Location strategies, trends, developments
& tips for Shared Services Centers
Johan Beukema
Managing Partner
Josefien Glaudemans
Partner
12 May 2016
Buck Consultants International
P.O. Box 1456
6501 BL Nijmegen
The Netherlands
P: +31 24 379 0222
F: +31 24 379 0120
E: johan.beukema@bciglobal.com
E: josefien,glaudemans@bciglobal.com
Welcome!
Your presenters today
Johan Beukema
Josefien Glaudemans
Managing Partner
Partner
Buck Consultants International
Buck Consultants International
 Buck Consultants International, 2016
1
Agenda
1
Short profile Buck Consultants International
2
Strategic questions for your global footprint
3
Location selection methodology
4
Geographic locations: positioning & trends
5
Some selected tips & tricks
6
Q&A
 Buck Consultants International, 2016
2
1 Short profile Buck Consultants
International
Founded in 1985, Buck Consultants International is a worldwide operating
leading, independent location advisor & supply chain specialist
 Location studies for new operations
(sites/buildings) for headquarters, shared
services center, R&D, manufacturing &
warehousing
 Developing a comprehensive strategic
corporate real estate plan, including
objectives, trend analyses and
identification of regions
 Supply chain strategy, network design
and optimization
 International business planning
(including market research, industry
analysis, and competitor analysis)
 Project management and implementation
 Buck Consultants International, 2016
Atlanta, GA
Shanghai, CN
3
Profile Buck Consultants International (BCI)
BCI’s Characteristics
BCI’s Corporate Consulting Services
Focused on adding value
Delivering Strategic Solutions to Corporations
 Extensive track record in thirty years:
2,000 projects for 1,500 clients in 40
countries
Corporate
Real
Estate
BCI ‘s
consultancy
services
 Tailor-made approach
 Cost-effective
International
Business
Strategy
Supply
Chain
Site
Selection
 Businesswise & result oriented
 Independent/unbiased
 Fixed time frame
 International Business Strategy
 Global reach
 Business Case Scenarios
 High customer satisfaction degree
 International Footprint Modelling
 60 professionals
 Investment Decision Making Support
 Location Strategies & Site Selection
 Market Research & Labor Market Analysis
 Hands-on Support: incl. Site Visits
 Investment Incentives Support
 Buck Consultants International, 2016
4
Clients in High Tech, ICT & Electronics (sample)
 Buck Consultants International, 2016
5
Clients in Life Sciences (sample)
 Buck Consultants International, 2016
6
Clients in Fashion and Apparel (sample)
OAKLEY
 Buck Consultants International, 2016
7
Office projects: headquarters & shared
services centers
 Buck Consultants International, 2016
8
Sample clients in other industries
 Buck Consultants International, 2016
9
2 Strategic questions for your global
footprint








What are your business drivers for your SSC/back office organization?
What can be gained from implementing new solutions and/or locations?
What are the strategic objectives that play a role?
What are the functions (high level) to be included in your new support organization?
Will we do this ourselves or do we outsource (parts) of the support functionality?
What is the ideal concept? Multi-functional center versus function-specfic?
What is the right scope & scale for these activities?
Do we have a business case?
Benefits from optimising your Shared Services organisation
Cost savings/ROI
Quality improvement
Effectiveness of people
• Headcount reduction
• Better access to support
• Consolidation of functions
• Efficient use of space
• Global connectivity (24/7)
• Concentration of know-how
• Cross-selling, up-selling, etc.
• Standardisation of systems
• Productivity improvement (KPI)
• Decrease in working capital
• Business processes refined
• In-company training
 Buck Consultants International, 2016
11
Possible footprint configurations
Consolidated Configuration
Functional Groups
Strategic
H
Q
Consolidate multi functions to one
or very few locations
IT, Operations, Shared Services,
Customer Services
X
Cluster Configuration
Functional Groups
Strategic
H
Q
Y
IT, Operations
X
Shared Services, Customer Services
Distributed Configuration
Y
Z
X
 Buck Consultants International, 2016
A
H
Q
Cluster functions with more
similar work for profiles and level
of skills in a network of
corresponding locations
Functional Groups
Strategic
IT
Operations
Shared Services
Customer Services
Utilize locations most optimal for
each function’s profile, skills and
cost objectives
12
Geographical business models
1 National markets have
Geographical business model 1:
Geographical business model 1:
national
centers
National
markets
have national centers
2 Regional markets served by various own/
outsourced regional centers
Geographical business model 2:
Geographical business model 2:
Regional markets served by various
Regional
markets
servedmodel
by various
Geographical
business
2:
own/outsourced
regional
centers
Geographical
business
model
2:
National
markets
have national
centers
own/outsourced
regional
centers
Geographical
business
model
1:
Regional
markets
served
by various
Geographical business model 1:
Regional markets served by various
own/outsourced
regional centers
National markets haveNational
nationalmarkets
centershave national centers
own/outsourced regional
centers
Outsourced SSC
Geographical business model 3:
Geographical business model 3:
Regional markets served by
Regional
markets
servedmodel
by
Geographical
business
3:
centralised
centers
Geographical business
model 3: centers
centralised
Regional
markets
served
by
Regional markets served by
centralised centers centralised centers
3 Regional markets served by
centralized centers
Captive SSC
Outsourced SSC
Captive SSC
Geographical business model 4:
GeographicalOutsourced
business SSC
model 4: Captive SSC
Regional markets
served
Outsourced
SSCby
Captive SSC
Regional
markets
servedmodel
by
Geographical
business
4:
own/outsourced
off-shored
centers
Geographical business
model 4:
own/outsourced
off-shored
centers
Regional
markets
served
by
Regional markets served by
own/outsourced
off-shored centers
own/outsourced off-shored
centers
4 Regional markets served by own/
outsourced off-shored centers
Outsourced SSC
Outsourced SSC
Captive SSC
Outsourced SSC
Outsourced SSC
Captive SSC
Captive SSC
Captive SSC
Finding the balance in centralization or
decentralization is key
 Buck Consultants International, 2016
13
3 Location selection methodology
Each back office project has its own requirements
Shared
Services
Center
Call
Center
Customer
Care
Center
Reservations
Center
Finance
Support
Center
HR
Support
Center
Business
Support
Center
Legal
Support
Center
Technical
Support
Center
Software
Development
Center
Center of
Excellence
Innovation
Center
…
 Buck Consultants International, 2016
15
Site selection process: narrowing down from
global to site level
Step by step approach
Phase 1
Start up: Definition investment profile, skills
sets, location requirements, geographical
scope
Selection of long list of locations
Phase 2
Short listing process:
In-depth assessment selected target areas
Phase 3
Site visits and identification of sites
Methodology
Profile, location requirements
& all location options
Detail analysis of
top 10 locations*)
Site visits to
top 3-5 locations*)
Kick off &
Project brief
Desk research &
Reporting
Site visits &
Reporting
Phase 4
First negotiations
Phase 5
Recommendation: preferred & back up location
*)
1 location
Conclusions &
Recommendations
Indicative number
 Buck Consultants International, 2016
16
Project specific location criteria
In general, the Buck Consultants International approach focuses on the location
specific costs, quality and risk factors of the new location
Cost factors
 Running cost:
employment, occupancy
cost, transportation
 Cost to achieve: start up
(building, travel,
recruitment, training),
relocation & exit cost
 -/- investment subsidies
& grants
+
Quality factors
 Labor availability &
quality
 Experience &
competition
 Labour flexibility
 Language skills
 Accessibility
 IT reliability
 Strategic alignment
 Business environment
+
Risk factors






Political risk
Economic risk
Financial risk
Transparency risk
Legal risk
Natural disaster risk
Total inflated
3-5 year cost
Total weighted
attractiveness score
Total weighted
risk score
(in Mln US $)
(1 = negative, 5 = positive)
(Low / Medium / High)
 Buck Consultants International, 2016
17
Detailed cost location factors example
Running cost
1
Total employer’s cost
1.1
1.2
1.3
1.4
Function x
Function y
Function z
Management
Running cost
2
Real estate costs
2.1 Total cost (rent & charges)
2.2 Transition cost
2.3 Other cost
One time -/7
Investment Incentives
7.1
7.2
7.3
7.4
Running cost
3
Other YoY cost
Capital grants
Recruitment grants
Training grants
Tax & other incentives
Telecom cost
Management time
Travel & transportation
Other cost
Cost to Achieve
4
Labour Related
Cost
4.1
4.2
4.3
4.4
4.5
Cost to Achieve
6
Exit cost
6.1 Severance cost
6.2 Loyalty premiums
6.3 Other costs
3.1
3.2
3.3
3.4
Recruitment cost
Training cost
Dual running cost
Travel cost & expenses
Relocation / Expat cost
Cost to Achieve
5
Build out cost
5.1
5.2
5.3
5.4
Design cost
Build out cost
Transition cost
-/- Rent free period
Cost are presented as total inflated 3-5 year cost in preferred currency
 Buck Consultants International, 2016
18
Framework for incentives/grants/taxes
A
F
Energy &Other
environment
Incentives/grants/taxes
 Different tax rates/tax
regimes in each country
Investments
Investments
Energy &
 Varies not only per country
but also per region
environment
E
Land/sites
Taxes
Import/
Technology/
export
R&D
Taxes
Personnel/talent
D
 Buck Consultants International, 2016
Personnel/
B
 In Europe: Large influence
of European Commission
for EU-28 member states
Technology/R&D
talent
C
19
19
Framework for incentives/grants/taxes
A Investments
 capital investment incentives
(initial)
 capital investment incentives
(follow-up investments)
 interest free loans
 subsidy for modernisation of
capital assets
 investment related job grants
 (re)investment allowances
 specific industry grants
 matching investment
subsidies of competing
regions
 regional/enterprise zone
grants
 strategic investment
subsidies
 Buck Consultants International, 2016
B Land/sites
 land subsidy
 subsidy for improvement of
site/industrial estate
 subsidy for infrastructure on
site
 subsidy for infrastructure to
site
 reduction/exemption
property tax
 exemption of building taxes
 subsidy for temporary
building
C Technology/R&D











R&D grants-upfront
R&D grants-shared risk
regional technology risk loan
match with national R&D
programmes
match with international
R&D programmes
R&D tax credit scheme
industry-university link
programmes
sharing of facilities
suppliers scheme
quality improvement scheme
venture capital
20
Framework for incentives/grants/taxes
D Personnel & talent
 job grants
 grants for safeguarded jobs
 reduction of social security
contribution costs
 training grants (start, continuous)
 subsidy for training/testing
facilities
 recruitment assistance
 subsidy for hiring specific job
seekers (e.g. unskilled, disabled)
 Buck Consultants International, 2016
E Taxes




tax concession/allowance
tax ruling
depreciation allowance
sales/value added corporate
income tax reduction
 currency risk insurance
 local business tax
concession
F Energy & environment
 subsidy for utility costs
 subsidy for energy saving
programmes/equipment
 subsidies for re-use of heat
 subsidies for environment
quality enhancing
programs/equipment
21
Detailed quality location factors example
A
Availability of
qualified labour
A1
A2
A3
A4
Size of the labour pool
Skill sets
Unemployment levels
Competition on the market
C
Language skills
B
Competition on labour market
B1 Other employers in market
B2 Saturation rate
B3 Turnover & loyalty
C1 Quality & availability
C2 Writing & speaking
C3 Accents / Natives
D
Labour flexibility
H
Quality of life
H1
H2
H3
H4
Quality
Quality of life
International schools
Visa regulations
Cultural fit
G
Accessibility
G1 Local/regional accessibility
by public transport or car
G2 International accessibility
D1 Worker motivation
D2 Flexibility
D3 Working schedule flexibility
F
Real estate
F1
F2
F3
F4
Quality of real estate
Availability of real estate
Flexibility/lease terms/
Timing
E
Labour relations
E1
E2
E3
E4
Labour relations (including unions)
Firing regulations
Works councils
Strikes
Quality is presented as a total weighted quality score based on relative
weightings for all factors and subfactors and a score between 1 = negative
and 5 = positive for all factors
 Buck Consultants International, 2016
22
Detailed risk location factors example
A
Political Risk
B
Economic Risk
A1 Government
stability/democracy
A2 Geopolitical conflicts
A3 Religions/ethnic tensions
B1
B2
B3
B4
GDP per Capita
Development economy
Inflation
Budget balance
C
Financial Risk
F
Natural Disaster Risk
F1
F2
F3
F4
Climatic catastrophes
Hydrological catastrophes
Meteorological events
Geophysical events
E
Legal Risk
E1 Permits
E2 Red tape
E3 Patent Infringements
Risk
C1
C2
C3
C4
C5
Financial Risk rating
Exchange rate
Exchange rate stability
Total (foreign) debt
Banking system
D
Transparency Risk
D1 Corruption
D2 Bureaucracy
D3 Bribery of public officials
Risk is presented as a total risk score (Low/Medium/High) based on relative
weightings for all factors and a score between Low/Medium/High for all factors
 Buck Consultants International, 2016
23
Total cost in US $ million
Euro (first 5 years)
Example: C-Q-R positioning of locations
80
J
Theoretic
optimum
Location 4
90
Location 2
Location 3
Risk Score
100
Location 1
Low
Location 5
Medium
110
High
L
120
2.5
3
3.5
4
4.5
Weighted quality scores
 Buck Consultants International, 2016
24
4 Geographic locations:
positioning & trends
Changing location drivers
Targeted
Geographies
Philippines
Eastern Europe
Northern Africa
Latin America
UK/Ireland
USA
India
Philippines
Central Europe
Post Great
Recession
Dot Com Era
USA
Western Europe
Late 90’s
Consolidation
Right Sizing
Operational Efficiencies
Geographic Diversification
Disaster Recovery
Globalization
Labor Arbitrage
Offshoring
Geo-Political Concerns
Wage Inflation
Labor Saturation
Labor Market Longevity
Nearshoring
Reshoring
Risk Aversion
Home Agents
Location Drivers
Source: BCI & SSG, 2016
 Buck Consultants International, 2016
25
High level positioning of global regions
Different drivers and strategies per geography
Americas
• Mature market
• 2nd & 3rd tier
cities
• Reshoring
Europe, Africa,
Middle East (EMEA)
• Mature Market
Upcoming
• Upcoming
‘Russia for
locations
Russia’
• 2nd & 3rd tier cities
• Re- & Nearshoring
Upcoming
Asia-Pacific
(APAC)
Upcoming
‘China for
China’
National
solutions
Mature
Market
Mature +
upcoming
• Maturing market
• Upcoming new locations
• US Nearshoring
• Mature Market
• Further growth
Mainly
country
only or
offshored
Source: BCI, 2016
 Buck Consultants International, 2016
26
Sample: Companies operating across LATAM
Especially for or US based multinationals, LATAM offers interesting
opportunities near shore, many BPO players active
Mexico
 Buck Consultants International, 2016
Brazil
Costa Rica
Jamaica
Dominican
Republic
Colombia
27
LATAM Hotspots
Current & future locations for international Support Centers
CURRENT
HOTSPOTS
FUTURE
HOTSPOTS
Guadalajara , Mexico
Mexico City, Mexico
Querétaro, Mexico
Monterrey, Mexico
San Pedro Sula, Honduras
Sao Paulo, Brazil
Heredia, Costa Rica
San Jose, Costa Rica
Curitiba, Brazil
Panamá City, Panamá
Montego Bay, Jamaica
Bogota, Columbia
Managua, Nicaragua
Santo Domingo, Dom. Rep.
Lima, Peru
Guatemala City
National capital
Current hotspot
Future hotspot
Montevideo, Uruguay
Source: BCI, 2016
 Buck Consultants International, 2016
28
Sample: Companies operating across APAC
Especially for or English speaking services many multinationals have
already benefited from the interesting opportunities in APAC
India
Philippines
 Buck Consultants International, 2016
Singapore
Malaysia
China
Thailand
Vietnam
29
APAC Hotspots
Current & future locations for international Support Centers
CURRENT
HOTSPOTS
FUTURE
HOTSPOTS
Shenzhen, China
Bangalore, India
Jakarta, Indonesia
Chennai, India
Johor Bahru, Malaysia
Manila, Philippines
Cebu City, Philippines
Hong Kong, China
Colombo, Sri Lanka
Shanghai, China
Bangkok, Thailand
Singapore
Ho Chi Min City, Vietnam
Kuala Lumpur, Malaysia
Kerala, India
National capital
Current hotspot
Future hotspot
Source: BCI, 2016
 Buck Consultants International, 2016
30
European Hotspots
Current & future locations for pan-European Support Centers
CURRENT
FUTURE
HOTSPOTS
HOTSPOTS
Glasgow/Edinburgh, UK
Manchester, UK
Belfast, UK
Leeds, UK
Baltic States
Cork, Ireland
Gdansk & Lodz, Poland
Barcelona, Spain
Debrecen, Hungary
Prague, Czech Republic
Sofia, Bulgaria
Warsaw & Krakow,
Poland
Timisoara & Cluj-Napoca,
Romania
Bratislava, Slovakia
Zagreb, Croatia
Budapest, Hungary
Belgrade, Serbia
Bucharest, Romania
Istanbul, Turkey
National capital
Current hotspot
Future hotspot
 Buck Consultants International, 2016
Lisbon, Portugal
Source: BCI, 2016
31
Companies operating across CEE
As mature market CEE still offers attractive SSC locations
Poland
Czech
Republic
Slovakia
Hungary
Romania
Baltics
at&t
 Buck Consultants International, 2016
32
Are you prepared for a potential Brexit?
Before Brexit
After Brexit?
Center of Gravity
 Buck Consultants International, 2016
33
Western Europe Location Strategies
Onshore & Offshore Strategies Differ from the U.S.
UK
Spain
France
OnShore
Scotland,
Wales,
N.Ireland
Lower cost
cities
Lower cost Lower cost
cities
cities (East)
NearShore
•
•
•
•
OffShore
• India
• Philippines
Malta/ CEE • Morocco
Egypt
• Tunisia
South Africa • Romania
Ghana
•
•
•
•
•
Germany
Italy
Benelux
Nordics
Lower cost
cities (South)
Lower cost
cities
Lower cost
cities
Morocco • Poland/
• Romania
• Turkey
Czech Rep./ • Croatia
Tunisia
• Morocco
Slovakia
Romania
• Egypt /
• Romania/
Lybia limited
Turkey
Croatia
Egypt
• Turkey
• Egypt
• Baltic
States
• LATAM
• Mauritius • Namibia
• LATAM but • South Africa • NA
• Argentina
• South Africa very limited • Surinam
Source: FirstSource, completed with experiences BCI, 2016
 CEE is often regarded for pan-European activities, as European language
skills are more available nearshore then offshore
 Lower cost options in (Northern) Africa with language skills available,
however political unrest in the region still hinders full potential
 Buck Consultants International, 2016
34
Labor arbitrage strategies
Wage reduction of 20% to 60% are feasible
Average annual total employers cost for a basic BPO agent
speaking English + another European language (in USD)
50.000
40.000
30.000
20.000
10.000
Western European
benchmark locations
 Buck Consultants International, 2016
Onshore
Nearshore
Central & Eastern
Europe
an
B a illa
ng
al
or
e
M
Ca Ca i
ro
sa
bl
an
ca
Bu
da
p
Bu es
ch t
ar
es
t
Be
rli
n
st
Be
lfa
Lo
nd
Fr on
an
kf
ur
t
-
Nearshore
North Africa
Offshore
Asia
35
Regional review of Africa
Some facts & figures
Africa in Headlines
Largest Cities in Africa
Cities with about 1 mln+ inhabitants
Rainbow Nation

Inhabitants
> 1 bln

Size economy
> 2 trillion $

Countries
54

Land mass:
China, India, Japan, America,
Mexico and Europe combined

GDP growth:
growing
11 of the world’s 20 fastesteconomies until 2017 in Africa
GDP current prices
(in US$)
North Africa
Sub-Sahara Africa
Source: IMF , 2015
 Buck Consultants International, 2016
Source: BCI, 2016
36
The African potential
Strategic language groups present
World languages spoken
Large diversity in languages &
cultures due to ‘colonial’
legacy:
English
335 million speakers
in 101 countries
French
338 million speakers
in 29 countries
English
•
•
•
•
•
Anglophone countries (English)
Francophone countries (French)
Lusaphone countries (Portuguese)
Innumerable ethnic and social groups
> 2,000 languages in total
Arabic
223 million speakers
in 59 countries
Spanish
Arabic
French
Arab and English
Source: MT Magazine, October 2013, adjusted by BCI, 2015
 Buck Consultants International, 2016
37
African Country Comparison
Many Emerging Markets with Potential Scalability
Language skills/
former colonies1
Size BPO/SSC/CC
Community
Employers Cost Per Month for
Language Speaking Agent
South Africa
English, German
Mature: Large Market
Est: ~100,000 seats
Euro 900 - 1,100
Mauritius
English, French
Mature: Small Market
Est: ~10,000-15,000 seats
Euro 800 - 1,000
Morocco
Arabic, French, Spanish
Mature: Medium Market
Est: ~20,000- 25.000 seats
Euro 800 – 950
Arabic, French, Italian
Mature: Medium Market
Est: ~15,000 -20,000 seats
Euro 800 – 950
Arabic, English, French,
German, Italian
Emerging: Large Market
Est: ~20,000-30,000 seats
Euro 650 – 850
French
Upcoming: Small Market
Est: < 10,000 seats
Euro 650 - 850
Kenya
Swahili, English
Upcoming: Small Market
Est: < 10,000 seats
Euro 650 – 850
Ghana
English
Upcoming: Small/Medium Market
Est: < 10,000 seats
Euro 300 – 500
Immature: Very Small Market
Euro 300 - 500
Tunisia
Egypt
Senegal
Ethiopia
Amharic, English
1 The first language is the official language, followed by the second and/or third language spoken in a country
 Buck Consultants International, 2016
38
Companies Operating in Africa
Mixture of Captives & Oursourcers
 Buck Consultants International, 2016
39
Commentary on Africa’s Conditions
Things to Know about Africa
 Labor regulations: longer working weeks,
more flexibility, less women employment, weekly &
summer working times (and in case relevant
Ramadan)
Africa’s workforce will become
the world’s largest by 2040
Size of the working-age population
1
 Accessibility: road & air connections in
Northern Africa comparable to CEE, public transport
less developed (organized by companies for staff)
 IT infrastructure: is of average quality in
Northern Africa, poor in Sub-Saharan regions
(Ghana, Kenya, Botswana), high quality (at
decreasing cost) in South Africa
 Real estate: relative expensive & availability is
not everywhere guaranteed
 Demographics: strong urbanization & very
young population, in some countries (like Tanzania)
more than half of the population is below 15 years of
age. Life expectancy is relatively short (~50 – 55
Source: United Nations World Population Prospect; McKinsey
years)
Global Institute, 2013
 Ease of doing business: bureaucracy &
corruption
 Risks: political, social, safety, other hazards
 Buck Consultants International, 2016
40
5 Some selected Tips & Tricks
A Information is not intelligence
B Never rely on one source
C Do not underestimate the impact of historical
background
D Keep in mind local practicalities
E Different perspectives
 Buck Consultants International, 2016
41
A Information is not intelligence
Cost
Gross or base salaries versus total employer’s costs
Example BPO Project
Total employers’ cost for a university graduate speaking (European) languages in
Manchester (UK) and Brno (Czech Rep.)
Base salary
Bonus
Language Bonus
Social Security
Total employers’ cost
Manchester
Min.
Max.
16.360
31.460
7.5%
Euro 1.500
12.8%
21.500
39.900
Difference with base salary +31%
+27%
Brno
Base salary
Performance bonus
Social Security
Pension Plan
Lunch
Total employers’ cost
Min.
12.400
Max.
17.350
10%
35.0
3%
Euro 435
19.400
26.970
Difference with base salary +56%
+55%
Source: Buck Consultants International
Conclusions
 Based on Gross Salary: cost savings potential of about 40%
 Based on Fully Loaded Employers’ cost: cost savings potential of about 20%
 Buck Consultants International, 2016
42
A Information is not intelligence
Cost
Example: total add up on top of gross annual salary to come to the total
fully loaded (employers’) cost in support industry
Social security &
employers tax
Pension
Plan
Medical
Plan
Performance
bonus
Other
Total
-
7,5%
-
10,0%
2,0%
+19,5%
UK
13,8%
7,0%
3,0%
5,0%
-
+28,8%
Philippines
3,0%
-
1,8%
8,0%
16,3%
+29,1%
USA, Chicago
8,2%
5,0%
9,0%
8,2%
-
+30,4%
Slovakia
35,8%
5,0%
0,6%
+41,2%
Argentina
27%
10,5%
7,5%
+60,0%
10-40%
-
+50-90%
Country
South Africa
UAE
7,5%
7,5%
~40% in total
Source: Buck Consultants International, based on projects 2014/2015
In general, total add ups to come to fully loaded employer’s cost include:



Social security and employers taxes
Pension plans on top of social security
Medical plans on top of social security



Bonuses (e.g. additional month)
Performance bonus
Other permanent allowances such as food or lunch,
transportation, housing, school allowance, language or
seniority premiums etc.
Overview excluding: visa cost, lease cars, hardship bonuses, night shift premiums etc. (when applicable)
 Buck Consultants International, 2016
43
Average national salaries versus
regional differences
Cost
The differences within countries can be larger than between countries
Halle
-10-20%
-20-30%
Lille -20-30%
Paris
Munich
-30-40%
 Buck Consultants International, 2016
44
Average national salaries versus
regional differences
Cost
Capitals are not always most expensive
Dubai
+15-20%
Abu Dhabi
+15-30%
 Buck Consultants International, 2016
45
B Never rely on one source
Cost
Always work with ranges
Example: input on salaries during site visits from different sources
Euro 40.000
Euro 25.000
Regional
development
agency
 Buck Consultants International, 2016
Recruitment agency
Similar investor
46
C
Do not underestimate the impact Quality
of historical backgrounds
Example: Availability of language skills & colonial heritage
Mediterranean
Sea
TUNISIA
MOROCCO
ALGERIA
WESTERN
SAHARA
LIBYA
EGYPT
Red
Sea
MAURITANIA
MALI
NIGER
ERITREA
SENEGAL
CHAD
THE
GAMBIA
SUDAN
DJIBOUTI
BURKINA
GUINEA
BISSAU
GUINEA
BENIN
SIERRA
LEONE
COTE
DTVOIRE
TOGO
GHANA
NIGERIA
ETHIOPIA
CENTRAL
AFRICAN
REPUBLIC
LIBERIA
CAMEROON
EQUATORIAL
GUINEA
GABON
REP. OF
THE
CONGO
DEMOCRATIC
REPUBLIC
OF THE CONGO
(ZAIRE)
RWANDA
UGANDA
KENYA
SOMALIA
Indian
BURUNDI
South
Ocean
TANZANIA
ANGOLA
Atlantic
MALAWI
Ocean
ANGOLA
British
ZAMBIA
French
MOZAMBIQUE
ZIMBABWE
NAMIBIA
MADAGASCAR
Italian
Portuguese
SOUTH AFRICA
Walvis Bay
BOTSWANA
Belgium
Spanish
LESOTHO
SOUTH
AFRICA
 Buck Consultants International, 2016
SWAZILAND
Indian
German
Ocean
Independent
47
Quality
Example: Historical heritage, differences in jurisdiction & legal
system
Common versus Civil law countries
Source: University of Berkeley, 2013
 Buck Consultants International, 2016
48
D
Keep in mind local practicalities
Quality
Example: working schedule flexibility & religion
Ramadan dates between 2010-2020 (the 9th lunar month of the year)
CE/AD
AH
First day
Last day
2010
1431 11 August
10 September
2011
1432
30 August
2012
1433 20 July
2013
1434
2014
1435 28 June
28 July
2015
1436 18 June
17 July
2016
1437 6 June
5 July
2017
1438 27 May
24 June
2018
1439 16 May
14 June
2019
1440 6 May
4 June
2020
1441 24 April
23 May
1 August
9 July
% of Muslim population
19 August
8 August
Source: Pew Research Center, 2014
 Working days from 8 to 6 hours during the holy month
 Buck Consultants International, 2016
49
D
Keep in mind local practicalities
Quality
Example: Working schedule flexibility
European working week
Mon
Tue
Wed
Thu
Fri
Sat
Sun
Islamic working week
Mon
Tue
Wed
Thu
Fri
Sat
Sun
Working days
Days of rest
 Buck Consultants International, 2016
50
E Different perspectives
Risk
Example: Competition on the labour market
 Buck Consultants International, 2016
51
Selected SSCs Risks & Rewards
Risks
Rewards
1 Decreasing labour arbitrage
1 Focus on value added activities
2 Limitations of scalability and growth
due to unfavourable labour market
2 Model possible functional and
geographical footprint
3 Offshore location does not meet the
original objectives & requirements
anymore
3 Develop the right strategy for the right
shore
4 Upcoming locations from 10 years
ago become mature and saturation
effects are visible
4 Shift to newer and smaller locations
(2nd & 3rd tier cities)
5 Social & political unrest is hindering
daily business
5 Take risk assessments into account
6 Productivity and customer
satisfaction levels lag behind due to
cultural issues
6 Use our tips & tricks or come talk to
us in more detail
 Buck Consultants International, 2016
52
Site Selection - Lessons learned
 Link the location decision process with the overall corporate
strategy
 Take a longer term corporate view
 Escape from a narrow scope
 Verify and record all assumptions of the process
 Set clear priorities in location requirements
 Focus on regions, not countries
 Feelings can be fact too
 Anticipate future regional developments (forecast costs)
 Search for excellence in terms of region, site & building
 Develop an exit scenario (flexibility)
 Challenge all information you get
 Plan the project’s process thoroughly
 Always negotiate a better deal
 Buck Consultants International, 2016
53
6 Q&A
Thank you for your attention!
Feel free to ask your questions now…
Alternatively contact us at:
Buck Consultants International
Kerkenbos 10-31
P.O. Box 1456
6501 BL Nijmegen, the Netherlands
Telephone: +31-24-3790222
www.bciglobal.com
Email Johan Beukema
Email Josefien Glaudemans
 Buck Consultants International, 2016
Johan.Beukema@bciglobal.com
Josefien.Glaudemans@bciglobal.com
54
16th Annual European Shared Services
& Outsourcing Week 2016, May 24-26 in Dublin
Please also note that Josefien will be present during the 16th Annual
European Shared Services & Outsourcing Week 2016, May 24-26 in
Dublin and would be pleased to meet with you there & then to
discuss things in more detail!
Please reach out via Josefien.Glaudemans@bciglobal.com
 Buck Consultants International, 2016
55