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Anurag Srivastava

Anurag Srivastava is a member of the Global Sourcing team and assists clients on topics related to location optimization, benchmarking, and global service delivery strategy. Anurag’s responsibilities include leading Everest Group’s Location Insider subscription offering. To read more, please see Anurag’s bio.

Can Indian Tier-2/3 Cities Fit the Bill for Digital Services Delivery? | Sherpas in Blue Shirts

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

India continues to offer an attractive service delivery location proposition for global companies, given its unique combination of a low-cost, scalable English-speaking talent pool, and the breadth and depth of available skills.

As the global digital services industry matures, and with increasing competition in the tier-1 cities, companies are looking to reduce the costs of talent and access additional untapped talent pools for digital services delivery.

Can tier-2/3 cities in India fit the bill? Let’s start by looking at the current state of digital services delivery in these cities.

Existing Landscape

Today, India is the largest destination for digital services delivery, with 75 percent of the market. Tier-2/3 cities in the country currently hold 14-16 percent of the market share, and we expect this proportion to grow by 15-20 percent in the next couple of years. Ahmedabad, Chandigarh, Coimbatore, Indore, Jaipur, Kochi, Lucknow, T-puram, and Vadodara are the top nine tier-2/3 locations, accounting for 55-60 percent of the digital services headcount in tier-2/3 cities.

Tier-2/3 cities are mostly leveraged to provide social & interactive (41-43 percent), cloud (21-23 percent), analytics (16-18 percent), and automation (10-12 percent) related services. When it comes to sophisticated digital technology services, such as cybersecurity, mobility, and Artificial Intelligence (AI), service providers still prefer tier-1 locations such as Bengaluru.

Major digital services Tier 2 3 blog

Now, let’s evaluate how tier-2/3 Indian cities’ value proposition stacks up against tier-1 cities.

 

What’s ahead for India’s Tier-2/3 Cities?

 Here are some of the key findings from our recently published report, “Will Tier-2/3 Indian Cities Carve a Niche in the Digital Story?

  • Tier-2/3 cities will continue to be leveraged predominantly as spokes to major hubs in tier-1 cities for the next two to three years
  • Because of a lack of skilled talent, delivery of advanced digital services such as machine learning, cyber security, and mobility from tier-2/3 cities will remain a distant dream for the next few years
  • An increasing number of enterprises will set up global in-house centers (GICs) or shared services centers for delivery of digital operations, due to increasing confidence and improvements in infrastructure quality
  • Reskilling/upskilling for digital capabilities will be paramount for companies operating in these cities
  • A few large service providers will invest in training talent, and benefit from early mover advantage by becoming distinguished employers in a less competitive market

To learn more – including the metrics around availability of talent, market maturity, cost of operations, business and operating risk environment, and implications for market participants including buyers, service providers, investment promotion councils, and industry bodies – please read our recently published report, “Will Tier-2/3 Indian Cities Carve a Niche in the Digital Story?.” We developed the report based on deep-dive discussions with leading shared services centers, service providers, recruitment agencies, and other market participants.

What Global Services Can Learn from the Facebook-Cambridge Analytica Scandal | Sherpas in Blue Shirts

By | Blog

Were you as riveted as I was by Mark Zuckerberg’s testimony about the Facebook-Cambridge Analytica scandal?

Here are my key takeaways on the future of the services industry supporting social media and the increasingly digital world.

Data is the New Currency

We are hurtling towards a truly digital economy where data is the key commodity. In such an economy, companies with access to data and, more importantly, the ability to make sense out of it through analytics tools will reign supreme.

It is not difficult to imagine a world where most corporate movements and conflicts center around data – lack of it, desire to access it and acquire better analytics tools, improper/unethical/overuse of it, and inadequate protection of it.

Internet of Things (IoT) and Social Media Will be Mines, but Not Necessarily Filled with Gold

Internet of things and social media platforms can capture zillions of data points, and will potentially be important tools that supply this new currency to the ecosystem. However, market success will depend heavily on who has the business acumen and analytical power to churn data into insights and useful products. This will apply across sectors, but will be critical for BFSI, CPG, retail, and healthcare segments.

Data will not just be hard, like names, addresses, and IP addresses. It will also be soft, such as sentiments, propensity to buy, satisfaction, and the likelihood that a given customer will be a leading adopter. IoT and other data capture/analysis tools will need to change rapidly to accommodate these factors. Whether the claims of Facebook storing 29,000 data points on each individual are true or not, the data it does store keeps track of not just actions but also interest and intent, e.g., browsing but not actually buying a product.

Safeguarding Data Will be Critical – for Companies and Countries

In this new world, data security will be paramount – akin to safeguarding money! That makes cybersecurity a critical prong of a digital strategy.

The U.S. legislative bodies have demonstrated considerable interest in introducing new legislation oriented around this new data economy. My expectation is that the U.S. will mirror the EU General Data Protection Regulation (GDPR,) at least in intent and punitive measures, although the exact tenets may differ, and may be more expansive.

In order to continue to be amenable, operating locations for U.S. and European firms and their back-and middle-offices and IT centers, offshore services delivery countries like Argentina, Costa Rica, India, the Philippines, Malaysia, and Mexico will have to mirror the EU GDPR and U.S. regulations, and upgrade their data protection laws.

The Cold War has Gone Digital

Alleged Russian interference in the Brexit vote and the 2016 U.S. presidential election, purported hacking by Western nations into Iranian nuclear reactors, political propaganda on social media, and the umpteen social media wars fought by even governments and elected officials all mean one thing: the Cold War has now gone digital. Against such a backdrop, technology and digital tools have come out of the back rooms of global businesses and into the front rooms of politics and governments.

With their strong emphasis on digital, we foresee governments increasingly investing in it to out-compete other countries. We also expect the public sector to increase their investments in cybersecurity.

Rise of Content Moderation as an Industry

Huge emphasis will be placed on a breadth of content moderation services – this includes content review, sentiment analysis, context analysis (e.g., distinguishing between hate speech and valid political dissent), and moderation.

While content moderation was previously viewed as low-value and transactional, the intense heat that social media platforms are facing will change it into a far more important process that involves a fair degree of decision-making. We might even see the most complex streams of content moderation leveraging legal professionals as agents. See my next point.

Increased Regulatory Oversight on Social Media Content

Because of the huge impact of social media content on almost everything in today’s world – politics (e.g., Brexit and the U.S. elections), the economy (e.g., Snapchat losing US$1.3 billion after a tweet by Kylie Jenner), entertainment, sports, and arts – content moderation will become a heavily regulated and watched process. Liabilities from social media fails will typically run into billions, and so will penalties.

Senator Ted Cruz raised a question related to the political leanings of moderation agents themselves, bringing into focus the larger issue of biases. Over-moderation will also be under scrutiny, meaning that content moderators will need to walk an extremely thin line.

Exploding Portfolio of Languages

With the explosion of social media across the nooks and crannies of the world, content moderation capabilities will need to keep pace. Facebook already has a team of up to 20,000 professionals moderating content, and that number is bound to leap up significantly in the near term, until AI and automation become smarter.

In our work with global service providers, we are seeing a huge ramp-up in demand for content moderation teams across all developed and emerging markets, and even for languages that were not previously supported by contact center or BPO service providers in any meaningful scale. Mark Zuckerberg himself gave the example of the need to increase Burmese language moderation due to the Rohingya crisis.

The trick for service providers to be successful in such as market will be to have a ready map of where they might be able to access just about any language in just about any kind of scale, because no one knows where the next crisis and related social media content may erupt.

Critical Role of AI and Automation

Finally, but probably the most critical game changer in all this, is the role of AI and automation. At a point it will no longer be financially prudent to support the content moderation process with a people-intensive model, especially with the potential demand that can arise in a matter of hours in languages that are traditionally extremely hard to support. In such a scenario, companies with natural language processing and sentiment analysis tools that can make increasingly smarter decisions related to content management will be successful. Service providers and technology vendors that can develop such tools will find a ripe market to sell into!

While human judgment will still be required, IT tools can potentially be trained in an unlimited number of languages and dialects to take care of the bulk of business as usual content.

That’s as far as the eye can see today. But we are poised to see an exciting new world where entirely new tussles lead to some companies emerging as winners and others fading into obscurity as losers.

I would love to hear your thoughts on this topic, so please feel free to contact me at: [email protected].

Driving Success in Your Automation Center of Excellence | Sherpas in Blue Shirts

By | Blog

Use of Service Delivery Automation (SDA) – which refers to various types of technologies that can automate inputs to a process, the process itself, or the outputs from a process – is surging in the global services industry. When scaling beyond proof of concept, organizations are finding it’s important to bring together the SDA skills and knowledge into an automation Center of Excellence (CoE). Doing so enables the business to develop its SDA capabilities and competencies in a controlled and centralized manner, in turn helping ensure maximum success from the SDA initiative.

Through our research into automation Centers of Excellence, we’ve identified several areas in which organizations struggle.

The right Center of Excellence structure

While there are numerous possible structures for a SDA CoE, we’ve found that a pyramid structure is ideal, as it helps bring the CoE governance in-line with its customers. The pyramid should have three distinct layers, each with its unique set of responsibilities and clearly defined line of communication with the client organization. Clarity around roles and responsibilities across different layers in the pyramid is critical, not only to avoid miscommunications and missteps, but also to help maximize operational efficiency.

eg15

The Service Delivery Automation skills demand-supply gap

Demand for SDA skills has far outpaced the talent supply. Some are filling the gap by locating the Center of Excellence in locations with mature, trainable talent. Others are partnering with specialist firms, e.g., technology vendors and service providers, to leverage their domain experience and access to skilled talent, collaborating with startups, and seeking talent from technology groups and professional communities.

Multiple leading global companies are also training their existing employees on SDA. They typically engage technology vendors and/or external consultants to conduct extensive training programs for three to six months. Further, they encourage employees to join and participate in professional networks /communities and other events to learn from other SDA professionals’ experiences. This approach not only helps build internal skills for automation and reduces dependency on hiring from external sources, but also provides FTEs impacted by automation with alternative career paths.

Conventional location strategies don’t work

The traditional offshore-centric sourcing model based on labour arbitrage has limited relevance for SDA. Because of SDA’s unique requirements, organizations are investing in a diversified location portfolio for SDA in order to leverage the best propositions of each. For example, mature talent markets such as India offer a relatively larger talent pool, are suitable for a large-scale centre, and can deliver quick ramp-up pace. Onshore and nearshore locations offer greater depth and breadth of skills, enable greater interaction with business stakeholders, and provide accelerated time-to-market. And co-locating the SDA CoE with existing global services/digital technology centres can help the organization benefit from greater collaboration and economies of scale.

 

eg14

To learn more about various aspects of the talent model, delivery landscape, and global location hotspots for SDA CoEs, please read our recently published report, “Talent Model and Location Hotspots for Service Delivery Automation (SDA) Center of Excellence (CoE),” which we developed based on deep-dive discussions with leading GICs, service providers, and automation technology vendors. And if you’ve established an automation Center of Excellence, we’d love to hear your story. Please contact us directly at [email protected] or [email protected].

The Equifax Data Theft: What if GDPR were in Force? | Sherpas in Blue Shirts

By | Blog

The high entropy data protection space has once again gained headlines after Equifax, the U.S- based consumer credit reporting agency, revealed that a July 2017 theft compromised more than 143 million American, British, and Canadian consumers’ personal data. The data breach incident, one of the worst cyber-attacks in history, was conducted by hackers who exploited a vulnerability in the company’s U.S. website and stole information such as social security numbers, birth dates, addresses, and driver’s license numbers. (Equifax maintains and develops its database by purchasing data records from banks, credit unions, credit card companies, retailers, mortgage lenders, and public record providers.)

Much about the situation would have been considerably different had this breach happened after May 2018, at which time the General Data Protection Regulation (GDPR) – a regulation by which the European Parliament, the Council of the European Union, and the European Commission intend to strengthen and unify data protection for all individuals within the European Union (EU) – goes into effect. Even though it is not headquartered in the EU region, Equifax would have come under the purview of GDPR, because it maintains and reports the data of British citizens. And the stringency of requirements and degree of implications would have been significantly higher for the credit rating agency.

GDPR and Equifax

Although not directly related to GDPR, another significant business impact is the sudden “retirement” of Equifax’s CEO less than three weeks after the breach was announced.

This massive cyber-attack is a wake-up call for the services industry. Starting today, operations and businesses must regard data protection regulations with the utmost importance. Non-compliance will not only harm firms financially, but also expose them to brand dilution and business continuity risks.

Some of the key imperatives for enterprises operating in the ever-so-stringent data protection space include:

  • Know and understand the data security laws under which your enterprise falls, especially those such as GDPR that have far reaching impacts
  • Redesign your business processes to incorporate privacy impact assessments to identify high risk processes
  • Implement necessary changes in the contracts with third parties to incorporate the stricter requirements of consent
  • Achieve process transformation to inculcate privacy by design; this includes risk exposure reduction by technological changes such as data minimization
  • Appoint a Data Protection Officer to align the business goals with data protection requirements
  • Make suitable changes in contracting and governance practices to ensure adequate emphasis on data protection

To learn more about the strategic impact of the EU GDPR on the global services industry, please read our recently released viewpoint on GDPR: “EU GDPR: Is There a Silver Lining to the Disruption.”

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

By | Blog

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.

eg5

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:

eg4

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.”

Six Common Mistakes Enterprises Make when Developing Service Delivery Location Business Cases | Sherpas in Blue Shirts

By | Blog

Everest Group regularly supports clients in developing fact-based business case models to assess all relevant costs and benefits associated with their service delivery portfolio and delivery location decisions.

Not surprisingly, we’ve seen an increase in this type of activity in the last several years due to technology disruptions, potential immigration reform laws, intensifying competition for talent, and macroeconomic and geopolitical uncertainties. We’ve also seen an increase in the number of faulty/incomplete business cases that, if unresolved, can result in unnecessarily high costs and less than expected benefits.

Six common mistakes enterprises make when creating their global service delivery location business cases.

#1 Clarity on the primary objective of the business case:

Establishing clarity on the key objectives of the business case for service delivery location selection is of utmost importance. Companies often include benefits of other initiatives (e.g., transformation) which may impact their overall locations footprint, but fail to include costs associated with these initiatives, resulting in a faulty business case. As business case assessment is typically done for long-term strategic decisions, it is critical to ensure clarity on the locations strategy and implementation roadmap under consideration.

#2 Underestimating the costs of “what it takes to get there”:

Companies often underestimate the costs associated with exiting their current location (e.g., lease termination and severance costs); disruption in their existing locations (e.g., loss of knowledge due to higher than expected attrition); migrations (e.g., employee relocation, technology migration, parallel/shadow run); and set-up of new centers (e.g., capex, cost of hiring and ramp-up, training costs, etc.)

Example: A global Financial Services company had a 12-month long shadow/parallel run to effectively complete knowledge transfer for high complexity processes. This negated most of the arbitrage-related benefits for the initial 12-18 months. In fact, the company incurred relatively higher total cost of operations (TCO) until steady state operations was achieved.

Example: In a recent engagement, the location selection for a Latin American client’s shared services center was greatly influenced by applicable withholding taxes (i.e., the Argentinean government levies a ~31.5% withholding tax on import of global services from certain locations such as Mexico). These factors significantly impacted the relative cost attractiveness of locations under consideration.

#3 Overestimating benefits:

Companies often plan multiple transformation and optimization initiatives in parallel with changes to their services delivery portfolio. In such cases, things seldom pan out as planned, and the savings achieved are significantly lower than expected in areas including:

  1. Headcount reduction from process improvements
  2. Delivery pyramid optimization
  3. Implementation of automation/technology solutions
  4. Economies of scale (in cases of location consolidation)
  5. Optimization of management and administrative overheads

Example: A BFSI firm changed its planned strategy midstream, as its initial plans to fund the business case for large scale service delivery location consolidation by reducing FTE headcount by ~ 6,000 could not be realistically achieved.

#4 Stakeholder misalignment:

A service delivery location decision must involve multiple stakeholders including onshore business leaders, offshore delivery leads, functional and GIC leaders, migrations and/or transformation teams, corporate real estate, and technology teams. Any lack of coordination among these stakeholders can pose challenges in alignment on data used, key assumptions, the roadmap for service delivery portfolio changes, and the plan for other transformation/optimization initiatives. All stakeholders must be kept in the loop from the beginning of the location evaluation, and they must periodically periodic sign-off on the approach.

#5 Industry benchmarks:

While it is important to leverage industry benchmarks, companies must contextualize information to their own unique situation. The specificity of operations or the role a location plays for the company can be different from the typical value proposition of that location/geography.

Example: A recent engagement for a global Financial Services client demonstrated that, despite industry benchmarks that indicated Location A offered ~20 percent cost savings over Location B for typical BPO processes, the client’s specific processes and talent needs reversed the cost attractiveness of the two locations.

#6 Talent competition in the local market:

Companies often underestimate the true extent of competition in the local talent market, and the impact of attrition on sustainability of their operations. This impacts a company’s ability to scale initially, retain talent, and back-fill lost staff.

Example: A global manufacturing company faced significant challenges in hiring language skills for its newly setup shared services center in the APAC region, resulting in significantly lower arbitrage savings than expected.

While developing business cases models can be a significant challenge, we believe that addressing the above-mentioned points can reduce chances of error significantly. Learn more about Everest Group’s Service Delivery Locations practice.

How Will Brexit Impact Your Europe Delivery Strategy? | Sherpas in Blue Shirts

By | Blog

On June 23, 2016, the United Kingdom (U.K.) voted to leave the European Union (EU) through a referendum, also known as “Brexit.” Indications over the last few months are that it will be a “hard Brexit,” wherein the U.K. makes a clean break from the EU’s common market. If that happens, we can anticipate the following major changes to the global services operating environment:

  • Passporting for companies will become tougher: Banks and financial institutions in the U.K. will find it more challenging to operate/set up new centers across countries in the region, as the U.K. will no longer be a part of the EU free trade market
  • Talent movement across U.K. borders will be a challenge: People will require separate work visas to work in the U.K. and continental Europe. Although this is expected to apply to new work visas, changes to visas for people currently working in these countries are still uncertain.

As many global companies leverage the U.K. and countries in continental Europe to deliver services to all of Europe, passporting and talent movement restrictions could have a significant impact on their business strategy, regardless of their operating location in the region.

Potential Brexit impacts on companies operating in the U.K. and EU

In the wake of the uncertainty, global companies that are planning to service their European customer base would prefer setting up their GICs/back-office centers in continental Europe instead of the U.K. This might cause a surge in back-office activity in continental European locations, and talent demand for multiple IT and business process functions in those countries might go up.

Additionally, companies that are currently operating in the U.K. and the rest of Europe will need to prepare for possible legal/policy changes, and will need to expedite visa, HR, and administrative processes for their employees. We expect this to lead to increased demand for back-office activity in the U.K. and continental Europe.

Moreover, with talent movement restrictions becoming a possibility, companies currently operating only in the U.K. might need to rethink their talent hiring strategy in the region, especially for language-specific needs that were previously easy to fulfill.

To paint a picture of the potential Brexit impacts, following are several sample scenarios about companies operating in the U.K. and EU, and their possible decisions pre- and post-Brexit.

Brexit decision scenarios

What lies ahead for those impacted by Brexit decisions

Until the exact Brexit-related policy changes become clearer, global companies might delay or shelve their investment decisions for the U.K. and rest of Europe. They might also possibly move toward greater levels of automation in their business operations to mitigate potential risks.

While it will be a wait and watch game over the next 10-12 months for companies operating in the U.K. and EU, they’ll need to keep their eyes carefully trained on developments in order to create effective strategies for dealing with the possible changes in the near- and long-term.
For a more detailed discussion on the topic, please refer to the recently released Everest Group viewpoint, “The Road Ahead: A Global Services Perspective on the Impact of Brexit. ”

Aspirants Show Potential as Star Performers | Sherpas in Blue Shirts

By | Blog

The global services space is complex and dynamic, impacted on a daily basis by developments and challenges – both natural and man-made – economic blips, corporate mergers, acquisitions, and divestitures, and so much more. Given this changeable nature, global services leaders are hard pressed to keep up with, much less make sense of, the global service delivery landscape.

Everest Group’s MAP MatrixTM cuts through the clutter and helps guide decision-making. This framework categorizes service delivery locations based on operating cost, talent availability, and relative risk into three clusters, plus a bonus category:

Leaders: The most attractive locations, Leader locations are characterized by significant talent availability at comparatively low cost, but also high levels of competitive intensity.

Major Contenders: These locations offer an attractive mix of talent availability and cost efficiency, but not quite at the level of Leader locations.

Aspirants: Aspirant locations generally have low talent potential due to limited market activity and/or a constrained entry-level pool. They may offer relatively lower costs but also may require higher investment to develop talent.

Star Performer: This is the bonus category. A Star Performer is a location that has experienced significant new center set-up activity in the past year; Star Performers can fall into any one of the three clusters.

How does an understudy qualify as a star?

Given those definitions, people are often confused when we rate a location as both an Aspirant and a Star Performer; “how,” they ask, “can a low-potential location possibly perform at a ‘Star’ level?”

Here’s how. First, remember a Star Performer is not a location that shines brighter than all other locations; it is, simply, a location that has seen significant activity in recent years.

In 2015, in fact, three Aspirant locations (Kingston, Santo Domingo, and Colombo) also performed at the Star level.

Exhibit 1: MAP Matrix – Business Process Services (BPS) (English and Spanish)

There are many things about the Aspirant locations that make them attractive:

  • They are compelling for companies that are primarily planning to establish small-scale delivery centers (<300 FTEs)
  • These locations offer access to a significant bi-lingual, entry-level talent pool, enhanced by low competitive intensity for various business processes
  • These cities provide comparatively low cost of operations
  • They offer potential as “spoke” locations to complement nearby “hub” locations
  • Their geographical and time zone-driven ease of business management may be attractive

Service providers are the growth engine in these locations as they try to drive lower overall cost of operations at the same time that they diversify their talent base in a relatively less competitive market.

Colombo, specifically, emerged as a Star Performer in the Aspirants cluster for delivery of transaction-intensive BPS, with significant new center set-ups in the past year.

Exhibit 2: MAP Matrix – Transaction-intensive BPS

These locations’ talent profiles – as well as that of Guatemala City and Belfast – also fundamentally shifted, as they are moving up the value chain, especially for BPS delivery for both voice and non-voice processes and, in some cases, judgment-intensive processes (such as financial planning and analysis, analytics, and banking middle-office).

Exhibit 3: Aspirants progressing towards higher maturity
Aspirants_progressing

Given the dynamic nature of the global services market, not to mention the overall global economy, it is truly possible for Aspirants to perform at Star level.

For more insights on the global service delivery landscape, please see Everest Group’s Global Locations Annual Report 2015: Resurgence of Activity Amidst Evolving Propositions.

Changing Talent and Business Needs Drive Growth: Diversifying Global Locations Portfolios | Sherpas in Blue Shirts

By | Blog

Practitioners of global service delivery are continuously diversifying their delivery locations portfolio and looking beyond the traditional choice of offshore locations for expansion. In fact, onshore (source geographies) and nearshore locations witnessed aggressive market activity in 2014-2015, despite often offering higher operating costs than their offshore counterparts. Here are some highlights from Everest Group’s recently released Global Locations Annual Report 2015: Resurgence of Activity Amidst Evolving Propositions.

Nearshore locations

During 2014-1H2015, nearshore locations (in CEE, Ireland, Northern Ireland, and Scotland for Europe, and in Latin America and the Caribbean for the U.S. and Canada) witnessed growth in terms of new center setups and increasing headcount. This increase in market share was at the expense of the Asia-Pacific region in the global services delivery context.

One of the major drivers of significant growth in these markets is the changing value proposition of these locations. Companies are now looking at these areas for delivery of high-end work, such as analytics for knowledge-based services, judgement-oriented processes for both BFSI and non-BFSI sectors, and cloud and digital in the IT services domain.

Beyond an attractive talent profile, these locations are also enticing due to cultural affinity with source markets, as well as geographical and time zone proximity that makes managing the business easier.

Exhibit 1: Snapshot of market activity (new center set-ups) in major regions

APglobaldelivery

Tier-1 and 2 locations in Chile, Costa Rica, Jamaica, and Mexico led growth in Latin American and the Caribbean.

In the nearshore Europe region, Ireland, Romania, and Poland accounted for the highest number of new center setups – due primarily to highly skilled talent, significant availability of a multilingual pool, and moderate-high savings – driving growth for the entire region.

Onshore locations

Onshore delivery experienced significant market activity in locations in the United States, United Kingdom, Western Europe, Australia, Japan, and New Zealand.

Exhibit 2: Number of new center setups by top 20 service providers in onshore locations

onshorelocations

Providers have been increasing their presence in onshore locations, although the pace of setups appears to be stabilizing. Several factors have led to this increase:

  • Increase in the complexity of services, and lack of adequate talent depth in offshore/nearshore locations
  • Increased pressure from buyers to grow onshore presence to enable easier coordination, better alignment/training, etc.
  • New regulations around data security, especially in the banking sector, making onshore delivery necessary, or at least preferred
  • Willingness of service providers to explore newer models and newer tier-2 locations in onshore geographies

For detailed insights on key changes in the global services sector in terms of delivery and sourcing models, please refer to Everest Group’s Global Locations Annual Report 2015: Resurgence of Activity Amidst Evolving Propositions.

A Snapshot View of Locations’ Changing Value Proposition| Sherpas in Blue Shirts

By | Blog

There has been a lot of market activity buzz in some offshore/nearshore regions in the last year. Declining local currency, strong sector-aligned growth, and niche offerings from certain locations (e.g., high-end knowledge services work and SI/consulting, cloud, and digital) have all contributed. Let’s take a quick look.

The changing cost proposition

Chile, Argentina, Mexico, Colombia, Brazil, and Ukraine witnessed a steady decline in local currency, making them attractive from offshore/nearshore delivery standpoint.

Exhibit 1: Countries that witnessed significant decline in local currency during 2014-2015

countries

This changing cost proposition enabled tier-1 and 2 locations in India, China, Mexico, and Costa Rica, to grow at a significant rate and thereby become “Star Performers” for various functions on Everest Group’s MAP Matrix™ 2015.

Function/sector-aligned growth

Costa Rica is witnessing surge in IT services along with its sweet spot for BPS and CC services.

Exhibit 2: Everest Group’s MAP Matrix™ 2015 – IT-ADM

mapmatrix

Singapore and Poland witnessed growth primarily on account of strong BFSI industry. The domestic / regional BFSI market remains strong (and continues to grow), hence, enabling the growth of back-office sector aligned to these services.

Exhibit 3: Everest Group’s MAP Matrix™ 2015 – Transaction-intensive BPS

transactionbps

Niche offerings

Despite relatively high operating costs, Singapore and Dublin managed to grow in terms of new setups and expansion of current setups. Niche offerings in these locations were one of the primary reasons for an upshift in market activity in these regions. For example:

  • Growth in Singapore was led by a push from the strong domestic BFSI industry
  • Growth in Dublin was driven by increasing leverage for high-end work in knowledge services (analytics), IT-ADM (SI/consulting, cloud, and mobility), and judgment-intensive business processes (primarily aligned with the BFSI industry.)

In the Everest Group’s Global Locations Annual Report 2015: Resurgence of Activity Amidst Evolving Propositions, we evaluate key shifts in the relative positioning of locations from their cost, talent, and risk profile attractiveness for various functions, e.g., Contact Center (English), Transaction BPS, Judgement-oriented BPS, IT-ADM, Bilingual (Spanish and English) and Multilingual (European languages) BPS. The report covers key shifts in the relative positioning of locations from their cost, talent, and risk profile attractiveness. The report also offers perspectives on the suitability of locations under various scenarios – with insights on key risks and rewards associated with each cluster of locations.