Conducting a Competitive Analysis for a Fortune 500 Service Provider

Executive Summary

In the current recessionary environment, the client, a leading multinational ITO and BPO service provider, needed to assess its relative cost and price competitiveness in the IT application development and maintenance (IT-ADM) space. To do so, it engaged Everest Group to benchmark it against its competitors on a comprehensive set of parameters. Everest Group helped the client refine, standardize and expand various components of the benchmarking initiative, and delivered fully analyzed results in less than one month.

The Client’s Challenge

It was critical for the client to ensure wide coverage of aspects in scope of the benchmarking initiative. The client’s initial in-scope benchmarking parameters and required analyses included:

• FTE-based prices spanning the complete role hierarchy in both IT-ADM consulting and technical delivery
• Delivery metrics that impact the overall cost and pricing for service providers, including staffing pyramids and the onshore-offshore delivery mix
• Multiple service delivery geographies, including Australia, Brazil, France, Germany, India, Italy, Spain, the United States, and the United Kingdom.
• Provider-specific variations of the aforementioned parameters
• Analysis of variation of the aforementioned parameters (FTE-based prices, staffing pyramids, and onshore-offshore delivery mix) with the delivery model deployed at the buyer geography i.e. deployment of onshore resources vs. deployment of landed / onsite resource

Insight to Action

Understanding the data and analysis requirements resulting from the benchmarking initiative, Everest Group collaborated with the service provider to refine the scope of the engagement, rationalizing or standardizing certain aspects and expanding others. For example, Everest Group recommended classifying and analyzing the full set of service providers by category (e.g., Indian service providers and global service providers), rather than analyzing each individual service provider. Similarly, it recommended expanding analysis of the onshore-offshore delivery mix to include project phase activities by consulting and technical delivery staff.

Everest Group leveraged multiple methodologies and sources to conduct the benchmarking and obtain meaningful insights for each agreed upon benchmarking area. For example, it largely focused the FTE-based price benchmarking on an analysis of its own proprietary pricing database. For less mature delivery locations such as Germany, France, Italy, and Spain, it simulated pricing based on an estimation of provider operating costs in each country. And for staffing pyramids and onshore-offshore delivery mix benchmarks, it analyzed deals on which it had previously advised, and conducted interviews with industry subject matter experts.

In order to meet the tight timeline of less than one month as required by the service provider, the entire analysis was broken up into multiple, simultaneously executed work-streams.

Impact

Everest Group’s collaborative, detailed, multi-pronged, and substantiated approach ensured the benchmarking deliverables were highly relevant to the service provider’s situation and well accepted by stakeholders. The analysis enabled the client to identify areas in which its pricing was potentially misaligned with its competitors. It also provided an understanding of how the client’s project staffing strategy compared with its peers on aspects including span of control and leverage of offshore locations.