Month: July 2017

Total Talent: The Future of Workforce Solutions | Webinar

July 26, 2017

Wednesday, July 26 | 11:00 am – 12:00 pm EDT

Register for the webinar

Research Partner Rajesh Ranjan will help lead a Pontoon-hosted webinar titled Total Talent: The future of workforce solutions.

Webinar attendees where they hear highlights from a recent report on Total Talent acquisition along with a detailed explanation on how a Total Talent approach can help your organization deliver on their business objectives through alignment of its talent resources.

Everest Group speaker

Rajesh Ranjan
Partner, Research
Everest Group

Register for the webinar

Signs of Structure in a Disordered Global Services World? | Sherpas in Blue Shirts

July 25, 2017

The global services market is in upheaval, and disorder seems to be the new world order. Geopolitical developments, macroeconomic pressures, and unprecedented pace of changes in technology have resulted in huge disruptions to the usual ways of doing business. However, despite the turmoil, the global services market continues to grow, albeit at a much slower pace compared to previous years.

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When developing our Global Locations Annual Report 2017, Everest Group spent considerable time and effort analyzing the underlying data to determine if there are some signs of structure amidst the disorder. Here are some patterns and trends visible from our analysis:

Pervasive rotation of delivery capability toward digital

There has been significant increase in both number and share of new centers focusing on delivery of digital services. Between 2013 and 2016, the number of such centers grew by ~177 percent.

  • Regions: Most of this growth was concentrated in Asia Pacific and nearshore Europe
  • Segments: Cloud, Internet of Things, and Big Data witnessed the highest adoption rates
  • Sourcing model: While the lion’s share of the growth was with the in-house model, service providers also reoriented their delivery portfolios

Greater leverage of nearshore locations

Both service providers and global in-house centers are growing faster in nearshore locations, such as central and eastern Europe, Latin America, and the Caribbean, compared to traditionally offshore locations (such as Asia Pacific.) This is driven by multiple factors, most prominently the drive towards digitalization and the different talent demands this imposes. The chart below shows the increasing share of nearshore regions in new delivery center setups:

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Complementary growth in onshore locations

There has been a rapid surge in large enterprises’ and service providers’ service delivery footprint in locations traditionally considered onshore. While firms either retained or reduced the pace of growth in offshore/nearshore locations, they ramped up presence significantly in the United States and continental Europe (see the following chart for new onshore delivery center setups of top-20 IT-BPO service providers.)

eg31  20 leading service providers across IT and BPS that Everest Group uses as “Index” providers to gauge market trends

This is largely driven by enterprises’ desire to deliver complex services coupled with the advantages of customer intimacy. However, for many providers, this is in anticipation of strict work visa issuance guidelines which may make it imperative for them to have a foothold in the onshore market for hiring talent

While there’s some “method to the madness” in these pervasive trends, there are many operational risks that are likely to add to the disorder. These include:

  • Increased safety and security risks (terrorism and border issues) in Indonesia, Malaysia, and Thailand, and high crime rates in Guatemala and Jamaica
  • Continuing conflict between Russia and Ukraine
  • Frequent changes in political leadership in Egypt
  • Macroeconomic instability in Brazil and Argentina.

For more such trends and analyses on the value propositions of different locations through Everest Group’s MAP MatrixTM, which will help you frame your global services location strategy, please refer to our report, “Global Locations Annual Report 2017: Signs of Structure in a Disordered World.”

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

July 25, 2017

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

7 hot IT outsourcing trends — and 7 going cold | In the News

July 24, 2017

As IT organizations become more strategic, so too do their partnerships with IT outsourcing providers. Digital transformation, automation, and the data revolution are not just shaking up how IT operates, they are greatly impacting the kind — and quality — of services under contract with IT outsourcing firms.

In an era that values superior customer and employee experiences, companies are placing more emphasis on the resources and technology employed to operate their internal service desks and customer-facing call centers.

“Call center consolidation and the desire to partner with strategic vendors continues, but call volumes are still high,” says Jimit Arora, a partner at Everest Group. “While virtual agents and chat bots are becoming prevalent, we see companies being reluctant to expose customers to these technologies just yet. They don’t want blow-back akin to interactive voice response system.”

Read more in CIO

Sustainable Service Provider Strategies for Digitalized Contact Centers | Sherpas in Blue Shirts

July 24, 2017

Is M&A required for growth in the hyper-competitive, increasingly digitalized contact center outsourcing (CCO) market, or are there still organic growth opportunities available to service providers?

This is a key question we pondered when developing our recently released annual CCO Service Provider Landscape with PEAK Matrix Assessment 2017 report. Before we address that question, let’s first take a look at the numerous changes that are impacting the (CCO) space:

  • Customers are demanding a seamless and consistent customer experience
  • Disruptive technologies are continuously redefining customer and buyer expectations
  • Buyers are shifting their focus towards better insights and increased agent performance
  • There’s a movement towards fewer but more meaningful CCO relationships, including vendor consolidation.

To address these phenomena, service providers continue to rely on acquisitions to bolster their capabilities in order to remain relevant and grow. Some of the large-scale acquisitions in 2015-2016 included those of EGS by Alorica, Minacs by Concentrix, and GoExcellent by Webhelp. Each of these acquisitions were focused on multiple pillars of capability enhancement – expanding geographic reach and delivery footprint, deepening industry focus, and boosting next-gen technology capabilities.

The following exhibit highlights the nature of these multi-capability, and other single capability, acquisitions that took place in the last 12-18 months, and how they are positively impacting the provider’s short- and long-term growth.

 

Contact Center Outsourcing, CCO

 

In addition to M&A activity – which delivers varying degrees of short- and long-term growth – many service providers are increasing their investments in multiple next-gen technology solutions. While these moves result in stronger client relationships that do grow over time, they don’t drive immediate revenue growth; this is often because these very solutions are around lower price point non-voice and self-service offerings which, inherently, challenge the providers’ growth rates.

Given the degree of competitiveness in the CCO market, we believe that M&A will continue to remain intrinsic to the growth of service providers and their capability enhancement strategy. But, as the market evolves and the competitive consolidation wave troughs in the next 12-18, service providers need to prepare themselves for sustained organic growth in the digitally-enabled business environment.

And, circling back to the question with which we opened this blog…organic growth is indeed still possible. Some service providers, such as HCL, HGS, Sutherland Global Services, and WNS, are registering strong organic growth driven by focused internal investments over the last few years. But the way forward for all service providers is to bring together a blend of people, process, and technology changes in order to transform themselves as strategic partners able to support their clients’ quest to achieve best-in-class customer experience.

 

Here are Everest Group’s recommendations for CCO providers’ organic growth strategy:

  • Move towards a consultative-led approach to engage with buyers as strategic partners, and understand key customer pain points and how to improve the customer experience through each one of them
  • Evolve the client engagement model to a more agile and business outcome-oriented sales and solutioning model
  • Invest beyond traditional enabler technologies such as analytics and multi-channel solutions, and focus on next-gen solutions such as robotic process automation (RPA) and artificial intelligence. If these capabilities cannot be built in-house, look at partnerships
  • Redesign the agent talent model to achieve the right skill set by relooking at recruitment strategies and learning & development practices to ensure the agent of the future has domain and technology expertise.

The contact center services market is at an inflection point which is creating both challenges and opportunities for service providers. M&A has played a key role helping leading players counter market disruption, but is not a long-term growth path. They need to bring out changes in their outlook, and enhance their capabilities to position themselves as strategic partners for enterprises. How well and swiftly they manage these changes will determine, which providers win in the market, and which ones risk falling off the radar.

To learn more about the growth strategies the leading and contending CCO service providers are employing, please read our report, “CCO Service Provider Landscape with PEAK Matrix Assessment 2017.”

RPA and BPM – The Twain Shall Meet after All | Sherpas in Blue Shirts

July 20, 2017

It was not long ago that I was talking to a German manufacturer about the relative merits of different types of automation solutions on the market. The client did not want any services-layer, API or connector-based process integration. He said those were in the realm of Business Process Management (BPM) and IT. That is why he was going for Robotic Process Automation (RPA), for integration through the user interface. We discussed the pros and cons of these different approaches – but the point is that he was looking for an alternative to traditional BPM. He, and many others, have come to view RPA as that alternative. Yet, recent announcements by leading vendors show that RPA and BPM are coming together. Announcements by IBM and Automation Anywhere, and Appian and Blue Prism, indicate that we have really come full circle and that the RPA and BPM twain have already met.

This was inevitable:

  • The recent success of RPA was a bolt out of the blue for the BPM market, distracting and taking away many potential customers and reaching business users that BPM providers could only dream about. BPM vendors had to take steps to protect their share of the market
  • The growing scale of RPA deployments is another driver for the twain to meet. It is one thing having a few robots running basic processes, but as organizations’ automation ambitions have become loftier, the need for integration with workflow to increase control and orchestration has grown too
  • Robotic Process Automation is not the answer to all automation requirements and, therefore, combining it with BPM for a full set of capabilities to handle different situations is a no brainer. Some of the most successful automation deployments combine RPA with BPM-based large strategic system integration and transformation. In these scenarios, RPA complements the BPM integration by connecting core business platforms to other disparate enterprise systems

IBM and Automation Anywhere

With their announcement, IBM and Automation Anywhere have taken their partnership to the deeper level of integrated offerings:

  • IBM will include Automation Anywhere Enterprise edition in its BPM software catalogue. Currently BotFarm and Automation Anywhere’s cloud offerings are not included
  • It will resell and support Automation Anywhere
  • IBM will integrate Automation Anywhere with the software becoming a part of its IBM Digital Process Automation platform. This included IBM Business Process Manager (BPM) and IBM Operational Decision Manager (ODM)
  • Automation Anywhere will be the standard RPA software offering unless clients ask for another

As things stand today, IBM Digital Process Automation orchestrates processes between core systems while Automation Anywhere RPA automates repetitive rules-based tasks. IBM’s vision for the future is that BPM and RPA will be integrated into a flexible offering with software, services and consultancy provided from a single source. In the future, we will see IBM add cognitive capabilities to this mix. The question is how much of Automation Anywhere’s intelligent capabilities will feature in IBM’s software catalogue.

While the move by IBM to build this partnership is part of the maturing RPA market, it must have been partly driven by a move by its other major RPA partner, Blue Prism, to join forces with Appian, a BPM vendor with whom Blue Prism has built deeper software integration. Last year, another BPM player, Pega, acquired Open Span, which also offers Robotic Process Automation.

An additional driver is that RPA offers integration at a relatively low cost of entry, and this partnership allows IBM to bring in customers at a lower starting point to traditional BPM projects.

Appian and Blue Prism

This week, Appian and Blue Prism, which, had already built some plug and play capabilities together, took their relationship to the next level with the announcement of an extension to Appian’s platform that is based on RPA from Blue Prism. The partners are also aiming for a one-stop-shop to all automation requirements and seamless integration between their combined BPM and RPA products.

Interestingly, the Blue Prism partnership with IBM is going on, unaffected by these pairings. The groups involved are different: Blue Prism started in IBM’s Global Process Services and expanded to GBS Digital. Automation Anywhere’s relationship is with IBM Software.

It is important to note that the Appian move is part of Blue Prism’s strategy to turn its software into a platform that other solutions can be plugged into easily. The Blue Prism Technology Alliance Program (TAP) will see integrated offerings from partners in cloud, virtualization, analytics, process mining, artificial intelligence including computer vision, as well as BPM. IBM is a TAP partner. Others, include Celaton and Instream, its intelligent automation software.
These alliances open new opportunities for Blue Prism, for example, to handle processes that use unstructured content and to access services that are run on cloud solutions. In summary, interoperability is going to be a key feature of the Blue Prism platform and the Appian move is a major step in that direction.

Everest Group has addressed aspects of automating different levels of processes with different solution types in a paper titled “Pushing the Dial on Business Process Automation”.

Everest Group has just positioned IBM as a Leader in a PEAK Matrix™ assessment of Business Process Services Delivery Automation (BPSDA).

I Can’t Get No Satisfaction – The CSAT View of RPA in BPS Contracts | Sherpas in Blue Shirts

July 19, 2017

Everest Group’s latest research shows that while there is growing adoption of Robotic Process Automation (RPA) within Business Process Services (BPS) contracts, customer satisfaction (CSAT) with service providers’ is distinctly average at 3.6 out of 5. Service providers need to do more to achieve better CSATs.

Everest Group’s research titled Business Process Services Delivery Automation (BPSDA) – Service Provider Landscape with PEAK Matrix™ Assessment 2017, which assesses the automation capabilities of leading service providers, shows that the number of automation proofs of concept run by service providers for their BPS clients has on average quadrupled in one year. Furthermore, the number of BPS contracts with automation has gone above 1,000. Yet, the scale of deployments is small; the average number of robots deployed per BPS client hovers at just below 10.

Unsurprisingly, at 85%, the vast majority of deployments are robotic process automation as opposed to automation based on Artificial Intelligence (AI).

The other finding from the report, based on interviews with reference clients of the service providers shows that CSAT with service providers automation services is fair to middling. The average overall score was 3.6 out of 5. Clients rated the need for RPA skills very highly with service providers achieving 3.9 for their RPA related services. The scores were dragged down by the CSAT for AI capabilities that scored only 3.1.

The kind of issues that the reference clients reported were mainly related to the immaturity of RPA in the global services market and the skills for deploying it. Examples of feedback include:

  • It feels like they used us as a training arena for some of their staff
  • They (the BPS provider) should communicate opportunities better. It feels like they were late to bring this to us
  • They took a long time to learn how to code in xyz RPA software. It took a long time to integrate the RPA with our systems
  • The service provider should have done more due diligence on the RPA technology vendor
  • Change management and governance need improving

What can we expect with Robotic Process Automation?

Some of this dissatisfaction is a result of the hype in the market about the ease of robotic process automation deployments and rapid returns on investment. Clients have high expectations from all RPA projects, and this is showing in projects that they deploy for themselves or through system integrators as well.

The good news is that service providers continue to invest in automation. On average, 60% of service providers’ technology staff are working on automation products, solutioning and related services. This will enhance their skills and capabilities in SDA technologies, both RPA and AI.

We expect to see skills grow alongside the market in the coming months. We’ll be watching this space closely to provide our clients with updates over the year.

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

July 19, 2017

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.

Accenture drives digi-innovations via worker seed funds, small acquisitions | In the News

July 18, 2017

The United States -based information technology firm Accenture Plc has started funding innovative ideas from employees on emerging technologies to drive faster growth in the digital segment. Aggressive innovation moves such as $2,000 for best ideas can outweigh Indian peers in gaining digital revenue.

The IT major has received 13,700 ideas from employees of its Indian technology delivery centres on digital technologies such as design thinking, machine learning (ML) and the best ones are being implemented for its customers across India and global markets. The two key themes for these ideas were disruptive businesses and Digital India.

Accenture has started offering $2,000 for 40-50 shortlisted ideas to turn them into prototypes.

“What sets them (Accenture) apart from their Indian competitors are not the programs, which companies such as Wipro, TCS and Infosys have also adopted and in some instances been even more aggressive, but when the early lead they gained by being the first mover and establishing industry credibility from this early mover role. The second big thing they have done is that they are far more aggressive in buying digital firms, which bring with them the IP and innovations,” said Peter Bendor-Samuel.

Read more in Business Standard

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