appropriate areas of BPO for their organization Business case development, to assist organizations in deciding whether BPO is appropriate for individual processes For more details, contact: U.S: Riverside Center 275 Grove Street Suite Newton MA Phone: (617) U.K.: Atrium Court, The Ring Bracknell RG12 1BW Phone: +44 (0) France: 4 place Louis Armand Tour de l'horloge Paris France Phone: Germany: lm Mediapark Köln Germany Phone: +49 (0) by. January 2010

3 Abstract The purpose of this study is to assist sourcing managers in understanding sourcing developments within the retail & CPG sector and to recommend options for vendors in addressing the business process outsourcing market in the retail & CPG sector. In particular the study uses senior executive interviewing to establish: Client requirements, in support of business initiatives Market drivers and inhibitors Planned BPO purchasing intentions. The study complements s earlier market assessments of Business Process Outsourcing in the retail & CPG sector by including an updated analysis of user expectations and attitudes towards use of business process outsourcing. s BPO Opportunities in the Retail & CPG Sector market assessment report is designed for: Sourcing managers investigating sourcing developments within the retail & CPG sector Marketing, sales and business managers developing strategies to target service opportunities within the BPO market Financial analysts specializing in the support services sector. The term business process outsourcing (BPO) is defined as the outsourcing of business functions or processes. In order to qualify under this definition BPO contracts must involve the vendor taking responsibility for operational management of the business activity. Potential BPO activities include: Front-office services, including customer management services & billing services, and document management services Middle-office administration services Industry-specific processing services e.g. mortgage processing services and card processing services Back-office support services Finance and accounting services HR Services including payroll services, HR administration services, managed recruitment services and training provision and administration Services for procurement of indirect goods and services Copyright 2010 by. All rights reserved. Printed in the United Kingdom. No part of the publication may be reproduced or distributed in any form, or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. The information provided in this report shall be used only by the employees of and within the current corporate structure of s clients, and will not be disclosed to any other organization or person including parent, subsidiary, or affiliated organization without prior written consent of. exercises its best efforts in preparation of the information provided in this report and believe the information contained herein to be accurate. However, shall have no liability for any loss or expense that may result from incompleteness or inaccuracy of the information provided by. January 2010

4 Table of Contents Chapter 1: Introduction 1 A. Objectives and Scope 1 B. Methodology 2 C. Structure of the Report 3 Chapter 2: Executive Summary 4 A. Retailers Need to Cross-Sell While CPG Companies Need New Customers 4 B. Retailers Need to Reduce SSC Cost with CPG Companies also Seeking SSC Service Quality Improvements 8 C. Eighteen Per Cent of Retail & CPG Companies Expect to Outsource SSCs during D. Retail Retailers Increasingly Willing to Adopt Pre-Standardized BPO Services 14 Chapter 3: Market Size & Growth 18 A. Market Forecast 18 Chapter 4: Key Business Issues & Initiatives 27 Chapter 5: Impact on Shared Service Centers 38 Chapter 6: Impact of Recession on Use of BPO by. - i - January 2010

5 Chapter 7: Planned Use of Third-Party Services 67 Chapter 8: Business Metrics by. - ii - January 2010

6 List of Exhibits Business Issues Faced: Retail...4 Business Issues Faced: CPG...5 Additional Utilization of BPO: Retail...7 Additional Utilization of BPO: CPG...7 Satisfaction with Shared Service Centers: Retail...8 Satisfaction with Shared Service Centers: CPG...8 Shared Service Center Issues: Retail...9 Shared Service Center Issues: CPG Response to Credit Crunch: Retail Response to Credit Crunch: CPG Shared Service Center Initiatives: Retail Shared Service Center Initiatives: CPG Change in Offshoring: Retail Change in Offshoring: CPG BPO Purchasing Intentions by Function: Retail BPO Purchasing Intentions by Function: CPG Change in Attitude to Service Bundling: Retail Change in Attitude to Service Bundling: CPG Consolidation of BPO Suppliers: Retail Consolidation of BPO Suppliers: CPG Attitudes to BPO Standardization: Retail Attitudes to BPO Standardization: CPG BPO in Retail Sector Market Forecast: BPO in Retail Sector Market Forecast by Service Type: BPO in CPG Sector Market Forecast: BPO in CPG Sector Market Forecast by Service Type: BPO Contract Value in the Retail Sector by Country BPO Contract Value in Retail Sector by Service Type BPO Contract Value in Retail Sector by Service Type: North America BPO Contract Value in Retail Sector by Service Type: Europe Leading Vendors: BPO Contract Value in Retail Sector by. - iii - January 2010

7 Leading Vendors: BPO Contract Value in Retail Sector: North America Leading Vendors: BPO Contract Value in Retail Sector: Europe Business Issues Faced Business Issues Faced: Retail Business Issues Faced: CPG Business Issues Faced: Continental Europe Business Issues Faced: U.K Business Issues Faced: U.S Business Issues Faced: Asia Pacific Cost Savings Sought by Function Cost Savings Sought by Function: Retail Cost Savings Sought by Function: CPG Cost Savings Sought by Function: Continental Europe Cost Savings Sought by Function: U.K Cost Savings Sought by Function: U.S Cost Savings Sought by Function: Asia Pacific Use of Shared Service Centers by Function Use of Shared Service Centers: Retail Use of Shared Service Centers: CPG Use of Shared Service Centers: Continental Europe Use of Shared Service Centers: U.K Use of Shared Service Centers: U.S Use of Shared Service Centers: Asia Pacific Satisfaction with Shared Service Centers Satisfaction with Shared Service Centers: Retail Satisfaction with Shared Service Centers: CPG Satisfaction with Shared Service Centers: Continental Europe Satisfaction with Shared Service Centers: U.K Satisfaction with Shared Service Centers: U.S Satisfaction with Shared Service Centers: Asia Pacific Shared Service Center Issues Shared Service Center Issues: Retail Shared Service Center Issues: CPG Shared Service Center Issues: Continental Europe Shared Service Center Issues: U.K Shared Service Center Issues: U.S by. - iv - January 2010

8 Shared Service Center Issues: Asia Pacific Shared Service Center Initiatives Shared Service Center Initiatives: Retail Shared Service Center Initiatives: CPG Shared Service Center Initiatives: Continental Europe Shared Service Center Initiatives: U.K Shared Service Center Initiatives: U.S Shared Service Center Initiatives: Asia Pacific Response to Credit Crunch Response to Credit Crunch: Retail Response to Credit Crunch: CPG Response to Credit Crunch: Continental Europe Response to Credit Crunch: U.K Response to Credit Crunch: U.S Response to Credit Crunch: Asia Pacific BPO Cost Reduction Sought BPO Cost Reduction Sought: Retail BPO Cost Reduction Sought: CPG BPO Cost Reduction Sought: Continental Europe BPO Cost Reduction Sought: U.K BPO Cost Reduction Sought: U.S BPO Cost Reduction Sought: Asia Pacific BPO Break-Even Timescale Sought BPO Break-Even Timescale Sought: Retail BPO Break-Even Timescale Sought: CPG BPO Break-Even Timescale Sought: Continental Europe BPO Break-Even Timescale Sought: U.K BPO Break-Even Timescale Sought: U.S BPO Break-Even Timescale Sought: Asia Pacific Change in Attitude to Service Bundling Change in Attitude to Service Bundling: Retail Change in Attitude to Service Bundling: CPG Change in Attitude to Service Bundling: Continental Europe Change in Attitude to Service Bundling: U.K Change in Attitude to Service Bundling: U.S Change in Attitude to Service Bundling: Asia Pacific by. - v - January 2010

9 Sourcing Approaches to BPO Sourcing Approaches to BPO: Retail Sourcing Approaches to BPO: CPG Sourcing Approaches to BPO: Continental Europe Sourcing Approaches to BPO: U.K Sourcing Approaches to BPO: U.S Sourcing Approaches to BPO: Asia Pacific Change in Offshoring Change in Offshoring: Retail Change in Offshoring: CPG Change in Offshoring: Continental Europe Change in Offshoring: U.K Change in Offshoring: U.S Change in Offshoring: Asia Pacific Consolidation of BPO Suppliers Consolidation of BPO Suppliers: Retail Consolidation of BPO Suppliers: CPG Consolidation of BPO Suppliers: Continental Europe Consolidation of BPO Suppliers: U.K Consolidation of BPO Suppliers: U.S Consolidation of BPO Suppliers: Asia Pacific Additional Utilization of BPO Additional Utilization of BPO: Retail Additional Utilization of BPO: CPG Additional Utilization of BPO: Continental Europe Additional Utilization of BPO: U.K Additional Utilization of BPO: U.S Additional Utilization of BPO: Asia Pacific BPO Purchasing Intentions by Function BPO Purchasing Intentions by Function: Retail BPO Purchasing Intentions by Function: CPG BPO Purchasing Intentions by Function: Continental Europe BPO Purchasing Intentions by Function: U.K BPO Purchasing Intentions by Function: U.S BPO Purchasing Intentions by Function: Asia Pacific Attitudes to BPO Standardization by. - vi - January 2010

10 Attitudes to BPO Standardization: Retail Attitudes to BPO Standardization: CPG Attitudes to BPO Standardization: Continental Europe Attitudes to BPO Standardization: U.K Attitudes to BPO Standardization: U.S Attitudes to BPO Standardization: Asia Pacific Purchasing Intentions for Supplier-Hosted BPO Purchasing Intentions for Standard Supplier-Hosted BPO: Retail Purchasing Intentions for Standard Supplier-Hosted BPO: CPG Purchasing Intentions for Standard Supplier-Hosted BPO: Continental Europe Purchasing Intentions of Standard Supplier-Hosted BPO: U.K Purchasing Intentions of Standard Supplier-Hosted BPO: U.S Purchasing Intentions of Standard Supplier-Hosted BPO: Asia Pacific Business Metrics Business Metrics: Retail Business Metrics: CPG Business Metrics: Continental Europe Business Metrics: U.K Business Metrics: U.S Business Metrics: Asia Pacific by. - vii - January 2010

11 Chapter 1 Introduction A Objectives and Scope The purpose of this study is to assist sourcing managers in understanding sourcing developments within the retail & CPG sector and to recommend options for vendors in addressing the business process outsourcing market in the retail & CPG sector. In particular the study uses senior executive interviewing to establish: Client BPO requirements, in support of 2010 business initiatives Preferred approaches to BPO delivery Planned BPO purchasing intentions. The study complements s earlier market assessments of Business Process Outsourcing in the retail & CPG sector by including an updated analysis of user expectations and attitudes towards use of business process outsourcing. s BPO Opportunities in the Retail & CPG Sector market assessment report is designed for: Sourcing managers investigating sourcing developments within the retail & CPG sector Marketing, sales and business managers developing strategies to target service opportunities within the BPO market Financial analysts specializing in the support services sector. The term business process outsourcing (BPO) is defined as the outsourcing of business functions or processes. In order to qualify under this definition BPO contracts must involve the vendor taking responsibility for operational management of the business activity. For the purposes of this definition, IT services do not count as a business function by January 2010

12 Potential BPO activities include: Front-office services Customer management services including billing services Document management services Middle-office administration services Industry-specific processing services e.g. mortgage processing services and card processing services Back-office support services Accounting services HR Services including payroll services, HR administration services, managed recruitment services and training provision and administration Services for procurement of indirect goods and services Standalone IT outsourcing contracts, including application process outsourcing contracts, do not qualify as BPO regardless of the length of the contract or the degree of business process change involved. B Methodology The approach taken to analyze this market is targeted user research to identify organizations business process outsourcing buying intentions. The user research of 80 interviews was carried out by interviewing senior executives in the retail & CPG sector to ascertain their attitudes towards: Key business issues and initiatives Shared service center issues and initiatives Stage reached in response to the recession Impact of the slowdown on approaches to BPO Attitudes toward use of offshore services Planned use of third-party BPO services. The breakdown of number of senior executives interviewed by geography was: U.S. (20) U.K. (20) Continental Europe (20) Asia Pacific (20). The breakdown of number of senior executives interviewed by sector was: CPG (40) Retail (40) by January 2010

13 C Structure of the Report The report is structured into the following chapters: Chapter I: Introduction Chapter II: Executive Summary Chapter III: Market Size and Growth, including an analysis of current patterns of BPO contract activity within the retail & CPG sector by geography and service type Chapter IV: Key Business Issues & Initiatives, including: Business issues faced Business initiatives planned for 2010 Chapter V: Impact on Shared Services Centers, covering: Satisfaction with shared service centers Shared service center initiatives planned for 2010 Chapter VI: Impact of Recession on Use of BPO, covering: Stage reached in amending sourcing strategies and preparation of RFPs Stage reached in award of BPO contracts Chapter VII: Planned Use of Third-Party Services, including Role of BPO services Attitudes towards use of pre-standardized BPO services 2010 purchasing intentions by function Chapter VIII: Business Metrics 2010 by January 2010