Thomas Bo JoergensenMikkel M. KrogsgaardJonas H. LevringStefan K. Madsen
Creating New Markets
Tietgen Consultancy Inc.A Legacy of Growth
Tietgen Consultancy Inc.A Legacy of Growth
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The vCustomer winning formula
“Where do we expand? And how does the geography interact with our choices about what services to provide and what verticals to serve?”
Sanjay Kumar
Tietgen Consultancy Inc.A Legacy of Growth
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The vCustomer winning formula
Bulgaria will be your launch pad for becoming the market leader of BPO within travel, hospitality, & retailing in Europe.
Tietgen Consultancy Inc.A Legacy of Growth
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The situation today
BPO(Business Process Management)
CRM(Customer Relations Management)
Type of business
15 % 85 %
Industry
Share of revenue
Services
- Customer Care Solution- Contact Center Consulting- Technology Help disk- Integrated CRM Solution- Knowledge Solutions
- Data management- Data Mining- Data processing- Data Validation- Data Entry- Content Digitalization
Information Technology Enabled Services
Where to go What to offer How to do it Tomorrow
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You are serving four industries
Retailing
Travels &Hospitality
Telecom
Technology
Where to go What to offer How to do it Tomorrow
Tietgen Consultancy Inc.A Legacy of Growth
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Finding low cost and stable environment
Where to go What to offer How to do it Tomorrow
Tietgen Consultancy Inc.A Legacy of Growth
7Where to go What to offer How to do it Tomorrow
Sorting by education and labor regulation
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Over 40 indicators!
Ease of Doing Business Rank, Starting a Business: Rank, Procedures (number), Time (days), Cost (% of income per capita), Min. capital (% of income per capita), Employing Workers: Rank, Difficulty of Hiring Index,
Rigidity of Hours Index, Difficulty of Firing Index, Rigidity of Employment Index, Nonwage labor cost (% of salary), Firing costs
(weeks of wages), Paying Taxes: Rank, Payments (number), Time (hours), Profit tax (%), Labor tax and contributions (%), Other taxes (%), Total
tax rate (% profit), Enforcing Contracts: Rank, Procedures (number), Time (days), Cost (% of debt), Economy Characteristics: GNI per capita (US$),
Informal economy estimate (% GNP), Population.
Macroeconomics: Total GDP 2004 (bUSD), Recession expectations, Business Cost of Terrorism, Impact of Rules on FDI, Goverment Surplus/
defecit 2004, Inflation 2004,Technology: Firm-level Tech Readiness, Quality of Competition in the ISP Sector that insure quality, Extent of
Business Internet Use HR: Quality of Educational System, Quality of Math and Science Education, Ease of Hiring Foreign Labour, Life Expectancy, Infrastructure: Overall infrastructure, Phone infrastructure, Government:
Judicial independence, Efficiency of Legal Framework, Reliability of police services, Business Cost of Crime and Violence, Business Cost of Corruption, Foreign Ownership Restrictions, Restrictive Labour
Regulations
Doing Business 2006
World Global Competatitiveness Report 05-06
Where to go What to offer How to do it Tomorrow
Tietgen Consultancy Inc.A Legacy of Growth
9Where to go What to offer How to do it Tomorrow
From twenty to five
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Top five countries
Where to go What to offer How to do it Tomorrow
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Quality of living
Cost of living
Avg. monthly wage
MHL$239Bulgaria
MHM$500Hungary
MHM$763Slovakia
MHMH$750South Africa
LVLL$89Mexico
Top five countries
Where to go What to offer How to do it Tomorrow
Avg. monthly wage in US dollarsCost of living: Low, Medium, HighQuality of living: Very Low, Low, Medium, HighSource: Mercer among others
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Finding your client market
05
101520
253035
4045
Retailing Travel & Hospitality
Europe International
Billion $
Where to go What to offer How to do it Tomorrow
Tietgen Consultancy Inc.A Legacy of Growth
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Finding your client market
05
101520
253035
4045
Retailing Travel & Hospitality
Europe International
Billion $
Total European market value:
$ 76 billions
Where to go What to offer How to do it Tomorrow
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Covering the languages
English~64 mill
Spanish~41 mill
French~60.5 mill
German~98 mill
Italian~58 mill
Where to go What to offer How to do it Tomorrow
Total: ~321 mill
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What can Tietgen Consultancy offer?
Tietgen Consultancy will assist you in:
• Entering Bulgaria
• Developing product portfolio for BPO automation for the new European markets
Where to go What to offer How to do it Tomorrow
Tietgen Consultancy Inc.A Legacy of Growth
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How to develop product portfolio
Analyze market to fit customer needs in automation
Define additional services for vertical automation
Create PDRs for cheap programming in India
Where to go What to offer How to do it Tomorrow
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Entering Bulgaria
Bulgaria can be entered by:
• Acquiring partner
• Setting up a Bulgarian BPO-joint venture by exploiting existing partnership
Where to go What to offer How to do it Tomorrow
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Your choice
Go with Tietgen
Go to Bulgaria
= choice
Joint venture
Acquisition
First thing Monday morning:
We will perform a due diligence to decide between the two
options
Where to go What to offer How to do it Tomorrow
Our immediate recommendation Joint venture with existing partner
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Financial assumptions
Assumptions
• CRM revenues: Low growth 5–6% • BPO revenues: High Growth 20-30%• Productivity: Parameter adm
expenses/revenues• CRM adm exp/rev: Will fall with 2-3%
points• BPO adm exp/rev: Will fall with 4-6%
points
Where to go What to offer How to do it Tomorrow
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Financial effects
Where to go What to offer How to do it Tomorrow
Forecast-EBITDA-Margin
6,00%
8,00%
10,00%
12,00%
14,00%
16,00%
2007 2008 2009 2010
EB
ITD
A/
Reven
ues
8.96%Worst case: 8.60%
Likely case: 12.90%
Best case: 16.24%
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Key Performance Indicators
K2
K3
K4
K5 Reaching market goal in European BPO
Increase brand awareness
Research in new markets and opportunities
Ensure high quality
Establish joint ventureK1
Where to go What to offer How to do it Tomorrow
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Key Performance Indicators - Timeline
Em
phasi
s
Low
High
Mid
/200
7
K2
K3K4
K5
K1
When to measure
End/
2007
Mid
/200
8
End/
2008
Mid
/200
9
End/
2009
Where to go What to offer How to do it Tomorrow
K2 K2 K2 K2
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Risk
AcquireJoint
venture
Government 3 3
HR 2 2
Infrastructure 2 2
Specifics 4 3
Technology 5 5
Avg. risk 3.2 3
Go with Tietgen
Go to Bulgaria
= choice
Joint venture
Acquire
Cost + ? 2
Control - 4 4
Compliance + 5 4
Possible - ? 4
Supplier dependence + 1 4
Total risk = ? 2
Note: Macro-risk is compared to the 3rd sorting of countries
Risk with Tietgen = 0
Total risk
Acquisition (?+3.2) = ?
Joint venture (2+3) = 51 = low, 5 = high
Where to go What to offer How to do it Tomorrow
Tietgen Consultancy Inc.A Legacy of Growth
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The vCustomer winning formula
Bulgaria will be your launch pad for becoming the market leader of BPO within travel, hospitality, & retailing in Europe.
Tietgen Consultancy Inc.A Legacy of Growth
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Q&A
Q&A
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Where What How
Miscellaneous
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Q&A – Situation
Q&AWhere What How
Presentation BackupServices today
New industries
Competitors
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – Countries
Q&AWhere What How
Presentation BackupOver 40
Top five
Not China
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – Markets
Q&AWhere What How
Presentation BackupClient market
Languages
Client market detail
Competitors
BPO definition
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – Offer
Q&AWhere What How
Presentation BackupWhat can TC Tietgen
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – Develop portfolio
Q&AWhere What How
Presentation BackupDevelop Tietgen
Horz vs. Vert
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – Entering Bulgaria
Q&AWhere What How
Presentation BackupOptions Pros vs. Cons
Choice Not China
Bulgarian partner
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – Finance
Q&AWhere What How
Presentation BackupAssumptions Assumptions in detail
Effects
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – KPI
Q&AWhere What How
Presentation BackupList KPI detail
Timeline
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – Risk
Q&AWhere What How
Presentation BackupRisk
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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Q&A – Miscellaneous
Q&AWhere What How
BackupHuman factor
Marketing
Service
Situation
Countries
Markets
Offer
Develop portfolio
Entering Bulgaria
Finance
KPI
Risk
Miscellaneous
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KPI no.
KPI Title KPI Target Baseline When to be measured
How to measure Responsible
KPIs related to major business objectivese
K1 Establish joint venture Successful establishment
Q2/ 2007 Q4/2007 No measurement Executive management
K2 Ensuring high quality within the services offered to clients and within the partners workforce
One quality supervisor for every 16 agents
Q2/ 2007 Continuously Conduct random quality checks on employees
Middle management
K3 Research in new market opportunities and potential clients within the European market
Contracts within $200 $1,000 mill/month
Q1/2008 Financial control etc. Executive management and Tiegent Consultancy
K4 Increase brand awareness in the European market within the Healthcare, Travel & Hospitality and retailing industries
N/A Q1/2008 Q3/2008 Marked surveys London sales office
K5 Reaching market goal in European BPO
72 USD Q3/ 2008 2010 Measure on revenue for the BPO in the Healthcare, Retailing and Treavel & Hospitality Division. The marketing team, should also conduct marketing surveys
Marketing team
Key Performance Indicators
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Assumptions in Detail
GrowthCRM: The market has been fairly exploited and growth has slowed:
Hence Low growth 5 – 6% (Bulgaria inflation 4,1%)BPO:The Offshoring market is expected to grow at 20 - 25%. As CRM
growth is assumed insignificant it is especially BPO- offshoring that will grow at this rate. Futhermore we plan to enter the European market where customers pay a premium: Hence High Growth 20-30%
ProductivityFor productivity we use Adm. expenses/revenues as a parameter.
Adm. expenses are considered mostly reliant on labour costs The initial ratios (2007) are estimated using peers within CRM and
BPO. By moving to low wage country Bulgaria we expect the productivity to rise and hence the parameter to decline:
In CRM: Will fall with 2-3% points. In BPO: Will fall with 4-6% points. This decline is catalysed as more
and more labour/total labour is moved to Bulgaria. The decline will also rely on the degree of BPO-automation.
This will eventually stagnate -> European union will most probably align wages over time as the country matures.
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Competitors - % of firms by region
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Competitors – Revenue group vs. offshore firms
Group1 100 MM -
Group2 100-500 MM
Group3 500-999 MM
Group4 1 B +
Group5 1-5B
Group6 5 B+
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Competitors – East EU offshore firm distribution
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Bulgaria pros and cons
Pros Vs Cons1. Good government economy 2. Few irregular payments in
tax collections3. Medium tax4. Good technology
infrastructure and penetration
5. Easy hiring and firing practises
6. High and available human capital at low cost
7. Regression expected -> will maintain sufficient work pool.
8. Easy to start a business 9. Partnership established
1. High real effective exchange rate and undeveloped financial market.
2. Inflation3. Credit rating4. Organized crime 5. Complex tax system6. Little reliance on pro
management7. Little tradition for authority
delegation8. EU entry will raise wages9. Negative impact of rules on
FDI
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3 reasons not to go to China
1. Lots and lots of red-tape and government intervention.
2. Poor ICT-infrastructure.
Most importantly:3. You believe the cultural differences
to differ too much from you.
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Finding your clients market
Europe:- Austria- France- Germany- Ireland- Italy- Spain- Switzerland- United Kingdom
International- Argentina- Australia- Canada- India- Mexico- New Zealand- South Africa- USA- Venezuela
Retailing
Travel & Hospitality
Languages
Total consumption
Million $ 34,246.16 Million $ 14,467.54
Million $ 41,867.11 Million $ 19,637.00
Million $ 76,113.27 Million $ 34,104.86
English, French, German, Spanish, Italian
English, French, Spanish
Factors
Regions
Source: Euromonitor
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Customer Service Sales/ Telemarketing Back Office / Analytics
Customer queries (BPO)
Product info details (BPO)
Fault management (BPO)
Billing queries (BPO)
Change management
Warranty returns (BPO)
Third party verification
Order processing (BPO)
Order management (BPO)
Presales (CRM)
Cross-sell / up-sell
Telesales for extended warranty (CRM)
Telemarketing of co-branded credit cards (CRM)
Customer feedback management
Data entry/ processing
Forms and rebate processing
Inventory planning
Demand forecasting
Credit card management
Inventory management
Industry analysis
Marketing analysis
BPO
CRM
Retailing
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Technology
Technology Support Account activation
Technical troubleshooting/networking support (L1, L2, L3)
IT products (desktops, PCs, laptops, PDAs, displays, printers, input/ output cards, routers, hubs, switches, hot spots & storage devices)
IT infrastructure (server monitoring, worldwide networks management, server maintenance support for Linux-based email, web, proxy, firewall , VPN, database, LDAP, customized applications)
Applications maintenance & support (ERP & CRM software)
Contact center solutions for process value additions in the areas of IVR, CRM/CTI focused application development & web enablement
Order fulfillment
Cross selling/up selling
Data entry and transaction processing
Billing support, inquiries and collections
Other support domains
BPO
CRM
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Telecom
Operational Support Systems Product and SalesBusiness Support
Systems
Activation /Ordering
CRM software services - Client /manager CSR monitoring- CSR ID, and performance tracker- CSR desktop call handling software- CSR Recorder and DB search
Tech Product Support and troubleshooting - Mobile platforms- Networking devices- Storage
Consulting Services - Computer Telephony Integration
Helpdesk- Productivity Apps
Escalation Resolution
Network Service Management
Research and targeting
Cross-sell / Up-sell
Follow-up verification Consulting Services
- Regulatory support services - Product management support services - Project management support services
CRM
CSR Training
Account Maintenance
Warranty/Replacement Programs
Rebate Processing
Business Analytics
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Travel & Hospitality
Customer Support Passenger Operations Transaction Processing
Information calls
Address changes
Loyalty programs
Up Sell/ Cross Sell
Schedule changes
Promotions/discounts
Collections
Grievance handling
Reservation processing
Fares/Rates
Seat allocation
Revenue management
Deal rate filing
Onward booking
Departure control
Loyalty program management
Baggage tracking/ Handling
Forms processing
Fare refunds
Procurement
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Tietgen – A Legacy of Growth
AnalysisBased on quantitative and qualitative
methods with a high focus on thought through and practical implications centered around Value-driven profitability.
DeliveryWritten report and/ or presentation.Price policyProject driven.Recent clientsBiosonic, Aldi, Brightcove.com.
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Why you should go vertical
Vertical Vs Horizontal• Long term• Higher service offerings• Stronger negating
position and customer loyalty
• Unique market position
• Short term• Lower service offerings• Weaker, but faster
negation• Wide market proposition
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The Human Factor?
”Most clients are trying to eliminate the human factor altogether” – S. Kumar.
V as in virtual = transferable and measurable, yet still indispensable
The back office worker is a cost – The knowledge worker is an asset => All firms are trying to eliminate cost and increase assets.
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Marketing
The London office will be the platform for all marketing coordination in Europe
Why:Good location, low cost (centralized
marketing structure)
Obstacles:The sales department is required to speak
all the languages in the offered to the European market
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The meaning of the word ”service”
>>…let’s focus on improvement services rather than just services<<
Sanjay Kumar
Improving the service to vCustomer clients
Improving the service within the organisationvCustomers organisation
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Bulgarian Partner
• Call Center Bulgaria(callcenterbulgaria.com)
• Established 2003 in Sofia• ”Operating in German, English, French and
Bulgarian with possibilities for other languages”
• ”..view to develop the main services of a modern contact center: inbound and outbound services for European, East European and domestic (Bulgaria) clients delivered from a multi-language low cost platform in South-Eastern Europe.”