South Africa & Outsourcing Opportunities An Introduction to Ionic Consultancy Group Ltd, The Good and the Bad of Outsourcing and the Republic of South Africa www.icgroup.org.uk Graeme Mackenzie: Managing Partner Ionic Consultancy Group: +44 755 573 4517 / graeme@icgroup.org.uk
If South Africa was your home (instead of the UK). living the dream.
If South Africa was your home (instead of the UK). living the dream. You would be likely to die 31 years sooner You would be 89.5 times more likely to have HIV/AIDS You would be 32 times more likely to be murdered You would be 9.5 times more likely to die in infancy You would be 3.5 times more likely to be unemployed You would be 2.5 times more likely to be in prison You would have 1.5 times more babies You would spend 82% less money on health care Your 5 bed upmarket home would cost +/- 300k Your cost of living would be 58% less Your interest rates on savings would be +/- 4 x better Your private school fees on average 75% lower You would be in a manufacturing and agriculturally led technical recession
In the last 5 years.. living the dream. An education system producing large numbers of qualified actuaries (three times as many as India), chartered accounts and other specialists each year. 100% increase in broadband capacity Strict new money laundering laws enacted 40% cost reduction in telecoms costs 10% growth in GDP from services South Africa s data protection laws, products and certification are now virtually identical to those used in the UK and EU. Working alliance between the FCA and FSB. Regulatory synergy WEF rank South Africa 1st worldwide for Auditing and Reporting Standards. South Africa emerging as a leader in international BPO standards and highly influential in the development of the global ISO contact centre standard
Why South Africa. South Africa voted Global Sourcing Association offshoring destination of the year 2016 Infrastructure Talent Domain Skills 35% Telecoms Cost Culture Audit & Compliance 27% Finance & Insurance 15% Aviation Innovation DTI Support and Incentives 8% Retail
Fastest Growing 27% Finance & Insurance South Africa voted Global Sourcing Association offshoring destination of the year 2016 53% Inbound Customer Service 9.5% 11% Back Office Processing (document processing / research etc) 11% Collections 9.5% Outbound Sales 9% Inbound Sales 5% LPO and Shared Services
The regular start point.. Sales Margin Productivity Innovation living the dream. Capacity Opportunity Compliance Control Cost Costs of service HR Payroll Outsourcing
The regular start point.. Sales Margin Productivity Innovation living the dream. Capacity Opportunity Compliance Control Cost Costs of service HR Payroll Governance Due Diligence Regulatory obligations Business continuity Data protection & processing Outsourcing Ongoing monitoring and oversight Change framework
Deloitte 2016 Worldwide Outsourcing Survey The top issues with service providers: Respondents represent more than 46% 33% 29% 25% 25different sectors Providers are reactive rather than proactive Don t provide enough innovation Have high staff attrition rates Lack of leading practices 23% 22% 20% 20% Unqualified resources Lack of internal integration Poor service quality Lack of cross provider integration When issues arise, a majority of respondents indicated they first seek to manage to the relationship Escalated toleadership 68% Restructured the Deal 49% Enhanced Governance 40% Increased Competition 35% Applied Penalities Terminated for Cause Terminated for Convenience 8% 13% 22%
Deloitte 2016 Worldwide Outsourcing Survey Opportunities for improvement Nearly half of respondents experienced challenges with change management (46%) while over 25% reported challenges with job reassignments, retaining process design, retaining job changes and process / service management 31% 28% 28% 27% 20% Spend more time in service transition Construct better service levels Devote more time to vendor selection Build more robustness into vendor management Transform process Change Management Job Reassignments 30% 46% 18% Increase outsourced scope 16% Use alternative pricing model 16% Use competitive bidding process 15% Decrease outsourced scope Retained Process Design Retained Job Changes Process / Service Management 27% 26% 27% Over 50% of participants found that third-party advisors added value during strategic assessment, business case development, RFP / vendor selection and negotiation and contracting.
Not just about cost.. Sales Margin Productivity Innovation living the dream. Capacity Opportunity Compliance Control Cost Costs of service HR Payroll Outsourcing
Deloitte 2016 Worldwide Outsourcing Survey Why Outsource? Key Findings 1. Cost, enabling core business functions and solving capacity issues are primary drivers to outsource. 2. Leading practice organizations use outsourcing to drive transformational change and improve business results 3. Companies seek innovation from outsourcing agreements, but many are unsure how to define, motivate and track it (65% do not currently measure the value created through innovation)
How does innovation create value in outsourcing relationships? Deloitte 2016 Worldwide Outsourcing Survey Innovation is being used to 45% of respondents see outsourcing as a key enabler of M&A activity Outsourcing is a key enabler to M&A activity and has the ability to deliver tangible benefits for savvy organizations 21% Only 21% make innovation a key part of contracting Use outsourcing to reduce need for Transition Service Agreements Use outsourcing to improve the operating income of divestitures Outsourcing initiatives make our organization more appealing Use outsourcing to speed up ability to integrate new organizations Use outsourcing to lower operating costs of acquired companies 41% 39% 32% 21% 19%
Its not a challenge of TECHNOLOGY Outsourcing So.its not for everyone Its a challenge of EXPERIENCE and IMAGINATION
Remember This? The top issues with service providers: Opportunities for improvement WHAT WE DO based in London and Johannesburg we provide a one stop, independent, UK contact interface allow businesses to increase capacity without linear cost provide a platform for business to enter new markets and develop new initiatives allow business to drive systematic efficiencies, productivity and margin assist in improving business compliance and collection scorecards provide business with scalable and sustainable facilitated solutions manage all regulatory and management reporting commit experience, energy and innovation FROM the UK TO/IN SOUTH AFRICA
What we do. Facilitate and Manage Services i.e From the UK To and managed in South Africa DTI support
Reduce First Mover Adjustment. Call Centres Insurers Banks * Assessment in the UK * Provider selection SA * Training (UK/SA) * Responsibility/ownership * Project management * All transacted in UK * Culture * Experience * On risk Councils Private Equity Companies Accountancy Practices If you think its expensive to hire a professional Just wait until you hire an amateur
South Africa & Outsourcing Opportunities Thank You For Your Time www.icgroup.org.uk Graeme Mackenzie: Managing Partner Ionic Consultancy Group: +44 755 573 4517 / graeme@icgroup.org.uk