G8 APAC - Sydney 2009 - Press Release

SSON’s global G8 series was launched earlier this year in April, with the first of 4 regional panels held in Sydney at the Shared Services & Outsourcing Week APAC, in which participants discussed the state of the industry across Australasian markets. The 3 remaining G8 regional panels cover local debates in EMEA, Asia and the Americas, and have been held or scheduled in Budapest, Singapore and Orlando respectively.

Designed to provide the Shared Services and Outsourcing industry with a neutral platform to build a common agenda, the G8 series hopes to combat end-user cynicism and confusion surrounding the growing complexity of sourcing models and provider solutions options available to companies today.

Chosen by local SSON members, and invited to help extinguish the white noise and establish some clarity, the Sydney line-up included pivotal industry figures that are active across the consulting, BPO provision/advisory and the ERP technology side of the shared services and outsourcing space.

Described by G8 Chairman Martin Fahy (CEO at Finsia) as a "mini Ocean’s 11", these 8 local experts, took to the stage to consider 3 core issues; service delivery models, offshoring in the current climate and the Government sector’s current position and role in the industry.

Citing G8 as "an opportunity to engage with some really tough questions, go beyond the veneer and rhetoric and address the reality’’, Martin went straight for the jugular by asking if "outsourcing was the name of the game" and whether it was "just a premise that captive centers will inevitably struggle to reach the level of performance of outsourced operations".

Arno Franz, APAC MD at TPI responded with the provocative view that, challenges with organizational scale in Australia, mean local companies are usually "better off going straight to the 3rd party relationship, skipping the shared services step, and understanding that you’re not going to get that first dollar, but your share in the second".

Deloitte’s Donal Graham strongly disagreed stating that a direct move to outsourcing was very risky and that service delivery is better when performed in-house over a period of time initially. "In most cases, unless there is a compelling burning platform, organizations should build their own shared services capabilities as part of a long-term strategic path". 

Other views followed the notion that the answer was neither black nor white, with IBM’s Dominic McHugh voicing that whilst it can be quite complex, there is a great opportunity for Australia if a collaborative approach is adopted. "There is an opportunity to do some near-shoring, and build our onshore capabilities. With a vision from government, there is a real opportunity and possibility of turning this into an export opportunity".

James Hunter of KPMG followed suit when quizzed on the fact base surrounding the lack of gross benchmarks in shared services, highlighting that benchmarks are one of several comparative parameters, and with vary significantly by geography, industry and level of maturity. However he went on to elaborate that "moving too quickly to outsourcing can also be fraught with issues, and can mean that the intended 1+1=3, could actually decrease service and escalate true costs" and he urged companies to fully understand their business strategy and specific Divisional and Functional requirements before moving directly to an outsourced model. 

Genpact’s Shantanu Gosh rounded up the outsourcing debate stating the journey choice was heavily influenced by change management capacity and that the real question in today’s climate was one of innovation, "Now that labor arbitrage is done, the question is - who has the better chance of innovating? Who’s going to be sinking the dollars to make it happen?"

Next the group took up the controversial and often political offshoring gauntlet. Fahy posed a hypothetical example where a reasonably high profile Australian Securities Exchange (ASX) company needs to move 150 jobs offshore, but is worried about a public negative reaction. McHugh was first in to bat, alluding to the key role media plays in managing the politics; "It’s about brand and reputational risk". He went on to argue that provided a company’s motivations weren’t centered on pure labor arbitrage "then the efficiency savings can be re-invested elsewhere".

APAC Shared Services Lead for PricewaterhouseCoopers (PwC), Paul Zanker, backed this view and added that careful and natural attrition regularly sees clients re-deploying their workforces successfully. When asked why clients shouldn’t defer plans and wait till the heat is out of the economy to look at offshoring plans, he responded that "you don’t build an SSC for a 6 month return; it’s a long term strategy".

Shared Services in Government was the last item on the 90 minute-long G8 agenda. This caused even more of a stir with over 60% of the 150 strong audience working in the public sector. When asked the status quo on public sector’s success in transformation, the panel ratings were significantly mixed – sliding from 7/10 down to zero/10.

Further to the debate on whether "big T Transformation" was achievable within the public sector, WNS’s Arijit Sengupta admitted that although successes have been achieved, they are patchy. However he went on to rationalize that success depends heavily on commitment to 4 key things by the companies; process re-engineering, innovation, applying business insights and analytics to processes, and technology. "It [transformation] requires huge amount of capability and commitment from the people doing it and that isn’t going to happen every time".

Donal Graham from Deloitte reacted; "in some cases it is probably ‘O’ for osmosis rather than transformation!". He suggested timelines are very different within the public sector, as they are inclined to be twice as long as that in the private sector and as a result he would be very wary about using the term transformation in the public sector.

For those not present, this was a fascinating and cutting edge insight into today’s shared service and outsourcing market, set against the back-drop of the rapidly evolving political and economic landscape in Australasia. Not to be missed and unlikely to be replicated – if you want a 360 view of industry watch the full 90 minute debate now at www.ssonetwork.com.