Companies are firing on both thrusters—leveraging outsourcing and global business services—to drive growth momentum in global services.
The global services industry is on a growth trajectory and will overcome COVID-19-related business disruptions in 2021, according to Everest Group. The firm has released research findings that summarize the performance and shifts of the sourcing industry in 2020. The report also forecasts the key trends that will shape the market in 2021.
Everest Group highlights the following as key developments in the global services industry in 2020:
- 1. Despite the pandemic, the global services industry witnessed an increase in number of outsourcing deals in 2020 as compared to 2021, with a significant growth in share of IT outsourcing deals.
- 2. 2020 saw significant momentum in new Global Business Service (GBS) center setups by the technology and communication vertical.
- 3. The past year also saw a rise in M&As (mergers and acquisitions) and alliances among service providers, driven by providers’ desire to augment digital capabilities and expand geographically. Also, many cash-rich service providers found startups to have attractive valuations driven by COVID-19.
Looking ahead to the remainder of 2021, Everest Group suggests that multiple forces will drive growth of the global services industry:
- Positive enterprise sentiments
- Vaccine roll-out
- Fiscal stimulus across demand geographies
- Pent-up demand
- Digital acceleration
- Need for cost optimization
Everest Group research indicates that enterprises are firing on both thrusters—leveraging outsourcing as well as GBS centers.
- Outsourcing revenue is recovering sharply and bookings have accelerated significantly. Large deals are expected to increase, driven by large-scale transformation initiatives, vendor portfolio consolidation to drive cost efficiency, and a rise in asset-leveraged deals as enterprises monetize their non-core assets.
- GBS center executives expressed optimistic sentiments about accelerated growth in 2021. More than 70% of those surveyed anticipated growth in IT functions, especially application development and maintenance, cloud and datacenter services, and infrastructure services. More than half expected growth in analytics, industry specific business process outsourcing (BPO), finance and accounting BPO, and human resources (HR) BPO.
Two HR-related trends will also factor significantly in 2021:
- The war for talent will intensify. Solutions to talent challenges will be found in increased training and development, automation and building a longer-term talent pipeline. Additionally, enterprises will need to revise workforce strategies to make them future-ready, examining skills needed, application of automation and robotics, organizational structure and whether traditional models of workforce engagement still apply.
- Work From Home (WFH) is here to stay. While WFH model adoption will decline from current levels, it will continue to be a part of the delivery model strategy, but with a more intentional approach. Organizations will need to invest in a wide array of tools, technologies and platforms to enhance the employee experience.
These findings and more are shared in the Everest Group report, “Market Vista™: 2020 Year in Review and Outlook for 2021.” The Market Vista report highlights the key trends and developments in the fast-evolving global offshoring and outsourcing market. The study captures the key developments across outsourcing transaction trends, health of GBS centers, location risks and opportunities, and service provider developments.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com/