Tag: shared services

Liberty Source: Bringing Innovation to the Onshore Delivery Model | Sherpas in Blue Shirts

What if a service provider could build itself from scratch based on the learnings from the past two decades? Liberty Source, launched in 2013 as an impact sourcing provider, is trying to do just that in the highly competitive finance & accounting (F&A) outsourcing market. It has agreed to share its story with us over the coming months as its business continues to scale. We plan to look at how it optimizes its talent model to align to its social mission, its approach to using automation technology in service delivery, and other key issues which it faces as they look to compete in the market.

Our first discussion was with Steve Hosley, CEO of Liberty Source and a veteran of the outsourcing and shared services industries. We hope you enjoy this unique view into what it is like to start a new service provider company that is attempting to disrupt traditional models.

 

Eric: What is Liberty Source and how is it unique?

Steve: Liberty Source is an onshore BPO provider of F&A services. Our differentiators revolve around transparency and flexibility with our customers. Business is changing fast and flexible agreements are important to keep up with the pace. By flexible, we mean being able to pivot quickly to a company’s evolving delivery needs with a mix of automation and human capital needs.

We have chosen to run our onshore center with a social compass. Our team members – or as we call each other “shipmates” – primarily have a direct military affiliation as spouses of active duty military members or they are veterans themselves. This represents over 70% of our employee base. Our culture continues to be built around the U.S. military community.  We believe that this community makes us look and operate much differently than a typical BPO operation. For example, we have “family meetings” instead of the more stereotypical “all-hands meetings.” Our conference rooms are named after famous U.S. military spouses with our Boardroom named after Martha Washington. Our transformation training revolves around the OODA Loop (Observe, Orient, Decide, Act) rather than the typical Six Sigma.

Lastly, we aim to create a business that is known as a transformation center – where customers come to transform their work and employees come to transform their careers.

 

Eric: Where is Liberty Source finding this military talent?

Steve: Our current operations center is in Fort Monroe Virginia, near Virginia Beach. It is located near five bases, home to over 70,000 active service members and the largest naval base in the world. 85% of our employees have college degrees and of them, 21% of them are holding Masters Degrees. This helps confirm that we have a talented workforce that is simply seeking big company, multi-national experience. The fort has a storied history and is known as Freedom’s Fortress. Under Union General Benjamin Butler during the U.S. Civil War, it became a beacon for tens of thousands of slaves to come and gain their freedom. We believe, that that in small way, we hope to continue in the spirit of Fort Monroe by providing real commercial technical skills and careers to a population of well-deserving and very talented U.S. military spouses and veterans.

Our spouses are allowed to take their positions with them when they are PCS’d (permanent change of station) so now with over 10 percent of our employees operating virtually, we aim to continue to expand our footprint of Liberty Source coverage to all the major U.S. military bases around the world.

 

Eric: How is Liberty Source structured, legally and financially?

Steve: Liberty Source was created to capture the growing commercial demand for onshore BPO delivery but do it in a manner that was socially responsible. We established ourselves as a Public Benefits Corporation, or a PBC. This allows us to operate as a commercially viable and market relevant for-profit enterprise, while also holding the company accountable to a social mission. Given that this structure and delivery model was new, we elected to initially go to market as a wholly owned subsidiary of Digital Divide Data, which pioneered the offshore impact sourcing market in the early 2000s.

 

Eric: What successes has Liberty Source had to date?

Steve: We are a little over a year old in terms of go-to-market efforts and have stabilized our first client, a very large contract with 15 different processes. These were brought back from India from an eight-year incumbent. We transitioned in 100 FTEs and have been live with the client’s work since February. Our first client attained the same price as it did in India, and now the work is only three hours away from them versus being in India.

We achieved price neutrality by doing the work more efficiently. The efficiencies have been gained through three primary drivers. As we stated previously the community we are building is loyal, resulting in single-digit attrition this year. What we have found is that this lack of attrition makes us more competitive in that we are not having to spend time and effort on retraining and extensive review cycles. We inherited an ingrained functional tower orientation and migrated it to end-to-end process teams, which really helped reduce rework. Lastly, we are benefiting from building a business in the era of “As a Service” and cloud offerings so our infrastructure is light and efficient. A combination of things like email from Office365, general ledger from NetSuite, payroll from ADP, and all workstations are laptops to provide DRP (disaster recovery plan) flexibility. Most importantly we strongly believe that we are in the people business and that our success in delivering quality service back in the U.S. on this tough economic contract, is due to the fortitude and dedication of our employees. This is most evident in that we successfully trained 100 people in 120 days with a limited background in SAP and SFDC applications to work effectively in those environments.

 

Eric: How has the organization and its business matured in the short time Liberty Source has been in existence?

Steve: With the monthly delivery to our foundational client, now stable and our second client underway, the Board of Directors of Liberty Source made the decision last month to exit the foundation stage and enter our next stage of growth given that we have proven the viability of the model and have positive momentum. This growth stage includes investing in pursuing other clients. Our second client, also a large Fortune 500 multi-national, is undergoing a transformation and wanted a BPO provider that was willing to be flexible as its strategy evolved. This translates into taking on work that is initially about providing performance-based labor, which they need now, while also working on a project to automate the work, and then eventually rebalance the delivery mix into the appropriate levels required to be done by humans after the automation is completed.

The market and customers have spoken to us, so we have pulled forward the training, building and management of Robotic Process Automation (RPA) in our business model and invested in it earlier than we had planned.

 

Eric: How does Liberty Source plan to compete in the market moving forward?

Steve: We are targeting the market through a couple lenses. We are starting in the F&A area. We typically aim for companies that share our social mission of employing military spouses and vets. Finally, we resonate with organizations that have already outsourced before and are able to understand the benefits of our model when we explain things like transparent governance, providing a pathway to outcome-based pricing and how we embrace technology.

Because we have proven the model in Virginia, we would like to continue to scale and grow this location. We are also open to creating another center near an existing military population that may align with some other company’s geographic delivery or customer base and shares our social mission of providing opportunities to U.S. military families.

Lastly, part of our social mission is about providing upward mobility to our employees and we believe that embracing automation will over time elevate the remaining work and fulfill this commitment. In turn, our customers benefit from Liberty Source’s pursuit of these technology solutions though continuous improvement.

 

Eric: What are some of the things on your mind as you look forward to the next steps of Liberty Source?

Steve: We know the market need – it is seeking agility and flexible arrangements. Ones that can provide innovation and benefit to both parties. We feel our model and culture position us well to provide these differentiators.

Further, we must marry up this to the human capital strategy – we are beginning to build a virtual spouse model, which will give us even more elasticity on how to access and deliver talent. We also believe that bringing RPA into the service delivery model will provide flexibility in how we manage operations and our talent pool.

 

Eric: Thanks for your time and insights – I look forward to hearing more about how the journey has progressed when we speak again.


Photo credit: Flickr

Three Facts about GIC-Supported Analytics That You Probably Didn’t Know | Sherpas in Blue Shirts

While multiple studies have addressed the significant value-add potential of analytics delivered by third-party service providers, surprisingly little research has been conducted on analytics supported by Global In-house Centers (GICs). To close this gap, Everest Group recently released a research report detailing GIC footprint, adoption, and best practices for analytics processes.

Following are three lesser known facts about analytics in GICs:

Consulting and professional services is one of the largest and fastest growing verticals in GIC analytics adoption

Perhaps unexpected to many, consulting and professional services is the second largest vertical in terms of GIC analytics headcount, after BFSI. It is also the fastest growing vertical for analytics market. (See Exhibit 1 below). Leading professional services firms such as Deloitte, EY, KPMG, and PwC have developed large analytics teams in their India GICs and other offshore/nearshore locations. These analytics GICs are an integral part of these firms’ core delivery model, and support both internal and external stakeholders. The teams provide support in areas including core audit, tax support, risk advisory, performance improvement, technology advisory, and transaction advisory. They also have sizable headcount supporting market intelligence and reporting activities. Leading consulting firms such as McKinsey & Company and Bain & Company are also significantly leveraging in-house analytics capabilities to support client work.

Projected growth of GIC analytics headcount
Exhibit 1

Most verticals, other than BFSI, primarily use analytics to drive top-line growth

The prime focus of the analytics teams in CPG & retail, and technology is to drive sales through activities such as product recommendations, optimal pricing, and customer lifecycle. And due to GICs’ role as an extended team, most of the analytics work in consulting and professional services contributes towards the firm’s revenue.

This is in sharp contrast with BFSI, which is the most mature adopter of GIC analytics. Major regulatory changes such as Dodd-Frank Act, the CARD Act, FATCA, and Basel III have compelled banks to be more transparent in data reporting, thus requiring regular data collection and event monitoring. Hence, leading financial services firms need to maintain large in-house reporting teams. Increasing usage of online banking, mobile banking, and card payments has led to higher risk of a fraud these days. Banks use analytics to cull out the risky customers and predict default. This, and given legacy reasons, banking GICs tend to have a much higher analytics scale for activities pertaining to cost reduction and risk management compared to those that support top-line growth. These vertical-specific variations in utilization of specific analytics processes by GICs are illustrated in Exhibit 2.

Analytics in GICs 2015, I4
Exhibit 2

Increasing evidence of analytics consolidated as a shared capability within GICs

Most of the analytics work requires domain understanding and alignment with business unit-specific objectives. Hence, GICs, especially financial services centers, traditionally structured analytics as vertical teams directly reporting to the corresponding business units.

However, there are increasing instances of GICs structuring analytics as horizontal shared capabilities for certain activities. With experience and maturity in service delivery, GICs have realized that certain analytics activities (e.g., data collection and cleaning, model design and validation, and Management Information Systems (MIS)) can be structured as a horizontal shared capability supporting multiple business units. The key driver for this is creation of a common talent pool of like-minded individuals for career development. It also leads to consistency in hiring and recruitment.

Everest Group’s recently released report, “Analytics in Global In-house Centers (GICs): Running Deep and Wide” provides details on the current market size of analytics services delivered by GICs (overall and industry-specific), key growth drivers, and location landscape. For more details, please download a preview of the report.

GICs Are Here to Stay! Getting Bigger, Better, and Brighter | Sherpas in Blue Shirts

Do you remember back in 2009 when questions were raised on the sustainability of the Global In-house Center (GIC) model? The GIC market was shaken up with multiple divestures, giving rise to speculation that the model was dying. Since then, confidence in the construct has been a little precarious, even though the number of divestitures has remained low (except for in 2012.)

But here are some recent facts that will quell those concerns:

GIC facts

Now, after recognizing that the shared services model is flourishing, let’s look at key developments that occurred in the GIC space in 2014:

  • Business Process Services (BPS) continued to witness growth due to increased demand for Customer Relationship Management (CRM), Finance and Accounting (F&A), and Human Resource (HR) services

GIC Annual Report 2015 I3

  • Activity in the Manufacturing, Distribution, and Retail (MDR) vertical picked up considerably, especially in the retail sub-vertical, as companies set-up GICs for IT services delivery
  • Several locations made their mark on the location radar for the first time for specific industries. For instance, Romania and Ghana emerged as new GIC regions for BFSI firms, Croatia for healthcare companies, and the UAE for the hospitality sector
  • Share of GIC activity by U.S.-based firms declined, as most of the large companies are already adopters of the model; moreover, other geographies are increasingly embracing the GIC model.

While the model continued to see considerable momentum in 2014, the overall market is gradually shifting toward getting better and becoming more relevant for their adopters. Changes that have surfaced and are expected to shape the future course of the industry include:

  • GICs are no longer seen as only a support unit or cost-saving mechanism for the parent entity; rather, they are becoming a partner in their companies’ growth journey
  • Due to the increased value that the GICs are adding, or are capable of adding, buyers are willing to invest more for the additional advantages they can reap from the model
  • Cost arbitrage is not the only factor for GIC location selection. Talent scalability and sustainability, and linguistic and cultural affinity, are also playing a critical role in the decision making process
  • Realizing the value of diversification and the concentration risk involved in the mature markets of India and Philippines, companies are increasingly leveraging locations in other geographies such as Central and Eastern Europe, Latin America, the Middle East, and Africa. Ericsson, Intel, Johnson & Johnson, and Robert Bosch are among the firms that have spread their wings in the last few years to explore delivery locations in countries including Ghana, Mexico, Romania, Ireland, and Vietnam. Still, India remains the top location for GIC set-ups, with 28 centers established in 2014
  • Several delivery locations are also becoming attractive for their domestic market opportunities. Thus, some organizations are leveraging offshore centers for dual purposes; for their GIC operations and to tap into the local market
  • In addition to the pure GIC model, hybrid sourcing constructs, such as virtual GICs, that require a partnership between the buyer and the service provider to deliver services, are being considered.

For those of you who may have been questioning the health of the GIC model, it’s clearly vibrantly alive and kicking. The data speaks!

For more insights on the GIC model landscape, please refer to our recently released report “Global In-house Center (GIC) Landscape Annual Report 2015.” The report provides a deep-dive into the GIC market and an analysis of the GIC trends in 2014, comparing them with the trends in last two years. The research also delivers key insights into the GIC market across locations, verticals, and functions. It concludes with an assessment of the hybrid sourcing constructs.

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