Author: Hrishi Raj Agarwalla

Key Issues 2024: Creating Accelerated Value in a Dynamic World | Webinar

ON-DEMAND WEBINAR

Key Issues 2024: Creating Accelerated Value in a Dynamic World

In an era of ceaseless change, ever-evolving market dynamics, and an unrelenting demand for progress, the traditional pace of value creation is no longer enough. Creating accelerated value has become paramount for business leaders.

How do you achieve accelerated value? Enterprises must embrace innovation while effectively managing change. This approach will help businesses navigate rapid transformation while ensuring stability and sustainability.

Watch this webinar to gain valuable insights into the current perspectives of IT-BP industry leaders.

We discussed the major concerns, expectations, and trends for 2024 and provided recommendations on how to drive accelerated value from global services – helping position organizations to plan and align goals and succeed in 2024.

What questions has the webinar answered for the participants?

  • What are the key challenges and priorities and the outlook for global services in 2024?
  • What are the likely changes in sourcing spend, sourcing strategy (in-house vs. outsource), and locations?
  • Which digital services and next-generation capabilities are expected to be in demand?
  • How will generative AI impact the global services industry?
  • How are outsourcing deals, enterprises’ leverage of service providers, and bill rates expected to change?

Who should attend?

  • CIOs, CDOs, CTOs, CFOs, CPOs
  • Service providers
  • GBS / Shared services center heads
  • Global services leaders
  • Locations heads
Agarwalla Hrishi
Vice President
Malhotra Bhanushee
Practice Director
Mittal Alisha
Vice President
Ranjan Rajesh
Partner

Key Issues 2023: Assessing the Global Services Industry’s Performance Against Expectations | Blog

The global services industry’s confidence waned in 2023 after a banner post-pandemic year. Leaders were more cautious and prioritized cost optimization. To gain valuable insights into how the year unfolded compared to expectations, read on.

Participate in the Key Issues Survey 2024 to better understand the current thinking of industry leaders across the globe.

Coming off a bumper year in 2022 with double-digit growth driven by pent-up demand after the pandemic, the global services industry entered 2023 with macroeconomic uncertainty clouding the forecast.

As a result of these concerns, global leaders adopted a more cautious stance going into this year, according to Everest Group’s annual Key Issues survey of over 200 global leaders across industry enterprises, Global Business Services (GBS) centers, and providers.

In the survey, price and cost margin pressures ranked as the top business challenge expected in 2023, and subsequently, cost optimization emerged as the highest business priority for the year.

As 2023 nears an end and leaders start planning for 2024, let’s reflect on how the year fared against global services industry expectations of the industry.

1. Macroeconomic uncertainty subdued industry growth in 2023

In the face of macroeconomic uncertainty, most industry leaders felt cautiously optimistic about 2023. True to their expectations, results from the first three quarters of this year indicate subdued industry growth similar to the pre-pandemic numbers. A mix of macroeconomic concerns, rising prices, fiscal tightening, and geo-political tensions have resulted in a slowdown in customer demand and growing margin pressures on the global services industry. While revenues grew, the escalated cost and price pressure resulted in stagnant or even declining operating margins for most providers, as presented in Exhibit 1.

Exhibit 1: Key financial metrics for providers for 2022-23

Picture1 2

2. Talent demand and supply mismatch eased but remain challenging for niche skills

With attrition at an all-time high and growing industry demand, talent supply continued to fall short of the demand in 2022. The talent/skill shortage was the top concern industry leaders highlighted as part of the Key Issues Survey 2022. However, as the industry prepared for the looming uncertainty in 2023, these concerns took a back seat. In line with the industry expectations, the talent situation eased in 2023. Data for the first half of 2023 show that attrition rates have declined, and most delivery geographies are reporting a narrowing talent demand-supply gap. An assessment using Everest Group’s proprietary Talent GeniusTM tool indicates talent demand for delivery of IT and contact center services has declined substantially compared to 2022, as shown in Exhibit 2.

Exhibit 2. a: Talent demand across select countries for delivery of IT services indexed to January 2022 (Jan 2022 = 100)

Picture2 1

Exhibit 2. b: Talent demand across select countries for delivery of contact center services indexed to January 2022 (Jan 2022 = 100)

Picture3

However, this improvement in talent supply has not applied to all global services, especially those requiring niche skills. Digital and next-generation technology services continue to witness a mismatch between talent demand and supply. This disparity is especially true for emerging skills like generative Artificial Intelligence (AI), where talent supply is even more limited. Preliminary estimates by Everest Group show that only 1% of AI talent has expertise in generative AI, pushing companies to focus on upskilling and reskilling their employed talent pools to bridge this gap.

3. Offshore locations and tier 2/3 cities are being considered to optimize costs

To manage growing cost pressures, a key strategy for global leaders entering 2023 was continuing to leverage offshore locations and exploring alternative delivery strategies, such as leverage of tier 2/3 cities. Global services trends in 2023 resonate with this approach. Offshore locations like India continue to be the destination of choice for global service delivery, given the significant cost arbitrage opportunities. Similarly, enterprises and providers alike are more enthusiastically exploring tier 2/3 locations driven by needs of cost savings, talent access, employee preference, and market competition management. Exhibit 3 shows how the leverage of tier 2/3 cities witnessed growth in 2023.

Exhibit 3: Trends in center setup across Tier 1 and Tier 2/3 locations (2022-23)

Picture4

4. Provider bill rates increased but at lower levels than expected

Despite the prevailing macroeconomic pressures, providers maintained optimism about bill rate increases in 2023, although they were expected to be at a lower rate than in 2022. Unlike other economic downturns, provider bill rates have continued to show positive growth despite the growing cost and price pressures in the first seven months of 2023. However, with the macroeconomic scenario hitting much harder than expected, input-based pricing has been subjected to hard negotiations. This has led to muted growth (0.5-2%) in bill rates across different functions, much lower than provider industry expectations going into 2023. For example, provider bill rates for traditional applications skill delivery in offshore regions grew by only 0.5-1% compared to the expected growth of 2-5% from January to July 2023.

5. Provider portfolios underwent significant rebalancing and consolidation to ensure better deal terms

Enterprises reported much lower satisfaction with providers in 2022 compared to 2021 when providers played a key role in supporting enterprises in navigating the pandemic. The leaders cited a lack of innovation and communication as the key reasons behind this dissatisfaction. Consequently, procurement leaders expected a significant change in their provider portfolios. Additionally, with macroeconomic concerns clouding all strategies, enterprises looked to consolidate and rebalance provider portfolios to negotiate better deal terms with limited providers. As expected, 2023 witnessed a shift in provider portfolios, with major providers winning deals that had vendor consolidation components.

6. Investments in strengthening the digital core are a priority over moonshot endeavors

Prioritizing resilience through uncertainty, the focus of the global services industry continues to be on pragmatic digital investments like cloud solutions, cyber security, analytics, and automation. While the advent of newer technologies like generative AI has created an industry buzz, the primary focus continues to be on strengthening the digital core and building a resilient technological foundation. Most industry verticals continue to wait and watch before diverting constrained resources to newer projects with limited use cases and industry adoption.

As 2023 comes to a wrap, the global services industry is at the forefront of another transformative shift – the need to create value and the need to create it fast. This becomes especially imperative as technological advancements like generative AI threaten to shift the industry’s current equilibrium and potentially start the next phase of a technological revolution. The global services industry must adapt swiftly to stay ahead of the curve.

Participate in our Key Issues Survey 2024 to capture the pulse of Information Technology and Business Processing industry leaders across the globe and uncover major concerns, expectations, and key global services trends that are likely to amplify in 2024. To discuss further, or for any questions, reach out to Ravneet Kaur or Hrishi Raj Agarwalla.

Don’t miss the Key Issues 2024: Creating Accelerated Value in a Dynamic World webinar to gain valuable insights into 2024.

Key Issues for 2023: Rise Above Economic Uncertainty and Succeed | Webinar

LIVE WEBINAR

Key Issues for 2023: Rise Above Economic Uncertainty and Succeed

As we look toward 2023, economic uncertainty is prime and center. Rising inflation, interest rate hikes, and GDP contraction – matched with low unemployment rates and high talent demand – have left business leaders unsure of what to expect and how to prepare for 2023.

Join Everest Group’s Key Issues 2023 webinar as our experts provide insights into the outlook of the global IT-BP industry and discuss major concerns, expectations, and key trends expected to amplify in 2023.

All the data is based on input from global leaders across enterprises, Global Business Services (GBS), and service providers.

Our speakers will discuss expectations for 2023, including:

  • The outlook for global services
  • Top business challenges and priorities
  • Changes in sourcing spend and service delivery costs
  • In-demand digital services and next-generation capabilities
  • The evolving strategy for talent, locations, and the workplace

Who should attend?

  • CIOs, CDOs, CTOs, CFOs, CPOs
  • Service providers
  • GBS / Shared services center heads
  • Global services leaders
  • Locations heads

Global Services Market Update: Emerging Location Opportunities to Combat Economic Slowdown | Webinar

ON-DEMAND Webinar

Global Services Market Update: Emerging Location Opportunities to Combat Economic Slowdown

Access the on-demand webinar, which was delivered live on September 8, 2022.

Explore the 2022 global sourcing market, looking at key developments and overall growth trends for the service provider and GBS markets.

Additionally, we will look at the changes in location strategies adopted by service providers globally and the emerging trends in these locations. We will also discuss the impact of the expected economic slowdown on the market’s overall workforce strategy and offer recommendations to service providers, focusing on which trends to monitor, the importance of sustainable workforce strategy, and the relevance of cost in location decision-making.

What questions will the on-demand webinar answer?

  • How has the global service market evolved in 2022, and what are key developments across leading global service providers?
  • How has the location strategy for service providers changed in the past couple of years?
  • How will the expected macroeconomic slowdown impact the war on talent?
  • What are some of the key steps service providers should take as they face the economic slowdown?

Who should attend?

  • Service provider leads
  • Enterprise | SVM
  • Global in-house center (GIC) / Shared services center leaders
  • Tech talent leaders
  • Global services leaders
  • Locations leads

Look at Latin America to Emerge Post-COVID as a Leading Global Service Delivery Destination

As the world emerges from the pandemic and looks for new destinations for high-end information technology and business process services, put Latin America on the radar screen for its lower costs, talent availability, language proficiency, and other factors. Learn why this region is an attractive emerging destination for global service delivery, what countries offer the most promise, and the trade-offs and risks.  

Latin America has emerged in recent years as a leading nearshore destination for companies in the US and Canada, primarily driven by its unique position of cultural parallels and geographic proximity to the North American market.

This popular delivery destination for IT and BP services has undergone dynamic shifts in the past few years, and its location can be increasingly critical post-pandemic to filling talent gaps and providing a more stable geopolitical climate than destinations in Europe, given the current Ukraine-Russia conflict.

Increased capabilities, aided by digital infrastructure investment, and scaled operations delivery are attracting companies to leading locations such as Mexico, Argentina, Brazil, and Costa Rica. Companies that are reimagining delivery in Latin America and growing operations in the region are differentiating themselves by capitalizing on the region’s attractive proposition.

Other favorable factors such as lower costs compared to North America, increased government support, and rising English proficiency are enabling growth, especially for the contact center industry. While promising, organizations need to be aware of some trade-offs and associated risks for operating in the region.

Trade-offs and risks

Organizations looking to enter the Latin American market should be concerned about market congestion, lack of digital infrastructure, and an unfavorable macroeconomic environment in a few key locations.

Leading cities in the region (e.g., San Jose, Mexico City, Sao Paulo) are experiencing growth in competitive intensity, threatening their cost arbitrage against North America. Moreover, countries like Argentina, despite their large talent pool, are facing major macroeconomic challenges brought forth by the pandemic.

On the other side of the coin, countries such as Jamaica, Uruguay, and Guatemala have low market congestion and are primarily leveraged for transactional BP services but have limited maturity in IT and engineering services. Organizations keen to support complex and judgment-intensive processes will need to make substantial investments in talent development in these markets.

Further Latin American destinations also face some challenges around reliability and digital infrastructure scalability. While investments are continuously being made in this area, certain countries within the region still rank relatively lower on the digital readiness scale. This potentially poses challenges for remote working in the post-COVID era.

Leading Latin American locations for financial attractiveness, talent availability, and operating and business environment

Latin America Blog

Here’s a quick look at the top four global services delivery locations by largest to smallest market size in Latin America:

  1. Mexico – boasts the largest scale among Latin American locations for global services delivery (both transactional and judgment-intensive processes). Leveraged to support IT-BP service delivery along with next-generation digital services (e.g., Artificial Intelligence, Internet of Things, analytics), the market faces one of the highest competitive intensity in the region, driven by a large player base and strong sector growth
  2. Colombia – primarily a global hub for voice-related services and transactional BPS delivery. Although it has limited maturity for next-generation digital services delivery, it holds the potential for increased IT and non-voice BP services delivery, given its large talent pool
  3. Argentina – a large-scale, multi-functional hub location to support service delivery to the Americas and some European locations. It exhibits relatively high maturity for next-generation digital services, including AI, analytics, cloud, and IoT, delivered from its highly congested Tier 1 cities
  4. Brazil – primarily delivers IT and BP services to Latin American locations. It has a large base supporting domestic demand (within the country) but global service delivery is limited. While it has a highly skilled talent pool supporting complex/niche skills and judgment-intensive IT work (e.g., cloud computing, big data), its more costly base owing to higher salaries and real estate costs affects its attractiveness as a global service delivery destination
Global service delivery destination to watch

Latin America is well placed in its growth journey to emerge as one of the leading nearshore destinations. Industry verticals such as retail, telecommunications, and Financial Services and Insurance (BFSI) continue to drive overall regional demand. Its unique positioning, strong government support, and growing talent pool make the region a destination of choice for some of the world’s biggest brands, including Amazon, PricewaterhouseCoopers, Galileo, and Pinterest, among others.

To learn more about the dynamics in the region, please read our recently published report Reimagining Latin America Delivery in a Post-COVID World, which highlights the relative attractiveness and talent-cost proposition of key Latin American locations to support global services delivery, based on our holistic and multi-faceted assessment across 12 critical parameters.

For more information on Latin America as a global service delivery location, please reach out us: contact us.

Takeaways from the International Innovation Summit 2020 | Blog

We recently partnered with the IT & Business Process Association of the Philippines (IBPAP) for its International Innovation Summit. The conference was a huge success despite prevailing uncertainties, bringing together global experts and leaders from the IT-BPM industry. The sessions were engaging and captured how the IT-BPM sector adapted to the disruptions caused by the pandemic and what lies ahead for the industry.

Here are our key takeaways from the conference.

Success factors for the IT-BPM industry

Organizations’ success will depend on how they capitalize on opportunities arising from the pandemic and how quickly they adapt to the evolving business landscape. In all forms of adversity, there is increased need for reliable leadership that puts people and customers first, and treats profit as an outcome rather than the goal. More than ever, it has become important to co-create with the client and culturally adapt to them.

Reinvent the worker, workplace, and workways

While there’s an immediate and critical need to redesign the worker, workplace, and workways to accommodate the new reality, different organizations are in different places in their comfort and readiness to adjust to the disrupted world. Hence, a single future of work strategy will not be effective for all organizations.

There are, however, some common themes for a successful future of work strategy. It should not be limited to work-from-home (WFH) enablement; it is important to consider the interplay of WFH with other decisions related to work. Organizations need to come up with an integrated approach involving the worker, workplace, and workways to adapt and progress in this dynamic environment.

Accelerate digital transformation and develop the digital workforce

COVID-19 has compelled enterprises to accelerate digitalization. While business transformation is fueled by increased adoption of digital technologies, the success of digital transformation is not rooted in technology.

A successful digital transformation initiative considers multiple factors – fostering a culture of continuous learning and innovation, embracing an agile operating model, creating a well-connected and collaborative workplace to enable higher output, among others.

At the core of accelerated digital transformation remains talent and, hence, the importance of future-proofing the workforce with digital skills. Talent will be the key differentiator, as work will follow where there is readily available skilled talent. The new digital era calls for increased focus on upskilling and reskilling, which can only be possible through a multi-stakeholder coalition of government, industry, and academia.

Rethink business resiliency 

Every business and organization is experiencing some degree of pandemic-driven disruption. The crisis has redefined the meaning of Business Continuity Planning (BCP), and organizations need to rethink their BCPs to ensure necessary resilience.

This future resiliency will be characterized by dependability on teams and leaders, creating/fortifying a nerve center that’s enabled and empowered to respond quickly to various situations, enabling organization and delivery structure, and empowering teams on the ground. There’s also an increasing need to become more agile and cooperative with competition and more consultative with clients.

A unified IT-BPM industry forging forward in the Philippines

The Philippines IT-BPM industry has shown resilience amidst the challenges arising from COVID-19. The fact that the industry was allowed to operate even during the Enhanced Community Quarantine – as these services were deemed essential – demonstrates the government’s commitment to the industry.

The Philippines will continue to remain a key destination for services delivery due to cost arbitrage and a steady supply of young and tech-savvy workers. The industry is focusing on enhancing digital capabilities and will focus on upskilling talent – for example, one planned initiative is the National Upskilling and Reskilling program, which intends to upskill one million workers over the next five years.

The country launched the Digital Cities 2025 program to promote countryside development and build IT-BPM sector resiliency. The Philippine telecom providers are working in partnership with the government to mitigate the limitations on the retail telecom infrastructure exposed by the WFH model. And the Philippines will continue to improve its infrastructure to provide a more robust ecosystem for existing and new players.

Overall, the IT-BPM industry in the Philippines is well positioned to deliver services at a large scale due to its large talent supply, strong language proficiency, attractive cost savings, robust ecosystem, and strong government support. The industry also plans to take proactive measures to address some of the challenges exposed by the pandemic. It’ll be interesting to see the developments in one of the leading global locations for IT-BPM services delivery.

Read more about Everest Group’s latest research on the impact of COVID-19 on delivery and location strategies; our perspectives on services delivery from the Philippines; and/or IBPAP.

Choosing Your Best-fit Cloud Services Delivery Location | Blog

While enterprises around the globe began their steady march toward cloud services well before the outbreak of COVID-19, the pandemic has fueled cloud adoption like never before. Following the outbreak, organizations quickly went digital to enable remote working, maintain data security, and ensure operational efficiencies. Globally, first quarter spend on cloud infrastructure services in 2020 increased 39% over the same period last year.

Given the new realities, as firms make long-term cloud investments, it is vital for them to understand the cloud landscape and how various regions and countries fare in comparison to each other as cloud destinations. In this blog, we evaluate and compare the capabilities of different geographies in delivering cloud services.

The Americas

North America is among the most mature geographies for cloud services delivery. The US and Canada offer excellent infrastructure, a mature cloud ecosystem, high innovation potential, a favorable business environment, and business-friendly rules and regulations. The US is the most mature location in North America, offering a large talent pool and high collaboration prospects due to the presence of multiple technology start-ups, global business services centers, and service providers. However, the cost of operations is significantly high, primarily driven by high labor and real estate costs.

In contrast, most locations in Latin America (LATAM) have less mature cloud markets and ecosystems. While they provide proximity to key source markets in the US and considerable cost savings as compared with established markets (60-80%), they offer low innovation potential, a relatively small talent pool, few government policies to promote cloud computing, and limited breadth and depth of cloud delivery. Mexico is a standout location in LATAM, scoring better than others on parameters such as quality of cloud infrastructure, size of talent pool, and business environment.

Europe

Europe provides a good mix of established and emerging locations for cloud services. Countries in Western Europe have a fairly robust infrastructure to support cloud services, with high cybersecurity readiness, sizable talent pools, high complexity of services, and robust digital agendas and cloud policies. England and Germany are the most favorable locations in the region, driven by a comparatively large talent pool accompanied by high innovation potential, excellent cloud and general infrastructure, and high collaboration prospects due to numerous technology start-ups and enterprises. However, high cloud-adoption maturity has markedly driven up operating costs and intensified competition in these markets.

Countries in Central and Eastern Europe (CEE) offer moderate cost savings (in the 50-70% range) over leading source locations in Western Europe. While they offer a favorable cloud ecosystem, talent availability, greater proximity to key source markets, and lower competitive intensity, they score lower on innovation potential, complexity of services offered, and concentration of technology start-ups and players. The Czech Republic is a prominent location for cloud services in the CEE, while Poland and Romania are emerging destinations.

 Asia Pacific (APAC)

Most locations in APAC have high to moderate maturity for cloud services delivery due to the size of the talent pool and significant cost savings (as high as 70-80%) over source markets such as the US. For example, India offers low operating costs, coupled with a large talent pool adept in cloud skills and a significant service provider and enterprise presence. However, it scores lower on aspects such as innovation potential, infrastructure, and quality of business environment. Singapore is an established location that offers well-developed infrastructure and high innovation potential but also involves steep operating costs (40-45% cost arbitrage with the US).  The Philippines, a popular outsourcing destination, has lower cloud delivery maturity given its low innovation potential and talent availability for cloud services.

Middle East and Africa (MEA)

Israel is an emerging cloud location in the MEA that has achieved high cloud services maturity, but that benefit is accompanied by high operating costs and low cost-savings opportunity (about 10-15%). Other locations in the region have moderate to low opportunity due to small talent pools and lower maturity in terms of cloud services delivery.

Choosing your best-fit cloud services delivery location

Our analysis of locations globally reveals that, while different locations can cater to the increasing cloud demand, there is no single one-size-fits-all destination. Instead, the right choice depends on several considerations and priorities:

  • If operating cost is not a constraint and the key requirements are proximity to key source markets and a favorable ecosystem, the US, Canada, Germany, England, Singapore, and Israel are suitable locations, depending on the demand geography
  • If you are looking for moderate cost savings, proximity to source markets, and a favorable ecosystem, with the acceptable trade off of operations in a relatively low maturity market, countries such as Mexico, the Czech Republic, Hungary, Poland, Ireland, Romania, and Spain are attractive targets
  • However, if cost is driving your decision and proximity to demand geographies is not a priority, India, Malaysia, and China emerge as clear winners

The exhibit below helps clarify and streamline location-related decisions, placing an organization’s key considerations up front and identifying acceptable trade-offs to arrive at the best-fit locations shortlist.

Key considerations for choosing your cloud services delivery location

Cloud Handbook for blog

To learn more about the relative attractiveness of key global locations to support cloud skills, see our recently published Cloud Talent Handbook – Guide to Cloud Skills Across the Globe. The report assesses multiple locations against 15 parameters using our proprietary Enabler-Talent Pulse Framework to determine the attractiveness of locations for cloud delivery. If you have any questions or comments, please reach out to us at Hrishi Raj Agarwalla, Bhavyaa Kukreti, or Kunal Anand.

Seven Key Global Services Market Developments in 2019 and the Outlook for 2020 | Blog

The global services industry saw a dramatic shift in 2019 across multiple dimensions, described in detail in our Market Vista™ Annual Report, which is based on an assessment of 1,800+ annual outsourcing deals, 550+ new delivery center setups, GIC market activity, trends in digital adoption, and other developments across 30 leading service providers.

Our research identified seven key global services market developments in 2019.

  1. After a significant uptick in 2018, the number of outsourcing deals declined marginally in 2019, primarily driven by a decrease in IT outsourcing. Business Process Outsourcing (BPO) deals grew.
  2. Short-term deals rose as a percentage of overall deals, driven by growth in outsourcing among small companies, an increasing share of digital services-focused deals, and global uncertainty resulting in apprehensions among buyers who are now signing smaller contracts.
  3. Global Business Services (GBS) center setups hit an all-time high, driven largely by an increase in setups by small and mid-sized enterprises. We also saw a lot of activity in R&D/engineering center setups.
  4. The share of digital-focused outsourcing deals far exceeded pure traditional services deals, with strong demand for cloud and automation services. GBS center set-up activity was also driven by digital services with automation, analytics, and IoT being the most dominant.
  5. We saw an increase in onshore delivery center set-ups by both enterprises and service providers. While the Asia Pacific region continues to lead in offshore and nearshore location activity, the Middle East and Africa saw significant activity growth.
  6. Tier-2/3 locations experienced rising activity, as both GBS centers and service providers increasingly explore smaller cities, especially in mature markets.
  7. Offshore-heritage service providers saw higher revenue and employee headcount growth than did global service providers.

Turning our attention from the past to the future, let’s take a look at what these shifts may mean for the global services industry – and your organization – in 2020.

  1. Uncertainty will rule in 2020 driven by environmental changes, geopolitical and macroeconomic concerns, business model disruptions, rapidly emerging technologies, and, most importantly, the impact of COVID-19. This uncertainty will require organizations to be increasingly agile in order to be able to respond quickly to changes. Driving agility will require a comprehensive shift across multiple dimensions, such as organization culture and people strategy, and a deliberate change to operating models.
  2. The economic slowdown caused by COVID-19 disruptions will have multiple implications for the global sourcing industry:
    1. Weakening financial performance resulting in significant cost pressures across organizations. Rapid and radical cost takeout will become a top priority for enterprises.
    2. A new focus on risk, which will force enterprises to reassess their global sourcing strategies and service provider portfolios.
    3. Accelerated technology adoption to unlock the next wave of cost savings and drive resiliency.
    4. An evolving role for GBS to provide higher value-add services to help mitigate the impact of recession. Simultaneously, financial pressures will result in divestitures of GBS centers that operate as a typical service provider.
  3. The global services market outlook remains uncertain across locations, driven by global macroeconomic and geopolitical concerns and the COVID-19-caused slowdown.
  4. The Center of Excellence (CoE) model will grow within GBS centers as they focus intentionally on building depth versus merely expanding breadth of services. Further, CoEs will act as powerful enablers to revise and execute the required shift in the GBS-parent relationship and help blur the boundaries between the parent and GBS.
  5. As organizations increasingly realize the benefits of various strategies such as offshoring, cost optimization, and automation, they will need to boost their focus on workforce productivity. There are multiple levers organizations can pull to enhance workforce productivity, such as optimizing active time, increasing efficiency, and improving effectiveness/quality.
  6. Customer experience is a key priority for both enterprises and service providers, and they plan to invest in technologies and capabilities to improve customer experience, even during the economic downturn.

For more details on these developments and the 2020 outlook – and to understand the implications for your organization – please see our report Market Vista™: 2019 Year in Review and Outlook for 2020.

Four Key Trends in Social Media Content Moderation | Blog

While the numbers vary depending on the source, there are give or take three billion social media users around the world in 2019. With the associated dramatic increase in manipulative and malicious content, there’s been an explosion in the market for content moderation services.

Based on our interactions with leading global enterprises and service providers, here are the four key trends impacting the content moderation services industry.

Key trends impacting content moderation services

1. Demand for content moderation is growing

Given the exponential rise of inappropriate online content like political propaganda, spam, violence, disturbing videos, dangerous hoaxes, and other extreme content, most governments have instituted or begun creating policies to regulate social networking, video, and e-commerce sites. As a result, social media companies are facing mounting legislative pressures to curate all content generated on their platforms.

The following image shows how seriously these companies are taking the issue. And note that these numbers only account for outsourced content moderation services, not internally managed content moderation.

Content generation services BPO Market

Orange boxes indicate CAGR / Y-o-Y growth over the years

2. Both technology and humans are vital

Technological capabilities – ranging from robotic process automation (RPA) to automate repetitive manual process steps, to AI-assisted decision support tools, to AI-enabled task automation of review steps – have certainly emerged as key levers to help social media companies protect their communities and scale their content management operations. For example, established tech giants including Microsoft and Google, as well as fast-growing start-ups, have been investing in developing scalable AI content solutions that deliver faster business value and safer conditions.

While technology will continue to play a big role, it certainly isn’t the be-all, end-all. The judgement-intensive nature of content moderation work requires the human touch. Indeed, with the increasing complexity of the work and the rising regulatory oversight requirements, the need for human employees as part of the content moderation equation will continue to grow significantly.

3. Content moderators need a multitude of skills

Content moderation is an extremely difficult job, at times monotonous and at others disturbing. As not everyone is cut out for the role, companies need to assess candidates against multiple criteria, including:

  • Language proficiency, including region-specific slang
  • Local context
  • Acceptance of ideas that may be contrary to self-held beliefs and personal opinions (e.g., on gender, religion, societal norms, political issues, etc.)
  • Ability to adhere to global policies
  • Ability/maturity to review content that is explicit in nature
  • Exposure to a multi-cultural, diverse society
  • Exposure to freedom of expression, both online and offline, and a drive to protect it
  • Ability to understand and accept increasingly stringent regulatory policies.

4. Content moderation services demand a different location strategy

Because all countries have unique cultural, regional, and socio-political nuances, the traditional offshore/nearshore-centric location selection strategies that work for standard IT and business process services won’t work for content moderation work. Companies seeking outsourced content moderation services need to look at regional hubs alongside multiple local centers to succeed. In the short-term, this means working with leading providers with hyper-localized delivery centers and rising local providers in the target countries.

Outlook

Here’s what we see coming down the pike in the increasingly complex content moderation space.

  • Short-term investments/quick fixes might take precedence over long-term investments
  • Until the regulatory landscape stabilizes, companies might need to allocate a disproportionate amount of resources/spend towards compliance initiatives
  • Regulatory uncertainty and ambiguity will increase demand for specialist/niche forms of talent, including legal professionals and consultants. Today’s content adjudicators will be displaced by forensic investigators with specialized skills in product, market, legal, and regulatory domains
  • Companies must make talent development activities a priority through a specialized focus on structured talent sourcing and training, and strong emphasis on employee well-being through various wellness initiatives
  • As AI continues to grow in sophistication, a more defined synergistic relationship between humans and the technology will emerge. AI will be responsible for evaluating massive amounts of multi-dimensional content, and humans will focus on intent and deeper context analysis
  • The need for a hyper-local delivery model will prompt enterprises to increasingly explore outsourcing as a potential solution to benefit from service providers’ diversified location portfolios.

To learn more about the content moderation space, please contact Hrishi Raj Agarwalla / Rohan Kapoor / Anurag Srivastava.

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

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.

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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.

 

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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].

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