KPMG China 2016 Q1 SSOA Survey Summary en

2016 Q1 China Shared
Services and Outsourcing

Survey Results
2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a
Swiss entity. All rights reserved.
Table of Contents
1. KPMG SSOA Practice
Pg. 3
2. About this Survey
Pg. 4
3. Business Outlook
Pg. 5
4. Captive Centre
Pg. 11
5. Outsourcing
Pg. 17
6. Robotics Process Automation (RPA)
Pg. 23
7. KPMG Contacts
Pg. 29
KPMGs Shared Services and Outsourcing Advisory Practice

KPMG has the ability to help member firms clients transform enterprise services to help improve
value, increase agility and create sustainable business performance.
The Shared Services and Outsourcing Advisory practice brings a specialized

global team of more than 1,000 professionals within KPMGs global network of
Who
we are
independent member firms operating in 155 countries. Our professionals help

clients design, build, and manage information technology (IT) and business
processes across the enterprise.
We help clients align their business strategy, organization and execution
What
we do
to enable them to manage the entire IT and business process life cycle,
improving business performance, and laying the groundwork for genuine
business transformation.
How
we do
it
We apply focused research, automating tools, proprietary data, clear

business acumen, and a forward-thinking mind-set to provide timely,
objective, actionable advice and practical approaches for clients.
About this Survey

KPMG China Shared Service and Outsourcing Surveys
KPMG China is proud to present the results of our 2016 Q1 China Shared Services and Outsourcing Survey.
Input sources:
Topics evaluated:
KPMG sourcing advisors

throughout China and Hong
Kong
Companies (MNC ,SOE ,POE)
Leading global business, IT,

and cloud service providers
KPMG thought leadership
New for 2016!
Primary functional focus:
China Overview
Finance and Accounting
Human Resources
Information Technology
Customer Care
Data & Analytics
Procurement
Business Outlook, growth and

overall enablers
Shared Services
Internal Captive
Outsourcing
Robotic Process Automation (RPA)

and overall observations
Starting this quarter, we have added new survey questions to address the global
trend of Robotic Process Automation (RPA)
Business Outlook
China Overview
70% of companies surveyed viewed internal captive centres as critical to reaching their goals and
objectives
People experience at a leadership & team level are key challenges when setting up and maintaining an
efficient internal captive center
Companies look to third parties for assistance in Process design, benchmarking and risk management
Internal captive centres continue to focus on operational efficiency and effectiveness improvements helping
the business to focus on revenue growth and outpacing local market competitors
Outsourcing is growing slightly in acceptance with the main challenges being funding and change
management
Growth expectations continue to be a key company challenge with 60% predicting less than 10% revenue
growth
Robotics Process Automation (RPA) technologies have not gained sufficient visibility and momentum
amongst China organizations, whereas globally this is a very hot trend
Growth Expectations
Q:
What are your Organization growth expectations within the next 1 - 2 years?
Company
Advisor
Over 20%Growth
10%t o 20%Growth
0% to 10% Growth
Negative Growth
0%
Company
10%
20%
30%
40%
50%
60%
50%
40%
30%
20%
10%
0%
Advisor
Enablers
Q:
What do you feel are the biggest enablers of growth for your Organization over the next 1 to 2 years?
Company
Advisor
Improved access to capital and funding
Improving regulatory environment

Better execution of sales and marketing efforts
Innovation in products/services improved return on
research and development
Improved operational efficiency reduced operating
cost, reduced investment costs
Improved operational effectivenessimproved process
performance, greater
Growth via mergers/acquisitions
Export growth for good/services
Domestic market growth for goods/services
0%
Company
10%
20%
10%
0%
Advisor
Challenges
Q:
What is the biggest challenge for your Organization within the next 1 to 2 years?
Company
Advisor
Reducing SG&A Costs

New Local Market Competitors
Slowing Demand for Core Products & Services
Access to Capital and funding
Slowing Business Demand

Growing Exports
Increased Competition
Restrictive Regulatory Environmnent
Leveraging Technology
Managing Supply Chain
Developing and Executing a Competitive
Managing Wage Inflation
Merger Execution and Integration
Finding and Retaining Talent
Increasing Net Income

Revenue Growth
Company
Advisor
0%
5%
10%
15%
10%
5%
0%
Shared Services Criticality

Q:
How important and critical is the usage of Shared Services (Internal Captive Centre / Outsourcing)
to helping your Organization achieve its goals and objectives over the next 2 years?
Criticality of Internal Captive Centre
Criticality of Outsourcing
Company
Very important 5
4
3
2
Not important 1
0%
10%
20%
30%
40%
Criticality of Internal Captive Centre
30%
20%
10%
0%
Criticality of Outsourcing
Advisors
Very important 5
4
3
2
Not important 1
0%
Internal captive centre
15%
30%
45%
60%
45%
30%
15%
0%
Outsourcing
10
Captive Centre
11
Management Expectations
Q:
What is top expectation from the executive management for your / your clients Internal Captive
Centres efforts for the coming 2-3 years?
Company
Advisor
Improve governance of efforts

Improve talent/skills of resources
Increase scope of efforts
Greater efficiencies gained
(harmonization)
Greater of commercial enterprise software
Greater use of cloud
Greater use of data analytics
Improve in-scope process performance
and operations
Drive down ongoing costs
0%
Company
5%
10%
15%
20%
25%
20%
15%
10%
5%
0%
Advisor
12
Adoption Drivers
Q:
What do you think are the most important drivers to your clients adoption or expansion of Internal
Captive Centre?
Advisor
Standardization, simplification and harmonization
Support business growth/expansion agendas
Reduce operating costs (OpEx)
Reduce future investment costs (CapEx)
Redirect resources to more strategic activities
No specific reasons/many competing reasons
Improve process performance
Improve global delivery & operating models
Improve financial flexibility/create more variable cost model
Productivity and efficiency gains
Gain economies of scale
Gain access to external skills/talent/resources
0%
5%
10%
15%
Advisor
13
Current Challenges
Q:
What are the top challenges your organization faces with your current shared service center (internal
captive center)?
Company
Advisor
Organizational structure design
Use of technology
Inexperienced Governance Organization
Inability to drive improvements and
efficiencies
Lack of a viable business case,
assumptions have changed
Change Management Challenges
Lack of operational team experience to
manage efforts/weak governance
Lack of Leadership Team Experience to
manage the center / relationship
Lack of funding
Lack of Executive Leadership
0%
Company
5%
10%
15%
20%
15%
10%
5%
0%
Advisor
14
Third Party Assistance

Q:
In which of the following areas do you feel your organization / your clients would seek third party
assistance regarding shared services (internal captive center)?
Company
Advisor
Benchmarking / health check

Continuous improvement
Governance structure and design
Transition support
Retained organization design
Location assessment
Risk assessment and mitigation
Business case
Process design
Scope Assessment
People and change management
Stakeholder management
Stakeholder alignment
Project Management
0%
Company
5%
10%
15%
10%
5%
0%
Advisor
15
Demand
Q:
What do you feel are the major demand areas for Internal Captive Centre for your clients today [next
24 months?] ?
Advisor
Sales Support & Marketing Research
Supply Chain - Sourcing & Procurement
Research & development
Real estate & facilities management
Information technology
Industry specific services
Human resources
Finance & accounting
Documentation services (scanning, print, mail)
Data and analytics
Customer care / Customer Service
Administrative services
0%
5%
10%
15%
Advisor
16
Outsourcing
17
Management Expectations
Q:
What is top expectation from the executive management for your / your clients Outsourcing efforts for
the coming 2-3 years?
Company
Advisor
Improve governance of efforts

Improve talent/skills of resources
Increase scope of efforts
Greater efficiencies gained (harmonization)
Greater of commercial enterprise software
Greater use of cloud
Greater use of data analytics
Improve in-scope process performance and
operations
Drive down ongoing costs
0%
Company
5%
10%
15%
20%
25%
20%
15%
10%
5%
0%
Advisor
18
Adoption Drivers
Q:
What do you think are the most important drivers to your clients adoption or expansion of
Outsourcing?
Advisor
Standardization, simplification and harmonization
Support business growth/expansion agendas
Reduce operating costs (OpEx)
Reduce future investment costs (CapEx)
Redirect resources to more strategic activities
No specific reasons/many competing reasons
Improve process performance
Improve global delivery & operating models
Improve financial flexibility/create more variable cost model
Productivity and efficiency gains
Gain economies of scale
Gain access to external skills/talent/resources
0%
5%
10%
15%
Advisor
19
Current Challenges
Q:
What are the top challenges your organization faces with your current shared service center
(outsourcing)?
Company
Advisor
Organizational structure design

Use of technology
Inexperienced Governance Organization
Inability to drive improvements and efficiencies
Lack of a viable business case, assumptions
have changed
Change Management Challenges
Lack of operational team experience to manage
efforts/weak governance
Lack of Leadership Team Experience to
manage the center / relationship
Lack of funding
Lack of Executive Leadership
0%
Company
5%
10%
15%
20%
15%
10%
5%
0%
Advisor
20
Third Party Assistance

Q:
In which of the following areas do you feel your organization / your clients would seek third party
assistance regarding shared services (outsourcing)?
Company
Advisor
Benchmarking
Governance structure design
Transition project management office support
Negotiations support
Retained organizational design / restructuring
Site selections
Service level / reporting requirements
Scope definition
Opportunity case / Business case

RFP development / Management
Service provider identification and assessment
0%
Company
5%
10%
15%
20%
15%
10%
5%
0%
Advisor
21
Demand
Q:
What do you feel are the major demand areas for Outsourcing for your clients today [next 24
months?] ?
Advisor
Sales Support & Marketing Research
Supply Chain - Sourcing & Procurement
Research & development
Real estate & facilities management

Industry specific services
Human resources
Finance & accounting
Documentation services (scanning, print, mail)
Data and analytics
Customer care / Customer Service
Administrative services
0%
5%
10%
15%
Advisor
22
Robotics Process
Automation (RPA)
23
Changing How Business is Done

Shifting to a digital labour force
Digital Labor (a.k.a. Robotic and Cognitive Automation) is a range of technologies that
companies can use to automate both business processes and operations. It includes
automation of transactional parts of a business process through the application of
technologies such as workflow, screen scraping and rules engines, up through automating
more strategic business operations by leveraging more sophisticated technologies involving
cognitive machine processing and elements of artificial intelligence. .
These types of technologies will drive exponential and unparalleled transformation of

business models. Their use is set to enable a progressive digitization of labor. Their
development has been driven by significant advancements in natural language processing,
machine intelligence, digital engagement, analytics, big data, social, mobile, and cloud.
Ranging from basic optical character recognition (OCR)/screen scraping technologies, these
technologies sit on top of existing IT architecture components. In their most advanced form,
they interpret data from multiple sources to make decisions like a human would.
24
Benefits of a Digital Labor Force

WAVE 1:
LABOR ARBITRAGE
WAVE 2:
LABOR AUTOMATION
Digital
Business Models
Social
Mobile
Cloud
15 - 30 percent
Cost take out
Data/
Cognitive
Analytics
40 - 75 percent
Cost take out for relevant functions
Model is scalable to the extent that

you can scale labor
Model is scalable through technology, and is

largely independent of labor growth
Custom/complex, legacy:
Your Mess for Less
Transformative new way of doing business
Ongoing access to low cost labor necessary

to provide continuous value
Revenue/profit correlated to people
One-Time (and limited ongoing) access

to analysts who can codify
manual processes
Revenue/profit not correlated to people
Source: The Outsourcing Institute, Three Secrets Your Traditional Service Providers Are Not Telling You, June 2014
25
Digital Labor Automation (DLA)

Natural
Language
Processin
g
Adaptive
Alteratio
n
Large-scale
Processing
Processing of
Unstructured
Data & Base Knowledge
Machine
Learning
RULES
ENGINES
Artificial
Intelligence
SCREEN
SCRAPING
Basic Robotic Process

Automation (RPA)
WORK
FLOW
Big Data
Analytics
Macro-based applets
Screen scrapping data collection

Workflow
Visio-type building blocks
Process mapping
Business process management BPM
Enhanced Process
Automation
Built-in knowledge repository
Learning capabilities (e.g. learning assist)

Ability to work with unstructured data
Pattern recognition
Reading source data manuals (e.g. NLP)
Autonomic/Cognitive
Artificial intelligence
Teaching versus programming
Natural language recognition & processing
Self-optimization / self-learning
Digestion of super data sets
Predictive analytics
Hypothesis generation
Evidence-based learning
High value use cases across key financial service providers
Customer On-Boarding
Account Opening
Fund Payments
Cross check multiple systems, with

structured and unstructured data, to
ensure compliance
An intelligent virtual personal assistant

can rapidly solve customer problems and
help users navigate and connect to the
correct information
26
RPA Deployment Global Survey

Q:
What is your organizations level of activity relative to the deployment of robotics process
automation and cognitive automation technologies?
Enhanced Process Automation
Basic Process Automation

1%
Cognitive Automation
2%
5%
8%
9%
15%
43%
38%
19%
28%
14%
22%
36%
32%
28%
Source: KPMG Global Pulse Survey 2015Q4

27
RPA Deployment China Survey

Q:
What is your / your clients current level of activity relative to the deployment of Robotic Process
Automation (RPA) technologies and systems?
KPMG observed large scale cross functional RPA deployment globally, while China has
limited awareness and almost no activity
Level of activity relative to the deployment of RPA
Company
Process areas involving RPA techniques

Customer care
Advisor
Live implementations
Human resources
Supply chain/procurement Other
Experimenting and
running pilots
Finance & accounting - Other
Self-education and
planning
Record to Report
No activity
Procure to Pay
Quote to Cash
Source to Procure
0%
Company
20%
40%
60%
Advisor
80%
60%
40%
20%
0%
0%
20%
40%
Source: KPMG China SSOA Survey 2016Q1

28
Key KPMG Contacts
29
KPMG Contacts
Gary P. Nowak
James OCallaghan
Kai Cui
Partner-in-Charge
Partner
Partner
Shanghai Office
Beijing Office
Hong Kong Office
Gary.nowak@kpmg.com
Kai.cui@kpmg.com
James.Ocallaghan@kpmg.com
Webster Shao
Yong Zhu
Max Yang
Director
Director
Director
Beijing Office
Shanghai Office
Guangzhou Office
Webster.shao@kpmg.com
Yong.zhu@kpmg.com
Max.yang@kpmg.com
30
2016 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
The information contained herein is of a general nature and is not intended to address the circumstances of any
particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no
guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the
future. No one should act on such information without appropriate professional advice after a thorough examination of
the particular situation.

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2016 Q1 China Shared

Services and Outsourcing

2. About this Survey

6. Robotics Process Automation (RPA)

KPMGs Shared Services and Outsourcing Advisory Practice

The Shared Services and Outsourcing Advisory practice brings a specialized

independent member firms operating in 155 countries. Our professionals help

We apply focused research, automating tools, proprietary data, clear

About this Survey

KPMG sourcing advisors

Companies (MNC ,SOE ,POE)

Leading global business, IT,

KPMG thought leadership

New for 2016!

Primary functional focus:

Finance and Accounting

Data & Analytics

Business Outlook, growth and

Robotic Process Automation (RPA)

Improved access to capital and funding

Improving regulatory environment

Reducing SG&A Costs

Slowing Business Demand

Increasing Net Income

Shared Services Criticality

Criticality of Internal Captive Centre

Internal captive centre

Improve governance of efforts

Organizational structure design

Third Party Assistance

Benchmarking / health check

Improve governance of efforts

Organizational structure design

Third Party Assistance

Opportunity case / Business case

Real estate & facilities management

Changing How Business is Done

These types of technologies will drive exponential and unparalleled transformation of

Benefits of a Digital Labor Force

Model is scalable to the extent that

Model is scalable through technology, and is

Transformative new way of doing business

Ongoing access to low cost labor necessary

Revenue/profit correlated to people

One-Time (and limited ongoing) access

Digital Labor Automation (DLA)

Basic Robotic Process

Screen scrapping data collection

Built-in knowledge repository

Learning capabilities (e.g. learning assist)

Reading source data manuals (e.g. NLP)

High value use cases across key financial service providers

Cross check multiple systems, with

An intelligent virtual personal assistant

RPA Deployment Global Survey

Basic Process Automation

Source: KPMG Global Pulse Survey 2015Q4

RPA Deployment China Survey

Process areas involving RPA techniques

Finance & accounting - Other

Source: KPMG China SSOA Survey 2016Q1

Key KPMG Contacts

Hong Kong Office