COLLABORATIVE BUSINESS RELATIONSHIP: OPTIMIZING THE VALUE OF STRATEGIC OUTSOURCING

11th Oil & Gas HR Round Table

COLLABORATIVE BUSINESS RELATIONSHIP:

OPTIMIZING THE VALUE OF STRATEGIC

OUTSOURCING : BPCL CASE STUDY

11TH OIL & GAS HR ROUND TABLE


Bharat Petroleum Corporation Ltd….

Integrated Petroleum Refining and Marketing Company

Fortune 500 & Forbes 2000 company

Sales Volume 29 Million MT

Revenue US $ 31 Billion per annum

Two Refineries at Mumbai & Kochi, a subsidiary Refinery at Numaligarh

and a JV Refinery at Bina

Large distribution network across India – 425 locations

Network of 9300 Retail Outlets and 2,450 LPG Distributors

7 Subsidiary companies and 11 Joint Venture Companies

14000 Employees

1


Why have we invested in collaborative business relationship /

outsourced

Aspirations

&

Challenges


Aspirations…

To be a high growth, integrated energy company

Exploration & Production

Gas & Power

Alternate fuel/energy

Petrochemicals


Challenges

Continuing, increasing pressure on cash and profits

Major shifts in Business models of certain products - Aviation

Upgradation of refineries for future fuels requiring high levels of

investments

Building marketing infrastructure in synch with substantial growth and

sources of products

High cost manpower

Procurement of land

Retention of talent


Collaborative strategic business relationship – the initial journey

Learnt through the journey of Bharat Shell, first of its kind for

marketing lubricants, and Bharat Oman Refineries Limited – business

joint ventures

and

Collaborative effort in growing in pioneering initiatives in the country

for loyalty programmes for Fleet and Urban customers in Retail

business, struggle and growth alongwith three partners – loyalty

programme manager, technology provider and technology manager –

today turnover stands at Rs.16000 Crs


Never underestimate the power of aspirations and pride of your own

employees as well as the partner’s

Have clarity on the assumptions and protocols agreed on

Respect for the partner for what he brings on the table irrespective of

the size – ours and theirs

Treat vendors associated in strategic initiatives as partners. Work with

them for ideation and creative processes

Learn to manage the challenge of PSU framework and continuing

relationship with the vendors

Expose young talent to this collaborative process to build internal

talent

Maintain learning orientation – remember we are talking ‘strategic’

What did we learn?


Collaborative strategic business relationship – current

Exploration & Production – partnering with major operators like

Anadarco and Petrobras. Gained informal status of preferred partner.

Bharat Renewable Energy Limited – partnered with technology

provider, Nandan Biomatrix Ltd and Shapoorji Palonji

4 CGDs with GAIL, one of them being the first and the most

successful – IGL.

Bharat Star Services Private Limited – for now competitive business of

into plane fueling

Matrix Bharat Marine Services – for international bunkering

Delhi Aviation Fuel Facility Private Limited – Partnering with DIAL

and IOC for survival

Several JVs for gas pipelines – strategic access to critical infrastructure


Outsourcing – current

Marketing logistics operation

Construction of new terminals – on CUT (Common User Terminals)

basis for OMCs

BOO, BOOT basis with private parties

Operations and Maintenance contracts for running the terminals

Tankage hiring from parties like Aegis, IOTL, Ganesh Benzoplast,

etc.

LPG Bottling by Private Bottlers instead of proliferating beyond

supply source

Lube Oil toll Blending by Third Parties like Ballmer Lawrie

IS infrastructure maintenance

Maintenance of automated installations/Ros

Non core jobs contracted out at existing plants


Outsourcing – current

Refineries

LSTK contracts for turnaround

BOO basis contracts for packets of large projects


Outsourcing – future

Retention of talent in the company

Strengthening shared services operations in finance thereby reducing

embedded manpower in the business – also look for outsourcing

options

ERP Competency centre - outsource transactional jobs, provide

consulting on value adding consulting

HR shared services – explore outsourcing post retirement of existing

manpower


Key contributors to positive outcomes...

Belief in the need for collaborative partnership demonstrated by the top

leadership

Inclusive conversations for strategic partnership decisions

A well thought-out governance regime that retains flexibility and control

Development of scoping /contracting skill

Re-skilliing /Up-skilling and redeployment to new roles in nearby locations

of Internal excess resources

Ensuring statutory compliances through suitable contract provisions and

onsite audits/inspections

Extending some of the onsite benefits to contract employees such as canteen

facility, health check-up, safety equipments, operations training etc. which

were hitherto available to company employees only


Constraints and Obstacles to scaling Outsourcing

Mindset, belief that control can be achieved only by doing it

yourself

Expectations from Public Sector Enterprises on social

responsibility

Sunk cost of existing, in pockets, surplus manpower

Not enough expertise, experience of oversight on outsourced

processes

Uncertain and volatile oil markets along with financial markets,

will teach us to think and be differently in ways we have never

done in the past

11th Oil & Gas HR Round Table Please feel free to contact Jayesh Shah or Chaityparna Banerjee on 022-22713120 / 3186 in case you need any support from us.

http://www.bharatpetroleum.com/Index.aspx


Outsourcing can help addressing the challenges….

Reduce risks, shorten cycle times and create better responsiveness to

customer needs

Reduction in operational cost

Reduction in capital invested

To focus on core competencies – activities that create a sustainable

competitive edge

To gain access to external competencies and to improve quality

To transform fixed costs into variable costs

To improve measurability of cost

To gain control over internal departments by eliminating time spent on

managing peripheral activities

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