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Anish Agarwal

Global Service Delivery Locations: Where to Go, Where Not to Go! | Blog

By | Blog, Shared Services/Global In-house Centers, Talent

Long gone are the days of selecting offshore/nearshore service delivery locations with a regional/local interpretation of demand, a focus on cost savings, and an emphasis on service delivery in and of itself. Today, it is evolving to include a global view of demand, an increasing focus on talent quality and capacity for innovation, and the involvement of group-level strategy at its core.

So, which locations will help enterprises fulfill their requirements? Where can they place a long-term bet for a sustainable strategy that provides a competitive edge against their competitors?

Everest Group’s viewpoint, “2019 Locations Predictions: Follow the Talent,” reveals location-specific forecasts that can guide organizations on how to transform their global delivery location strategies.

Everest Group’s Predictions for Global Services Delivery Locations

Asia

As companies look for large-scale rebalancing and consolidation/right-sizing to fewer centers, the primary focus of a location strategy will be talent quality and availability. Asia has the largest talent pool with varied skillsets for IT, digital, Engineering and R&D (ER&D), and BPS service delivery.

India – India will continue to progress in the next three to five years, driven by growth in the digital and ER&D functions, as well as the increase in the availability of depth and breadth of talent. Cities such as Hyderabad and Pune will experience the highest traction due to increasing demand for complex IT and high-end R&D work from the technology and BFSI giants.

The Philippines – The Philippines will continue its dominance as one of the largest voice-BPS markets, and will also experience growth in IT services, accentuated by a faster rotation into digital such as customer analytics and social media-driven services. We expect increased traction in locations beyond Manila, such as Iloilo, Quezon, Taguig, and Davao, given their attractive cost proposition and untapped talent pools.

Malaysia – Malaysia will continue to grow, especially in the multilingual BPS, banking-BPS, and digital sectors, due to the increasing demand from Southeast Asian markets and global BFSI majors.

Europe, Middle East, and Africa (EMEA)

As companies consolidate their portfolios, and as technology and design thinking-based approaches blur the boundaries between IT and BPS, cross-functional collaboration will become critical to achieving digitalization and faster time-to-market. The EMEA region provides an ecosystem that enables companies to tap into talent that can multi-task, and is more suited for cross-functional center setups.

Poland – Poland will overtake Canada to become the third largest location in the world for BPS delivery, given its expansion of multi-functional delivery centers across various verticals and its strong government support. Cities such as Krakow, Warsaw, and Wroclaw will see traction in high-end IT services, with players setting up digital innovation hubs, including blockchain, cryptocurrencies, and AI.

Ireland – Ireland will experience the fastest growth in the region due to strong government support, well-developed infrastructure, and the increasing trend across global majors to shift their headquarters away from the United Kingdom because of Brexit uncertainties. Beyond Dublin, we also expect higher BPS growth in tier-2/3 locations such as Cork, Limerick, and Galway.

Israel – Israel will witness a significant uptick in next-generation IT services including big data, cybersecurity, cloud, and IoT, driven by a focus on research and close collaboration between academia and industry.

Americas

The rise of reshoring amidst the protectionist policies adopted by leading source geographies, including the United States, is driving companies to scrutinize and consolidate their service delivery portfolios. The Americas region is becoming a preferred choice for firms, given the ease of coordination with onshore teams, better alignment/training, and customer intimacy.

Costa Rica – Costa Rica will experience an increase in center set-up activity, although the typical scale of operations might decline due to the focus on delivering agile transformation and automation solutions to support North American operations.

Jamaica – Jamaica will see accelerated growth, especially in the BPS segment, on the back of availability of a large English-speaking talent pool and dedicated government investments to enhance the business environment.

Canada – Canada will also witness accelerated growth, particularly due to high government investments in attracting foreign investors, and especially in the IT and digital services space. Uncertainty around U.S. government policies will further drive enterprises to expand beyond existing U.S. delivery centers, especially Canada.

In today’s complex, and often volatile, environment, a tightly defined and carefully crafted location strategy is increasingly critical to enterprises’ long-term success. For more details on Everest Group’s Predictions for Global Services Delivery Locations, please see our viewpoint, “2019 Locations Predictions: Follow the Talent” or contact Parul Jain or Anish Agarwal directly.

Why Many Banks Might Have to Dump Their Delivery Location Strategy | Blog

By | Banking, Financial Services & Insurance, Blog, Onshoring

Long gone are the days when consumers were welcomed with toasters when they opened a checking or savings accounts at their local bank. Today’s consumers don’t want toast-making capabilities from their financial institution: they want cheaper, easy-to-use Internet- or smartphone-based financial products and services, including payment applications, lending platforms, financial management tools, and digital currencies, all with hyper-personalization. Most customers are quick to make a move if their current financial institution doesn’t deliver.

So, what do banks need to do to retain their customers? Two things. First, they need to deliver the banking experience their customers are increasingly demanding. Second, they need to reconsider much of their service delivery location strategy.

What do Bank Customers Want?

Let’s first look at banking customers’ requirements for a SUPER banking experience.

Few, if any, banks have the ability to deliver on these requirements. So, they’re increasingly partnering with financial technology start-ups – popularly known as FinTechs – to meet customers’ expectations.

This brings us to the second thing that banks need to do to retain and grow their customer base: reconsider much of their service delivery location strategy.

Cracking the Service Delivery Location Strategy Code

With innovation and personalization topping customers’ list of banking requirements, banks can no longer rely on the same location strategy they’ve used to deliver traditional functions such as applications, infrastructure management, and business processes. Why? Because FinTech requires a higher proportion of onshore/nearshore delivery compared to traditional functions and co-locating all FinTech segments such as payments, lending, and capital markets in the same region may be difficult given varying maturity of locations across segments.

To help banks find locations for successful FinTech delivery, Everest Group developed a framework – presented in our recently published research report, “FinTech Services Delivery – Traditional Locations Strategies Are Not Fit For Purpose!” – to measure the innovation potential of a location.

With the framework, banks can evaluate all aspects of innovation potential, including the availability of talent with emerging skills (such as artificial intelligence, machine learning, and analytics), adequate cost of delivery, and providers’ financial services industry domain knowledge.

Framework to Measure a Location’s Innovation Potential

To develop our FinTech Services Delivery/Locations report, we started with a list of 40+ global cities with leading FinTech investment and market activity. Subsequently, we shortlisted 22 locations based on multiple criteria including overall investment, technology and infrastructure, and talent. Finally, we used our innovation potential framework, coupled with other factors such as maturity of the FinTech ecosystem and cost of operations, to determine the top locations banks should consider for specific FinTech use-cases such as payments, lending, and capital markets solutions.

Here are some key findings from our location strategy research:

  • Banks may need to create a parallel portfolio of FinTech delivery locations, as they may be far different than those that are mature in delivery of traditional functions
  • A location’s innovation potential (not its cost arbitrage or delivery efficiencies) is the most important factor for successful FinTech delivery. This is because the right location will offer depth and breadth of maturity across multiple financial segments, a vibrant startup scene, agile academic institutions, tech-savvy government, ample financing options, modern technology infrastructure, and friendly regulatory environment
  • Locations that are currently regarded as nascent (e.g., West Africa, Southeast Asia, and Latin America) may emerge as attractive alternatives as the market evolves.

For more details, please see our report, “FinTech Services Delivery – Traditional Locations Strategies Are Not Fit For Purpose! Plus Profiles of Emerging Offshore/Nearshore FinTech Hubs” or contact Anurag Srivastava or Anish Agarwal  directly.