SGS SA (SGSN) Earnings Call Transcript & Summary

Welcome, everybody, and thank you for joining this SGS Life Sciences presentation on how to expedite the implementation of insourced technical teams in GxP environments. My name is Mark Glass. I'm presenting today, and I head up our business excellence center, which is a central support function for our life sciences network, which includes the delivery of insourced projects. And this is where we recruit. We deploy and then manage technical teams who are providing some sort of functional service into our clients' facilities. And this work is typically undertaken on a medium- to long-term basis to support our clients' operational activities. Today's agenda is broken down into 4 main sections. Firstly, we want to consider insourcing as a managed service. Secondly, we want to go through the process of really defining project scopes, that contractual process that ensures we really understand the resourcing and technical needs of the client. And thirdly, to ensure that these projects are delivered on time, it's essential that we have effective expedited recruitment, and we're going to talk about the key elements to enable effective, timely onboarding of technical staff. And then finally, we're going to consider governance. Governance is the process through which we deliver continuous improvement, we ensure effective communications with our clients and that our performance is appropriately managed and delivered. So let's consider what are the drivers for insourcing as a managed service. So what are the things that make us need to manage our resources when we deploy them into our clients' locations? And this has a lot to do with the specific needs of the life sciences industry, which is increasingly using contingent workforce solutions, i.e., managed insourced services to reduce cost, permanent headcount, support ongoing capital investment and commercialization activities by accessing variable human resources. To support this effectively, resource providers need to have a strong operational and regulatory compliance knowledge of the client operations and be able to add value through ongoing technical support and governance. So the service provider really needs to understand customer needs within a regulated environment. Additionally, these deployments have a supervisory component to mitigate co-employment challenges, which can only be effectively delivered again with direct operational understanding of client activities. So let's consider what is a managed insourced solution. First of all, they are medium- to long-term projects. So assignments of 6 months typically is a minimum, often being permanent deployments. They may vary in size over time. But often, these deployments result in a permanent functional service. There is typically a minimum of 2 FTEs, 2 people involved, and that enables on-site supervision but also the provision of off-site management from a technical and supervisory perspective. We'd be providing technical quality professionals and support staff for deployment within regulated environments, be it GxP or ISO, with an R&D for commercialization, manufacturing functions of biopharmaceutical and medical device company. The resourcing can be global in nature. We provide contract and payroll infrastructure and the general induction before site-specific client training. The project is managed on an ongoing basis. And a key component of that is governance, where we use KPIs to monitor, manage and improve performance over time. And then as I said, the managed service involves off-site management that can provide technical oversight and assistance in collaboration with the client. So with those things considered, what are the key elements for successful implementation of an insourced solution? So it needs to combine scientific operational knowledge and progressive recruitment expertise and the infrastructure in order to do that. You need dedicated people, dedicated project delivery and relationship management resources and global coverage, offering regional expertise in both technical and recruitment compliance while leveraging centers of excellence and learning from best practice across the organization. This graphic represents our global presence and the locations we have that deliver our managed insourced solutions. There are 2 basic types. One are our SGS offices where we have recruitment and project management professionals who work on each project, liaising with the client to deliver the requirements. And then secondly, we have our global network of life laboratories where we have technical operational quality professionals who support our insourced projects from a technical oversight perspective. And that combination of regulated life sciences laboratories and dedicated recruitment and project management locations allow us to deliver our service globally but with the understanding of local regulatory and recruitment requirements. So to ensure a successful project initiation and management, it's really important that you have a clearly defined project scope and a contractual process from definition to delivery. So as I said, there are often regional considerations to be made when looking at these projects. So it's important to have a regional contractual framework, and that ensures compliance with variations in local regulation. Then it's important that the functional requirements, the activities that the client is requiring resource support on, is interpreted correctly and is fully understood. Part of that is then a risk assessment. Once those functional requirements are defined, a risk assessment needs to be undertaken, both from a scientific or technical perspective but also a recruitment one to understand the feasibility of identifying the appropriate resources in the appropriate time frame. From that then, we would develop a resource and delivery plan. And when considering ongoing project management, we would decide what are the critical measures and KPIs to use and what cadence of governance, how often would we engage with the client to ensure ongoing performance delivery. And then we would describe those commitments, those services and service levels in an SLA, a service level agreement, which we would sign with the customer for a specific project. So once we've gone through that, scoping of project requirements and the contractual process, we will have developed a proposal. And that proposal will have key elements, which demonstrate the parts of the project that require a clear definition and understanding. And this is typically done under the scope of a master services agreement and appended to it as a specific project scope of work. So first of all, to reflect the functional requirements on how we organize ourselves, there would be an organizational chart with implementation milestones to the points at which we would onboard specific individuals or resources to support the project and the -- where the people will fit in that organizational chart to deliver the service. With each individual within the organizational chart, we will have profiles of the individuals and their corresponding job descriptions and then functionally, what they will deliver in terms of service. And then that's described through key performance indicators and the ongoing review through governance. We would also describe the employment contract types for each individual within the organization chart, and they will vary from temporary types of employment through to permanent. And again, it's having our global contractual framework in place that allows us to define those employment types and options quickly and clearly to the client. And then, of course, the charges, the cost for the work, and that can be defined per resource required. But also, it can be associated with the deliverables that are part of the overall service provided by the insourced team in place. There would typically be a minimum duration that would be defined in the proposal and then a change control mechanism. The idea of a contingent workforce solution is that they are flexible, and they can change to meet ongoing client requirements. And so we have a clear mechanism of change control where we can vary the types and size of the teams and resources accordingly. So now that we've considered insourcing as a managed service, I want to focus on a key element of the overall project delivery model, and that's effective expedited recruitment. If we can't identify appropriate personnel and resources quickly, as these projects are always time-sensitive, we won't deliver on our clients' expectations. To understand resource requirements, search and onboard effectively, the following elements really need to be in place. We've got to have dedicated teams for technical and recruitment assessment and proposal development. So those are scientific staff and recruitment teams working collaboratively to assess both operational technical elements and the recruitment and human resource aspects of the project. We need to proactively develop profile templates, job descriptions, and have those organized in the database, so that they are quickly and easily acceptable and reflect the expected client requirements that we typically encounter within the biopharmaceutical and medical device industry. With those profiles defined, we can recruit proactively. And what we do is create candidate pools, which are identified candidates for technical areas and specialisms that we expect to be required to deliver for our clients. And that means that we've done some base work in terms of recruitment and identifying appropriate resources when specific project requirements are defined. To facilitate that, we use technology. We use applications to allow us to interact effectively with our clients and the candidate population. And I'll describe that in a later slide in more detail. It's very important, as I've said, that you have a regional understanding of the differences in recruitment market requirements and then to be able to support that from a payroll and a contractual process is critical. And then there are a number of specific elements that need to be supported, insurance, medicals, HSE, generic induction processes and having the infrastructure and arrangements in place to be able to provide those components as part of the overall service. One of the key elements that I mentioned before was proactive recruitment and candidate pooling. This is a slide that indicates the functional areas that we would focus on when we're proactively identifying candidates in the employment market. So it may be from a regulatory perspective, managers or associates, general project management. On the more operational and laboratory side, it could be support staff, managing samples. It could be QC analytical within different technical areas such as microbiology, chemistry, biochemistry. It could be more developmental activities like method development and validation, environmental monitoring, manufacturing support or potentially, stability program management. When we have deployed teams in these areas, we would always have a supervisory rollout off-site and an on-site manager responsible for the overall cadence of governance. The recruitment platform is the technology that we use, the application that we use to manage different aspects of the recruitment activity. We like to have a clear audit trail for applicant tracking. So we know exactly where any particular applicant is in terms of the overall onboarding process. The platform is also a storage facility for all related documentation related to recruitment for the project. It also allows us search keywords on our CV database to expedite recruitment and allows us to manage the contractual process and the interactions with the client when we're progressing that activity. The platform always also provides a portal and access point with the clients and candidates to interact with us, either to change scope of a project or define profiles or job descriptions or to make applications and provide necessary documents like resumes or CVs for its particular position from a candidate. We can use the application to actually post job requirements within an overall project. And in addition, it's integrated with other related platforms, so that we provide a seamless onboarding experience for our candidates, including integration with payroll software. So in summary, our recruitment platform is an application that allows us to manage the 3 key components of an insourced delivery model. First of all, the interface with the clients, so we can clearly define and manage the delivery of projects. Secondly, it allows us to effectively manage the operational aspects of recruiting and onboarding. And then thirdly, it gives us a very expeditious and effective access to the recruitment market and potential candidates for any given project. And in doing so, it gives the stakeholders access to key information in real time. Once initial recruitment activity is complete, it's essential that governance and performance management is supported appropriately. There are some key elements to this. There needs to be an objective assessment of performance through the use of KPIs and implementation of resultant improvement initiatives and actions, and this is essential for success. Within that, there must be clear rules and responsibilities between the client and service provider, and there must be a regular cadence of review between the parties with a very structured agenda. There needs to be a defined process for issue escalation and problem resolution. The KPIs need to reflect both technical, operational requirements and also human resource aspects. And as we mentioned before, this needs to be encompassed within a clear service level agreement between the parties. So this is an overview of a typical governance process. So we often have a monthly review, which will involve the distribution of a periodical KPI report and then quarterly face-to-face stakeholder engagement. It's important to have appropriate stakeholder representation from both sides, and we typically have both operational, quality, HR and also people considering the commercial aspects of the relationship around those at least quarterly engagements. In terms of KPIs, as we said, they need to reflect the key technical and operational deliverables but also aspects of recruitment, so time to recruit, staff turnover levels. Let's say within a QC analytical environment, we would also be looking at turnaround time, right first times, measures relating to the QMS, be it deviations or CAPA, and also the review of the training matrix, a gap analysis and remedial training or cross-training initiatives to address any gaps that are evident as part of that ongoing review. So in summary, we wanted to consider a case study and take you through the engagement process and describe the key project deliverables and outcome. So there are 3 main stages that we've described. There's the engagement where we discuss potential requirements. We develop that proposal. We assess it from a compliance and a feasibility perspective and finalize that scope and contract with the client. Then we move into the delivery phase where we're finalizing profiles and undertaking the recruitment activity and onboarding the resources, finalizing and implementing the KPIs and doing a T-0 or initiation project kickoff meeting with all the key stakeholders involved to establish that governance process, which will be led by the client and the SGS team manager. And then when we get into steady state, it's an ongoing cadence of governance where we're reviewing the project at an operational, a quality and a commercial level on an ongoing basis. So as a result of that engagement process, this is an insourcing case study we wanted to describe to you, which involved a global pharmaceutical client that was establishing analytical QC activities to support new product development. And so they required a team of QC analysts to perform activities relating to method development, release and stability. So initially, quite a lot of method establishment and then moving into a more steady state of QC release and stability study conduct. So as part of the process, we provided candidate profiles and defined job descriptions with the client. We then were able to access our candidate pools and shortlist and interview candidates to onboard within 6 to 8 weeks. This was an initial team of 8 FTEs, which has grown over the first year of the project to 40. And the project is now in its fourth year of operation. Once selected, the FTEs were onboarded onto SGS payroll and employment contracts. Ongoing team performance is managed by SGS within the client's quality management and training environment. And SGS delivers performance and technical support to the insource teams. Regular governance and business review cadence, including KPIs, ensure that value is delivered to the pre-agreed service levels defined at the scoping phase of the project. So taking an insourced managed service approach where we share responsibility closely with the client for overall performance delivery creates value. First of all, the team resources onboarded in industry best time frames, leveraging the technology we have to access appropriate candidates against technical specifications quickly and with clear communication to the client. The administrative burden for the client is minimized with only onboarding oversight and ongoing governance engagement required. Day-to-day execution management is the responsibility of SGS. Performance and continuous improvement framework was implemented within the SLA and ensures the ongoing maintenance and improvement of performance but still maintaining flexible terms, so that the team size can be flexed to meet changing demand. We use our expertise to ensure that employment legislation is complied with and that we use our life sciences network infrastructure to provide off-site technical and development support for the team within our clients' location. Well, we hope the presentation gave you an overview of the key elements required to expedite the implementation of insourced teams into regulated environments within the biopharmaceutical and medical device industries. We're going to follow now with a question-and-answer session. So please, I encourage you to submit any questions you have, and we'll endeavor to answer those in the remainder of the webinar. Or later, we will reach out and make direct contact with you if we don't get everything covered. But thank you again for your time, and we look forward to the upcoming Q&A.

Thank you, everyone, for submitting the queries for Q&A. I'm joined here with Samantha Badreddine, who's our -- heads up our global recruitment operations. And so just in response to the first question that we have relates to -- okay, relates to employment legislation. So the question -- and I think, Sam, if you could pick this one up for me, but the question is, within Europe, are there differences in employment legislation related to temporary working contracts?

Hi, everyone, and thanks, Mark. That's a really great question, and it's one that we're asked all the time. And as the question implies, there are really wide variances in the employment legislation between countries. But because this is what we do day to day, we're very experienced with dealing with those challenges. We have the support of the SGS local offices and experts alongside our in-house legal teams and any consultancy support, where required, from companies like Deloitte to be abreast of any employment or taxation contractual obligations. So that ensures that our solutions are always fully compliant.

Great. Thanks. The next question again is one that's posed to us a lot, and it's really focused on how we collaborate, particularly the supervisory level, with our clients. So the question is actually, how do your supervisors collaborate with tight client management on a day-to-day basis? And that is managed through very clear definition in rules and responsibilities. And the responsibility of the service provider, the insourcing service provider, is for performance management and delivery of the requirements of the service level agreement, which includes the technical and HR aspects of the management of the team. Where we collaborate with the client, obviously, working within their environment, the training and quality management system, is from a facilitating perspective. So we can reach out and obviously collaborate on the resolution of technical issues and things like that. But in terms of the deliverables of the service level agreement, that's the responsibility of SGS. So communication happens typically at a supervisory level, and then it's cascaded down to the team. But that's a good question. And I think we've got time for one more question. And it's, what role -- and Sam, if you could take this one for me, what role do the clients have in the interview and selection process?

Okay. It's an interesting question. As you mentioned in your presentation, Mark, all of our solutions are fully customizable and can be tailored to our clients' needs. And it's exactly the same for the hiring process. So we're mindful of co-employment exposure, so we always factor that in. But our clients can be as involved or as hands-off as they choose to be. If the client just wants to see the CV of the person that we've selected, that's fine. Or if the client would like to conduct their own interview to assess team fit or technical ability once we've shortlisted a candidate, then that's fine, too. So to get the best out of our insourcing solution, we work really closely with our clients and always act as an extension of them anyway. So we'd like to think that we know what kind of talent makes our clients pick. But of course, there's nothing like the peace of mind you get from speaking to the new member of the team yourself. So yes, we can be really flexible on that.

Okay. Excellent. Okay. Well, with one eye on the clock, I'd just like to thank everybody for attending today. We do have a number of other questions, which we will reach out to you directly on after the webinar. So again, just thank you for affording us the time to join the webinar today. Thanks very much.

Thank you.