Cost Reduction Strategies: Transformation Options Overview PPT

This PPT slide, part of the 33-slide Cost Reduction Methodologies PowerPoint presentation, outlines various transformation options for companies looking to implement long-term cost reduction strategies, particularly through Shared Services and Business Process Outsourcing (BPO). It categorizes these options based on 2 key dimensions: the degree of difficulty to achieve and the duration of implementation.

At the top of the slide, "Transformational Outsourcing" is highlighted as the most comprehensive option, requiring a commitment of 18 to 36 months. This approach involves outsourcing all non-core processes and applications to a prime contractor, emphasizing service improvements designed to enhance operational efficiency. The estimated cost reduction potential is significant, ranging from 25% to 65%.

Moving down, "Global Shared Services" and "Regional Shared Services" are presented as alternatives that focus on consolidating processes. The former involves relocating global processes to a single low-cost location, while the latter emphasizes common processes across regions, with an expected cost reduction of 15% to 40%. Both options have durations of 18 to 24 months and 12 to 18 months, respectively.

"Point Solution Outsourcing" targets specific processes and applications, offering a quicker implementation timeframe of 10 to 18 months, with potential savings of 5% to 30% per process. Lastly, "Process Consolidation" is the least complex option, requiring only 6 to 12 months and yielding modest savings of around 5% to 20%.

The slide effectively communicates that while there are various pathways to achieve cost reductions, the complexity and time required vary significantly among these options. Companies must assess their specific needs and readiness for transformation to choose the most suitable approach.

This slide is part of the Cost Reduction Methodologies PowerPoint presentation.

Developed by an ex-McKinsey and EY consultant, this presentation breaks down several cost reduction methodologies commonly used by management consulting firms.

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