McKinsey-Morocco_BPO_case_for_colombia_compites

1. Establishing Morocco as a credible
French-speaking offshoring destination
p g g
1. Positioning : Morocco’s approach to building globally
competitive exporting industries
2. Concrete impacts on the ground : Acceleration of growth in
French-Speaking Offshoring
Cali, November 10th 2008

2. AGENDA
1. Morocco’s approach to building globally competitive
exporting industries
• Strong focus on Priority Sectors – as “fuel” for transversal
reforms
• “Flagship Projects”/Special Zones as forcing devices for fast
impact on the ground
• Government as a Strategic Architect (shaping, impulsion)
• FDI as an accelerator and credibility tool
• Discontinuity in means for a discontinuity in impacts
2. Concrete impact on the ground
• Achievements t date in 3 core sectors : T i
A hi t to d t i t Tourism, A t
Automotive,
ti
BPO/Offshoring
• Zoom on BPO/Offshoring : acceleration of growth and leadership in the
French-speaking world
1
1

3. MOROCCO: THOROUGH VISION BUILD ON 4 MAIN PILLARS
“Plan Azur”: The Tourism “Emergence Program” :
pillar – 10 million tourists A focused industrial
by 2010 policy to boost exports
growth (7 sectors)
• Holistic Vision
(economic and
social)
• Prioritization taking
into account
country means
(
(financial,
managerial)
• Exports as the
primary economic
growth engine
(GDP, hard
currency)
Improvement of existing Human Development
infrastructure and initiatives and social
liberalization
lib li ti investment (INDH)
i t t
2
2

4. OVERVIEW OF THE MAJOR INITIATIVES FOR THE COUNTRY
• Traditional economic pillar of the country ; leveraging the natural
attributes of Morocco (proximity to Europe, climate, history, culture. etc.)
“Plan Azur”: The • “Plan Azur” articulated around 5 dimensions (image, hotel capacities,
Tourism pillar – 10 airline capacities, real estate development, training)
million tourists by • Development of 6 new sea-side integrated resorts (~200,000 beds)
2010
1. Automotive 5. Fish processing
“Emergence
Program” : A 2. BPO/ Offshoring 6. Textile
focused industrial 3.
3 Aeronautics 7.
7 Handicraft
policy to boost
exports growth 4. Agribusiness
(7 sectors)
• Roads & Highways : (1’000 km of highway roads, 15’000 km of
Improvement of conventional roads)
i l d )
existing infrastructure • Ports / « Tangiers Med »: Launch of a new international large-scale port
and liberalization • Energy: new generating capacities / liberalization (PPA)
• Utilities: major investments in water/sewage; new concessions of public
services in largest cities
• New Cities and social housing p g
g programs (
(200’000 units)
)
Human
Development
Initiatives and
• INDH : National program to improve quality of life and opportunity for the
poorest of the poor
social investment
(INDH)
• But also numerous structural political and social reforms (e.g. Women
rights - new civil code)
3
3

5. 4 KEY DIMENSIONS CONSIDERED TO SHAPE MOROCCO’S Moroccan
approach
POSITIONING IN THE GLOBAL MARKETS
Cross-cutting reforms Sector focused approach
Economic policy
approach • Create positive business environment • Prioritize sectors where country has
(e.g., taxes, doing business, justice) competitive advantages (e.g., labor natural
• Natural development of economy/ resources, geographic position)
sectors (let the market do the rest )
( • Set sector specific reforms ( g taxation)
p (e.g., )
Pragmatic and actionable and incentives
approach
• Factoring country Widespread across nation Focus on flagship projects/Special
specificities Implementation Economic Zones
scope/ pace
– Execution capabilities Full territorial All strategic Prioritized Pilots on Special
limitations of the implementation + sectors g
strategic + Economic zones
country (scarcity of simultaneously sectors (impact&
skills, funding feasibility)
constraints)
– Local industry
structure/scale (mainly Owner of productive
SMEs) Strategic Architect Pure Market regulator
Role of assets
government • Strategic shaping role • No intervention as
• Strong involvement in ((frame conditions) operator or shaper
• Incorporating core productive sectors
• Impulsion role on key • Role focused on market
leanings from other • Significant presence/ sectors / reforms Risk regulation only
emerging countries ownership of companies taker of last resort
economic approaches
Target industry Dominant state-owned National Competitive private sector
structure Champions
• Government control of major companies Local private Foreign Direct
in productive sectors companies + investors
• Build-up of National Champions Columbia
Discontinuity in results Discontinuity in means/ methods
• Special delivery units (e.g., Economic Agency, Country FDI Promotion Arm)
• Significant public investment (core infrastructure, training, incentives) 4
4

6. A COHERENT, INTEGRATED AND PRAGMATIC INDUSTRIAL PROGRAM
AROUND 8 KEY SECTORS AND ~15 “FLAGSHIP PROJECTS”
1
Overa vision /
rategy
• Overall forward looking
Portfolio definition of country
all
Strategy & positioning
str
Strategy development
t
Sector • Prioritization of key sectors
prioritization based on natural competitive
advantages
2
y
Tourism Automotive
ector Deep-
• Development of sector-based
dives"
BPO / Aeronautics Agro-
Offshor- business comprehensive strategies
ing
over a 5-10 year period
“Se
Fish
process-
Textile Handicraft 8 key
ing sectors
3
Implementation
6 Touristic 2 Auto. Cities 2 BPO zones
- Tangiers - Casablanca
"Flagship
projects”
Resorts • Development and launch of
projects
- Kenitra - Rabat
concrete "flagship projects”
• Visible results within 12-18
1 Aeronautic 2 Fishing Hubs 2 Agropolis
city - Agadir - Meknes
months ~15
(Nouaceur) - Dakhla - Berkane flagship
projects
5
5

7. “FLAGSHIP PROJECTS” : WINNING THE BATTLE FOR CREDIBILITY
‘’Plan Azur’’ : World-class integrated resorts
• Saïdia • Mogador
Tangiers
• Khémis Saleh • Taghazout
Saïdia
• El Haouzia • Plage blanche Khémis Saleh
Kenitra Gharb
Dedicated BPO/Offshoring Zones Rabat
Casablanca
Nouacer
• CasanearShore (Casablanca) El Haouzia Meknes
• Technolpolis (Rabat) Fez
Mogador
Essaouira
Taghazout
Industrial outsourcing Zones Agadir
• Tangier Automotive City
• Kenitra Automotive City Guelmim
Plage blanche
g
• Nouacer Aerospace City
Dedicated “Agro-Centers”
• Agropolis – Meknès
• Agropolis - Gharb
g p
• Agropolis - Souss Massa Draa
• Agropolis Berkane
Dakhla
Regional processing center – Fishing
Transformation Hub
• Agadir Fish hub
• Dakhla Fish hub
6
6

8. AGENDA
1. Morocco’s approach to building globally competitive exporting
industries
• Strong focus on Priority Sectors – as “fuel” for transversal reforms
• “Flagship Projects”/Special Zones as forcing devices for fast impact on
the ground
• Government as a Strategic Architect (shaping, impulsion)
• FDI as an accelerator and credibility tool
• Discontinuity in means for a discontinuity in impacts
2. Concrete impact on the ground
• Achievements to date in 3 core sectors : Tourism, Automotive,
BPO/Offshoring
BPO/Off h i
• Zoom on BPO/Offshoring : acceleration of growth and leadership
in the French-speaking world
7
7

9. SYSTEMATIC APPROACH ARTICULATED AROUND 5 KEY THRUSTS
detailed in
following pages
Key strategic exporting sectors identified
In-depth sector fact-based diagnostic from the
1 Tourism standpoint of Business Operators (international
and national)
2 Automotive
Development of deep sector strategies (target
sector-strategies
3 BPO/Offshoring niches, key strategic thrusts in all dimensions)
4 Aeronautics
Development of pragmatic Sector Master plans
articulating clear priorities on all key fronts
5 Agro-business
6 Fish processing Parameterization of flagship projects
(location, key infrastructure, training plans,
incentive schemes )
7 Textile
Development of government-led sector
8 Handicraft promotion targeting key markets & FDI partners
8
8

10. 1 KEY THRUST FOR TOURISM STRATEGY
Aspiration to become the 2nd Cote d’Azur –
10 millions tourists by 2010
– Targeting of top 3 European markets - 200
million people less than 3 hours from Morocco
p p 6 resorts coming
– Reposition Morocco as a preferred on-line from 2010
beach/cultural destination for European tourists and onwards (until
2015)
Number of international tourists in Morocco,
Very aggressive sector-wide reform agenda millions
– Liberalization of air access with Europe (open 10
sky)
– Favorable incentive scheme (easy/cheap 9 7,5
access to land, exemption of taxes for resort
Tourism developers, improvement of financing access) 8
– Financing of training to scale-up in HR
7
Development of 6 world-class sea-side 6
resorts
– Strategically located (Atlantic/Mediterranean 5 4,5
coasts)
– Innovative approach to resort design 4
(integration, style) 2001 2008 2010E
– Massive capacity increase ( (200,000 beds) )
Massive government-led promotion effort Strategic
impulse
toward world-class potential FDI partners
(e.g. Kerzner International, Dubai International
Properties)
9
9

11. 2 KEY THRUST FOR AUTOMOTIVE STRATEGY
Aspiration to become the industrial
automotive backyard of Europe • Renault-Nissan
assembly plant
– Focus on 2 types of players: car-makers and coming on line
equipment manufacturers
• Capacity to build
– Focus on countries regions with strategic 200,000 cars p.a.
delocalization agendas (e.g. Southern from 2010
France, 6 Spanish regions) Automotive jobs in Morocco,
Thousands
Development of a Government-led Value
70
Proposition around Dedicated automotive 75
cities 60
50
50
Automotive World-class port and integrated logistics
14 km away from Europe 40
30 27
Targeted training plan and training 18
subsidies (academic, on-the-job) 20
10
Special incentive scheme including 0
industrial free zones
2001 2005 2008 2010E
Government-driven promotion of
Morocco’s automotive value proposition Strategic
(Prime Minister) impulse
– 6 Spanish regions for Tiers 1 and Tiers 2
equipment manufacturers
– Direct discussion with Renault-Nissan Group
CEO
10
10

12. 3 KEY THRUST OF BPO/ OFFSHORING STRATEGY
FIGURES EXCLUDE DOMESTIC MARKET
Focus on natural markets for Morocco :
French-speaking nearshoring
– Target French speaking countries (France,
Belgium)
– Seek BPO activities fitting Morocco’s natural
intrinsic (e.g., language, geographical/ cultural Offshoring jobs in Morocco
proximity, business practices) Thousands
50% of
objective
Development of a Government-led Value 60 [100,000 jobs
Proposition around Special BPO Zones by 2013] 52
50
BPO/ World-class infrastructure and services 40
Offshoring 32
(esp. real-estate, telecom)
30
Aggressive training plan and training
20
subsidies (academic, on-the-job) 10
10
1,5
0
Competitive incentive package and doing 2001 2005 2008 2010E
business
Strong promotion effort in target countries Strategic
impulse
led at the highest level of the Moroccan
State (Prime Minister, Minister of Industry)
St t (P i Mi i t Mi i t fI d t )
11
11

13. POSITIONING STRATEGY – TARGETING OF KEY OFFSHORING
BUSINESS/PROCESSES
Geographic targeting Offshoring processes targeting
• Importance of French language
Main targeting
criteria • Similar business practices
• Geographical proximity/management high-touch
• Adapted Process (simplicity, IT operability)
12 “natural”
natural
3h from processes for
Paris Morocco
3 industry-specific •Banking: payments processing
1 h from processes (checks)
Madrid
(
(banking
g •Insurance: Contract Administration,
claims management
& insurance)
•Accounting and Finance: handling of
6 functional mass accounting processes (A/R, A/P)
processes •Customer care: basic voice, sales
(
(Inbound & outbound))
PriorityFrench speaking countries :
1: French speaking •HR: Payroll processing, Personnel
admin.
• countries (France
France
• mainly)
Belgium 3 IT-related • Help desk
processes • Application development (tiers 2)
• Switzerland • Application maintenance/management
(legacy systems)
PrioritySpain
2: Spain
12
12

14. MOROCCO’S OFFSHORING VALUE PROPOSITION
Structural advantages
St t l d t
of Morocco Morocco value proposition : A clear business case
for captives
9 commitments on 3 critical
• Geographical, cultural dimensions • Massive reduction in costs
and economic - 60-70%
proximity to France
Dimension 1
• Human resources pool
“World Class“
at competitive costs • Strategic case and “option
infrastructure and value” (defense)
• Good infrastructure services
Dimension 2
A decisive offshoring Competitive human
p
Strategy resources pool and A clear business case
training subsidies for providers
• Special BPO zones (real
estate, telecoms) • Strong cost reduction
• World-class
W ld l
Dimension 3 ~40%
infrastructures
Competitive Incentive
• Targeted education plan package • Strategic case (growth)
• Aggressive incentive and “option value”
packages (defense)
• Strong promotion effort
13
13

15. OVERVIEW OF THE "MOROCCO VALUE PROPOSITION"
Dimension 1 O1
“World Class“ • 2 zones (CasaShore, RabatShore) specially dedicated to
infrastructures Dedicated
offshoring with infrastructure and services of the highest
and services zones
quality at competitive costs (e g rental costs at USD
(e.g.,
8/m 2/month)
O2
Dimension 2 • A first-class telecom offer – guaranteed technical and
Competitive human Outstanding commercial SLAs and costs in line with most competitive
resources pool and telecom offer locations (USD 7,800/month for a 2 Mbits leased line to
training subsidies
France)
a ce)
O3
Dimension 3 • A "R d for Output" approach iincluding an offer of
"Ready f O t t" h l di ff f
Competitive "Ready for
Output" furnished offices (e.g. ~300,000 m2 on CasaShore) and
Incentive
package approach 10-12 on-site "business support services” provided by
international suppliers selected on a competitive basis
14
14

16. CASASHORE : THE LANDMARK PROJECT OF MOROCCO’S
OFFSHORING STRATEGY
• ~ 53 ha site
• ~300,000 m2 of world-class
infrastructure office space and
facilities (including Telecom)
Key developments:
• Launch of site development
in Q2 2006
• Delivery of nearly 60,000m2
by Q2 2008
(fully operational)
• Upcoming 2009 45,000m2
completely sold out
• Acceleration of construction
due to strong demand from
40,000m2 to 50,000m2 per
year
15
15

17. A “READY FOR OUTPUT” OFFER – HIGH QUALITY BUSINESS
SERVICES PROVIDED BY INTERNATIONAL SUPPLIERS NON EXHAUSTIVE
A Business services
Dedicated client services
s
Administrative IT Recruiting Office space Business Others ( events.
facilitation : operations support organization Center Travel)
SPOC* support
d
B General services for the zone
Telecoms Catering Transportat Hospitality Sports & Postal and Others (stores,
ion
i (Hotels)
(H t l ) leisure
l i financial
fi i l daycare, etc.)
d t )
services
services
C Facility Management
On-site
Facility Security Reception Cleaning Parkings Utilities
Management desk & Help services (Power
line supply)
* Single Point Of Contact 16
16

18. RENTAL COSTS IN LINE WITH THE MOST COMPETITIVE
DESTINATIONS BACK UP
USD / m2 / month
Chennai class C 4
Hyderabad Class C 5
Kolkata Class C 5
Bandwidth Barn 7
Delhi Class C 8
Casa Shore – class A 8
Bucarest - Gelati Region (BPO specific) Class B 9
Prague Cl
P Class B - N C t l min
Non Central i 9
Mumbai Class C 10
Prague Class B - City Centre min 12
Mauritius Cyber City 12
ITP min Bangalore
min, 12
Budapest - Normal office min 13
Bucarest Class B min 14
Chennai Tidel Park 15
Casablanca Zénith Millénium 16
Prague Class A - Non Central min 16
Dubai - DOZ 18
Bucarest Class A min 19
Prague Class A - City Centre min
g y 19
Budapest - Prime office 21
Dubai - Quality office (lower end range) 32
17
17

19. VERY COMPETITIVE TELECOMMUNICATION COSTS
BACK UP
USD,
USD monthly cost of a 2 Mbits International leased line to Paris France
Paris-France
15 900
13 600
11 100
8 500
7 800
Morocco’s ~ -50%
objective
3 500
South of Morocco India Romania Tunisia Czech
France Republic
p
Source: Maroc Telecom, Tarifica 18
18

20. OVERVIEW OF THE "MOROCCO VALUE PROPOSITION"
Dimension 1
“World Class“ O4
infrastructures Large, • Large and very competitive potential HR pool, notably
and services competitive Bac+2 - Bac+4 : annual production of 60–70,000
HR pool French speaking target profiles
Dimension 2
Di i
O5
Competitive human Voluntary • Proactive National Training Program focused on building
resources pool and national key competencies around 16 profiles (Software
training subsidies training Engineers, Database manager, Banking back-office
program employees, Client services operators …) – with the
objective to train ~20,000 to 30,000 associates between
2006 and 2009
Dimension 3 O6
Competitive Competitive • Subsidy of 100% of initial training costs and 75% of
y g
Incentive subsidies for continuous training costs
package on-the-job • 5,000 USD subsidy per employee (average; variable by
training
profile)
19
19

21. DECISIVE NATIONAL TRAINING PROGRAM
Planned training volumes by end 2009
Cumulative
Specific profiles (not exhaustive) by end 2009
a
Management •
a1 Offshoring platforms manager (operations) 100–200
(2 profiles) a2 Project management for offshoring platforms (feasibility study, assembly ...)
• managers
Bac +5
5
b
Engineers •
b1 Software Quality Engineers sector (applications, software ...) 2,000–3,000
(2 profiles) •
b2 Network and Systems Engineers sector (WAN, LAN ...) engineers
c •
c1 Developers (Java, C++ ...)
•
c2 Database manager (Oracle, Sybase ...) 3,000–4,000
Technicians
• technicians
Bac +2 – Bac + 4
(5 profiles) c3 Enterprise application manager (SAP ...)
•
c4 Network technician (router, LAN/WAN, servers ...)
•
c5 PC pool (hardware) and office automation manager
d •
d1 Accountants (French norms, IFRS ...)
Qualified 10’000 –15,000
•
d2 Banking back-office employees (payment managers ...) admin. staff
Administrative
•
d3 Insurance technician (contract management claims manager ...)
management, )
(5 profiles)
•
d4 Personnel manager (wages, social security declaration ...)
•
d5 Client services operators (active sales/outbound)
e
Bac + 2
Basic •
e1 Client services operators (passive sales/inbound) ~5’000–8,000
Administrative •
e2 IT help desk (level 1: office automation) operators
t
(2 profiles)
20,000–
30,000
20
20

22. OVERVIEW OF THE "MOROCCO VALUE PROPOSITION"
Dimension 1 O7
“World Class“ • Individual Income Taxes (IGR) capped at 20% “flat rate”
infrastructure and Aggressive for both nationals and expatriates
services fiscal incentives • Total exemption of corporate tax for the first 5 years ;
50% exemption for the following 5 years
• Limited import duties on hardware/software (@2.5%)
• Free repatriation of profits, dividends and capital
• Free operation of foreign currency accounts
Dimension 2
Di i
Competitive human
O8
resources pool and • Single window clearances on the zone (CasaShore)
training subsidies "Lighter" • Total flexibility of the new labor code (e.g., clear and
administration simple rules for hiring/firing)
Dimension 3
Competitive
Incentive O9
• Additional and specific incentives on top of Morocco’s
package “First Movers Offshoring Value Proposition for first movers with
premium" clear commitments in the BPO arena (activity levels,
e p oy e t)
employment)
21
21

23. INCENTIVES : AMBITION TO POSITION MOROCCO IN THE FIRST
TIERS OF MOST ATTRACTIVE COUNTRIES Former position of Morocco
Current Morocco Offer
First tier countries in terms of
aggressiveness of offer
Description Increasing aggressiveness
Most aggressive countries
1 Income taxes (national
employees)
2 Income taxes (expatriates)
3
Corporate tax
4
Custom duties
5 Training subsidies
6 Set-up subsidies
7
Lay-off costs
22
Source: Analyses McKinsey 22

24. STRONG PUBLIC INVESTMENT FOR CASANEARSHORE ZONE WITH
ALMOST USD 250 MILLION
HIGH LEVEL ESTIMATES
USD million Subsidies for trainings and fiscal calculated for a 5 7 years period
million, 5-7
250
50
0
Indirect subsidies –
140
National training
program*
40
Direct subsidies –
On-the-job training
100
60
Infrastructure
I f t t Training
T i i Fiscal
Fi l Total
T t l costt
Subsidies Subsidies Subsidies of incentives
(Land Access)
* Pre-recruiting 23
23

25. STRONG INITIAL IMPULSE FORWARD BY ACTIVE ON-GOING
PROMOTION
On-going
Initial impulse promotion
Objective: • Create political goodwill in France around • Prove the strategic relevance of Morocco
Morocco’s offshoring value p p
g proposition as the destination of choice for French-
speaking offshoring
Audience: • Targeting of CEOs of Top 30 French global • Targeting of CIO/COO of Top 100
companies (across all sectors) companies as to discuss concrete
• French government officials through offshoring opportunities in Morocco
institutional cooperation bodies (building on success-stories)
Mechanism: • High-profile road shows as the primary • Yearly event in Paris (“Maroc Offshore”)
marketing tool at 3 levels with presence of key officials of both
– Direct promotion in France at the highest countries
level of the state (Prime Ministers) – Potential clients
– Offshoring suppliers operating in Morocco
– Activation of GIEFM (Moroccan-French (success stories)
Economic Impulsion Group)
• Continuous support of the Moroccan State
– Official presentation of Moroccan value (Moroccan secretary of state for trade and
proposition by officials industry)
24
24

26. IN LESS THAN 2 YEARS MOROCCO’S OFFER ATTRACTED MAJOR
PLAYERS, MAINLY IN IT OUTSOURCING
Almost 20 out of 50 first IT providers operating in Major French captives installed in Morocco –
France installed in Morocco mainly banks and insurances
25
25

27. CASABLANCA ALREADY THE FRENCH-SPEAKING
NEARSHORE DESTINATION OF CHOICE
GLOBAL FRENCH FINANCIAL INSTITUTION
Distance from head office
Onshore Nearshore Offshore
Casablanca in the
Strong
Hyderabad
top 5 (out of 37) of
ion
New Delhi
potential offshore
Attractivenes of destinati
S
Casablanca Mumbai
destinations
Darlan
analyzed (at par
DublinLondon Shanghai
Amsterdam Prague
Sofia with Indian cities)
Rotterdam Guangzhou
Kuala Lumpur
Swindon
ss
Brussels Budapest
Manila
Milan Florence Bucharest
B h t
Peterborough Luxembourg
Barcelona
Weak
Madrid Lille Warsaw
Nantes
Leipzig Kiev
Zurich
Geneva
Frankfurt
Nuremburg
Moscow
Best • London • Hyderabad, India
location • Casablanca
• Dublin • New Delhi, India
26
Source:McKinsey 26