Category

Press Releases

In First-of-its-Kind Assessment, Everest Group Identifies Leaders of Service Delivery Automation in Business Process Services | Press Release

By | Press Releases

Accenture, Cognizant, IBM and Wipro lead the industry in SDA impact, capabilities and vision. 

Several big names in the Business Process Services (BPS) market have emerged as leaders in Service Delivery Automation (SDA), according to an assessment just published by Everest Group.

Influential enterprises are disrupting the status quo by demanding from their service providers not only cost reduction but also next-generation benefits focused on business outcomes and enhanced customer experiences. For service providers looking to pivot quickly from an arbitrage-first model to digital-first one, SDA is the one of the key levers, according to new research from Everest Group.

SDA comprises a spectrum of automation solutions for delivering services, such as Robotic Desktop Automation (RDA), Robotic Process Automation (RPA), autonomics, cognitive computing (machine learning, deep learning and neuro-linguistic programming) and advanced Artificial Intelligence (AI). Collectively, SDA is one of the most potent levers that BPS service providers can deploy to help buyers move beyond labor arbitrage to attain valuable benefits.

In a first-of-its-kind report, “Business Process Services Delivery Automation (BPSDA)—Service Provider Landscape with PEAK Matrix™ Assessment 2017,” Everest Group evaluates 18 leading broad-based BPS service providers relative to their SDA market impact and overall vision and capabilities. Employing its proprietary PEAK Matrix framework, Everest Group segments the providers into three categories of performance: Leaders (top quartile), Major Contenders (second and third quartile), and Aspirants (fourth quartile):

  • Leaders: Accenture, Cognizant, IBM and Wipro
  • Major Contenders: Capgemini, Conduent, EXL, Genpact, HCL, Hexaware, Infosys, NTT DATA, Sutherland Global Services, Syntel and WNS
  • Aspirants: HGS, Intelenet Global Services and Mphasis

“Given the importance of SDA as a key value lever in the digital-first BPS world, this report provides an in-depth analysis and comparison of leading BPS providers in terms of their progress and market impact in this space,” said Rajesh Ranjan, partner at Everest Group. “Buyer experience and satisfaction was one of the important dimensions considered in this multi-dimensional assessment. Notwithstanding better performance by Leaders, there is clear opportunity for the BPS industry to improve on buyer satisfaction to realize SDA potential. This is more pronounced in the Artificial Intelligence space.”

Other key findings:

  • Accenture and Conduent have the most number of clients with BPSDA deployments by far. They are followed by Capgemini, Cognizant, Genpact, IBM and Wipro.
  • Accenture and Conduent lead in most geographies. In APAC, in addition to Accenture, Genpact has found good traction.
  • Providers’ success differs across BPS segments. Competitive intensity is high in all other high-potential areas except contact center, which is heavily dominated by Conduent.
  • Accenture and Cognizant have the most number of FTEs dedicated to BPSDA. Genpact and Cognizant have the highest share of FTEs in BPSDA product development

***A complimentary 4-page preview of the report is available for download here.*** (Registration required.)

This new report is a part of a three-part series of research findings that Everest Group plans to publish in the BPSDA space. The next report will provide an in-depth view of the state of the industry in terms of key trends, progress and future direction.

Michel Janssen Rejoins Everest Group as Chief Research Guru | Press Release

By | Press Releases

Strong senior leadership to guide research agenda and capabilities in an era of sourcing industry disruption

Everest Group, a consulting and research firm, today announced the return of Michel Janssen to the company. Janssen, a 20-plus-year veteran of the research and consulting industries, will assume the position of chief research guru, responsible for guiding the agenda and architecture of Everest Group’s research capabilities, a division that he co-founded in 2005 during his original tenure with the firm.

“It is a tremendous pleasure to welcome Michel back to Everest Group. Having worked closely with him during his first stint and remained friends since that time, I am very excited about adding his creativity and spark to our leadership team,” said Eric Simonson, managing partner of research. “His experience in developing and scaling research capabilities will help us accelerate our evolution across many dimensions.”

As an expert in research development, Janssen has established an unequivocal track record for developing analysis and frameworks that are compelling and highly valued by clients. His return to Everest Group reflects the firm’s commitment to the growth of its research practice and its confidence that Janssen will contribute significantly to the firm’s expansion and market-leading innovation during a period when the senior executives across industries are facing significant market disruptions that call for the innovative, best-in-class application of technology and business processes.

“With his broad and varied career in the research industry, Michel is uniquely positioned to offer profound fact-based insights to enterprises and service providers alike,” said Everest Group CEO and founder Peter Bendor-Samuel. “His experience and entrepreneurial spirit will help propel Everest Group’s research practice to a new level – one that truly reflects the depth and breadth of our research capabilities, including our focus on digital transformation. We are pleased to welcome him home.”

Prior to rejoining Everest Group, Janssen spent a successful decade serving as chief research officer at Market Track, where he more than tripled the practice’s revenues during his 3 1/2 years there, and at The Hackett Group, where his contributions to innovating the research methodology and enhancing the market relevance of research services helped the company expand its practice by more than 15 percent annually. Earlier in his career, Janssen held analyst positions with Gartner and service leadership roles at EDS. He is widely quoted in news media as a subject matter expert on applying business insights and is a prolific contributor of thought leadership to conferences.

In addition to Janssen, Alan Wolfe, who brings 30 years of sales and sales management experience with leading research and consulting firms, joined Everest Group in the role of senior vice president of sales in May 2017. A dynamic and versatile sales leader, Wolfe helps generate revenue and income growth by building and nurturing outstanding sales teams. Prior to joining Everest Group, Wolfe held leading roles in several professional services organizations, including The Hackett Group, Gartner and Deloitte Consulting.

Procurement Outsourcing Makes Leap to Digital-First as Market Growth Slides to 9%—Everest Group | Press Release

By | Press Releases

As procurement outsourcing market matures, buyers seek innovation, market intelligence; providers invest in technology and talent.

The global multi-process Procurement Outsourcing (PO) market slowed slightly to a single-digit growth rate of nine percent in 2016, reaching US$2.4 billion in size, according to new research from Everest Group. However, with a market penetration of just 12 to 15 percent, procurement outsourcing continues to be an attractive market, one that is experiencing a significant shift from an arbitrage-first to a digital-first model.

The arbitrage-first model, now receding in use, focuses on reducing manpower requirements and standardizing processes, offering buyers the primary value of cost-savings. However, today PO buyers are demanding more, especially better sourcing and category expertise. The fast-growing digital model addresses these demands. It focuses on improving bottom-line performance by contributing innovation, market intelligence and productivity improvements that directly support business objectives.

In this shift to digital-first, technology is a key enabler. Analytics, automation, cloud, mobile, social media, block chain and cognitive/artificial intelligence technologies are being used to create a touchless procurement ecosystem. Providers that are investing in these technologies are experiencing revenue growth of up to 15 percent by expanding existing accounts, gaining share from other players and winning greenfield opportunities.

Talent strategies are also having a major impact on the PO industry as buyers demand significant improvements from service providers in this area. For example, 45 percent of buyers have indicated that the resource pools employed by service providers do not meet their expectations, and almost half of buyers highlight the need for better training and skill enhancement. Furthermore, more than 40 percent of buyers cite attrition as negatively impacting their business. Service providers are responding to this need in two ways: either looking at acquisitions as a one-shot way to gain the necessary talent and capabilities, or investing heavily in training and development of their employees.

 “Service providers have a dual imperative to successfully navigate this sea change from arbitration-first to digital-first procurement,” said Megan Weis, vice president, Business Process Services, at Everest Group. “They must adopt new-age technology solutions and also bridge the gap with respect to talent selection and management. Going forward, technology and talent will be the chief factors distinguishing leaders in the procurement services market.”

 These results and other findings are explored in a recently published Everest Group report: “Procurement Outsourcing (PO) Annual Report – 2017 – Leap Towards Digital Transformation. This report describes the changing dynamics of the PO market, provides a market overview, identifies buyer adoption trends and examines the service provider landscape.

***Download complimentary report abstract here***

Other key findings:

  • Emerging markets have seen a robust adoption while there is a slight decline in the adoption rates in maturing markets.
  • Industries such as healthcare and pharmaceuticals as well as energy and utilities (E&U) are witnessing an increase in adoption in North America; in APAC, the traditional industries such as manufacturing are witnessing an uptick.
  • The market is moving away from a lean six-sigma model to a design thinking approach to usher in more innovation.
  • The process scope of contract is expanding as buyers recognize the value of outsourcing judgment-intensive work.
  • Multi-country deals declined as growing geopolitical and economic risks restricted buyers from making bold decisions.
  • Competitive bidding is on the rise, even when incumbents are involved.
  • Offshoring has declined in the wake of global political and economic uncertainty.
  • Hybrid pricing models predominate as buyers have moved away from transaction-based pricing.
  • Although large businesses represent the majority of PO adopters, adoption by the small to midsize business segment is growing and presents significant opportunities.
  • Everest Group has classified 15 PO service providers based on their market success and delivery capabilities:
    • Leaders include Accenture, GEP, IBM and Infosys
    • Major contenders include Aquanima, Capgemini, Corbus, Genpact, HCL, Optimum Procurement, TCS, Wipro and WNS
    • Aspirants include Aegis and Conduent
    • Star performers (charting positive movement year on year) include Accenture, GEP and WNS

Multi-Country Payroll Outsourcing, Already a $1.5 Billion Industry, Posts a 23% Growth Rate | Press Release

By | Press Releases

Employers turn to MCPO to enhance employee payroll experience, retain talent

The Multi-Country Payroll Outsourcing (MCPO) market is one of the fastest growing markets in the HR outsourcing space, growing at a compound annual growth rate of 19 to 23 percent between 2014 and 2016 to cross the US$1.5 billion mark. This momentum is likely to continue for the next two years due to the rising appreciation for the MCPO value proposition and increasing provider maturity, according to Everest Group.

Enhancing employee experience with payroll processes is likely to become a key driver for MCPO, particularly because talent retention has become a vital and challenging business requirement.

“Talent retention is one of the biggest challenges employers face today, and the payroll process is a crucial employee touch point, so employers are ramping up their investments in technology to provide a more sophisticated user experience,” said Anil Vijayan, practice director at Everest Group. “This includes getting rid of multiple sign-ins; presenting a consistent look, feel and function across all pages; offering fast-loading and friendly interfaces; providing dynamic visualizations of data; and, of course, ensuring reliable, easy-to-use mobile access.”

Enterprise buyers also are becoming increasingly aware of the other key benefits that  the MCPO construct provides:

  • better control and visibility of payroll operations across multiple countries through consolidated reporting and analytics
  • compliance with regulations, particularly as repercussions of failed compliance have become harsher and the legislative landscape is changing rapidly
  • cost reduction, directly through labor arbitrage and technology as well as through efficiencies derived from centralization, standardization and vendor consolidation

Everest Group explores these findings and others in a recently published report: “Multi-Country Payroll Outsourcing (MCPO) – Annual Report 2017 – Evolution of Drivers and Enablers in a Rapidly-growing Market.” This research provides a comprehensive analysis of the global MCPO market, including buyer adoption trends across geographies, regional trends, emerging solutions and the service provider landscape.

***Download complimentary report abstract here***

Additional key findings in this report include:

  • North America and Europe are relatively more mature and bigger MCPO markets, and they accounted for a large chunk of the global deal activity. Asia Pacific and Latin America are emerging as strong MCPO markets on their own. Local buyers in these geographies, especially Asia Pacific, are playing an important role in shaping these markets.
  • In terms of buyer size, smaller firms continue to dominate the MCPO market adoption through simple deals spanning a few countries.
  • The MCPO market is mostly industry-agnostic. Services, hi-tech and IT, and manufacturing are the leading adopters of MCPO globally, with industries such as healthcare and energy showing promising upticks.
  • While core payroll subprocesses such as “gross-to-net,” payroll distribution and reconciliation remain fundamental to the construct, ancillary processes such as those for contact centers and time-and-attendance are also increasingly being included
  • Emerging areas of technology investment include analytics, automation and enhancing employee experience through UI improvements. Other major areas of investment include enhancing in-country and multi-language capabilities and meeting compliance needs.

Recruitment Process Outsourcing Market Grows 16%, Bears Fruit for Companies of All Sizes in 2016 | Press Release

By | Press Releases

RPO providers seek more value from technology; industry leaders moving beyond efficiency solutions to advanced analytics and next-gen digital tools to enhance candidate experience

The global Recruitment Process Outsourcing (RPO) market continued to remain one of the fastest growing single-process Human Resources Outsourcing (HRO) markets in 2016, growing at a rate of 16 percent to reach a cumulative market size of US$2.85 billion, according to Everest Group. In 2016, RPO saw wider acceptance among companies of all sizes, including small (less than 3,000 FTEs) and mid-sized (3,000-15,000 FTEs) buyers, which captured an increased share of the market at 51 and 6 percent, respectively, as compared to large buyers at 43 percent.

Digital adoption is the trend most strongly attributing to this rapid growth. RPO service providers are increasingly differentiating themselves through technology, increasing their investments in both technology partnerships and proprietary solutions. The exact nature of the “partner+build” strategy adopted by each provider is dictated by the regional availability and quality of off-the-shelf talent acquisition tools. Annual technology investments vary considerably among providers, ranging from $1 million to in excess of $100 million.

Efficiency focused technology solutions such as Applicant Tracking Systems (ATSs), Customer Relationship Management (CRM) tools, and Robotic Process Automation (RPA) systems are readily available through technology partners and have essentially become “table stakes” in the industry. In fact, nearly half of all RPO engagements include provision of ATS solutions.

So, now, the focus for differentiation has shifted to technology solutions that either enhance the experience of candidates or generate better insights on various aspects of the recruitment value chain. Accordingly, RPO service providers are adjusting their “partner+build” strategies to rapidly assimilate into their service portfolios additional technology solutions such as self-service scheduling tools and chatbots (primarily acquired through partnerships) and advanced analytics (primarily developed through proprietary investments).

“The RPO service provider landscape is intensely competitive, with many players and very few with dominant market share; plus, the high growth in the global RPO market, combined with increasing adoption in emerging economies, is attracting even more new players,” said Arkadev Basak, practice director, Business Process Services, at Everest Group.  “In the coming year, technology orientation will be one of the key parameters by which RPO service providers will distinguish themselves in this fragmented market. Other key differentiators will be geographic focus; consulting capabilities, particularly with respect to strategic workforce planning and talent management; and Total Talent Acquisition capabilities.”

These and other research findings are explored in a recently published Everest Group report: Recruitment Process Outsourcing (RPO) Annual Report 2017 – Strategic Value Creation in a Rapidly Evolving Market.

This research provides comprehensive coverage of the RPO market and analyzes it across various dimensions such as market overview, key business drivers, buyer adoption trends, solution and transaction trends, and service provider landscape.

***Download complimentary report abstract here***

Other key findings:

  • The mature market of North America saw a decline in its market share, with the emerging markets of Eastern Europe and Latin America gaining at its expense. The biggest growth of single-country RPO was seen in deals outside the mature markets of the United States, United Kingdom and Australia. Many countries in different regions across the world are emerging as strong RPO markets on their own, particularly in Latin America, Continental Europe and Asia Pacific.
  • RPO as a concept continues to gain wider global acceptability as evidenced by the rising number of multi-country deals. These are more complex deals, which require both the buyer and service provider to invest more time and effort in order to understand local nuances.
  • Value-added processes such as employer branding, talent communities, workforce planning and assessment are increasingly becoming table stakes; buyers are now demanding next-gen value-added services such as consulting (especially for technology strategy and implementation), talent engagement, and content creation and communication.
  • 2016 saw heightened activity in the market around Total Talent Acquisition (TTA) services, as demonstrated by a 41 percent increase from 2013 to 2016 in number of new TTA deals.

Everest Group Unveils Third Annual Business Process Services Top 50 | Press Release

By | Press Releases

ADP rises to No. 1, Conduent takes No. 2 and Accenture retains No. 3 ranking among world’s largest third-party BPS providers

Everest Group, a consulting and research firm focused on strategic IT, business services, and sourcing, today released the third annual edition of “The Everest Group BPS Top 50™,” a revenue-based ranking of the world’s largest third-party providers of business process services (BPS). The list was launched in 2015 as the first of its kind for the global industry, which today is valued at more than US$160 billion.

The Everest Group BPS Top 50 ranks the largest BPS service providers by revenue and reports their growth and coverage cutting across geography, domain and buyer size. Further, it analyzes key changes over time along growth, geography and functional coverage dimensions.

Everest Group estimates there are more than 200 service providers with more than US$50 million in revenues offering BPS services around the globe. What started as a cost optimization concept focusing on “non-core” and “back-office” business processes today permeates the entire business process value chain, addressing a wide variety of business objectives.

“As the global services industry in general and BPS in particular goes through a fundamental shift from an arbitrage-first to a digital-first model, service providers’ ability to transform themselves to the new paradigm will be critical to their future success,” said Rajesh Ranjan, partner at Everest Group. “This ranking, the only one of its kind for the overall industry, provides an early indication of who is navigating the shift more successfully than others. We expect the volatility in the ranking of providers to increase in coming years.”

***Download a complimentary copy of the 2017 Everest Group BPS Top 50 list and analysis.***

Topping the 2016 list of BPS providers are these 10 leaders:

  1. ADP
  2. Conduent
  3. Accenture
  4. Teleperformance
  5. Xerox
  6. Convergys
  7. Paychex
  8. Arvato Bertelsmann
  9. DXC Technology
  10. Capita

Other highlights:

  • The cumulative revenue of the providers in BPS Top 50 list grew by 5 percent year-on-year.
  • The highest growth rate for the past two years was logged by Alorica at 95-105 percent and was achieved largely through acquisitions in 2015 and 2016. Cognizant logged the second fastest growth rate at 22-25 percent and achieved this largely through organic growth.
  • North America-based service providers continue to dominate the list; however, the region’s overall share declined versus 2014, while APAC’s share has grown.

Top 3 North American Providers:

  • ADP
  • Conduent
  • Xerox

Top 3 EMEA Providers:

  • Accenture
  • Teleperformance
  • Arvato Bertelsmann

Top 3 APAC Providers:

  • TCS
  • Transcosmos
  • Relia
  • For the second straight year, the number of broad-based service providers increased their share of market as compared to specialists. Broad-based providers now represent 56 percent of the market whereas specialists represent 44 percent. The top 5 broad-based providers are:
    • Conduent
    • Accenture
    • Arvato Bertelsmann
    • DXC Technology
    • Capita
  • Among the specialist providers, the following ranked highest in their respective specialty area:

Human Resource Outsourcing:

  1. ADP
  2. Paychex
  3. Fidelity

Contact Center Outsourcing:

  1. Teleperformance
  2. Convergys
  3. Alorica

Document Management:

  1. Xerox
  2. Williams Lea Tag
  3. Iron Mountain

***Watch our video about “The Everest Group BPS Top 50 2017”.***

Profitability Pressures and Technology Advancements Sustained Double-digit Growth in Property & Casualty Insurance Business Process Outsourcing in 2016 | Press Release

By | Press Releases

Growth of 12-14% anticipated in 2017, driven by scope expansion; automation, blockchain and analytics ready to transform the industry.

 The global property and casualty (P&C) insurance business process outsourcing (BPO) market continues to register high growth, attaining nearly 13 percent compound annual growth rate (CAGR) over the last four years to reach US$1.6 billion in 2016, according to new research from Everest Group. Everest Group expects the market to grow at 12 to 14 percent in 2017 as insurers face intensifying pressures on profitability.

The growth in the P&C Insurance BPO market is largely being driven by first-generation buyers—insurers who are outsourcing P&C insurance operations for access to technology solutions and cost reduction.

However, the market is also getting a boost from tenured buyers with more evolved expectations. These buyers are demanding value addition, including assistance in expanding their businesses, reducing time to market, getting higher customer mindshare and building multi-channel capabilities.

Service providers are responding by developing better solutions. For example, automation is being swiftly adopted, as its benefits include cost reduction, improved quality (reduced errors) and speed, higher compliance and enhanced security. In fact, Everest Group research indicates that robotic process automation (RPA) can yield incremental cost reduction from 15 percent for offshore operations to as high as 45 percent for onshore operations.

Another solution that service providers may soon bring to bear for insurers is blockchain, a disruptive technology that is expected to transform the way insurance operations run. Numerous insurers across the globe are currently evaluating and piloting blockchain in key P&C insurance processes such as premium collection, disbursement and subrogation.

In addition, many providers are augmenting their capabilities with analytics to deliver judgment-intensive processes, such as fraud detection/prevention, actuarial and underwriting services, customer experience management and marketing, and claims adjustment.

“Insurers are looking to service providers to move beyond the expected bottom-line impact to deliver top-line impact,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “By that we mean that insurers rely heavily on their service providers to bring in next generation technological capabilities to stay relevant and competitive in the marketplace. For example, service providers help insurers create and manage their digital presence, which is increasingly important today in addressing the ever-evolving expectations of tech-savvy customers and fending off competition from ‘InsurTechs.’ Another example is blockchain; service providers that facilitate successful blockchain deployments for their clients will be true transformation partners.”

Everest Group explores these findings and others in a recently published report: “Property and Casualty (P&C) Insurance BPO Annual Report — Embracing the Digital-First.” This report provides comprehensive coverage of the global P&C insurance BPO market, including adoption trends across geographies and buyer size, factors impacting the market, key solution characteristics, emerging trends and service provider landscape.

***Download complimentary report abstract here***

Other key findings:

  • While North America continues to lead P&C insurance BPO adoption with over three-fourths of the total contracts, the United Kingdom and other geographies, such as Australia and Europe, are driving outsourcing adoption.
  • Leverage of offshore locations to deliver P&C insurance processes continues to be high, with more than 80 percent of the total FTEs based in offshore and nearshore locations.
  • Small and mid-sized buyers are increasingly signing more comprehensive deals.
  • Increasing adoption of automation along with higher adoption of platform-based solutions within P&C insurance contracts is reducing the FTE-intensive play in transaction-based processes such as claims management.
  • With several deals up for renewal in the next three years, intense competition between service providers is expected to increase pricing pressures.
  • Claims processing and policy servicing/reporting remain the most outsourced processes.

Demand for Digital Technologies Will Fuel Continued Growth of IT Services in 2017 | Press Release

By | Press Releases

Global services market growth rate expected to decline in 2017 for the fourth straight year, hampered by political uncertainties, macroeconomic slowdown.

The growing demand for innovative and digital technologies will spur continued growth of the IT services segment of the global service market in 2017, according to Everest Group. The number of new delivery centers focusing on development of digital services increased 177 percent between 2013-14 and 2015-16. The largest digital services growth segments during this period included cloud, Internet of Things (IoT) and big data.

The global services market has witnessed a significant increase in the share of IT service delivery since 2012 (up by 7 percentage points, from 32 percent to 39 percent), while the share of business process services has declined consistently in the same period (down by 4 percentage points, from 46 percent to 42 percent). Currently, of the US$173-178 billion global services market, IT services have a 39 percent share, with business process services and engineering/R&D services commanding 42 percent and 19 percent, respectively.

Overall, the global services locations landscape continued to experience stable growth in 2016 in terms of revenue; however, the growth rate was slower in 2016 (7 to 9 percent) than the previous year (8 to 10 percent). Similarly, the growth rate of center setups dropped in 2016 in comparison to 2015.

“Going forward, we expect that the global services market growth rate will decline in 2017 for the fourth straight year, measuring 6 to 8 percent,” said Anurag Srivastava, vice president and director of the Global Sourcing practice at Everest Group. “Some of this is due to the direct impact of the macroeconomic slowdown. Other dampening factors will include the political instability associated with Brexit in the United Kingdom and the review of the H1-B visa program in United States. Volatility in equity and investment markets and currency fluctuations will hamper the growth rate as well.”

These findings and more are discussed in Everest Group’s recently published report “Global Locations Annual Report 2017: Signs of Structure in a Disordered World.”

This research offers insights into the size and growth of the global services market, global services exports by regions and country, an update of locations activity by region and country, and trends and risks affecting global locations. It also provides industry-leading comparison and analysis of key changes in maturity, arbitrage and potential of global delivery locations through Everest Group’s unique MAP Matrix™ analysis.

***Download complimentary report abstract here***

Other key findings:

  • In terms of revenue, Asia Pacific continued to hold the largest share (more than 60 percent) of the global services market, followed by Nearshore Europe, Latin American and the Caribbean, and Canada.
  • In terms of headcount, India and the Philippines continue to be the leading delivery locations, accounting for 66 percent of the share, followed by Canada, China, Poland and Ireland.
  • India and the Philippines held more than one-third of the share of the new delivery center setups in 2015-16.
  • Most onshore locations are expected to see an increase in the near future in terms of delivery setups by the top 20 service providers.
    • The United States’ share in terms of onshore delivery center setup activity is expected to increase due to likely changes in U.S. visa regulations, which could make hiring of offshore resources difficult; increasing emphasis to hire locally; and greater focus on delivery of non-traditional functions, such as digital.
    • England’s share has witnessed a significant decline in the past few years; however, its share is expected to increase once investor apprehensions about Brexit decline.
    • Continental Europe is also expected to witness an increase in its share, due in part to the direct impact of Brexit and players moving out from England. Additionally, many cities in the region are being leveraged to develop new digital technologies for global delivery.

Double-Digit Growth for Managed Service Providers Masks Emergent Threats, Opportunities | Press Release

By | Press Releases

Contingent workforce management is a US$300 billion market in terms of managed spend, growing steadily, but MSPs face challenges in broadening their scope to include services procurement.

The Managed Services Provider (MSP) market, occupied by companies that provide contingent workforce management, is flourishing, logging a robust growth rate of 12 percent in 2016 to reach US$300 billion in managed spend. According to research recently published by Everest Group—a consulting and research firm focused on strategic IT, business services, and sourcing—the growth rate for the MSP industry has exceeded 10 percent since 2014.

Everest Group also reports that fundamental changes are altering the dynamics of the global MSP market. A key example is how Business Process Outsourcing (BPO) providers are increasingly encroaching on traditional MSP turf by offering temporary labor management in their broader procurement deals. Although temporary labor management is the core strength of MSPs, BPO providers are witnessing much faster growth in this area (30-40 percent compared to 9-13 percent growth for MSPs).

Conversely, as the temporary labor management market matures, most MSP providers are looking at service procurement (also know Statement of Work or SoW) as the next area of growth. This segment is currently dominated by BPO and purchasing outsourcing (PO) providers, but MSPs are witnessing faster growth (40-50 percent as compared to 4-6 percent for BPO/PO providers).

“Going forward, enterprises will have greater luxury of choice for labor management services due to a wider universe of providers including MSPs and BPOs,” said Arkadev Basak, practice director at Everest Group. “This is both a risk and an opportunity for MSPs. The increased competition is a threat, but MSPs can also turn the tables and find new clients in the untapped market of current BPO clients.”

These findings are discussed in more detail in “Managed Service Provider (MSP) – Annual Report 2016: Embracing the New Talent Landscape.”  The report includes a market overview and an analysis of the evolving market situation, buyer adoption characteristics, solution dynamics and service provider capabilities.

The following service providers were analyzed as a part of this report: Agile•1, Allegis Global Solutions, Alexander Mann Solutions, AMN Healthcare, Capita Resourcing, Geometric Results Inc., Hays, HCMWorks, KellyOCG, nextSource, Pontoon, PRO Unlimited, Randstad Sourceright, Superior Group, Tapfin, Yoh, and ZeroChaos.

***Download complimentary report abstract here***

Other Key Findings

  • Economic uncertainties, changing preferences of millennials, and technological advances are leading to the increased use of contingent labor.
  • With an increased inclusion of freelancers in the workforce, buyers are looking to MSP to help them mitigate various types of risks and contain costs. MSP service providers are investing in developing Freelancer Management Systems (FMS) in order to serve buyer requirements.
  • An increasingly holistic approach to talent management is leading to adoption of the blended model, in which MSPs are involved in recruiting permanent as well as contingent workers. The blended model has seen the most penetration in Europe, especially in United Kingdom, while other regions have yet to see any significant adoption.
  • MSP deals are increasingly becoming multi-country in scope, including global multi-continent deals. However, only a few service providers have strong capabilities in this space. The market is also witnessing higher adoption of large and mega-sized deals, led by multi-country deals and expanding scope of MSP deals.

Global Services Market Sees 3x Rise in Digital-Focused Deals at Expense of Traditional Business Process Services | Press Release

By | Press Releases

Digital services now represent up to 20% of business portfolios of leading firms.

In 2017, global services providers witnessed sluggish revenue growth in their legacy businesses, while their digital businesses grew remarkably. Digital-focused deals increased nearly threefold in 2017, with cloud application and analytics forming a major portion of digital deals. However, while there is increased focus on next-generation technologies and cloud services, deal volumes in traditional business processes and legacy infrastructure services remained stagnant for many of the leading service providers.

This trend was evident in Q1 2017 as well. Activity in the global services market witnessed a notable increase in Q1 2017 compared to Q4 2016 (383 deals to 367 deals, respectively), owing to a significant rise in ITO deals, while BPO transactions declined.

“There is increasing demand from enterprises for next-generation services given need to improve customer satisfaction and increase efficiency and effectiveness of service delivery. Service providers are accordingly making digital investments to adapt to changing market dynamics,” said Salil Dani, vice president at Everest Group. “In 2017, we witnessed 40 acquisitions to expand digital capabilities, 140 alliances between providers and technology providers or startups, and the setup of 35 new centers and digital pods to help clients rethink their digital strategies. Unfortunately, this robust activity cannibalized traditional business services investments and resulted in a deceleration of service providers’ overall revenue growth to a compound annual growth rate of between 0 and 5 percent.”

These results and other findings are explored in “Market Vista™: Q1 2017.”

Market Vista: Q1 2017 includes data, analysis and insights on transaction trends, major outsourcing deals, global in-house center market dynamics, trends in offshoring, emerging destinations and service provider development (including latest development on next-generation technologies such as digital services). The report also includes Standard Locations Database, which tracks 23 leading offshore locations.

***Download complimentary report abstract here***

Other Key Takeaways

  • While the overall outsourcing demand remained steady, there was a significant decrease in demand from the United Kingdom given the uncertainty with Brexit.
  • GIC setup activity continues to remain high, led by engineering/R&D services.
  • Delivery center setups increased in Asia Pacific relative to Nearshore Europe, reversing the previous year’s trend.
  • Service providers have acknowledged the uncertainty due to U.S. visa reforms and have increased local hiring and overall onshore leverage to safeguard their businesses, especially in IT services.
  • As the market shifts from arbitrage-first to digital-first in contract demands, leading providers are making fundamental changes to their talent and service delivery models.