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vCustomer. Making a Global Footprint. Jovana Pecikoza Ivan Leposavic Nenad Vlaketic Uros Milosavljevic. Content. Background Market Analysis Geographic Expansion Horizontal Expansion. Background. vCustomer - BPO/ITES company founded in 1999.

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Vcustomer

vCustomer

Making a Global Footprint

Jovana Pecikoza

Ivan Leposavic

Nenad Vlaketic

Uros Milosavljevic


Content
Content

  • Background

  • Market Analysis

  • Geographic Expansion

  • Horizontal Expansion


Background
Background

  • vCustomer - BPO/ITES company founded in 1999.

  • Engaged in providing outsourced services for IT and business processes out of its call-centers in India

  • Since its founding, vCustomer had combined aggressive growth with close to 100% customer retention

  • Ranked as one of the Top-5 pure-play call centers by Business Week in 2006. as well as one of the world’s top BPO companies by Fortune Magazine

  • 4500 are employed- 300 are in the BPO business and the rest in CRM

  • 85% of its revenues are from CRM and 15%from BPO


Development of bpo industry
Development of BPO industry

  • Started in India in 90’s

  • Phase 1 – Captives ( GE, British Airways, Ford, HP etc. ) – focus on cost savings

  • Phase 2 – Venture backed ( vCustomer, Daksh etc. ) – founded by professionals from Captives

  • Phase 3 – IT services and other players ( Tata, Infosys etc. ) – hedge against global slowdown

  • Phase 4 – Global players ( IBM, Convergys etc. ) – aggressive entrance and acquisition of Indian Co’s ( e.g. IBM – Daksh )




Market analysis2
Market Analysis

  • Emerging problems in India

    • Market maturity and saturation

    • Fierce competition from “big players” intending to take over smaller companies ( e.g. IBM and Daksh )

    • Rising wages ( city of Bangalore )

    • Balancing Geopolitical risks



Serbia and romania
Serbia and Romania

  • Serbia

    • PROS:

      • Young – emerging market – 2005 – named top business reformer by World Bank

      • Low wages

      • Large number of highly educated experts from eminent technical schools

      • Lack of competition in outsourcing

      • Biggest English proficiency rate in region

      • Central European time zone ( same as Germany, France, Italy etc. )

      • Country hungry for FDI ( 3 billion $ in 2006 )

      • Duty free access to 1 billion people market comprising Europe, USA and Russia

      • One of Europe’s lowest corporate profit tax rate – 10%


Market analysis3
Market Analysis

Hungary 14%

Bulgaria 14%

Romania 16%

Poland 22%

Czech Republic 22%

Serbia 42%

Knowledge of English language ( % of population )


Serbia and romania1
Serbia and Romania

  • Serbia

  • CONS:

    • Political risk and instability

    • Not a member of EU

    • Low data and intellectual property protection level

    • Important personal connections

    • Lack of business culture


Serbia and romania2
Serbia and Romania

  • Romania

    • PROS:

      • Emerging big market (22 million people)

      • Lowest IT salaries in EMEA countries – its predicted they will stay lower than in rest of EU for next 6-8 years

      • Member of EU since January 2007

      • Low political risk

      • Attractive destination for Europe – Proximity – well developed English and other Western European languages

      • Particular specialty in French and Italian

      • Most IT experts per capita in Europe

      • Average programmer salary in Romania is 24 % lower than in Czech republic and 38% lower than in Hungary


Serbia and romania3
Serbia and Romania

  • Romania

  • CONS:

    • Still weak IT infrastructure

    • Most companies are small – 15 to 20 people

    • High level of piracy

    • Wages inflation


Serbia and romania4
Serbia and Romania

  • How to go in?

    • Acquisition of Trizma – company founded in 2002

    • Premier and leading Serbian CRM outsource provider

    • Offices in Belgrade, Serbia and Bucharest, Romania

    • Small company – 50 employees with big potential

    • Vertical – telecommunication, retail, banking

    • Good base to build on and enlarge company – expand vertically and offshore

    • Company associated with Transcom – access to 29 other European countries


Serbia and romania5
Serbia and Romania

  • Perspective – Software outsourcing

    • Large number of small successful local software outsourcing firms in Serbia

    • Microsoft center ( 5th of that kind in the world ) opened in Belgrade, Serbia

    • Software market in Serbia estimated at 340 million $ with annual growth of almost 30%

    • Possible companies for partnership – Micro Business Solutions and Hermes Soft Labs

    • Possibility to grow horizontally – develop and grow vCustomer technologies


China
China

Pros:

  • Educated, skilled urban workforce

  • Low wages

  • Off-shore manufacturing and outsourcing know-how already there

  • WTO entry and increased Chinese efforts at free trade

  • Rapidly developing telecoms infrastructure

  • China government efforts to privatize and modernize economy

  • Chinese government support

  • Potentially the worlds leading market

  • FDI over 50 B $


China1
China

Cons:

  • small and globally inexperienced IT companies

  • minimal English skills

  • senior management lacks talent

  • data and IP piracy

  • rising wages

  • cultural differences

  • hard to find Chinese partners

  • Guanxo important


China2
China

Market Penetration Strategies

Options

Greenfield Vs M&A

We suggest greenfield


China3
China

Our goal is to cover growing Chinese market

- First through CRM

- Then try with Software development outsourcing

Great opportunity:

- huge and diverse talent pool

- Chinese Government support (g. put china on the software map)

- Infrastructure

- by 2015 China will be ahead of India as a global outsourcing destination

- India is overheating

- companies’ previous experience


China4
China

Our potential customers in China:

  • Chinese companies

  • Japanese companies

  • Foreign companies that operates in China



New trends in the industry
New Trends in the Industry

  • Preference for “global presence and local knowledge” – “nearshoring”

  • Practice of diversifying risk by picking different outsourcing services provider will change – clients request larger “menu of services”

  • The point isn’t only to do the service, but to improve processes

  • Potential of BPO is finally accepted by European companies

  • Clients will take greater controlin driving and designing deals


CRM

CRM (customer relationship management)

- call center outsourcing

- data bases management (data warehousing, data mining)

- telemarketing

- internet marketing

- web site promotion


Marketing outsourcing

Public relations

Direct marketing

Internal communications

Web marketing

Media buying and printing

Marketing Outsourcing

  • Outsource marketing includes:

    • Research

    • Analysis

    • Strategy

    • Planning and management

    • Advertising


Outsourcing software development
Outsourcing software development

Benefits:

  • Improved quality of development work

    - Specialist resources

    - Experience across multiple projects

    - Experienced project management

    - Existing teams with established software development processes in place

    - Existing development hardware and software infrastructure

  • Reduced risk of failure

    • Reduced cost of development

    • Reduced development time




Marketing outsourcing1
Marketing Outsourcing

  • Among the pluses:

    • Improved focus

    • Reduced overhead

    • Integrated marketing

    • No media and discipline bias

    • Access to some of the best marketers around

    • Accelerate your marketing instantly


Outsourcing software development1
Outsourcing softwaredevelopment

Reduced risk of failure

  • Reduced cost of development

  • Tight control over project resources costs

  • Reduced permanent staff costs

  • Reduced training costs

  • Reduced management costs

  • Suppliers with a vested interest in delivering a high quality solution

  • Reduced investment in development hardware and software


  • Reduced development time

  • Specialist resources

  • Reduced lead time for recruitment and training

  • Experienced project management

  • Suppliers with a vested interest in delivering a high quality solution within time and budget agreed


Marketing outsourcing2
Marketing Outsourcing

Benefits

  • Cost effective: By booking full-time or part time hours, you receive the talents or qualified professionals without worrying about sick time, taxes, or the salaries involved with having to hire each individual skill set.

  • Efficient: An outsourced solution provides access to individuals with expertise in marketing, branding, web development business development, search engine optimization and print media




Outsourcing software development2
Outsourcing software development

Problems

1. Project management (problems affect running of the project itself)

- Poor understanding of customer business objectives and software requirements by the supplier

- Poor communication between supplier and customer during the development period

2. Solution Support and Maintenance

  • IPR Issues

    - Failure to agree ownership/licensing issues prior to delivery

  • Cost of updates to the solutions

    - Lack of in-house solution knowledge

    - Supplier tying themselves in by not releasing sufficient information to enable 3rd parties to perform updates

    - Supplier bankruptcy

    - Lack of interest in providing support from the supplier


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