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© 2012 Duke CGGC
OFFSHORE SERVICES GLOBAL VALUE CHAIN
Conferencia Deslocalización de servicios y cadenas globales de valor: ¿Nuevos factores de cambios estructurales en América Latina y el Caribe?
Santiago, Chile18-19 de Octubre de 2012 1
Karina Fernandez-Stark Center on Globalization, Governance & Competitiveness (CGGC)
Duke University
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© 2012 Duke CGGC
Infrastructure
Software
Network Management
Applications Management
Applications Development
Applications Integration
Desktop management
CRM (Customer
Relationship
Management)
HRM(Human Resource
Management)
ERM (Enterprise
Resource
Management)
Marketing &
Sales
Finance &
Accounting
Procurement,
Logistics and
Supply Chain
Management
Training
Payroll
Recruiting Contact
Centers/Call
Centers
Talent
Management
Content/
Document
Management
ITO Information Technology Outsourcing
BPOBusiness Process Outsourcing
KPOKnowledge Process Outsourcing
Horizontal ActivitiesVertical Activities a
Industry specific b
Banking, Financial
Services and
Insurance (BFSI) Ex. Investment research,
private equity research,
and risk management
analysis
TelecommunicationsEx. IP transformation,
Interoperability testing and
DSP and multimedia
ManufacturingEx. Industrial Engineering
and sourcing and vendor
management
Retail eComerce and Planning,
merchandising and demand
intelligence
Health/Pharma
Ex. R&D, clinical trials,
medical transcript
Others
Travel &
TransportationRevenue management
systems, customer loyalty
solutions
Business Consulting
Business Analytics
Market Intelligence
Legal Services
EnergyEx. Energy Trading and Risk
Management , and Digital
oil field solutions
ERP (Enterprise Resource Planning): manufacturing/operations, supply chain
management, financials & project management
Infrastructure Management
IT Consulting
Software R&D
Va
lue
Ad
de
d
LOW
HIGH
Offshore Services Global Value Chain
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© 2012 Duke CGGC
Offshore Services: Global Supply and Demand
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Demand for Offshore Services (%)
51.1%
US & Canada
30.6%
EU-15
16.2
%
Asia-
Pacific
50
3015
2
2.1% Rest of the World
Source: CGGC based on Everest & Datamonitor
45% of the
industry market
Same number of
call centers
employees than
India
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© 2012 Duke CGGC
The Size of the Offshore Services Industry
(estimates)
Estimates of the Offshore Services Market Size
0
50
100
150
200
250
300
2005 2006 2007 2008 2009 2010
Year
Billion
(U
S$
)
OECD
NASSCOM
BCG
• Difficult to quantify the industry no accurate data & limited country level tracking
• Industry growing & evolving rapidly
• New activities -most dynamic not included, such us innovation
US
$ b
illio
ns OECD
US$ 252.4 bill
BCG
US$ 281,3 bill
NASSCOM
US$ 117.5 bill
Source: CGGC based on OECD 2008, NASSCOM 2009, Boston Consulting Group 2007.
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© 2012 Duke CGGC
Offshore Services Potential
• Activities previously reserved for rich nations or in-house • Creating more jobs, specifically in developing countries
• One of the world’s fastest growing industries Reduce company costs and find new talent• Almost unlimited potential Services from any industry
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© 2012 Duke CGGC
Examples of Upgrading Trajectories
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Entry into the value chain Upgrading within the BPO
segmentBroad Spectrum Services
Upgrading to KPO Activities Industry Specialization
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© 2012 Duke CGGC
Offshore Services Upgrading: India, Philippines
and Chile
7
India
1990s – 2010 Early 2000s Mid to late 2000s
Philippines
Early 2000 Mid 2000s Late 2000
Chile
2000-2008 2007-2010 2010
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© 2012 Duke CGGC
Human Capital: Essential Element for Upgrading
in Offshore Services
• Human capital has been found to be a key determinant of
value creation, competitiveness, and success in service exports
from developing countries
• One of the most important factors MNCs take into
consideration when relocating services operations is to ensure
the labor market has cost competitive, qualified workers
• Developing countries must work hard to supply the necessary
human capital to sustain industry growth today while also
preparing the future labor force to upgrade the industry.
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© 2012 Duke CGGC
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Upgrading and Workforce Development
BPO KPOITO
Skill Level
Value Chain
Segments
Job Profiles
Job Profiles and Upgrading
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© 2012 Duke CGGC
Upgrading Trajectory: Entry into the Value Chain
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En
try in
to t
he
Valu
e C
hain
Call centers hire people with high school diplomas or Bachelor’s degrees. Further skills training is provided by the company or private training institutions.
Skills Preparation
Short technical training
Institutions Private sector Government
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© 2012 Duke CGGC
• Interpersonal and language skills are highly
valued in this sector
• High competition for talent has resulted in shift
from individual spending on education and
training to firm-based training
• Tax incentives and public subsidies for
education are increasingly used to attract
offshore operation centers
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GVC Upgrading & Workforce Development:
Select Findings
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© 2012 Duke CGGC
Center on Globalization, Governance & Competitiveness- Duke University
http://www.cggc.duke.edu
Karina Fernandez-StarkSenior Research Analyst
[email protected]
THANK YOU FOR YOUR ATTENTION!