Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
Topic: Global Offshore Captive Landscape and Trends Focus Geography – The Philippines
Global Sourcing Report: February 2012 – Preview Deck
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
2
Our research offerings for global services
Subscription information
The full report is included in the following subscription(s) – Global sourcing
In addition to published research, a subscription may include analyst inquiry, data cuts, and other services
If you want to learn whether your organization has a subscription agreement or request information on pricing and subscription options, please contact us: – [email protected] – +1-214-451-3110
Market Vista Global services tracking across functions, sourcing models, locations, and service providers – industry tracking reports also available
Custom research capabilities Benchmarking | Pricing, delivery model, skill portfolio Peer analysis | Scope, sourcing models, locations Locations | Cost, skills, sustainability, portfolio Tracking services | Service providers, locations, risk Other | Market intelligence, service provider capabilities, technologies
Finance & accounting
Human resources
Procurement
Information technology
Banking, financial services, insurance
Transaction Intelligence
Recruitment process
Global sourcing Service provider Intelligence
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
3
Background and scope of research
The global sourcing market evolved and grew rapidly to reach a size of ~US$116 billion. Captives were a core component of this evolution with companies such as Texas Instruments and GE setting up offshore captive units in the late 1980s and early 1990s
The last 15-20 years witnessed increased adoption of the captive model with a large number of companies setting up/expanding their captive centers. While India continues to remain a leading geography, companies also explored and successfully established captive operations in China, the Philippines, Central and Eastern Europe, and Latin America. Recently, Middle East and North Africa (MENA) has emerged as an attractive offshoring destination
However, significant growth of third-party service providers and selective divestitures during the economic crisis led to the perception that the captive model is under threat. Stated reasons include captive not delivering value and being significantly more expensive than third-party service providers
At the same time, mature users of captive articulate their commitment to the model and reinforce its importance in their sourcing strategy and portfolio. Additionally, our discussions with global sourcing offices of large companies and captive leadership reveal imperatives under way to expand the role of captive and its value proposition
This research report provides an in-depth analysis of the global offshore captive landscape across leading locations. The report is based on Everest Group’s proprietary captive database and is updated every six months. Besides providing details on global captive landscape trends and analysis, the report also contains a focus section that provides deep-dive into the captive landscape in a select geography. This edition features the Philippines as the focus geography
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
4
Buyer organizations have a range of options for capturing value from offshoring, with captive and third-party outsourcing as the primary models
Strategic alliance / Joint Venture model
Offshore business models
Third-party outsourcing model
Captive model
Managed third-party offshoring Full- / part-time resources on the
ground to facilitate transition, relationship management, and transfer of organization and domain knowledge to third-party providers
Example: Greenpoint-Infosys BPO
Pure captive model An internal cost center or a
100% subsidiary company to cater exclusively to the parent company
Examples: American Express, HSBC
Inverted BOT Offshore service providers
provide only implementation support initially and are allowed to buy into the entity at a later date
Examples: AIG-Polaris, BA-WNS
Build Operate Transfer (BOT)/ Joint Venture (JV) Provider-owned / joint
operations that can be transferred back to the customer
Example: eServe-Citigroup
Pure third-party offshoring Use of an offshore provider to
outsource business processes or IT services
Examples: Alcoa-Infosys, Rio Tinto - Wipro
Source: Everest Group analysis
The focus of this report is on the captive model
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
5
This research report leverages Everest Group proprietary captive database that tracks offshore captives of leading companies
Key dimensions tracked Scale (FTE range)
Industry verticals
Functions offered (e.g., IT, BP, ES / R&D)
Parent geographies
Parent size (revenue range)
Location of delivery centers
Unique characteristics
Industry’s most comprehensive database of global captives located across India, Rest of Asia, Europe, Latin America, and Africa
Tracks captives of leading firms (e.g., Forbes 2000 and Fortune 500 companies)
Database covers more than 1,200 captive centers
Focus on captives providing offshore delivery of global services – excludes shared services centers serving the domestic market
Everest Group proprietary captive database
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
6
Table of contents (page 1 of 2)
Section I: Executive summary 8 Section II: Overview of the global captive landscape 12 Summary 13 Global offshore services and captive market: Size and growth 14 Distribution of the global offshore captive landscape by:
– Parent revenue 17 – Parent geography 18 – Industry vertical 19 – Functions supported 20 – Offshore delivery locations 22
Section III: Deep-dive into key industry verticals 25 Summary 26 Banking, Financial Services, and Insurance (BFSI ) 27 Energy and Utilities (E&U) 30 Healthcare 33 Manufacturing, Distribution, and Retail (MDR) 36 Technology 39 Telecom 42 Section IV: Recent trends in the global captive landscape (2009-2011) 45 Summary 46 Recent trends in captive set-ups and divestitures 47
Topic Page no.
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
7
Table of contents (page 2 of 2)
Topic Page no.
Section IV: Recent trends in the global captive landscape (2009-2011) (continued…) Recent trends in offshore captive landscape (2009-2011) by:
– Parent revenue 48 – Parent geography 49 – Industry verticals 50 – Functions supported 51 – Key captive locations 52
List of offshore captive divestitures (2009-2011) 57
Section V: Focus geography: Captive landscape in the Philippines 64 Summary 65 The Philippines’ offshore services and captive market: Size and growth 66 Distribution of offshore captives in the Philippines by:
– Headcount 70 – Parent revenue 71 – Parent geography 72 – Industry vertical 73 – Functions supported 74 – Locations 75
Deep-dive into key industry verticals 77 Appendix 82 Recent offshore captive set-ups (2011) 83 Glossary of key terms 100 Additional research recommendations 101
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
8
This research report provides an in-depth analysis of the global captive landscape and trends
Distribution of offshore captives by parent revenue 2011; Percentage
xx%
xx%
xx%
xx%
xx%
US$xx billion
>US$50 billion
US$xx billion
<US$xx billion
US$xx billion
100% = 1,193
xx%
xx%
xx%
xx% xx% xx%
xx%
100% = 1,193
Distribution of offshore captives by industry vertical 2011; Percentage
A
B
E F
D
C
G
xx%
xx%
xx%
xx% xx%
A
B
C
D E
Distribution of offshore captives by delivery location
2011; Percentage 100% = 1,193
xx%
xx%
xx%
A
B
C
Distribution of offshore captives by type of cities
2011; Percentage 100% = 1,193
Source: Everest Group (2012)
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
9
The report analyzes the captive market across six key industry verticals
BFSI
Energy and Utilities (E&U) Telecom
Technology Healthcare
Key industry verticals
MDR
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
10
This study also provides an analysis of the recent trend (2009-2011) within the global captive landscape
Number of offshore captive divestitures
xx% xx% xx% xx% xx%
xx% xx% xx%
xx% xx% xx%
xx%
xx% xx% xx%
xx%
xx% xx% xx% xx%
2009 2010 2011 Up to 2011
New captive set-ups
1,193 65 82 83
Distribution of offshore captives by parent revenue Percentage
US$xx billion
>US$xx billion
US$xx billion
<US$xx billion US$xx billion
100% =
xx% xx% xx% xx%
xx% xx% xx% xx%
xx% xx% xx% xx% xx% xx% xx% xx% xx% xx%
xx% x% xx% xx% xx% xx% xx%
2009 2010 2011 Up to 2011
New captive set-ups
1,193 65 82 83 100% =
Distribution of offshore captives by industry vertical Percentage
A
B
C D E F G
8
2 1
2009 2010 2011
44%
42%
41%IT
ES / R&D
BP3
100% = 1,193 100% = 65 100% = 82 100% = 83
2009; Percentage1 2010; Percentage1 2011; Percentage1Up to 2011; Percentage1
40%
45%
28%
39%
55%
22%
29%
66%
19%
Source: Everest Group (2012)
Distribution of offshore captive by functions
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
11
The report also covers a detailed analysis of the focus geography – The Philippines
Source: Everest Group (2012)
Voice BPO
Non Voice BPO
IT/ESO
XX XX 100% =
xx% xx%
xx% xx%
xx% xx%
2006 2011E
Philippines IT-BPO export revenue by service segments US$ billion
xx-xx%
xx-xx% Captive
Third-party service provider
Distribution of market by sourcing models 2011; FTEs
xx%
xx%
xx%
xx% xx%
100% = ~XX
100% = XX
XX-XX
XX-XX
XX-XX
XX-XX
XX-XX
Distribution of offshore captives by headcount – range of FTEs 2011; Percentage
XXX XXX XXX XXX XXX
Pasig
MakatiManila
Muntinlupa QuezonTaguig Alabang
CebuBacolod
Baguio
BulacanClark
Mandaluyong XXX XXX XXX XXX XXX
XXX XXX XXX XXX XXX
XXX XXX XXX XXX XXX
XXX XXX XXX XXX XXX
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
12
Appendix: Additional research recommendtions
For more information on this and other research published by the Everest Group, please contact us: Amneet Singh, Vice President - Global Sourcing: Salil Dani, Research Director: Ritika Dhingra, Knowledge Associate :
[email protected] [email protected] [email protected]
Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240
Phone: +1-214-451-3110 E-mail: [email protected]
The following documents are recommended for additional insight into the topic covered in this research report. The recommended documents either provide additional details on the topic or complementary content that may be of interest 1. Global Offshore Captive Landscape and Trends, Focus Geography – China (EGR-2011-2-R-0601); 2011. This report
analyzes the global offshore captive landscape and key trends for the last 30 months (2009 - H1 2011). The report also provides a deep-dive analysis on the offshore captive landscape in China covering market size and growth, distribution of captive landscape, and deep-dives into industry verticals
2. Global Locations Compass – China (EGR-2011-2-R-0606); 2011. The report provides detailed data and analysis on the global services landscape in China
3. Global Locations Compass - The Philippines (EGR-2012-2-R-0637); 2011. The report provides detailed data and analysis on the global services landscape in the Philippines
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
13
About Everest Group
Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations and private equity firms, in six continents across all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com.
Copyright © 2012, Everest Global, Inc. EGR-2012-2-PD-0661
14
Everest Group Leading clients from insight to action
Everest Group locations
www.everestgrp.com | research.everestgrp.com | www.sherpasinblueshirts.com
Dallas (Headquarters): New York: Toronto: London: Delhi:
[email protected] +1-214-451-3000 [email protected] +1-646-805-4000 [email protected] +1-416-865-2033 [email protected] +44-207-887-1483 [email protected] +91-124-496-1000