Tag: outsourcing

Forward-looking Sourcing for 2024: Outsourcing, Location, and Pricing Strategies in APAC | Webinar

ON-DEMAND WEBINAR

Forward-looking Sourcing for 2024: Outsourcing, Location, and Pricing Strategies in APAC

Following a muted 2023, business leaders in the Asia-Pacific (APAC) region are cautiously optimistic about 2024. Within the current APAC sourcing market, as buyers prepare for the coming year, they are actively leveraging inventive commercial models, emerging location trends, and innovative pricing constructs to optimize the value they achieve from service providers.

In this on-demand webinar, Everest Group analysts will explore how APAC buyers can develop forward-looking sourcing strategies with the potential of advancing innovation in their outsourcing relationships and portfolios as value acceleration takes priority in 2024.

What questions will the on-demand webinar answer for the participants?

  • What are the top forward-looking strategies in APAC for outsourced services buyers for 2024?
  • What location strategies are sourcing leaders planning to adopt in 2024 to achieve increased value from their service provider portfolio?
  • What are the pricing trends and forecasts in APAC?
  • What are the new-age commercial models observed in the APAC market?
  • How should APAC-focused procurement leaders shape their contracting and negotiation strategies in 2024?

Who should attend?

  • CIOs, CTOs, CPOs, heads of procurement, and heads of outsourcing
  • Category managers
  • Indirect sourcing leaders
  • Buyers of outsourced services
  • Strategic sourcing leaders
  • IT and BPO department leaders
  • Supplier management leaders
  • GBS leaders managing IT and BPO outsourcing contracts
  • Price-to-win teams from service providers
  • Service Providers’ sales leaders and country heads
Ashutosh Dhoot
Bhanushee Malhotra
Ashish Sehdev
Mihir Sinha

Pricing and Outsourcing Trends: Navigating Uncertainties in Services Sourcing from APAC | Webinar

on-demand WEBINAR

Pricing and Outsourcing Trends: Navigating Uncertainties in Services Sourcing from APAC

Persisting economic uncertainty and increasing geopolitical pressures continue defining the macroeconomic environment this year. Because outsourcing service providers are unable to pivot to meet changing demands, buyer satisfaction with providers is hitting a record low, and the Asia Pacific (APAC) region is no exception.

In this webinar, our analysts will discuss shifting buyer expectations and the defining characteristics of the outsourcing climate in 2023 from an APAC-focused lens.

We will also explore what sourcing leaders are doing to navigate uncertainties across a range of levers, including service provider portfolio shifts, location and talent strategies, pricing and contracting tactics, and engagement models.

Our speakers will discuss:

  • What are the macroeconomic trends shaping the APAC outsourcing market?
  • What are the top focus areas in APAC for buyers of outsourced services?
  • What location and talent strategies are sourcing leaders adopting to overcome increasing uncertainties?
  • What are the pricing trends and forecasts in APAC? Which skillsets are facing more demand?
  • How should APAC-focused procurement leaders shape their contracting and negotiation strategies?

Who should attend?

  • CPOs, CIOs, and CTOs
  • Category managers
  • Indirect sourcing leaders
  • Buyers of outsourced services
  • Strategic sourcing leaders
  • IT and BPO department leaders
  • Supplier management leaders
  • GBS leaders managing IT and BPO outsourcing contracts
  • Price-to-win teams from service providers
  • Service providers’ sales leaders
  • Service providers’ country heads
Prateek Gupta
Bhanushee Malhotra
Abhishek Sharma

The Rise of Retail Investors in Global Capital Markets | Blog

Retail investors are here to stay. As global capital markets face macroeconomic headwinds and a liquidity crunch, retail investors are gaining volume in traditional equity and debt markets as well as emerging alternate investments. Read on to understand the new global capital market trends, the staying power of retail investors, and the impact on investment banks, asset and wealth managers, and service providers.

Watching global capital markets over the past few years has been a rollercoaster ride of issuances and investments. Concerns of market volatility and issuances softening started way before the recent collapse of global banking giants, Silicon Valley Bank (SVB) and Credit Suisse. As illustrated below, overall global equity issuance was stagnant from 2017-2019, while global debt issuance has been steadily rising since 2017.

Driven by the pandemic, total equity issuance increased significantly starting in the third quarter of 2020 and remained high until the fourth quarter of 2021, resulting from regulatory support, major rate cuts, and gradual liquidity pumped into the markets by governments across the world.

Similarly, global debts in capital markets witnessed a significant increase in borrowing levels from the first to the third quarters of 2020. Interest rates across the globe reached historic lows during 2020 and remained down in 2021, leading to continued low borrowing costs for activities such as refinancing existing debt or financing mergers and acquisitions.

After the booms in 2020 and 2021, equity and debt issuance slowed in 2022 due to various macro-economic headwinds that resulted in volatile and low-growth capital markets.

Picture1 5

The current market volatility has been impacted by the following factors:

  • Tightened money supply
  • Aggressive interest rate hikes
  • Inflationary pressures
  • Heightened geopolitical risks that triggered supply chain issues; Russia’s invasion of Ukraine has resulted in higher global costs for energy, minerals, and grains
  • Tensions between the US and China and regulatory pressures

Rise of retail investors

Despite the ups and downs in global capital markets through the recurring macroeconomic headwinds, the growth of retail investors reshaped investing trends starting in early 2020 and by 2022, individual investors held roughly half of all global wealth.

Picture3 5

The strength of retail investors has been fueled by both demand and supply side factors. The exhibit below shows the contributing demand-side factors that include:

Picture2 6

Drivers for expanded retail volumes

Now let’s explore the various supply-side drivers for the increased participation of retail investors:

  • Growth of blockchain technology-backed assets – Retail investors have had a huge influence on the performance of cryptocurrencies, non-fungible tokens (NFTs), and other similar assets/stocks
  • New retail investment platforms – Newly available stock trading, investment platforms, and apps that provide better customer experience and real-time information to investors at a low commission/brokerage or subscription model have grown
  • Innovative debt, equity, and other assets investment offerings – As the market matures, banks and fund managers are delivering innovative and customized offerings, bridging the gap between retail investors and the ticket size. Concepts such as fractional investments and ownerships have highly encouraged and facilitated market entry for retail investors with smaller trades. These fractional investments can cross investment classes, such as real estate investment trusts (REITs). These tokenized options to invest in real estate allow retail investors to gain returns from fractional investments in real estate that otherwise require huge investments with low liquidity
  • New equity investment options – Similarly, investing in private companies that are not yet listed through debt instruments, invoice discounting, or sale of shares in private markets have drawn retail investors’ attention to realize high returns that are less impacted by volatility compared to stocks
  • Central Bank Digital Currency (CBDC) – The introduction of a digital currency issued by a central bank is expected to especially appeal to cash-rich yet risk-averse retail investors
  • Alternative investment funds – Private investment funds such as private equity firms and hedge funds that historically catered to institutional investors are now increasingly looking to tap wealthy individuals. According to reports, individual wealth invested in alternatives will grow more than institutional capital allocated in the next decade

As retail investors increase their volume and market participation, enterprises are rapidly scaling operations to support demand from growing retail investors as well as institutional investors.

Enterprises also are building capabilities across the traditional equity-debt markets and exploring building alternative investment offerings such as gold commodities, invoice discounting, crypto, and NFTs. To enable this, enterprises require support for back-end operations and to manage declining margins.

What does it mean for Business Process Services (BPS) on the sell side:

Amid the global rise in interest rates and capital markets volatility, investment banks have begun to feel margin and cost pressure. The subdued demand was visible in the quarterly earnings results of some major investment banks. In the fourth quarter of 2022, Morgan Stanley reported a 49% drop in its investment banking business compared to the prior year, Goldman Sachs registered a 48% plunge, and Citi Group witnessed a 58% decrease, among others.

The margin strain trickled down to operational cost pressure that led to job cuts in the investment banking division of all the big banks, including Barclays, Citi Group, Deutsche Bank, and Goldman Sachs.

The volatile environment is expected to drive the industry to look for support from service providers to stem costs and sustain business profitability in the following ways:

  • Offshoring: Tier 2 and tier 3 banks that may feel more heat are expected to move more back-office and regulatory reporting operations to low-cost nearshore and offshore centers by partnering with BPS providers
  • Accelerated shift to digitally-enabled operations: Banks are keeping IT investments restricted to core offerings and focusing on intelligent automation transformation, cloudification, and deploying machine-learning-based platforms, among other strategies
  • Captive carve-outs: Banks scrambling with extreme cost pressures are expected to carve out their captives to service providers, giving them responsibility for operations and accountability for business risks

What does it mean for BPS on the buy-side:

Picture1 6

Increasing demand for retail as well as private investments is driving many banks, fintechs, private equity firms, and hedge funds to make inroads or expand their existing asset and wealth management operations.

For instance, Morgan Stanley acquired E*TRADE in 2020 to strengthen its wealth management offerings, while JP Morgan bought digital wealth manager Nutmeg in 2021.

With enterprises scaling up and the regulatory environment changing, the need for low-cost and seamless operations is fuelling outsourcing spend in some of these key areas:

  • Technology-enabled and data-enabled services for better user experience
  • Asset servicing, such as fund administration and accounting
  • Corporate actions
  • Automated workflow for client onboarding, reconciliation, settlements, etc.
  • Support for existing regulations as well as up-and-coming regulations on Environmental, Social, and Governance (ESG), and cryptocurrencies
  • Increase in cyber security and data safety platforms and services

Changing yet challenging times

The fast-changing financial services landscape and the recent collapse of banking giants such as SVB and Credit Suisse are expected to influence investor sentiment as well as operating models and capital requirements of banking enterprises.

Watch this space for further updates on how the changing banking landscape opens additional risks and opportunities for service providers.

For more information on trends in global capital markets, reach out to the authors, Sakshi Maurya, Shrey Jain, Dheeraj Maken, and Suman Upardrasta. To learn more about BPS market trends, the competitive landscape, and our latest research findings, see Capital Markets Operations PEAK Matrix Assessment 2023.

Changing Dynamics In The Business Process Services Marketplace | Blog

I’ve blogged often in the past few months (here, for instance) about the emerging platform operations model and how it creates a more intimate, dynamic relationship between the tech stack and business operations. Just like the IT and engineering services marketplace, this new relationship between technology and operations because of platform operations is now increasingly dominating the business process services (BPS) outsourcing space.

Structuring an Outsourcing Deal in This Era of Uncertainty in Europe | Webinar

LIVE WEBINAR

Structuring an Outsourcing Deal in This Era of Uncertainty in Europe

Economic changes have taken the global market by storm, and Europe is no exception. In this webinar, our analysts will discuss changes in enterprise expectations and the defining characteristics of an outsourcing deal in 2023 in Europe.

Join us to learn what an ideal outsourcing deal in Europe should entail in terms of offshoring, automation, pricing and cost savings, engagement models, and contract terms.

Our speakers will discuss:

  • Business expectations from outsourcing deals
  • How service providers are structuring deals to meet these expectations
  • How outsourcing pricing in Europe has evolved and its consequent trajectory in 2023

Who should attend?

  • Sourcing leaders
  • Category strategy leaders
  • GBS leaders managing IT and BPO outsourcing contracts
  • Price-to-win teams from service providers
  • Service providers’ country heads
  • Industry leads within service providers.
  • Service Providers’ sales leaders
Vice President, Pricing Assurance
Practice Director, Pricing Assurance
Partner, Pricing Assurance

Four Steps to Transformation: Overcoming Buyers’ Achilles Heel in IT and BPO Deals | Blog

By starting with four basic elements in agreements, buyers can realize the transformation objectives they desire but often struggle to achieve from their outsourcing relationships. Read on to learn recommendations from our findings evaluating sourcing proposals over the past two years.

It is no secret that when buyers evaluate proposals for IT and BPO work in a managed services model, they consider various criteria such as provider capabilities, cultural alignment, pricing, etc. But one of the most important selection criteria, without a doubt, is the transformation the organization can achieve through the provider’s solution.

Based on our experiences in reviewing existing engagements, transformation is the biggest gap between buyer expectations and provider performance. The outcomes often are not transparent or measured, and when they are, the results are subpar.

This observation is astounding. Transformational outsourcing can reduce the outsourcing spend or total contract value (TCV) and improve the user experience, quality, and timeliness. While buyers know they need to focus on this critical aspect, they visibly struggle to realize the desired transformation objectives through their outsourcing relationships.

Here are a few examples that highlight the extent IT and BPO providers can fall short of expectations:

Example 1: A Tier 1 IT service provider was near the end of an application management service contract with a mid-sized US-based manufacturer. During the entire term, it charged the client for specialized automation resources as well as proprietary automation platforms. While the provider believed it had done a great job by piloting various use cases, no meaningful reduction in the number of full-time equivalents (FTEs) could be attributed to its efforts, leaving the customer dissatisfied.

Example 2: A leading BPO service provider was in the middle of its managed BPO services contract with a large UK-based client. Even though multiple transformation projects had been initiated and completed, neither the provider nor the client had measured the results because it was a fixed-price contract, making the business benefits unclear.

Four elements to ensure transformation

To overcome issues with lack of transparency, the following elements should be included in agreements after the initial proposal sales spin:

  1. Have the provider commit to a practical level of benefits from transformation
  2. Agree to a mechanism to measure the benefits and hold the service provider accountable for delivering on them (for example, link non-performance to reduced fees for the provider)
  3. Ensure regular transformation governance to identify new initiatives, track execution of existing ones, and measure the intended benefits compared to the plan
  4. Incentivize providers to deliver beyond the committed benefits through mechanisms like gainsharing

Once these basic aspects are part of the agreement, further steps can be taken to ensure the benefits realized are best in class and transformation is achieved.

To discuss how to realize or elevate transformation benefits in IT and BPO deals, please reach out to [email protected] or [email protected].

Discover more about outsourcing deals and contracting in our webinar, Pricing Actions to Capture Outsourcing Savings and Drive Success in 2023.

For Growth Objectives, Select A Service Provider Suitable For A Deeper Partnering Relationship | Blog

Companies that contract with third-party service providers to build and evolve digital platforms that help them compete must understand that this calls for a different kind of relationship. A partnering relationship with a deep commitment between both parties. A much more dynamic, fluid relationship. Not an arm’s length relationship with a provider that focuses on driving efficiencies. Unfortunately, not all service providers are equally strong in this kind of partnering relationship.

Read more in my blog on Forbes

Beroe Partners with Everest Group to Offer Deep Insights into Global IT Services and BPO Markets | Press Release

Beroe Inc, a global SaaS-based procurement intelligence and analytics provider, announced its partnership with Everest Group, a global research firm focused on strategic IT, business services, engineering services, and sourcing. The partnership will enable Beroe to further strengthen its intelligence offering with category-leading market and supplier research.

Beroe will integrate Everest Group’s research on supplier identification, monitoring, and locations for key technology and process outsourcing-related categories onto the Beroe LiVE.Ai platform. Procurement teams will be able to access Everest Group’s rich research around Supplier identification (including PEAK Matrix® summaries), service provider spotlights, and location-specific analysis on Beroe’s AI-powered intelligence platform, Beroe LiVE.Ai.

“We are delighted to be partnering with Everest Group and extending its unmatched research insights with procurement teams around the globe. Our partnership with Everest Group will add greater depth to our intelligence offering on Beroe LiVE.Ai,” said Beroe Inc Chief Executive Vel Dhinagaravel.

Beroe LiVE.Ai is an AI-powered intelligence platform tailored for procurement and sourcing professionals – providing market intelligence, supplier risk information, category benchmarking, cost models, market monitoring dashboards, and supplier discovery.

“We’re excited to support Beroe customers through Beroe LiVE.Ai. Everest Group brings robust market intelligence gathered over 30 years of research on complex services markets and providers,” said Amy Fong, Partner, Sourcing and Vendor Management Programs, Everest Group. “Partnering with Beroe will extend this research to a broader group of sourcing organizations and power better decision making and competitive positioning for category managers and their stakeholders.”

About Beroe

Beroe is a global SaaS-based procurement intelligence and analytics provider. We deliver intelligence, data, and insights that enable companies to make smarter sourcing decisions – leading to lower cost, reduced risk, and greater profits. Beroe has been a trusted source of intelligence for more than 15 years and presently partners with 10,000 companies worldwide, including 400 of the Fortune 500 companies. For more information about Beroe Inc., please visit https://www.beroeinc.com/.

About Everest Group

Everest Group is a research firm focused on strategic IT, business services, engineering services, and sourcing. Our research also covers the technologies that power those processes and functions and the related talent trends and strategies. Our clients include leading global companies, service and technology providers, and investors. Clients use our services to guide their journeys to maximize operational and financial performance, transform experiences, and realize high-impact business outcomes. Details and in-depth content are available at www.everestgrp.com.

Media Contacts:

Debobrata Hembram ([email protected])
Jennifer Fowler, Cathey Communications ([email protected]) for Everest Group

Optimizing Guidewire Licensing: A Guide to SaaS Vendor Management Pricing

With increased competition and cost pressure in the property and casualty industry, insurers are rapidly modernizing technology and moving to the cloud. Top SaaS vendors like Guidewire and Duck Creek are playing increasingly important roles in insurers’ modernization journeys. Getting the correct licensing for your enterprise needs is critical to the success of these strategic partnerships. Read on to learn the key aspects that go into Guidewire pricing to negotiate smarter and make more informed purchasing decisions.     

How does Guidewire charge for its platforms?

The most common Guidewire products we see clients use are InsuranceSuite and InsuranceNow. For both platforms, Guidewire’s annual fees are charged as a percentage of the annual Direct Written Premium (DWP) of the procuring enterprise.

An incremental license fee applies to all DWP increases once the enterprise exceeds the DWP baseline contracted during the term period. The incremental fee is typically staggered in nature and decreases as a percentage with increased DWP.

Negotiating the right fees for the platform remains a key stepping-stone to realizing commercial success and increased ROI for the platform. Some of the key negotiating levers in SaaS vendor management scenarios are:

Capture

Five factors to focus on beyond fees

While subscription fees remain the most important aspect of the commercial agreement, the following factors play a key role during negotiations:

  • Non-production environments

The number of non-production environments (NPEs) included in the subscription is an important parameter to consider.

Similarly, Guidewire provides additional credits that can be redeemed to provision NPEs. These NPEs are typically used to provision dev, test, pre-production environments and come in multiple sizes from Guidewire – Standard, Enhanced, Performance, etc. Since these environments are chargeable (post credit redemption), it becomes extremely important to internally calibrate enterprise requirements for NPEs and understand if the provided credits will suffice now and in the future.

  • Price renewals

Price hikes during contract renewals are one of the most dreaded conversations for an enterprise, especially for a niche vendor like Guidewire. Negotiating favorable terms around price renewals is critical. Typically, we observe enterprises pushing for renewal prices to be capped at a mutually agreeable percentage.

  • Price lock-in

Guidewire typically provides multiple add-ons like Predictive Analytics, DataHub, etc., at additional costs. While these may not be immediate enterprise requirements, they may later become necessities. In certain scenarios, Guidewire offers price holds for some of these products.

We recommend price lock-ins at the time of contracting for add-ons that may become requirements in the future and also advise that customers take these two additional steps:

      • Be sure the price lock-in term is longer to take into consideration the implementation period
      • Negotiate a broad price lock-in that includes all add-ons that may become future requirements
  • Service credits

In addition to the core product, Guidewire significantly cross-sells its services. It typically offers service credits that come with conditions. Using service credits is restricted up to a certain percentage of the invoice value (thereby allowing Guidewire to bill for the remaining invoice amount) and the credits expire.

Both of these conditions are geared towards allowing Guidewire’s professional services arm to make inroads into the client environment. Based on our benchmarking engagements, some of the key negotiation points for clients remain around service credits adequacy and the validity period, and the increased usability of each invoice.

  • Support costs

Support costs are an often-overlooked aspect of the agreement. As is the case with most top SaaS vendors, platform support remains with the product vendor, and the cost is baked into Guidewire’s licensing fees. However, Guidewire charges a certain percentage of the subscription fee for extended support if the enterprise is currently on an earlier product version.

This can be a tricky scenario since enterprises may choose not to upgrade due to various reasons – making this one of the most important aspects to benchmark and negotiate as part of your SaaS vendor management.

To learn more about how Everest Group can help your enterprise optimize and navigate through your Guidewire license procurement and SaaS vendor management, please reach out to [email protected].

Learn more about pricing in the services industry in our webinar, Outsourcing Pricing: 3 Pitfalls and 2 Unknowns Enterprises Need to Know in 2022.

 

How can we engage?

Please let us know how we can help you on your journey.

Contact Us

"*" indicates required fields

Please review our Privacy Notice and check the box below to consent to the use of Personal Data that you provide.