ParulJain, Author At Everest Group

Impact of Coronavirus on Service Delivery Is Limited But Ongoing | Blog

February 13, 2020

This is the second in a series of blogs that explores a range of topics related to these issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.

These insights are based on our ongoing interactions with organizations operating in impacted areas, our expertise in global service delivery, and our previous experience with clients facing challenges from the SARS, MERS, and Zika viruses, as well as other unique risk situations.

To date, over 99 percent of the officially confirmed total of 45,000 (61,000 if the Chinese authorities’ newly expanded definition is used) Covid-19, or Coronavirus, cases are inside China. The impact of the virus is pronounced in a core group of ten Chinese provinces: Hubei, where the virus originated, the six neighboring provinces of Shaanxi, Heinan, Anhui, Jiangxi, Hunan, and Chongqing, plus the adjacent coastal provinces of Guangdong, Fujian, and Zheijiang. As of February 9, these areas account for 90 percent of the total reported confirmed cases and 92 percent of China’s new cases.

While supply chain organizations in these provinces are facing severe impacts due to closures, we believe the level of exposure to risk of disruption for service delivery organizations is limited because the service delivery centers are largely servicing internal customers, which are themselves operating at reduced capacity or are closed completely until further notice.

Data from Everest Group Market Intelligence (EGMI) shows that there are 51 Global Inhouse Centers (GICs) – or shared services centers – and 20 service provider delivery centers located in these 10 provinces. Of the seven GICs in Hubei at the epicenter of the outbreak, two, owned by FedEx and UPS respectively, are thought to deliver internal shared services to domestic and near-Asian employees. The rest are technology research or innovation centers.

In view of restrictions imposed by the Chinese government, provincial governments, or companies implementing business continuity protocols, it is highly likely that most, if not all, of these delivery centers are closed and will remain so until further notice.

Examples of the restrictions imposed by the authorities or by companies themselves that have been in place for at least two weeks and look set to remain include:

The Chinese government extended the New Year holiday, which began on January 24, to February 2. Authorities in in 24 provinces and cities further extended closures by a week to February 9, and many businesses look set to remain closed the week of February 10; authorities in Beijing have urged businesses to adopt flexible working policies, including working from home
Places of business in Hubei will remain closed until February 15 at the earliest
With extensive internal travel restrictions in place, many workers who had returned to their home provinces for the New Year holiday are now unable to return to work
All multinationals with offices in China and Hong Kong have imposed either complete travel bans (Amazon, Ford, Google, HSBC, and LG) or non-essential travel (GM, Johnson & Johnson, P&G, PwC, and Siemens) to and from mainland China
Many multinationals have imposed a work from home policy for all staff in China and Hong Kong until further notice; in some cases, this policy has been backed by widescale closure of offices and facilities
Some businesses have cancelled meetings or conferences involving large numbers of international participants, including, for example, Citibank’s annual investor conference in Singapore, ZTE’s press briefing at MWC in Barcelona, and Ericsson’s attendance at MWC in Barcelona.

As an example of specific defensive measures businesses are taking, all businesses and public facilities in Singapore, in accordance with government guidelines issued on February 10, are now:

Scanning people entering and leaving buildings for raised temperature
Increasing the frequency and intensity of cleaning
Making hand sanitizer widely available
Requiring all visitors to make a health and travel declaration
Issuing face masks to staff who interact with members of the public

It is possible that some enterprises will use the disruption caused by the outbreak as justification for cost cutting and capacity reduction, but we don’t yet see clear evidence of that.

Visit our COVID-19 resource center to access all our COVD-19 related insights.

Selecting the Best Multilingual European Service Delivery Destination for Your Needs | Blog

February 11, 2020

Although Europe is the second smallest of the world’s continents by surface area, it packs a huge business and economic punch. And because the continent is home to 24 official languages, businesses that are headquartered or have large operations there need to have workforces proficient in languages beyond the native tongue in the country in which they’re located. Extensive language capabilities will help them penetrate new European markets and enable them to have more productive conversations with stakeholders across the globe.

So, just as we did in a recent blog on service delivery destinations best suited for Asian language delivery, we’re taking a look at the countries best equipped to handle the wide range of European languages.

European Countries and Regions

While Europe is, of course, the go-to continent for European language delivery, there are considerable differences among the Central and Eastern Europe (CEE) and nearshore regions, and among the different countries within each region.

Central and Eastern Europe (CEE)

CEE locations offer high scalability of multiple European languages at relatively moderate cost, but many face certain regulatory and macroeconomic issues.

Poland is the premier location in the CEE region. Because many shared services centers – or global in-house centers – are based in Poland, it has a mature service delivery ecosystem and robust infrastructure. Poland also has significant talent availability with the ability to support complex service delivery, and a multilingual talent pool with high scalability potential for a number of European languages, particularly German and French, and Russian, Italian, and Spanish to a lesser extent. However, because it’s a preferred location in the region, high competition for talent has created sourcing and talent retention issues. The country also lacks the ability to scale delivery in other European languages, such as Dutch and Portuguese.

Romania and Hungary are other good options in the region; they offer particularly high scalability for French, Spanish, and Italian language skills at a moderate cost of operations.

Nearshore Europe

Nearshore locations provide the best quality of life in an optimum business environment, but operational costs are high.

Ireland is the top nearshore destination in Europe. It offers a high quality of life, a favorable business environment and infrastructure, and significant availability of multilingual talent, with high scalability potential for French, German, Spanish, and Italian due to its ability to attract quality talent from other countries. And many companies are attracted to its high proximity to onshore locations.

However, like Poland, it suffers from high global and regional player competition for talent and struggles to achieve scaled service delivery for Dutch and Portuguese. It’s also among the most expensive locations in Europe for service delivery.

Scotland is a good alternative, as it offers comparable languages skills and infrastructure at a lower cost of operations.

Beyond Europe

There are also destinations in Latin America and the Middle East and Africa (MEA) region that can satisfy some European languages needs.

Most Latin American countries have large graduate pools with bilingual capabilities, despite a general lack of high-quality educational infrastructure. In particular, Mexico and Costa Rica provide strong Spanish and English skills, along with mature global services ecosystems and proximity to onshore locations. However, as the premier location in the region, Costa Rica suffers from high competition for talent and the highest cost of operations in Latin America.

Destinations in MEA also have large graduate pools with strong multilingual capabilities. For example, Egypt and Morocco offer abundant French – and, to a lesser extent, Spanish – language skills, driven by a strong cultural and historical affinity to France and Spain. But the cost of operations is high in Morocco, and Egypt is politically unstable.

To learn more about the relative attractiveness of key global locations to support global languages, please see our recently published Talent Handbook for Language Skills. The report, which assesses locations against 20+ parameters, uses our proprietary ”Enabler-Talent Pulse Framework” to determine the attractiveness of locations for language delivery. You can also reach out to the report authors: Parul Jain, Kunal Anand, and Pagalam Rajeshwaran.

Ongoing Coverage of the Service Delivery Impacts of Coronavirus | Blog

February 3, 2020

Ongoing Coverage of the Service Delivery Impacts of Coronavirus

Coronavirus, or 2019-ncOv, creates many uncertainties for organizations engaged in the delivery of business process, IT, and engineering services. While the initial focus is the delivery of services from China, geographies such as India and the Philippines (and perhaps others) may also become areas of increased concern. Global service delivery organizations are typically large and involve extensive international mobility, increasing their risk exposure; at the same time, they are also leaders in virtual interactions via phone, email, and video.

This is the first in a series of blogs that explores a range of topics related to these issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.

Everest Group recently published a Risk Radar update on China related to coronavirus. With this update, we increased our risk rating for service delivery in China from “low-medium” to “medium.” Members of our Locations Insider, Catalyst, and Market Vista memberships can access the report.

We recommend that business process, IT, and engineering services firms migrate their critical operations to alternate delivery locations and promote the use of teleconferencing and work-from-home policies to ensure business continuity with minimal impact to operations. Additionally, companies should implement precautionary measures in compliance with the government guidelines.

In the coming days, we will publish additional blogs covering a range of topics related to this issue. At this point, mortality rates appear low, so the main concern may continue to be basic availability of business operations in China and implications on travel, families, and in-flight initiatives.

Visit our COVID-19 resource center to access all our COVD-19 related insights.

Innovation in 2020: Shared Services Can’t Fake it Anymore! | Blog

January 31, 2020

At the very beginning of 2020, we launched our Pinnacle Model analysis focused on innovation in shared services centers (SSCs)…also referred to as Global In-house Centers (GICs). This ground-breaking research identifies the characteristics of Pinnacle GICs™ – those global shared services centers that stand apart from others for their business outcomes and capability maturity. We study these best-of-the-best GICs to identify common trends among them, including the differentiated capabilities they’ve built to support and drive enterprises’ innovation agendas, and the best practices they’ve adopted to enable the desired transformation and overcome any operational challenges.

Here’s a look at two of the top trends we’ve identified thus far from our current analysis of leading GICs spread across offshore and nearshore geographies.

Time to achieve the expected ROI

Realizing fast return on investment (ROI) is key to making an innovation agenda a win-win for both SSCs and their parent organizations. A quick ROI enables the GIC to gain the influence it needs to serve as an end-to-end innovation strategic partner to the parent enterprise. Our emerging findings show that approximately 90 percent of GICs/SSCs achieve expected ROI in less than 24 months. If you’re a GIC leader, you can confidently use this number to boost your parent enterprise’s confidence in further leveraging your team and its capabilities to drive its innovation agenda.

Extent of external ecosystem collaboration

GICs have a unique combined insider’s and market view that enables them to provide strategic insights to orchestrate enterprise-wide innovation. Our emerging analysis shows that Pinnacle GICs have invested extensively in and partnered with start-ups and academic institutions to source innovation ideas across their product and services portfolio. They leverage these partners across various stages of the innovation cycle, particularly in the idea generation and concept testing stages. Additionally, Pinnacle GICs strongly embrace start-ups to help drive an innovation-focused culture across the entire organization.

We’re winding down our analysis of GICs’ innovation journeys and would love to incorporate your views into our report. Please click here to participate in this study. When we’ve finished our analysis, we’ll send you a complimentary report that will show you where you stand relative to the industry’s crème de la crème.

The Many Languages of Asia, and the Delivery Locations Best Positioned to Service Them | Blog

January 24, 2020

Asia has long been an important business destination, as it’s home to more than 60 percent of the world’s population and accounts for a major share of world consumption. In fact, forecasts suggest that – with increasing access to credit, low inflation, rising income levels, and a favorable regulatory environment – Asia alone will account for 40 percent of the world’s consumption by 2040. The region also accounts for approximately half (about 2.2 billion) of the world’s internet users, which constitutes an enormous pool of digital consumers.

So, it’s no surprise that many businesses have set up facilities closer to the region and that many indigenous organizations have emerged as well. Indeed, about 40 percent of the world’s 5,000 largest companies are based in Asia.

However, to truly succeed in this market, enterprises need a crucial weapon: a multilingual workforce proficient in Asian languages.

Although English is still widely accepted as the universal language for business, a workforce proficient in Asian languages brings additional value to the table. It acts as a conduit between the organization and the region by helping develop a deeper cultural connection with customers, revealing their concerns and preferences, which might not be understood otherwise.

Major Asian business languages include Mandarin, Korean, Thai, Bahasa Indonesian, and Malay, and each one provides access to a different consumer market. Thus, one key strategic consideration for enterprises selecting an Asian service delivery location is the language capabilities of the talent in the destination.

Let’s take a quick look at some of the major multilingual destinations in Asia and the value proposition they offer.

Malaysia

Malaysia ranks among the top service delivery locations for Asian languages, primarily because it lies close to source markets and is a mature destination that supports a wide range of services and languages. The country supports scaled delivery of Mandarin and Bahasa Indonesian and, to a lesser extent, Korean, Japanese, and Thai. The only challenge is the relatively high cost of operations compared to other Asian service delivery locations.

The Philippines

Another attractive location for service delivery in Asian languages, the Philippines offers moderate cost savings, breadth and depth of services, and scalable language delivery. However, the country struggles with achieving scaled service delivery in Thai.

Vietnam

Vietnam is a moderately attractive location for Asian language delivery, driven by the significant cost arbitrage it offers compared to other prominent locations. Organizations can achieve scaled delivery of services in Japanese and Mandarin but will experience challenges in scaling up service delivery in other Asian languages.

India

Although India is a key global services destination, the country falls behind its competitors in multilingual service delivery in Asian languages. India struggles to scale up service delivery in almost all major Asian languages, and compensation for multilingual service delivery approximately costs 50 percent more than service delivery in English.

With India out of the race, what’s the best service delivery location for your organization’s Asian language needs? If cost is an important consideration in setting up your multilingual team, the Philippines and Vietnam are attractive locations. But if you are looking for market maturity, scaled language delivery, and proximity to source markets, Malaysia is the clear winner. The country can comfortably cater to Indonesia, Korea, Japan, China, and Thailand – a huge belt within Asia – which combined house a population of nearly 1.6 billion.

To learn more about key locations for language-based service delivery and the primary drivers – including infrastructure, talent potential, business environment, adoption maturity, competitive intensity, and financial feasibility – that impact location attractiveness, please read our recently published report, Handbook for Language Skills, or reach out to the report authors: Parul Jain, Kunal Anand, and Pagalam Rajeshwaran.

Middle East and Africa: An Emerging Frontier for Global Services | Blog

November 15, 2019

Numerous locations in the Middle East and Africa (MEA) are emerging as upcoming destinations for global services delivery. Several multinational companies have set up their centers in the MEA region to deliver services to Europe and North America, and tech giants including Apple, Facebook, Google, Microsoft, and Uber are leveraging it for global services delivery.

What’s the appeal?

Availability and quality of talent pool

There’s been a consistent increase in the pool of entry-level talent and experienced professionals with domain-specific skills. Egypt is the leader in the region; due to various government measures to improve education quality and a significant rise in contact center operations in multiple languages, including English, French, and Arabic, the country posted an enormous 35 percent increase in the headcount for global services exports in 2018.

There’s also been a considerable rise in R&D centers and Centers of Excellence (COEs), where talented professionals with relevant and often advanced technological skill sets work to develop state-of-the-art solutions.

Less competition for talent

Because there’s a relatively large population base, limited jobs, and high unemployment rates throughout much of the region – for example, South Africa is at 27 percent and Nigeria is at 23 percent – organizations can procure talent easily and train the workers as per their specific business needs.

Cost arbitrage

Some of the countries in the MEA region offer highly attractive cost arbitrage compared to source geographies. For example, Egypt, Nigeria, and Kenya come in at 70-80 percent less (although Nigeria and Kenya are primarily leveraged to serve domestic markets), and South Africa (for non-voice F&A) and Morocco (for voice-based services) offer cost savings of 40-60 percent over source geographies.

Proximity to Europe

Proximity with various European countries is a big selling point of many African locations. For example, because Morocco offers both cultural and geographical proximity to France and Spain, companies are increasingly leveraging it for French and Spanish voice-based business process services. Because the English language was introduced by British colonists, and because there’s shared cultural affinity, South Africa is becoming a popular destination for voice-based services delivery for U.K. companies. Additionally, because most African countries share similar time zones with Europe, delivery and client teams are able to collaborate in real time, thereby, optimizing work in both the geographies.

The leading locations in the MEA region

The map below highlights key locations leveraged by global enterprises and service providers for global services delivery. While the emerging locations house 20,000 to 100,000 FTEs across global services, nascent locations employ less than 20,000 FTEs in this space.

A snapshot view of the top five global services delivery locations in MEA

Egypt: Offers the most attractive cost-talent proposition, with strong multilingual skills, especially in English, French, and Arabic languages. However, relatively higher operating environment risk with concerns around high inflation rates and repressive government policies
Morocco: Primarily leveraged for French and Arabic language voice-based BPS and IT services. Morocco offers moderate-high competitive intensity and strong government support (especially for the IT-BPS sector through financial, tax, and customs advantages)
South Africa: Characterized with large, high-quality talent pools and the highest maturity across functions, South Africa houses multiple organizations delivering voice and non-voice BPS, including complex processes. It has a stable geopolitical environment, well-developed infrastructure, high ease of doing business, strong government incentives for the IT-BPS sector, and limited safety and security concerns
Mauritius: It is leveraged for IT (both ADM and infrastructure), non-voice business process services, and R&D services to serve French and Canadian markets. It offers a favorable business environment, with government incentives for the IT-BPS sector, such as tax-free dividends and foreign tax credits
Israel: Leveraged for delivery of advanced IT (including IoT, ML, and AI) and R&D services, primarily to support the U.S. and Europe. Israel offers a highly favorable business environment with lower tax rates and conducive government incentives, such as low corporate tax and grants up to 20 percent of the amount of the investment.

For a detailed view of each of these locations, please read our latest Location Spotlight reports. Each report analyzes the individual country’s global sourcing profile, key opportunities, drivers, challenges, talent and skills availability, financial attractiveness, and environment risks.

What’s the Best Structure for Your Shared Services Innovation Team? | Blog

September 27, 2019

As we presented in a recent blog, shared services centers (SSCs) – or what we refer to as Global In-House Centers (GICs) – must create their own innovation team to support their parent enterprises’ innovation agenda. But how should you structure your team to yield the desired outcomes?

Innovation maturity and mandate

You should start by determining your SSC’s innovation maturity and mandate. The maturity is determined by the strength of your existing internal capabilities, including talent, technology, and culture; the involvement and support you require from leadership; the primary focus area of the innovation, e.g., generate revenue, reduce costs, or mitigate risks; and the impact generated by your innovation initiatives e.g., dollar value of costs saved or revenues generated.

The innovation mandate is outlined by the level of ownership and visibility for innovation initiatives; the extent of cross-collaboration between business units / functional teams; and overall alignment of your SSC with the parent enterprise’s structure and business model.

Once you’re armed with that information, you can select one of the three SSC, or GIC, innovation team structures most prevalent today, based on the guidelines we present below.

Types of SSC innovation team structures

SSCs with low-to-medium maturity and innovation mandate

If this describes your SSC, you’ll do best with a centralized structure in which your parent enterprise drives the innovation and you have limited involvement. This structure allows the parent company to have greater control and ownership, and prevents the GIC’s low maturity from being an obstacle. Many organizations prefer this structure, as it enables faster implementation of enterprise-wide and business model-related innovations, promotes standardization, and improves governance of innovation initiatives. However, many SSCs are reluctant to operate in this structure, as it presents limited opportunities for them to breed an in-house culture of innovation and deliver higher-level transformational value.

SSCs with moderate-to-high maturity and innovation mandate in a specific domain

The best fit for these SSCs is a business unit-or functional team-led innovation structure. This allows the parent enterprise to adopt a decentralized innovation approach, enable direct communication and visibility between the SSC and business unit or functional stakeholders, leverage innovation teams placed within the GIC’s business units or functional teams, and provide better alignment on domain-specific end-business objectives. Key success factors include regular mentoring by the parent’s teams to build strong future-ready GIC leadership, and direct communication channels between SSC and business unit stakeholders.

SSCs with high overall maturity and innovation mandate

For GICs that fall into this category, a dedicated innovation team in which responsibility for innovation is fully in its hands works best. This structure allows the GIC to take more ownership of proposing and prototyping new, innovative solutions, and equips it with capabilities to better respond to enterprise-wide requirements.

Achieving the right balance of ownership, accountability, and investment is the key to successfully implementing this structure and making it a win-win for both SSCs and parent enterprises. It enables the SSC to reach its true potential and gain recognition as a thought leadership partner and empowers the parent to implement innovation initiatives with relative ease and replicate best practices across business units and functions.

Because every company’s innovation structure is inherently different, GIC leaders need to thoroughly investigate each of the models and decide on the most appropriate one based on their GICs’ overall maturity and mandate.

If you’d like detailed insights and real-life case studies on how SSCs are driving their enterprises’ innovation agenda, please read our report Leading Innovation and Creating Value: The 2019 Imperative for GICs.

In upcoming blogs, we’ll be discussing ways you can promote innovation and increase its impact in your shared services. Stay tuned!

Does Your Shared Services Center Need an Innovation Team? | Blog

August 27, 2019

In order to evolve from cost enablers to strategic partners that can drive competitive advantage, shared services centers (SSCs) – what we call Global In-House Centers (GICs) – must support their parent enterprises’ innovation agenda. And whether innovation means one, more, or all of the following to their enterprise, SSCs are quickly recognizing that creation of their own innovation team is one of the key ways they can deliver on that strategic requirement.

Types of innovation initiatives

What is an innovation team?

An innovation team is a group of dedicated resources mandated to evangelize innovation within the organization. The members typically have innovation-specific competency and relevant experience, and are unrestricted by business-as-usual constraints.

While ad-hoc or informal innovation teams used to be the norm in most GICs, the forward-thinking ones realize that a formalized approach is becoming essential for long-term success.

SSCs’ innovation teams influence strategy, capabilities, and culture

Based on our discussions with and analysis of around 800 GICs spread across offshore geographies, we’ve grouped innovation teams’ focuses and capabilities into three areas.

Shaping the enterprise’s overall innovation strategy

SSC’s innovation teams help shape their enterprise’s innovation agenda by enabling decisions on key themes such as: improving the process/product/service mix, enhancing the customer/employee experience, and revamping the business model; impact areas like cost savings, risk management, and revenue generation; and innovation partnerships with start-ups, academic institutions, etc. For example, one GIC’s innovation team was given a mandate to ideate and develop innovative solutions/products to better engage customers. It led all the stages of the innovation journey (from ideation and concept testing to detailed design and development) to develop the enterprise’s flagship mobile payments app.

Enhancing capabilities by improving skills, tools, infrastructure, and technology

SSCs’ innovation teams support and lead capability and ecosystem development. Areas they become involved in include setting up the physical work environment including innovation labs, garages, and digital pods, and developing new methodologies, frameworks, and tools. For example, one GIC we work with – that of a leading U.S.-based financial services firm –assisted in development of a cloud-based, compliant platform for instant communication and content sharing. The platform is used by more than 20,000 employees across the organization for real-time collaboration.

Fostering a culture of innovation

Beyond their primary responsibilities of supporting core, business-as-usual activities, GICs’ innovation teams often serve as “innovation champions” or “innovation ambassadors” to shine a spotlight on best practices and key pitfalls to avoid. These teams primarily consist of employees embedded within the GIC’s business units/functional teams, and focus on domain-specific innovation. This enables direct development of an innovation culture in delivery teams. For example, in one insurance company’s GIC, the innovation team is mandated with promoting innovation at the grassroots level. So, it organizes trainings, workshops, and competitive events.

Innovation team make-up

At a broad level, innovation teams are comprised of the following key roles:

Innovation champions: Leadership members (typically C-level executives, and functional/business unit heads) for providing strategic guidance
Program managers: Senior management members and/or dedicated managers for driving innovation programs/projects
Process experts/technologists: Experts with deep knowledge of product, technology, and tools
Strategists: Typically, tenured senior resources with extensive experience with innovation programs and solid domain knowledge.

Of course, some SSC’s also include other roles, some very niche and company-specific, in their innovation teams.

Size your innovation team to your specific needs

Our research found that SSCs’ innovation teams are typically comprised of five to 20 dedicated FTEs, spread across the enterprise and the SSC. A relatively small number of GICs have 20-50 or more FTEs that are specifically part of their innovation team.

While most GICs have a lean innovation team, we encountered multiple instances of recently bulked-up teams. Interestingly, there is a limited co-relationship between revenue/size of the SSC’s parent enterprise and the size of its innovation team. What tends to impact the size of the innovation team is the extent of the innovation focus, the level of innovation maturity, existing structures for driving innovation, and broader business requirements.

There is no one-size-fits-all approach. When designing your SSC’s innovation team, you should start by determining what aligns well with the existing structure and caters to evolving innovation needs. You can customize its size and composition once it’s up and running.

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

May 22, 2019

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.

The Three Components Your Shared Services Center Needs to Include in its Innovation Equation | Blog

January 28, 2019

Supporting enterprises’ innovation agendas is no longer simply an opportunity for in-house shared services centers – what we call global in-house centers (GICs); it’s fast becoming a competitive imperative. And, contrary to popular perception, cracking the innovation code requires much more than just novel ideas. Success entails boarding the right people on the bus, gearing them up with the right mechanisms to drive agile decision making, and reengineering the organization’s cultural DNA to foster innovation. We’ve developed a simple approach that will help you solve this complex problem.

Let’s take a look at the three components.

Process

Innovation is not the product of logical thought, although the result is tied to logical structure – Albert Einstein

The first element is formulation of the right mechanisms to evangelize innovation initiatives. It requires the right idea generation mechanisms to harness unique ideas from both internal (GIC and parent company stakeholders) and external (including startups, academia, and service providers / specialists) ecosystems. A critical part of this is evaluating the strategic rationale for the partnership. While some shared services centers partner with third-party providers and start-ups for talent augmentation and skill acquisition, others leverage the connections to develop domain expertise or increase the speed of innovation.

Another essential component, specifically for GICs, is the right funding mechanism. While we see most shared services centers carving out a separate fund for innovation (which is part of the overall GIC CEO budget), we are increasingly seeing them push for a global/centralized fund where the innovation team within the center operates as an extension of the global innovation team(s), and is funded by centralized global venture funds / programs. For select initiatives, we have also seen GICs securing funding from business units and driving project-based innovation initiatives.

The third component here is timely deployment of robust governance mechanisms. Shared services centers need to adopt a disciplined approach to rigorously track performance and incorporate remedial feedback on a continual basis. This not only helps to assess the effectiveness of activities, but also guides allocation process for resources, and helps assign accountability for actions/responsibilities.

People

Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have and how you’re led – Steve Jobs

Involving the right people in the right team structure is the second critical component. Leading GICs involve stakeholders from different parts of the organization, i.e., functional and business teams, central innovation groups, R&D departments, and corporate teams to invest time in exploring adjacent and transformational opportunities. This helps in cross-pollination of teams and enables development of a holistic solution in an accelerated go-to-market timeframe. While we have seen varied designs for innovation teams (based on organizational fit and business alignment), the common thread is the focused top-driven approach to creating structural changes, supplemented by continuous support from middle management to ensure smooth implementation.

Another key initiative leading centers are taking is remodeling their existing talent practices. They are now shifting their focus from hiring for specific “skills” to hiring for “learnability” / “thinking skills”, i.e., the ability to innovate. They are incentivizing innovation, and providing special recognition for outside- the-box thinking. We are also seeing strong innovators recalibrate their existing performance measurement metrics to align with the impact generated against the business objectives.

Culture

“Innovation is not something you do for one afternoon a week, it’s got to be in your DNA” – Jasper de Valk and James van Thiel, Google

The third principal tenet to ensuring foundational success on the innovation journey is dedicated investment in developing a customer-centric culture with active CXO-level participation. Shared services centers are deploying multiple tools to reengineer their DNA and develop a culture that breeds innovation. Most successful examples include: gamification of programs and distinctive recognition for positive reinforcement; stimulation of an experimentation mindset and instillation of risk appetite; and adoption of flexible employment models, including remote working, crowdsourcing, and open innovation.

Although new technologies are path-breaking, we believe that the key to a GIC’s success is incremental innovation. They should keep testing small-scale POCs to demonstrate end-client value and build credibility. Successful implementation of pilots can help them instill confidence among parent stakeholders, and ensure adequate support and funding for much larger scale initiatives. This process also presents centers with an opportunity to course-correct early and drive/lead enterprise-wide digital initiatives.

If you’d like detailed insights and real-life case studies on how GICs have effectively driven the innovation agenda for their enterprises, please read our recently published report – Leading Innovation and Creating Value: The 2019 Imperative for GICs. And feel free to reach out to us at [email protected] to explore this further. We will be happy to hear your story, questions, concerns, and successes!

Author: ParulJain