Unlocking the Power of Enterprise Functions: A Transformative Approach

The Business Services/ Shared Services and Outsourcing industry has sprawled at a steady pace across India, registering record growth in the early 2000s. It also houses some of the best talents in terms of human capital for the world’s leading enterprises.

Starting in the late 90s to the early 2000s, the Shared Services and Outsourcing industry has empowered businesses by significantly contributing to managing ROIs, accelerating growth, and amplifying potential. They have strategically allowed the enterprises to focus on their core business, thereby, helping them to achieve the level of efficiency they aspired for through innovative functioning techniques.

Evidently, India’s Shared Services and Outsourcing sector has come a long way from how, and where it started.

A look at the shared services and outsourcing sector

Critical, yet resource-heavy and time-consuming operations units such as data processing, human resource management, finance and accounts ops, supply chain & procurement ops, customer services, vendor management, infra & logistics, IT infra/ ITeS, etc. have been primarily offshored to captive centres or third-party organizations across the globe. This strategic move by many leading enterprises, including Fortune 500 companies, to outsource to a third-party service provider or setting up of a captive center to offshore to lands such as India, has given the mileage to top global companies in terms of business focus, functioning, finances, operations, and human capital investment and has enabled a better ROI through cost or labor arbitrage, offloading organizations from the management of non-core functions.

Benefits of offshoring enterprise/ support functions to shared services or outsourcing organizations:

1. Increased productivity: Offshoring enterprise functions to shared services or outsourcing to a third party freed up local resources and helped the business heads to assess productivity within the core business, closely.
2. Heightened efficiency: With companies focusing their strengths on accelerating business growth, large to medium enterprises can work much more efficiently by outsourcing to a third party.
3. Increased overall output: The output and profits escalate with outsourcing to a captive center or third-party/ BPO as an approach when companies punched their mainstream investments into visible components of the business. It reduced the costs and brought down the ROIs, as well.
4. Access to more resources and talent: Outsourcing to shared services or third-party, expands the horizon of the enterprise and they can tap the potential and local talent of the geography, hence increasing productivity and finding newer ways to solve business challenges.

What are Business Services?

Business services largely cover two major types of verticals (or Domains, Industries, etc.) i.e., (a) Manufacturing and (b) Services sector verticals. Two broad types of Functional Categories have been identified for services –

1. Support Functions (or Staff Functions, Corporate Functions, Horizontal Functions, Enterprise Functions, etc.) of both Manufacturing & Services sector verticals are mostly common for both types of verticals and are largely represented by F&A, HR, Procurement, IT, Customer Lifecycle Management, Supply Chain, Logistics, etc., Engineering, Research, and Design (ER&D) services are very specialized services for the Manufacturing Sector companies and are generally classified more as Enterprise Services than Business Services.
2. Operations Functions especially for the services sector like BFSI, Telecom, Healthcare etc., on the other hand, vary and are specific to the respective business of the Services Sector. For instance, Banking will have processes relevant to Opening of Current Accounts, Savings Accounts, etc., while Insurance will have processes relevant to them like Policies Issued, Claims, Claims settled etc.

Ongoing trends and transformation

A decade ago, with the advent of digital transformation across the global business landscape, several trends and changes also emerged and paved the way for several innovations.

Today, the world looks at managing business process outsourcing functions, digitally. From functioning to providing value to enterprises, process outsourcing has become part of the overall growth strategy of firms. The introduction of automation and transformation of support functions that required manual management has now been upgraded. Adding to this, talent upgrades also became a focal point in the sector.

Meanwhile, the post-pandemic change and the need to evaluate work scenarios emerged as a major reason to organize how outsourcing processes to a captive or third-party provider can transform global enterprises. Amidst these changes, the shared services and outsourcing sector is also expanding faster than expected, bringing in more innovative models and approaches to serve with top-notch service quality.

While it is no surprise that offshoring reaps rewards in the long term, there are some reasons why the strategy has not been taken up by all the global organizations:

1. Savings Potential: Remains low in case of captive centre and medium when outsourcing to a third-party
2. Capital Investment: While it is low in case the operations are being outsourced to a third-party organization or a BPO, it remains high while setting up an offshore/ onshore captive center
3. Adoption of Relevant Technology: In case of a third-party offshore, the technology used is not always relevant, while technology adoption remains low scale in a captive center due to high costs
4. Transformational Capabilities: Remains low in a captive center due to lack of expertise and experience, and medium in third-party outsourcing or a BPO where the domain knowledge will usually be limited
5. SLAs Driven: In case of third-party outsourcing, this aspect is high in contrast to a captive where generally the ops are not always SLAs driven

What is the way out?

To tackle the challenges rooted in the classical solution models – captive center or outsourcing to any third-party service provider – models such as the D-Cap??, that is, a dedicated captive model was curated to provide value and enhance the service experience of the parent company. It has been created from the point of view of providing end-to-end support, wherein, low-scale deployment of resources is required.

What is the D-Cap?? model?

Dedicated Captive (D-Cap??) is a unique and innovative operating model where you create an extension of your business, onshore or offshore. The model enables a transformation-centric, tech-driven new-age solution, which is much beyond the two classical models for enterprise services. This model includes the transformation of processes in a way that will increase the capability to handle bigger challenges while acting as a dedicated captive unit. Combining operations and transformation approaches, D-Cap removes the challenges of the classic operating models - pure play captive and standard outsourcing.

Typically, the D-Cap?? model will always have six unique elements that make the solution 'best in context' to drive transformation and co-create value.

1. Fully Dedicated Unit for captive shared services operations designed to meet parent company’s/ client’s goals and objectives
2. 5-Pillar Solution focused on people & organization, process, infrastructure, technology, and services – to achieve operational efficiency in this new normal world
3. Low Investments with high savings potential through an opex based 'As a Service' strategy for BPM & Process-specific Tech tools that are contextually designed to ensure service effectiveness
4. Tech-integrated Transformation is at the core of the solution with the right capabilities & experience – be it, basic operations, functional excellence, or value-added services
5. Nurture customer relationships across levels to anticipate and deliver customer experience
6. Extension of your Organization and provide transformational leadership with end-to-end focus enabling business growth and value

The D-Cap?? model innovatively combines low-scale high capabilities and transformational operations. Deriving full benefits from a D-Cap?? model entails:

Get scale benefits from your support functions as a service while you focus on the core business.

Start from ~50 headcounts of support function processes in an exclusive unit and scale up to 100-500 headcounts, for multi-functions with full benefits and hassle-free Captive Operations

Reduce costs and grow your profits.

By consolidating distributed locations thus lowering admin costs, with 20% to 50% cost saves, upfront, as well as year on year, causing a direct impact on EBITDA & cash flow

Transform Fast and end-to-end.

Your support function processes will become dedicated captive operations and you will experience fast-track end-to-end transformation, as an extension of your business with D-Cap??’s process expertise, people talent, and tech tools.

Transformation Centricity of a D-Cap?? Model

The transformation characteristic of the D-Cap?? model is largely due to two interconnected components for driving transformation and co-creating value and business impact.

Transformative-centric Operations or TCOPS

TCOPS is the ‘Segregated Ops Centre’ for each client, to serve as ‘an extension of the parent company, and delivering productivity saves and EBITDA impact. Each unit is referred to as DTU – Dedicated TCOPS Unit. The operations will always be transformation-centric, not just ‘managing’, but ‘reengineering, enhancing and aligning’ the operations with the parent company’s goals, through:

1. Management – includes the day-to-day operations of the parent’s support functions by Quintes Global.
2. People – current employees from the parent company and newly hired employees on the payroll of Quintes Global will comprise the workforce of the DTU.
3. Ownership delineates the equity ownership term of the newly-formed SLE (special legal entity) between the parent company and Quintes Global, and irrespective of the % ownership, the parent company will continue to have full access to the DTU.
4. Operations in the DTU will run as per the pre-agreed SLAs and other contractual terms signed upon.
5. Branding – to maintain the continuity of branding, servicing, and relationships, the DTU operations and all its employees will be treated as a dedicated part of the parent company from the point of view of its business, brand, and culture.

Transformation Capability ‘As a Service’ or TCAAS

Aggregated capabilities, driving end-to-end tech-integrated enterprise services transformation, supported by an ecosystem of cutting-edge tech and tools, will constitute TCAAS for the D-Cap?? center of the parent company. The tech & tools combine the optimization of existing technology as well as bringing in new-age and relevant technology for effective transformation. TCAAS ensures relevant capabilities, right from review of enterprise functions, to creating the business case and value potential, till such processes deliver business impact. It includes up-stream/ down-stream, onshore/ offshore process focus, and leveraging existing technologies across the end-to-end process.

The TCAAS will be a step-by-step roadmap for promised service delivery.

1. Blueprinting and roadmap will be an outcome of systematic functional reviews, process documentation, transition, voice of customer exercises, and benchmarking metrics resulting in an efficient roadmap.
2. Process transformation and capabilities will be derived through process redesign or re-engineering, lean & six sigma, org capabilities like eSCM, change management, training & org development initiatives, and leadership training/ coaching for effective transformation.
3. Automation and enhancements through BPM workflow, document management systems, cognitive & IA solutions ‘As a Service’, RPA ‘As a Service’, ERP optimization, relevant digital platforms for ‘contextualised transformation’.
4. Governance and compliance ease will be ensured through program management (PMO services), reporting & dashboard, CFO assistance, audit & compliance management, risk management, and controlled self-assessment.

Business Services Lifecycle Spectrum

D-Cap??, offers comprehensive services across the Business Services Lifecycle to ensure that the goal of ‘Transformation Centricity’ as per the context of the parent company is achieved. For instance, the Manufacturing Sector businesses tend to lend their support function headcounts/ employees for the D-Cap?? centre for effective operations. The operations functions for Manufacturing Sector do not come under Business Services as they are directly linked to Business.

On the other hand, for the Services Sector businesses, the Support Functions are limited more like the Manufacturing Sector companies, but the Operations Functions are quite large since they are directly linked to Business, and they lend themselves to consolidation and management as Business Services. The early-stage adopters of Shared Services included several BFSI Companies which have a large number of resources deployed in transactional operations – both voice and non-voice – and these have been brought under the classical models of Pureplay Captive Centres or outsourcing to third-party Service Providers.

In Conclusion

For several years now, outsourcing has been one of the core components that defined the non-core functions of both, the manufacturing and services sectors. QG’s fragmented solutions help in the systematic implementation and utilization of capabilities, both tangible and non-tangible. In a nutshell, the D-Cap?? model empowers structured enterprise services and instills a sense of trusted dependency on dedicated captives as the extension of the organization with remotely-monitored business-crucial units, that are otherwise categorized as non-core for business growth.

The coming years will be crucial for organizations trying to expand operationally while maintaining the momentum of success; their outlook from growth and technology transformation would require transformative and evolution-based approaches such as dedicated captive centres.

The D-Cap?? Model will provide the right strategy, leadership, captive mindset, transformational capabilities, technology, and governance to derive the power & benefits of business impact through Enterprise Services Operations & Solutions.