Although global outsourcing market remains sluggish, enterprises, GICs and service providers increase investment in digital
DALLAS, September 1, 2015 — North America witnessed significant increase in both volume and relative share of global outsourcing contracts in Q2, driven by growing demand from public sector, healthcare, and mid-sized banking and financial services organizations. The global outsourcing industry in Q2 witnessed multiple instances of M&A, restructuring, and partnerships, as service providers looked to revamp their business model.
New GIC set-ups continued to grow—particularly in manufacturing, technology and telecom—with GICs playing a key role in enterprise digital transformation efforts. GICs and service providers alike are increasing leverage of start-ups to drive disruptive innovation in data integration, mobility solutions, big data analytics, and cyber security, as well as customer service improvement initiatives, marketing solutions, and efficiency improvement measures.
These results and other findings are explored in a recently published Everest Group report: “Market Vista™ Q2 2015.”
The report includes data, analysis and insights on transaction trends, major outsourcing deals, global in-house center market dynamics, trends in emerging offshore destinations, and service provider developments. The report also includes Standard Locations Database, which tracks 23 leading offshore locations
Other Key Findings:
- Despite significant increase in deal volume from North America, overall outsourcing market growth continued to remain sluggish due to weak activity in Europe.
- There is growing leverage of the GIC model to drive the digital transformation agenda for the enterprise.
- Europe continues to lead Asia in terms of new center set-ups for the second consecutive quarter given increasing preference for nearshoring by European enterprises.
- New center set-ups are shifting towards tier-1 cities across regions, driven by the profile of companies setting up new GICs and the nature of functions (i.e., engineering services / R&D, analytics).
- Most providers reported sequential fall in revenue, impacted by significant currency fluctuations; however, a few offshore players reported revenue growth.
- All major providers continued to face pressure on operating margins; the margins are expected to be impacted by currency fluctuations in the near future.
“Amid overall sluggish growth in the outsourcing market, we see some interesting shifts in the industry, particularly with respect to locations,” said Salil Dani, vice president at Everest Group. “New center set-ups are shifting towards tier-1 cities, Europe has overtaken Asia in set-up activity, and North America’s share of outsourcing transactions is growing, reversing a previous downward trend.
Among key trends to watch in the second half of the year are increasing investments in digital by all industry players and a surge in onshore locations for voice services. Among GICs, we’ll see an increasing emphasizing on top-line growth initiatives and the exploration of partnerships with start-ups to drive innovation.”
***Download the Complimentary 12-page Select Findings Here*** (Registration required.) This summary highlights key findings through text and graphics, with details provided on focus topics and selective themes.
Sign up here to download the presentation or listen to a recording of the Everest Group webinar “Global Services Development in H1 2015 and Key Trends to Watch: Market Vista Briefing.” The webinar features Everest Group experts discussing key market developments in H1 2015 and four key trends to watch.
***Additional Resources*** (Registration required to download complimentary content.)
- Market Vista™ Q1 2015
- Webinar: “Domestic Sourcing: Good to be Home! Plus Market Vista Q1 2015 Global Services Updates”
- Webinar: “GIC-Service Provider Collaboration: Does it Take Two To Tango?”
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at www.evererstgrp.com and research.everestgrp.com.