Real Story Business Process Outsourcing

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Real StoryBusiness Process Outsourcing

• Michal Jelínek, OKIN OUTSOURCING, CEO
• Johan Thorpenberg, Verizon Business, Director New
  Ventures

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Outsourcing/Offshoring basic info

• Transfer of staff and process to selected vendor
• Cost cutting
• Getting flexible cost structure performance
  based pricing
• Transfer of operational risk
• Downsizing
• Offshoring
• Transfer of process to remote destination to
  internal vendor
• Outsourcing
• Transfer of process to external vendor

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Good Reasons for Outsourcing to Czechia

• EU member stable political and economical
  environment
• Educated and motivated workforce
• Just 1,5 hour flight from London
• Very good language skills English and major
  European languages
• Substantial cost differential
• Good governmental support for Centres of
  Strategic Services

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Population Structure in Czechia
5
Labour Force in Czechia
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Case Study - Partners

• Client
• VERIZON BUSINESS (MCI before acquisition by
  Verizon 2005)
• Telco operator No. 1 worldwide
• EMEA region
• Outsourcer
• OKIN FACILITY CZ (Czech based subsidiary of
  VINCI)
• Outsourcing specialist (BPO, outsourcing for
  industry)
• Operates locally in Czechia and Slovakia

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Case Study - Scene and Targets

• Verizon
• Back office support for EMEA region
• Cost savings
• Improve overall back office effectiveness
  (especially time wise)
• Flexibility of the system more reactive on
  changing business
• Purely performance based costing
• OKIN
• Deliver project according to Verizon requirements
• Huge flexibility combined with financial strength
• Purely performance oriented by efficiency
  improvements

REAL PARTNERSHIP BASED ON JOINT INTEREST
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Case Study - Legal Pricing Framework

• 3 Year contract
• after the first year termination terms 6 months
• Two models
• transactional pay per activity
• fixed monthly pay per HC
• Performance bound credit and bonus structure
• Substantial part of operations launched before
  closing of the contract
• Two locations Ostrava and Prague

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Implementation fast lane project

• First contacts MCI OKIN 3/2004
• Start of training first batch of 30 FTE
  7/2004
• Pilot operations 9/2004
• Fully operational 1/2005
• Now every second month new product added
• Train-the-trainer system
• Short fixed pay period then switched to
  performance based model

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Savings and cost on time the REAL driver

• Cost savings
• Ostrava 63 (excl. line cost saving)
• Line cost saving thanks to faster ceases, 100 k
  monthly
• Prague 45
• Ostrava costs
• Fully loaded HC cost about 10 12 hourly, about
  1.750 monthly
• Back office operators
• Target 2006 160 FTE (now 105 FTE)
• University graduated, average age 25
• Prague costs
• Full loaded cost between 2.500-4.000 monthly
• Technical telco specialists high level

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Ostrava OE Performance
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SD Cost per Direct Order

• The cost per direct order declined fast during
  2004, during 2005 the trend continued at a slower
  rate. Overall the cost per direct order dropped
  approximately 40 compared to 2004.

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Fundamental Reasons for Success Story

• Real partnership
• No gambling with side interests
• Large amount of project made fully operational on
  the basis of gentleman agreements
• OKINs flexibility
• VERIZONs consistency
• Strong HR support by OKIN
• Very motivated staff
• Performance based salary structure
• Project providing strong carrier opportunities
  due to continuous development
• Annual growth products and volumes - around 80
  

14

• Thank you
• Wish you good luck with business in the Czech
  Republic