【正文】 China Statistics Yearbook of seats (’000)(% of outsourcers)37DEMAND PROJECTION DEPENDENT ON A CYCLE OF FACTORSWide variance in projection... … dependent on a group of factors of outsourcing seats (’000) Virtuous or vicious cycle?Outsourcer’s PriceOutsourcer’s professionalismCustomer satisfactionOutsourcer’s service sophistication of new customer trialEducation effect to potential customersOutsourcing industry reputationIt’s hard to tell whether the industry can establish its reputation or go underdeveloped, at the very beginning of its emergenceDemandOutsourcerCAGR = 100%CAGR = 20%CAGR = 20%38POSITIVE CUSTOMER EVOLUTION OBSERVED IN CHINA’S OUTSOURCING BUSINESSPositive projections for future? Historical trends showed increasing peration into highend business? China’s massive smalltomedium business constitutes good potential customer base? Massive unexploited geography: outside top 3 cities? Good outsourcer will emerge with increased business, which will generate more business for the outsourcing industryOutsourcing service sophisticationTimeLowHighBefore Recent 2 yearsWe believe in the positive argument and project demand to grow at least 50% a year for the next 4 yearsPaging service outsourcing for Hong Kong“Secretary” serviceSimple telemarketingOrder takingAftersales serviceNegative projections for future? Customer’s negative thoughts about outsourcer’s quality haven’t changed? Professionalism will continue to be a headache for China service industry, including outsourcing? Lowend entry (paging panies) will ruin outsourcing industry’s pricing structure and make good outsourcer’s unprofitableDemandOutsourcer39BALANCE BETWEEN LONGTERM CLIENTS AND PERIODIC ASSIGNMENTS IS CRITICALCustomersOutsourcerLongterm clientsLongterm clients are most important to the profitability of an outsourcerJob natureCustomer requirementCompensation? “Secretary” service? Ordertaking? Aftersales service? Valueadded information? Others? Trust between pany and customer? Training to agents? Good understanding of clients’ business? Smooth munication and feedback of important information? A monthly payment per agent seat? Telemarketing? Campaign/activity phone reception? Brand name in outsourcing industry? Trained agents and effective management? Information feedback? Reasonable price? Payment per callPeriodic assignments40INTERVIEWED OUTSOURCER’S LONGTERM CUSTOMER LISTOutsourcer Longterm client Outsourced business type Location Profitable?TCY Pfizer Pharmacy China After sales Beijing, Shanghai DeficitCCID Call Center China InfoWorld (Newspaper) Inbound service Beijing DeficitGuangzhou MobileHighway Bridge Fee collection call out GuangzhouCOMPAQ After sales ShanghaiNEC Mobile China After sales ShanghaiChina MotionChina Mobile Management outsourcing .ProfitableBeijing HongfanSun Micro Systems Simple question handling .Channel Beyond ProfitableCompaq Star ProfitableBackupAfter sales“Secretary” serviceFee collection call outGuangzhouVanke Community service GuangzhouBeijing Tele Messaging service Beijing Deficit95 info Nokia After sales (mobile) Beijing Deficit800 teleservice Motorola After sales (mobile) Shanghai .ITS Pharmacy panies . Shanghai Deficit41MULTINATIONALS NOT FULLY READY FOR OUTSOURCINGCustomersOutsourcerMultinationals need customer information to assist decision making? Especially important in infoscarce ChinaConfidentiality is also a big concernThere are little established outsourcers in the market to useMany multinationals don’t resort to outsourcers at parent pany? Hard for China subsidiary to outsourceA number of multinationals outsource their sales and service functions to focus on core capability? No need for call centerOnly a few multinationals outsourced their call center operations 42OUTSOURCING SALES AND SERVICE HELPS MULTINATIONALS TO FOCUS ON CORE CAPABILITIES Advanced product design Technology Financial muscle Operational management Manufacturing Distribution work Customer relationships Local marketing Facilities (land, house…) Regulatory knowhowServiceSourcing Manufacturing Sales X X XMultinational’s strengthsLocal pany’s strengths X X X X X X X X X X X X X X X XExample of multinationals outsourcing sales and service? Panasonic? Shanghai VolkswagenCustomersOutsourcerBackup43HIGHEND OUTSOURCERS ARE GENERALLY LOSING MONEYThe key determinant: UtilizationProfitabilityEconomicsOutsourcerHi profitsLow profitsBreakevenLow deficitsHi deficitsPrice/seat (RMB/month)China MotionShenghuaCheng BoCompaqStarCCIDHong FanTCY ITS95InfoSource: Interviews。 interviews, literature researchAdmindriven26UNIQUE THREETIER DECISION MAKING PROCESSSystem Integrators Should Put Efforts to AllTopdown initiativesAdvocate improving service standard? Make “service facilities” an evaluation criteria? May suggest call center as an optionDetermine rolling out call centers in the corporation Raise a list of remended system integrators? Present the list to branch paniesSet a budget for different branch paniesDecide call center size and sophistication based on corporate budgetNegotiate and select a system integrator mostly suitable to the branch’s requirementsSI should pay attention to Ministry’s recent service improvement incentiveMinistrySI should approach promising corporate headquarters in advance to get the name on the listCorporate headquarterSI should put most efforts to influence branch pany’s selectionProvincial/regional branchesAdmindriven27OUTSOURCING