FTE headcount dropped from PEAK Matrix assessment of outsourcing service providers
DALLAS, JUNE 10, 2015 —Everest Group announced today that it is significantly increasing the weighting assigned to assessing intellectual property (IP) and innovation in its proprietary PEAK Matrix™ assessment of outsourcing service providers, as those service dimensions have taken center stage in the value perceptions of enterprise buyers. Conversely, it is dropping the use of FTE headcount as a metric, as the size of a provider’s delivery talent pool has become irrelevant with advances in technology.
Although Everest Group regularly fine-tunes its hallmark assessment tool, the three key modifications announced today are intended to align the company’s PEAK Matrix assessment methodology with evolutions within the global services market:
- IP and innovation: The weighting assigned to IP and innovation has been increased markedly to reflect their rising significance in the global services market.
- FTE count: FTE count has been dropped as an assessment dimension. As technology increasingly fills the roles FTEs had managed in the past–at lower cost and often better outcomes–the size of a provider’s delivery talent pool is increasingly irrelevant.
- Scale: The provider’s overall scale (a combination of financial strength and focus on the service area being assessed) will remain as part of the assessment, but will decline in importance in the evaluation, making room for innovation to take on a larger role.
The Everest Group PEAK Matrix is a proprietary framework for assessing the relative market success and overall capability of service providers based on Performance, Experiences, Ability and Knowledge.
Each service provider is comparatively assessed on two dimensions:
- Market success, including factors such as revenue or annual contract value, number of clients and growth; and
- Delivery capabilities, including factors such as financial strength, scope of services, delivery footprint, investments in domain, technology and innovation, and buyer satisfaction.
The resulting matrix categorizes service providers as Leaders, Major Contenders, and Aspirants, a new name that more accurately reflects the characteristics of category members than the former Emerging Players. Companies that demonstrate strong upward movement in successive reports are recognized as Star Performers.
The recalibrated methodology announced today offers benefits to both service providers and enterprise buyers of outsourcing services.
- Providers receive recognition for bringing innovation to clients and the market, and they suffer less negative impact for being comparatively “sub-scale,” provided they are demonstrating innovation and business outcomes.
- Enterprise buyers receive an enhanced perspective on service providers in terms of their innovation and outcome-oriented approaches. They also gain increased insights on how service providers’ capabilities align to their future objectives.
“Our fundamental principle of using a fact-based assessment methodology to evaluate the players in the outsourcing market remains, said Rajesh Ranjan, partner at Everest Group. “These changes ensure that our assessment framework continues to be aligned with the emerging and future direction of the global services market, particularly as innovation, intellectual property, digital, and technology-driven solutions become dominant forces.”
Our new methodology aligns our assessment approach to three ‘new realities’ of the global services market,” said Jimit Arora, vice president at Everest Group. “First, IT and business process services are rapidly evolving. Second, innovation, IP, and technology-driven solutions are taking center stage. And third, enterprises are placing less emphasis on service provider FTE count given rapid advancements in service delivery automation.”