Deloitte Shared Services, GBS & BPO Conference Out-Tasking vs Building a Global Team: Moving Beyond Labour Arbitrage

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1 Deloitte Shared Services, GBS & BPO Conference Out-Tasking vs Building a Global Team: Moving Beyond Labour Arbitrage Peter Marsland, Danske Bank; Mark Craddock, Deloitte September 2015 Berlin, Germany

2 Take a minute and answer our quick poll on the Shared Services App Does your organisation see Global Business Services (or Shared Services) as an essential development step for Senior Leadership? 2

Introductions Your presenters for this session Mark Craddock Director, Deloitte Global Business Services 15 years experience in Shared Services and BPO covering F&A, Procurement, HR, IT and Supply

3 Introductions Your presenters for this session Mark Craddock Director, Deloitte Global Business Services 15 years experience in Shared Services and BPO covering F&A, Procurement, HR, IT and Supply Chain Mark has both managed and advised on GBS services, with Operations leadership experience in two major BPO suppliers Anne Melchiorsen Exec. VP, Danske Bank Chief of Staff COO area 9 years experience in Financial Services Responsible for driving the overall COO strategic agenda and transformation (IT, Operations, Procurement), including the implementation of Global Teams in Group Functions of Danske Bank. Has held a number of leadership roles within the fields of change management, strategy development and implementation, communication and public affairs Uffe Gade Danske Bank Head of Global Teams Development More than 5 years experience in developing shared service setups both as a consultant and from within operations Uffe has worked with offshoring and development of global teams in operations, finance, risk and several other functional areas 3

4 You might not always get what you want, but you always get what you expect. Charles H. Spurgeon 4

Out-tasking or simple lift and shift Quotes we often hear from onshore teams The teams are very transactional we don t feel confident in giving them more complex

5 Out-tasking or simple lift and shift Quotes we often hear from onshore teams The teams are very transactional we don t feel confident in giving them more complex processes All the thinking and coordination comes from the retained organisation Sure, the SLAs are green, but we still get a lot of noise from our internal customers 5

6 The root of the problem is often in the building blocks used to create the Shared Service What messages are we sending our teams? Process Splits Service Catalogues SLAs Strategic Business Partners Operational Centre of Excellence Transactional SSC Sumantra Ghoshal (London Business School): The real test of an organisation is the context it creates Phil Whelan (Head of Strategy, BP GBS): If you don t have a vision or a brand, you simply become known for what you do labour arbitrage 6

7 The growth of Shared Services talent Organisations are neglecting the global talent pool 150, ,000 14% CAGR 750,000 ~ 1,800,000 Talent is moving East and South (E) FTE in Indian Captives grew at a CAGR of 14% from 2003 to 2015 Source: Deloitte India Survey,

8 Building a Global Team Simply creating a Captive version of a BPO is not the solution 1 Invest in Leadership Training 4 From SLAs to Business Outcomes 2 Global Talent Management 5 End-to-end Ownership 3 Global Leadership Mobility 6 International, Cross-functional Teams 7 Brand and Vision 8

9 Danske Bank Case Study Moving from out-tasking to building a global team 9

10 Case Study Danske Bank Background Key facts Market leader in Denmark, Finland and Northern Ireland 3.6 million customers 313 branches* in 15 countries 18,874 full-time employees Founded in 1871 Independent divisions [Norway] [Finland] [Russia] [New York] [Northern Ireland] [Denmark] [Sweden ] [Estonia ] [Latvia] [Lithuania] [Ireland] [UK) [Luxembourg] [Germany ] [Poland] 10

Case Study Danske Bank Shared Services SSC located in Vilnius, Lithuania Captive set up in 2013 as a proof of concept Rapid build-up of new organisation Fast and significant

11 Case Study Danske Bank Shared Services SSC located in Vilnius, Lithuania Captive set up in 2013 as a proof of concept Rapid build-up of new organisation Fast and significant financial impact driven by salary arbitrage Side-effect: Maturation of processes with rigid documentation and performance tracking Culture change to more data driven quality assessment 11

12 Case Study Danske Bank Shared Service Challenges Benefits limited to labour arbitrage Sub-supplier role builds perception of being lowest in the hierarchy No functional or process ownership in low cost locations. Small and fragile competency environments for specialist knowledge in sending areas no pipeline for continuity Limited career paths hampers talent pool utilization, causes higher attrition Us and them culture blaming instead of solutioning 12

13 Activities Case Study Danske Bank The Roadmap Globalising delivery model Global Teams Focus Getting Started and Gaining Experience with GSL Gearing the Organisation International workforce 30 FTE in GSL Bottom-up screening Initial processes piloted in GO DK 600 FTE in GSL Migration process standardized and experience strengthened Selected process centralizations to GSL Selected IT roadblocks solved 750 FTE in GSL Optimize and distribute workload across countries. Build infrastructure (e.g. non psychical quality and planning boards, Workflows) Pilots for integrated Global teams Further remove itroadblocks Continue build-up in GSL International workforce Integrated global teams across countries, with common objectives Global functional management in key areas Long term sustainable knowledge environments Adjusted role of Market Area Operations Timeline Today 13

Continuous flow Case Study Danske Bank Changing the Model Centralization a natural step in the overall migration of work backwards in the value chain Harmonization and integration of services a

14 Continuous flow Case Study Danske Bank Changing the Model Centralization a natural step in the overall migration of work backwards in the value chain Harmonization and integration of services a pre-requisite for scale benefits and effective digital solutions Custom work Front line Country based thinking Global functional mindset Common work Local back office Routine work Centralized back office Straight-through processing Automation Local standards Customer service varies Common standards Deliver service as one collective unit focus on customer value work better together as one collective unit 14

15 Case Study Danske Bank Lessons Learnt after the First Year A valuable change journey... Global teams an ongoing change process Leadership that sees the full potential in Global talent pools perform better Clear vision drives collaborative thinking Workforce planning a critical enabler to identify challenges and define endstate organisation Set up in Lithuania allows easy access to talent at low cost...although change is not easy Many existing systems and structures do not support global working Poorly documented processes - difficult to collaborate across countries Managing Global teams can throw up complex issues Investment required for planning, change management and temporary double staffing 15

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Deloitte Shared Services, GBS & BPO Conference Shared Services Design Through to Implementation

Deloitte Shared Services, GBS & BPO Conference Shared Services Design Through to Implementation Jo Hart & Charlotte Allen, Deloitte 22 23 September 2015 Berlin, Germany Agenda Shared Services Approach