Category: Press Releases

Consolidation, Patent Loses, Weak R&D Productivity Depress ITO Transactions in Life Sciences Segment: Everest Group Annual Report | Press Release

54 Deals in 2012, down from 82 the year prior, resulted chiefly from structural factors.

DALLAS, October 22, 2013 — ITO transaction activity in the life sciences industry slowed markedly in 2012, falling from 82 deals to 54, due to multiple challenges that included patent losses, middling R&D productivity, and rising consolidation.

Smaller life sciences firms – those with less than US$10 billion in annual revenue – signed the largest share of IT contracts, driven chiefly by the need to improve productivity.

These findings and others are detailed in a new research report published by Everest Group, an advisory and research firm on global services. The report, IT Outsourcing (ITO) in the Life Sciences Industry – Annual Report 2013: IT is the Trump Card for Life Sciences, focuses on current trends and outlook for large, multi-year ITO relationships in the life sciences market. The report also provides specific insights into the need for value-chain-driven IT adoption.

The life sciences industry has endured numerous structural challenges including a patent expiration cliff, falling drug approval rates and intense competition in the generics market. In response, pharmaceutical and other life sciences firms are adopting analytics, ERP services, and value-chain digitization to enable all or most of their strategic initiatives.

For service providers, the stakes are high. More than US$8 billion of life sciences ITO contracts are due for renewal between 2015 and 2020.

“Life sciences companies are stepping up adoption of outsourced delivery, and there is a corresponding uptick in demand for research and market intelligence for sourcing trends,” said Jimit Arora, vice president at Everest Group who leads the report team. “Our drill-down on this segment of the healthcare ITO industry is in response to life sciences companies’ desire for insights to help them unlock new value from ITO deals.”

This report is structured across four key sections:

• Healthcare IT outsourcing market overview: Analysis of the overall healthcare outsourcing market and transaction trends.
• Life sciences ITO market overview: Analysis specific to the life sciences ITO segment with a focus on large transactions.
• Emerging themes and future outlook in life sciences ITO: Analysis of emerging trends and their influence on the future of life sciences ITO.
• Outlook for 2013-2014: Analysis of the outlook and implications for ITO for the coming year.

The report also looks at emerging themes driving technology demand in the life sciences market:

• Analytics: Life sciences firms are looking to leverage insights from multiple information sources to influence strategic business outcomes.
• Personalized medicine: Firms looking to develop segment-focused therapies are looking at an amalgamation of various information tools across the value chain to transform R&D analytics and clinical-decision support.
• Strategic sourcing: Companies are looking at a multi-pronged strategy to source external innovation in products and services to streamline the value chain and focus on core processes.
• Compliance: Increasing and expanding regulatory scrutiny has resulted in significant IT compliance needs across data utilization, tracking, monitoring, and reporting.
• Value-chain digitization: Proliferation in the use of digital channels and adoption of technology enablers have led companies to reexamine their value chain from an efficiency perspective.

Webinar Thursday: Value Chain Digigization in Pharma

Jimit Arora and others from the Everest Group team will present a webinar this Thursday on how digitization in the pharmaceutical industry is causing major shifts in ITO strategy. Register now.

Skilled Jobs Now Largest Segment of Managed Service Provider Market: Everest Group Annual Report | Press Release

Upswing in multi-country scope with offshore model being pioneered; service providers scrambling to catch up with shifting market dynamics.

DALLAS, October 18, 2013 — Adoption of managed service provider (MSP) services has moved beyond management of a traditional, blue-collar contingent workforce to embrace engineers, IT professionals and other highly skilled workers. Additionally, interest in the offshore model is taking root, as are multi-country deals. These trends stand in contrast to the relative lack of these capabilities among service providers, setting the stage for competitive disruptions.

These findings and others are detailed in a new research report published by Everest Group, an advisory and research firm on global services. The report, Managed Service Provider (MSP) – Mastering the Winds of Change, focuses on shifting dynamics in the MSP market and identifies buyer adoption patterns and solution characteristics. A service provider landscape is also part of this annual report, and a PEAK Matrix™ assessment will be published soon.

The report identifies that adoption of MSP is moving beyond traditional drivers of cost, compliance and visibility to include access to critical and scarce talent and integrated workforce planning. This is leading to changes in the composition of job families in MSP. Engineers and IT professionals now constitute the largest job family managed by MSPs. The managed spend in the MSP market grew by 13-16 percent in 2012 to reach US$60-65 billion. The current market size, in terms of net fee income (NFI), is approximately US$1.05 billion.

Centralization of service delivery is emerging as the new norm. The offshore model is being pioneered and will grow in the future. Many MSPs have realized the possibility of servicing a number of low-touch MSP processes from centralized delivery locations, at a lower cost. Considering the significantly higher usage of offshoring/nearshoring in related outsourcing areas such as Procurement Outsourcing (PO), the potential for offshore/nearshore implementation in MSP is very high.

MSP deals are increasingly multi-country in scope. However, only a few providers have global deal experience. Global deals are driven by multinational companies (MNCs) that are expanding their existing single-country MSP deals in North America and Europe to their operations across the globe. However, only a handful of MSP players have the required footprint and capability to play in this space. Large corporations are the pioneers of MSP, but smaller organizations too are increasingly adopting MSP.

“Fundamental changes in the MSP market have the potential for causing dramatic competitive shifts,” said Rajesh Ranjan, vice president at Everest Group who led the report team. “Buyers are rapidly embracing new models, with the goal of unlocking new value from MSP. Service providers are grappling with how to add new capabilities and geographic footprint, placing bets on which segments of the market will emerge most quickly to align with their core competencies.”

Shifting market dynamics outlined in the report include:

• Increased “talent” scope of MSP: The MSP market has evolved to include varying job families and different types of workers such as Statement of Work (SoW) workers, independent contractors, and even permanent hires, within its scope.
• Evolution in delivery model: With increasing maturity, MSPs have started to gain cost benefits through centralization of some MSP processes that were earlier delivered on-site. A few MSPs have started to use nearshoring/offshoring.
• Entry of new MSP providers: In addition to the traditional MSPs, a number of new players from a variety of backgrounds have entered the MSP market.
• Advent of advanced pricing models: MSP pricing models are evolving beyond the usual “percentage of managed spend” to include outcome-based / gain-sharing models.
• Globalization of MSP: Large global MSP contracts spread across continents are emerging, though they are still small in number. However, only a handful of the largest MSP players with wide global footprint have the capability to play here.

Total Contract Value Falls 25 Percent for Capital Markets ITO Deals, Driven by Economic Uncertainty: Everest Group Annual Report | Press Release

Next-gen technology themes being leveraged by buyers to tackle emerging business challenges of a tougher operating environment, and increasingly demanding customers

DALLAS, October 9, 2013 — While capital markets ITO remains the smallest vertical in the BFSI ITO space, it is witnessing increased adoption of outsourcing as buyers face challenges related to evolving regulatory requirements and profitability pressures, according to new research published by Everest Group.

To address these challenges, capital markets buyers are focusing on several tactics. These include operational efficiency, resulting in widespread cost-saving initiatives. Also, they are enhancing and growing their customer base through investments in technologies such as social media, mobility, big data/analytics, and cloud computing.

Overall, the capital markets IT segment grew from US$10-12 billion in 2011 to US$15-20 billion in 2012. Despite this healthy growth in industry spending, there were select cases of IT spending being cut by a few large capital market firms as projects commissioned over last 3-4 years ended.

The data are included in a new report issued by Everest Group, an advisory and research firm on global services. The report, IT Outsourcing in Capital Markets – Annual Report 2013: Deploying Technology to Counter Environmental Challenge, focuses on trends in AO in the BFSI segment, market trends for large AO deals in capital markets, emerging buyer priorities, and important movements in volume/value of capital markets AO transactions over the past 12 months.

“Capital markets firms are investing in innovative solutions to transform their business models, and also are trying out cross product integration” said Jimit Arora, vice president at Everest Group who leads the report team. “A growing need for robust risk management, and higher standards in reporting, ensuring transparency are also important drivers for AO demand within this vertical.”

In this research, Everest Group analyzes the current trends and the future outlook for large, multi-year application outsourcing relationships for the global capital markets sector. The scope of the report’s analysis includes:

• Industry: Capital markets (investment banking, asset management custody and funds administration, and brokerage services); excludes retail and commercial banking, insurance (life, annuity, pensions, and P&C), and healthcare payers
• Services: Large (TCV > US$25 million), multi-year (>three years), and annuity-based application outsourcing
• Geography: Global
• Sourcing model: Third-party AO transactions; excludes shared services or Global In-house Centers (GICs)

Buyers Seeking New Sources of Value in Application Outsourcing (AO) Deals: Everest Group Annual Report | Press Release

Unbundling, Pricing Sophistication, Shorter Deal Terms and Service Provider Turnover Highlight End of Labor Arbitrage as Primary Driver in AO Contracts

DALLAS, October 9, 2013 — The traditional value drivers of labor arbitrage, process efficiency, and standardization are unable to provide the next level of value in AO engagements, according to new research published by Everest Group.

Buyers are facing multiple challenges in their portfolios such as rapidly declining productivity, and service providers are unable to respond to these issues. As a result, the market is witnessing an increasing number of service providers losing their existing AO engagements.

The data are included in a new report issued by Everest Group, an advisory and research firm on global services. The report, Application Outsourcing (AO) Annual Report 2013 – Declining Productivity, Rising Anti-Incumbency, provides data on market size and share, buyer adoption trends across geography and industry, and key trends shaping the market.

Everest Group’s annual research on application outsourcing provides fact-based perspectives on buyer adoption by geography, industry, and revenue size. It analyzes major trends that are shaping the applications market and the outlook for the next year. It also sizes the IT services market in terms of application outsourcing and consulting services.

Some key highlights:

• Anti-incumbency: Buyers appeared dissatisfied with their existing AO service providers, resulting in various incumbent players being replaced
• Buyer investments: Buyers are leveraging their existing providers for next-generation services, especially mobility and cloud. Mobility accounted for more than one in five AO engagements, and about 40 percent of these engagements required delivery of social business applications. Cloud adoption appears focused more on Software-as-a-Service deployment than the transformation of existing applications.
• Productivity: More effort is required from buyers to drive AO productivity in addition to the typical strategies such as automation and provider consolidation.
• Spending: Though buyers are willing to invest in applications, they require more spending visibility. Therefore, they prefer shorter deal terms and invest more in application maintenance than custom development.
• Pricing: Buyers are now granular in pricing discussions (e.g., cost by function point). Output-based pricing rose, especially in application maintenance.

Everest Group concludes that buyers will be willing to replace existing service providers with newer ones. The tendency to experiment will increase and service providers will respond with different incentives. Buyers will increase their focus on extracting more productivity in their application portfolios. This will not be limited to service providers but will also include their internal operations (e.g., global in-house centers). Next-generation technologies (cloud computing, mobility, and analytics) will witness further demand, but “bread and butter” capabilities will still comprise the core criteria for service provider evaluation.

“The transformation taking place in application outsourcing is a direct result of buyers pushing their incumbent providers to drive up productivity and deploy next-generation technologies,” said Jimit Arora, vice president at Everest Group who leads the report team. “A shift in buying centers is a part of this change, and we’re already seeing, service providers investing in targeting the “non-CIO” buying centers to offer next-generation services. Moreover, they will increase efforts to retain strategic clients by offering better commercial constructs.”

The research covers AO adoption trends, demand drivers, next-generation services such as mobility, analytics, and cloud. The research analyzes buyer challenges, trends shaping the market, and also provides an outlook for 2014 for the broader IT as well as AO market, including deal trends (new vs. renewals), deal size and duration, scope of services (e.g., application development, maintenance, and consulting), pricing trends, and delivery locations.

Cloud Connect Chicago Reveals Top Four Finalists for First-Time Innovation through Cloud in Enterprise Awards | Press Release

Expanded Keynote Lineup Presents Executives from IBM, VMware, Sears & More

SAN FRANCISCO, Oct. 1, 2013 — Today, Cloud Connect Chicago, produced by UBM Tech, recognizes four finalists for the event’s first-ever awards program, Innovation through Cloud in Enterprise (ICE) Awards. The winner will be announced from the keynote stage during the event. As the premier technology event for the cloud community, featuring the latest technologies, strategies and innovations, Cloud Connect will return to Chicago October 21–23 in a new downtown location, McCormick Place. For more information or to register visit: cloudconnectevent.com/chicago/.

In partnership with Everest Group, an advisory and research firm on global services, Cloud Connect launches its first awards program to honor companies that have achieved innovation through the adoption of cloud solutions. Everest Group narrowed down nominations to name four pacesetting enterprises that, through cloud implementations, have transformed business processes, positively impacted stakeholders and significantly contributed to the bottom line. The four finalists for the inaugural ICE Awards are:

— Columbia Sportswear

— LanguageLine Solutions

— Revlon

— Schneider Electric

Jimit Arora, Everest Group Vice President, will announce the winner during the keynote program on Tuesday, October 22.

“Cloud solutions have drastically changed business operations for the better. When implemented correctly, cloud directly contributes to business agility, streamlined collaboration between employees and partners, and higher revenue,” said Steve Wylie, Cloud Connect General Manager. “The four selected ICE Award finalists have made big strides with cloud implementation and we’re pleased to recognize their efforts in Chicago at Cloud Connect.”

In addition to the ICE Awards announcement, the keynote stage will feature presentations from top cloud solution providers, customers and expert consultants. Headliners will discuss the future of enterprise cloud and its ability to reinvent data analysis and differentiate businesses. The newly expanded keynote lineup includes:

— Narayan Desai, Principal Experimental Systems Engineer, Argonne National Laboratory

— Jim Reavis, Co-founder and Executive Director, Cloud Security Alliance

— Monty Taylor, Manager, Automation and Deployment, HP

— Ric Telford, VP, IBM Cloud Services

— Jean-Sebastien Bruneau, Cloud Architect, OVH.com

— Ted Rudman, Interim Vice President, Pricing, Marketing/Loyalty, Supply Chain & Corporate Systems, Sears Holdings Corporation

— Molly Rector, Chief Marketing Officer, EVP Product Management and WW Marketing, Spectra Logic

— Jason Witty, Senior Vice President & CISO, U.S. Bancorp

— Mathew Lodge, VP, Cloud Services, VMware

These keynoters will join the previously announced lineup, which includes executives from CloudOps Research, SoftLayer, The Weather Company and Zipcar/GoLoco.

Cloud Connect Chicago includes five tracks of conference content: Amazon Web Services & Eucalyptus, CloudStack, OpenStack, Platform-as-a-Service and Virtualization & Private Cloud. The event opens on Monday, October 21 with a full day of intensive cloud computing education through a series of Summits and Boot Camps that will outline standards and emerging trends around big data, security and risk, as well as management strategies in increasingly heterogeneous cloud environments. Cloud Connect Chicago will be co-located with The Big Data Conference, another UBM Tech event, and the events will share a keynote stage. More information available at: cloudconnectevent.com/chicago.

Follow Cloud Connect on Twitter #CCeventLike Cloud Connect on FacebookAdd Cloud Connect to your circle on Google+Register for Cloud ConnectApply for a Cloud Connect press pass via Media Registration

About Cloud ConnectCloud Connect, produced by UBM Tech, is the defining event of the cloud computing industry and the only venue where attendees learn how to leverage the cloud ecosystem to develop new services, revenue streams and business models.As both a conference and an exhibition, Cloud Connect’s goal is to chart the course of cloud computing’s development by bringing together enterprise IT professionals, developers, infrastructure and service providers and cloud computing innovators. Cloud Connect offers three days of in-depth boot camps, panel discussions and access to a host of industry experts, all designed to help organizations weigh their cloud options and drive transformation. For more information visit: www.cloudconnectevent.com.

About UBM TechUBM Tech is a global media business that brings together the world’s technology industry through live events and online properties. Its community-focused media and events provide expertly curated content along with user-generated content and peer-to-peer engagement opportunities through its proprietary, award-winning DeusM community platform. UBM Tech’s brands include EE Times, Interop, Black Hat, InformationWeek, Game Developers Conference, CRN, and DesignCon. The company’s products include research, education, training, and data services that accelerate decision making for technology buyers. UBM Tech also offers a full range of marketing services based on its content and technology market expertise, including custom events, content marketing solutions, community development and demand generation programs. UBM Tech is a part of UBM (UBM.L), a global provider of media and information services with a market capitalization of more than $2.5 billion.

SOURCE UBM Tech

Half of Global Banking and Financial Services BPO Growth in 2011-2012 Driven by Small Financial Institutions: Everest Group Report | Press Release

DALLAS, August 22, 2013 — The Banking and Financial Services (BFS) Business Process Outsourcing (BPO) market grew by 16 percent globally in 2012, a robust growth rate driven by small financial institutions seeking to grab a portion of the efficiency benefits promised by BPO services. Adoption of BFS BPO from small financial institutions accounted for more than 50 percent of new contracts in 2012.

The data and insights are included in a new report issued by Everest Group, an advisory and research firm on global services.

The report, Banking and Financial Services (BFS) BPO Annual Report 2013 – Small is the New Big!, chronicles how a higher proportion of contracts in 2012 were extensions or renewals as compared to new contracts. The overall value proposition of BFS BPO continues to be strongly driven by cost reduction. This report aims to assist buyers, service providers and technology providers in understanding the changing dynamics of the BFS BPO market and help them identify the trends and outlook for 2013.

The salient points of the report are:

• Market size and buyer adoption
• Banking BPO solution characteristics across size and scope, Line of Business (LoB) adoption, analytics and risk regulatory services trends, technology model, global sourcing, and pricing structures
• Capital Markets BPO solution characteristics across size and scope, LoB adoption, regulatory reporting and risk management, technology model, global sourcing, and pricing structures
• BFS BPO service provider landscape, covering service providers’ market share and areas of investments

The scope of the study covers third-party BFS BPO contracts and does not include shared services or Global In-house Centers. Around 300 BFS BPO contracts signed as of 2012 were analyzed as part of the study. A service provider landscape covering 18 BFS BPO service providers includes Cognizant, CSC, Dell, EXL, eClerx, Genpact, HCL, Infosys, iGate, Mphasis, Serco, Sutherland, Syntel, TCS, Tech Mahindra, Wipro, WNS, and Xerox.

Insights from the study include:

• The market for third-party BPO in BFS reached US$3.8 billion in 2012, growing at a rate of 16 percent over 2011, on the back of similar growth rate in previous year.
• The average contract size and term decreased from recent years.
• A higher proportion of contracts in 2012 were extensions or renewals as compared to new contracts. More than US$1 billion in annualized spend will be up for renewal over the next three years.
• The United States continued to be the key buyer geography for BFS BPO in 2012, accounting for over 60 percent of contracts.
• The average size of banking BPO contracts was approximately 90 FTEs compared to a historical average of approximately 235 FTEs. This is due to increased adoption by smaller financial institutions and the trend toward a risk-averse, incremental adoption approach that resulted in contracts focused on a single LoB and/or geography.
• India continues to dominate delivery accounting for over 90 percent of capital markets BPO FTEs.
• The impact of stringent regulation (Dodd-Frank, NAFTA, Basel III, new CFTC rules) led to a significant increase in inclusion of risk management and regulatory reporting services in capital markets BPO contracts in 2012.

“As BFS BPO demand gets more sophisticated, the service provider landscape will become more specialized,” said Saurabh Gupta, vice president at Everest Group, leading the firm’s business process research practice. “The ascending influence of smaller financial services, the risk-averse and focused approach of large global companies, and the rising competitive intensity require service providers to bring their A-game that goes beyond arbitrage and economies of scale.”

Stable Global Services Market in Q2 Underscores Gradual Economic Recovery: Everest Group Market Vista Report | Press Release

Pending US and EU Regulatory Reforms Cast Shadow Over Pace of Turnaround and Evolution of Sourcing Models

DALLAS, August 12, 2013 — The global services market remained stable in Q2 2013, both in terms of outsourcing transactions and Global In-House Center (GIC) activity, according to a new report issued by Everest Group, an advisory and research firm on global services.

While gradual economic recovery and improving business confidence in Europe led to revival of outsourcing demand there, a slower-than-anticipated market recovery was reflected in the financial performance of both traditional global and offshore-centric service providers groups.

The report, Market Vista: Q2 2013, documents increased maturation of the GIC model, although the number of new set-ups and expansions was lower compared to last year. Existing GICs continued to focus on delivering value beyond cost savings, a trend that has been evident in other Everest Group research this year.

Register Today For the Market Vista Q2 2013 Webinar

On Wednesday, August 14, 2013 at 9:00 am CDT, Everest Group experts will discuss global services developments in the second quarter and offer forward-looking view for the remainder of the year. Register today. The webinar will also address two special topics:

• changes in Latin American locations between 2012 and 2013
• the impact of appreciating currency on global services market in the Philippines

Location activity continued to remain low in Asia compared to the first quarter. Q2 witnessed new delivery center set-ups in Eastern Europe and Latin America by players to invest in capacity ahead of demand.

The report also found that steadily improving economic conditions in United States and Europe are likely to lead to recovery of the global sourcing market. However, regulatory reforms could have a significant impact on the extent of this recovery and the continued evolution of sourcing models.

The Market Vista report provides data and analysis highlighting trends in the global offshoring and outsourcing market, including the health of GICs, location risks and opportunities, and service provider developments. Contents of the report include:

• Outsourcing and offshoring deal trends by function, geography, industry, buyer type, etc.
• GIC market assessment, including recent set-ups, expansions, and divestitures
• Details on major outsourcing deals
• Details on renewal/restructuring activity and new contracts signed in the quarter
• Location risks and opportunities
• Fact base, including operating cost, wage inflation, attrition, and sustainability of arbitrage, for leading cities in Latin America
• Twenty leading service providers assessed on financial performance, changes in geographic footprint, alliances, capability enhancements, and M&A events

Everest Group Offers Advanced Locations Tool

The Advanced Locations Tool can perform complex analysis on our locations database. The tool covers 100+ data parameters across 180+ cities on a periodic basis covering details across four functions – ITO, BPO, Contact Center, and KPO. The choice of cities and analysis can be customized as needed. Media demonstrations of the tool are available.

“The headline for the second quarter in global services seems to be ‘slow and steady improvement’,” said Eric Simonson, managing partner, research at Everest Group. “We’re seeing service providers and buyers navigate slowly improving global economic climate by thoughtfully placing their bets to place capacity in markets they believe are likely to bounce back first, and they’re investing in new tools and models to offer value beyond cost once the turnaround is in full swing.”

Quest for Value Beyond Cost Savings Driving Contact Center Outsourcing (CCO) Strategy: Everest Group Report | Press Release

Customer Retention, Channel Management, Customer Analytics, Non-Voice Channels Behind Resurgent Growth in Global CCO Market

DALLAS, August 1, 2013 — Clients of global CCO engagements increasingly are looking beyond cost savings to more growth-oriented value, according to a new report issued by Everest Group, an advisory and research firm on global services. Instead, buyers want a partnership with their service providers to unlock new forms of value including customer retention and growth while unlocking new business opportunity from customer data and engaging customers via non-voice channels, especially social media.

The report, Contact Center Outsourcing (CCO) – Annual Report 2013: Focus on Customer Experience Management, is designed to assist key stakeholders (buyers, service providers, and technology providers) in understanding the changing dynamics of the CCO market. The report will help them identify trends and provides comprehensive coverage of the global CCO market. This includes detailed analysis of market size and growth, buyer adoption trends, CCO value proposition & solution characteristics, and service provider landscape.

The market for CCO globally grew at 7-8 percent in 2012, reaching US$65-70 billion, a steady rise from the lows seen in 2009. The global contact center spend stands at US$300-350 billion, of which third-party outsourcing accounts for 20 percent.

Data for the report came from two proprietary Everest Group sources. The first is a proprietary database of more than 400 CCO contracts, exclusive of shared services or Global In-house Centers (GICs). The second is the firm’s coverage of more than 20 CCO service providers including Aditya Birla Minacs, Aegis, Alorica, FirstSource, Genpact, HP, Mahindra Satyam, NCO-APAC, Serco, Sitel, Sutherland, Sykes, TCS, Teleperformance, Teletech, Transcom Worldwide, Webhelp, WNS and Xerox.

“As the global economy has shifted towards growth, the customer care function is once again viewed as a strategic operational area. A maturing CCO value proposition has moved beyond cost savings and labor arbitrage to include support of business growth,” said Katrina Menzigian, vice president at Everest Group. “As a consequence, we’re seeing forward-thinking service providers and savvy clients build new contracting relationships where service providers identify and deliver new sources of value. It’s an important trend that’s driving the high single-digit growth we’re now seeing and expect to continue for the next several years.”

Regulatory Reform, Thirst for Data Analytics Drive Growth in Healthcare Payer IT Outsourcing: Everest Group Report | Press Release

Report Examines Implications for Payers and Service Providers Leveraging IT Outsourcing Strategies to Reduce Costs, Wring Insights from Data

DALLAS, July 16, 2013 — A widening diversity of payers globally are turning to IT outsourcing (ITO) strategies in an effort to prepare for regulatory shifts while leveraging new technologies to gain useful insights from the mountains of data they collect, according to a report just released by Everest Group, an advisory and research firm on global services.

The report, ITO in the Healthcare Payer Industry – Annual Report 2013, provides an overview of the ITO market for the healthcare payer industry. Analysis includes key trends in market size and growth, demand drivers, adoption and scope trends, emerging themes, key areas of investment, and implications for key stakeholders. The report also provides specific updates on the readiness of the various stakeholders from the perspective of payer reform mandates.

Payer provider convergence, regulatory reforms, consumerization, growing focus on analytics and infrastructure, and emergence of new technologies have accelerated outsourcing in the healthcare market.

In this annual report, Everest Group analyzes trends driving for large, multi-year ITO relationships for the payer market. The report also provides specific updates on the readiness of various stakeholders from the perspective of payer reform mandates.

“Payers are killing two birds with one stone,” said Jimit Arora, vice president at Everest Group. “They are embracing sourcing strategies to not only address new regulatory requirements, but to gain quality of service and patient outcomes insights through business intelligence and big data analytics. And interestingly, we see the strongest deal growth coming from mid-market payers.”

Key findings in the report include:

• Mid-market payers are entering the IT outsourcing market in a big way. We are likely to see aggressive investment in this target segment by service providers.
• Infrastructure Outsourcing (IO) services are witnessing increased traction. Legacy modernization, health insurance exchanges and access portability requirements are creating opportunities in this space.
• Five key themes (The “Five Cs:” Contingency, Consolidation, Coordination, Consumerization and Competition) are driving payer technology investment strategies.

Trends analyzed in the report include:

• Healthcare was the only major IT buyer segment that saw growth in the number of outsourcing transactions
• Growing ITO activity from public sector and government in the healthcare sector is an established trend
• Growth was witnessed from deals originating from Europe and in new contract signings globally
• Smaller payers (less than US$10 billion in revenue) have driven the growth of ITO, with their IT spending more than other payer segments combined.
• The spike in payer spending in 2012 was driven largely by the nearing reform deadlines, with the key themes being public Health Insurance Exchange and International Classification of Diseases (ICD) 9-10 conversion.
• While North America continues to be the largest geography in terms of contract signings, EMEA has steadily grown to become a significant signing region for large payer ITO deals.

Enterprise Buyers Demanding Proof of Cloud-Savvy Skills From Traditional Service Providers: Everest Group Report | Press Release

Report Covers Buyer Expectations and Profiles of 17 IT Services Providers

DALLAS, July 10, 2013 — Buyers of enterprise IT services increasingly realize that the skills delivered by their traditional service providers are not the same skills needed for success in delivering cloud-based infrastructure, platform and software services. Not surprisingly, these buyers are adapting their strategies to shop for new skills, according to a report just released by Everest Group, an advisory and research firm on global services.

The report, Enterprise Cloud Services – PEAK Matrix Assessment and Profiles Compendium, provides a comprehensive assessment of cloud delivery capabilities of IT service providers and system integrators across applications and infrastructure services such as scale of operations, adoption across enterprise segments and geographies, types of services provided and domain investments.

Cloud delivery models are transforming the enterprise computing landscape. Enterprise buyers are realizing that as cloud delivery models expand their reach and become more complex and mission critical, they need help from IT service providers and system integrators.

With no clear leaders yet emerging across the cloud landscape, the report underlines three key findings:

• Cloud is about more than technology platforms. Enterprise buyers are demanding services such as consulting, system integration and management of the cloud environment.
• There is no “best” cloud service provider. Service providers’ capabilities – and their areas of focus – are very different when it comes to the cloud. Scale is important, but smaller providers also have a role to play in niche markets.
• The market will not settle any time soon. As more investments are pumped into the cloud market, service providers are likely to acquire fresh capabilities organically or through acquisitions. The competitive landscape will change accordingly.

As cloud adoption becomes more widespread, enterprise buyers want partners that can demonstrate a deeper understanding of cloud-based delivery models.

“Documentation of the cloud computing capabilities of enterprise systems integrators is thin,” said Chirajeet Sengupta, practice director at Everest Group. “Meanwhile, cloud adoption is growing within the global services space, and enterprise buyers need to identify differentiated system integrators who can bring together the right set of services across the cloud implementation and management lifecycle.”

The report specifically addresses this information deficiency, with detailed analyses on 17 large service providers, highlighting how success for these service providers will be determined by a combination of cloud innovation and legacy strengths.

The report provides an assessment and detailed profile on each service provider featured on Everest Group’s PEAK Matrices for cloud application and infrastructure services. The Everest Group PEAK Matrix is a composite index of a range of distinct metrics related to a service provider’s capability and market success. The report covers both cloud application and infrastructure services.

Service providers covered in the report include:

• Accenture
• Capgemini
• CGI
• Cognizant
• CSC
• HCL Technologies
• HPES
• IBM
• iGATE
• L&T Infotech
• Microland
• Mindtree
• NIIT Technologies
• Softtek
• Syntel
• Tech Mahindra
• Xerox