RitikaDhingra, Author At Everest Group

Real Diversity, Equity, Inclusion, and Belonging (DEIB) in Your Supply Chain: Advancing Gender DEIB with Impact Sourcing for the Workforce of Tomorrow | Blog

March 21, 2022

Organizations that have a diversified workforce and prioritize providing opportunities to all will ultimately contribute to building a stable global economy. While gender equity and inclusion have improved over the last decades, many challenges remain, including discrimination/bias, underrepresentation in leadership levels, and lack of access to education and employment opportunities. Impact sourcing is a business imperative that will not only help companies reach new talent pools but also offer opportunities to marginalized communities and populations, especially women.

Empowering women through impact sourcing

Impact sourcing is a business practice in which companies intentionally prioritize service providers that hire and provide career development opportunities to people who otherwise have limited prospects for employment.

Companies are implementing impact sourcing models to elevate excluded groups and improve gender equality through opportunities such as training and employment in various regions, especially where educational and career opportunities are not readily available to all. By including impact sourcing initiatives, organizations can begin to embed gender-responsive and ethical procurement practices into their business models, and, ultimately, affect social-economic improvements, such as decreased poverty and increased employment rates.

A response by the approximately US$215 billion¹ global services industry to address social exclusion, impact sourcing is not a new concept but can make a significant impact. Considering that third-party services is one of the largest corporate sourcing/procurement spend categories, with companies often spending 5% of revenue on services partners, the practice has the potential to not just open up new talent pools, but also provide equal opportunities.

The gender gap in global services

According to S&P Global data, the percentage of women in the total workforce in developed and emerging markets has averaged around 35% over the past five years and has been exacerbated by the global pandemic. The proportion of women decreases progressively up the corporate ladder. However, in developed markets, the percentage of women in senior management is even lower than the number of women within boards of directors.

By investing in impact sourcing, companies can combat unequal treatment of women in the workforce with specific impact sourcing strategy goals. For instance, they can focus on closing the gender gap at the base of the issue rather than reporting on diversity indicators at the top, such as the number of women on boards or the percentage of women’s ownership. This is part of a growing movement to broaden supplier diversity to gender-responsive procurement, spearheaded by UN Women[1].

How impact sourcing aligns with the United Nations (UN) Sustainable Development Goals (SDGs)

Impact sourcing is one of the most credible and powerful ways to accomplish some of the 17 UN SDGs. As a result, it bolsters gender-responsive procurement, which is defined as the selection of services, goods, and civil works that consider their impact on gender equality and women’s empowerment.

Impact sourcing naturally aligns with UN SDGs in the following ways:

	Goal 1 – No Poverty: Impact sourcing helps provide employment opportunities to marginalized groups, contributing to reduced income distribution gaps and eradicating poverty
	Goal 4 – Quality Education: The innovation in impact sourcing includes training, accommodation, recognition of unique talents, and career counseling for youth who may not have access to higher education
	Goal 5 – Gender Equality: Putting women at the center of economies will fundamentally drive more sustainable outcomes since individuals who identify as women are increasingly becoming part of the core workforce. Organizations can become more inclusive towards women by having a rigorous impact sourcing strategy
	Goal 8 – Decent Work and Economic Growth: Employment is at the core of impact sourcing, helping organizations offer good jobs to marginalized individuals
	Goal 10 – Reduced Inequalities: Growing inequality is one of the biggest roadblocks in achieving social progress and global stability. Impact sourcing can contribute towards inclusion and equal opportunities within and among countries

With lower attrition rates and higher corresponding levels of employee engagement, which results in lower costs and higher productivity over time, impact sourcing also provides a diversified talent pool to companies.

Impact sourcing encourages companies to help underserved populations, like women, move out of poverty and transform their lives and provide for their families. Corporations can engage in inclusive hiring practices that promote equal opportunity, diversity, skill development, and equal treatment for women. A responsible hiring mechanism by organizations can effectively contribute towards increasing employment opportunities and career development for this socially impacted and vulnerable segment of society, creating meaningful change in the world and taking an impactful step in the fulfillment of the UN SDGs.

Additionally, as the LGBTQ+ community enters the workforce, organizations may expand the definition of “gender” to become more inclusive in their impact sourcing decisions.

Impact sourcing use cases with gender-specific goals

Televerde

Established as a US-based for-profit sales and marketing organization in 1994, Televerde provides on-the-job training to more than 200,000 current and formerly incarcerated women in the US. As a purpose-driven company, Televerde helps these women reintegrate back into their communities.

Televerde has a global workforce of more than 600 employees, 70 percent of whom sit behind prison walls, and about 60 percent of its staff is comprised of incarcerated women. In addition to being paid fair market hourly wages, they receive training for the required skills and can also achieve certifications in sales and marketing, while earning college credits for completing company-sponsored training programs.

Not only does the Televerde business model help these women, but it has enabled the company to generate more than US$8 billion in revenue for its clients.

In 2020, Televerde formed its non-profit unit Televerde Foundation to further empower incarcerated women and serve as a driving force to fulfill Televerde’s mission to change the lives of 10,000 disempowered people by 2030.

iMerit

A global impact sourcing specialist, iMerit was founded in 2012 in rural India to bring a diverse talent pool from underserved backgrounds into the digital workforce. Today, 52 percent of its workforce is female, and, interestingly, the company was founded by Radha Basu, a technology pioneer who rose through the ranks when very few women did. By embedding purpose objectives into its business model, the for-profit impact sourcing firm has raised US$23.5 million in funding since July 2021.

Today, iMerit employs more than 4,000 data enrichment and annotation experts in Bhutan, India, and the US. It launched one of its first all-women centers in Metiabruz, West Bengal, a region where women have traditionally lacked professional career opportunities.

Sama

A for-profit training-data company, Sama focuses on annotating data for artificial intelligence algorithms. As one of the pioneers in the impact sourcing space, it aims to reduce poverty, empower women, and mitigate climate change. The company combines its technology platform and worker training programs to increase economic opportunity for those in underserved communities.

Sama, a certified B Corporation, operates global delivery centers in Kenya and Uganda and was named one of the “Best for the World” for workers in 2021.

By 2019, Sama had helped over 50,000 people move out of poverty. Its impact was particularly strong for women during the COVID-19 pandemic, when Sama was able to create a remote working model, allowing them to continue working despite lockdown orders.

FiveS Digital

An India-based certified woman-owned business and impact sourcing company, FiveS Digital has a workforce of over 1,500 employees at seven delivery centers in India, with a presence in Europe and North America. It started as a pure-play BPO company in 2009 and has entered the digital technology services domain over the years.

FiveS Digital collaborates with several non-profit organizations and supports young professionals’ upskilling needs, especially women from Tier-2 or Tier-3 cities and rural areas. With diversity and inclusivity as one of its key focus areas, it invests in opportunities and leadership roles for women. As a result of its continued commitment and focus, it was recently certified as a Women’s Business Enterprise (WBE) by the Women’s Business Enterprise National Council (WBENC), the largest third-party certifier of women-owned and operated businesses.

Organizations are choosing suppliers that aim to help disadvantaged groups

An increasingly used type of gender-responsive procurement, impact sourcing helps organizations discover initiatives to improve gender inclusion at all levels by partnering with leading impact sourcing specialists like FiveS, Sama, iMerit, and Televerde, as well as mainstream providers.

Enterprises can make a difference by partnering with service providers that employ groups experiencing exclusion, whether as an HR practice or by subcontracting to impact sourcing specialists. As businesses increasingly reach into untapped geographies for hidden talent, they will help build a stable global economy and promote inclusivity – a true win-win scenario.

Discover more about the benefits of inclusivity in the LinkedIn Live event, Why Inclusivity is Essential in Building Your Tech Talent Workforce.

[1] https://www.unwomen.org/en/about-us/procurement/gender-responsive-procurement

GICs Accelerating the Automation Gear in Their Digital Drive! | Sherpas in Blue Shirts

March 26, 2018

In the beginning of the digital revolution, GICs were primarily used as hotspots for analytic services. But in their quest to deliver more value-added services to the parent organization, many are accelerating their ability to serve as strategic innovation partners by significantly expanding their portfolio of digital-focused activity. In fact, our most recent Market Vista ^TM report showed that digital activity in new setups and expansions jumped 900 basis points between Q4 2016 and Q4 2017.

Like most organizations dipping their toe into the digital pool for the first time, GICs initially focused on automating processes through technologies such as Robotic Process Automation (RPA). However, in last couple of years, they have also started leveraging Artificial Intelligence (AI) to improve in areas such as customer experience, operational efficiency, risk management, and development of digital products and services for the market. After realizing the benefits of RPA and AI, some of the mature GICs are also now testing the waters for cognitive computing.

Here is a sampling of the digital use cases coming out of today’s GICs:

Of course, changes and challenges abound in the rapidly evolving digital environment. Here are several that will impact GICs in 2018.

War for talent: Although they’re upskilling/reskilling their existing workforce, GICs will still need external talent for critical skills such as intuition and innovation, design thinking, pattern recognition, leadership, and problem solving. They’ll struggle to find this talent due to demand-supply imbalances.
Ecosystem partnerships: We expect GICs to accelerate their technology adoption through increased partnerships with service providers, technology vendors, start-ups, and educational institutions to deliver new forms of value, such as innovation, automation, and speed to market.
Delivery locations beyond India: While India will remain a favored location for enterprises to introduce new technologies, our GIC market activity tracking (see our recently released Market Vista^TM report) suggests that other locations such as Brazil, Ireland, Israel, Romania, and Singapore may gain traction in near future. Israel is already progressing to support a range of digital functions such as IoT, AI, and data analytics for customer experience and cybersecurity services.

There’s no question that GICs have the ability to drive the digital agenda for their enterprises. To gain a deep-dive understanding of how they’re doing so today, and what they plan to do in the near future, Everest Group is conducting an online survey. This first-ever assessment will be based on our proprietary Pinnacle Model^TM, which identifies what the best performers are doing to achieve strategic business objectives and deliver increased value. We invite you to participate in this survey.

IT Services Opportunities with the NHS: Patient Care and Advanced Technologies | Sherpas in Blue Shirts

November 7, 2017

It should come as no surprise that global services activity in the U.K. has dropped significantly in all sectors in the aftermath of the Brexit referendum. Indeed, according to our Transaction Intelligence database of sourcing deals, in the healthcare space, the U.K.’s National Health Service (NHS) awarded 13 outsourcing deals in 2015, 11 in 2016, but only four in the first half of 2017.

However, our research indicates that the policy of patient-centric care introduced by the National Institute for Health and Care Excellence in 2012 is likely to drive ample long-term opportunities for innovative IT service providers that offer technology enablers.

For example, under the NHS’s RightCare initiative, the NHS may look to accelerate the adoption of value-based care. Funding is focused on allocative value (how well assets are distributed to different areas of healthcare), technical value (how well resources are used to achieve valid outcomes), and personalized value (determined by how well an outcome matches patient expectation). Additionally, with increasing demand for telemedicine, NHS trusts will be on the lookout for providers that develop mobile applications aimed at remote healthcare management to support the growing importance of care at home for chronic conditions.

A robust cybersecurity network is equally imperative in the wake of recent instances of data breaches such as the March 2017 WannaCry attack, in which the medical records of 26 million NHS patients were hacked. Service providers can help the NHS protect its IT infrastructure from malicious cyber attacks by offering threat intelligence solutions, threat detection and mitigation applications, Blockchain-powered Electronic Health Records (EHRs), and persona-based security platforms.

While third-party providers can profit from these long-term opportunities, they need to be cognizant of the changing competitor landscape, particularly from tech start-ups that are testing the waters to realize potential demand in the U.K. healthcare sector. For instance, DeepMind, a London-based artificial intelligence start-up, worked with the NHS in 2016 on technology to improve care coordination.

To take advantage of growing consumerism in the U.K. healthcare space – e.g., e-Referral and e-Consult services – we recommend that IT service providers increase their investments in growing technological areas such as security, mobility, analytics, and IoT. But first and foremost, they must offer services that focus on patient care. Doing so would help the NHS avoid a repeat of its failed National Programme for IT, which was aimed at cost savings and efficiency, but was abandoned after nine years at a cost of £10 billion in 2011.

We will continue to watch this space and actively share our thoughts and perspectives. In the meantime, you can stay up-to-date on our latest insights in the healthcare domain through our dedicated research on the Healthcare & Life Sciences sector.

GICs Are Here to Stay! Getting Bigger, Better, and Brighter | Sherpas in Blue Shirts

April 14, 2015

Do you remember back in 2009 when questions were raised on the sustainability of the Global In-house Center (GIC) model? The GIC market was shaken up with multiple divestures, giving rise to speculation that the model was dying. Since then, confidence in the construct has been a little precarious, even though the number of divestitures has remained low (except for in 2012.)

But here are some recent facts that will quell those concerns:

Now, after recognizing that the shared services model is flourishing, let’s look at key developments that occurred in the GIC space in 2014:

Business Process Services (BPS) continued to witness growth due to increased demand for Customer Relationship Management (CRM), Finance and Accounting (F&A), and Human Resource (HR) services

Activity in the Manufacturing, Distribution, and Retail (MDR) vertical picked up considerably, especially in the retail sub-vertical, as companies set-up GICs for IT services delivery
Several locations made their mark on the location radar for the first time for specific industries. For instance, Romania and Ghana emerged as new GIC regions for BFSI firms, Croatia for healthcare companies, and the UAE for the hospitality sector
Share of GIC activity by U.S.-based firms declined, as most of the large companies are already adopters of the model; moreover, other geographies are increasingly embracing the GIC model.

While the model continued to see considerable momentum in 2014, the overall market is gradually shifting toward getting better and becoming more relevant for their adopters. Changes that have surfaced and are expected to shape the future course of the industry include:

GICs are no longer seen as only a support unit or cost-saving mechanism for the parent entity; rather, they are becoming a partner in their companies’ growth journey
Due to the increased value that the GICs are adding, or are capable of adding, buyers are willing to invest more for the additional advantages they can reap from the model
Cost arbitrage is not the only factor for GIC location selection. Talent scalability and sustainability, and linguistic and cultural affinity, are also playing a critical role in the decision making process
Realizing the value of diversification and the concentration risk involved in the mature markets of India and Philippines, companies are increasingly leveraging locations in other geographies such as Central and Eastern Europe, Latin America, the Middle East, and Africa. Ericsson, Intel, Johnson & Johnson, and Robert Bosch are among the firms that have spread their wings in the last few years to explore delivery locations in countries including Ghana, Mexico, Romania, Ireland, and Vietnam. Still, India remains the top location for GIC set-ups, with 28 centers established in 2014
Several delivery locations are also becoming attractive for their domestic market opportunities. Thus, some organizations are leveraging offshore centers for dual purposes; for their GIC operations and to tap into the local market
In addition to the pure GIC model, hybrid sourcing constructs, such as virtual GICs, that require a partnership between the buyer and the service provider to deliver services, are being considered.

For those of you who may have been questioning the health of the GIC model, it’s clearly vibrantly alive and kicking. The data speaks!

For more insights on the GIC model landscape, please refer to our recently released report “Global In-house Center (GIC) Landscape Annual Report 2015.” The report provides a deep-dive into the GIC market and an analysis of the GIC trends in 2014, comparing them with the trends in last two years. The research also delivers key insights into the GIC market across locations, verticals, and functions. It concludes with an assessment of the hybrid sourcing constructs.

The Facts About the Recent Service Provider Restructurings

November 25, 2014

In the past year, multiple global service providers have engaged in restructuring initiatives that will significantly alter their business model and fundamentally change the competitive landscape. Some of these restructurings include:

Numerous providers have also announced plans around changing operating and talent models. For example:

Workforce rationalization
- HP has announced ~55,000 job cuts since 2012 in a move toward workforce rationalization
- IBM’s company-wide employee count dropped in 2013 for the first time in a decade as a result of massive lay-offs
Increased offshoring leverage, particularly in India
- Capgemini plans to increase share of India to 50 percent of overall firm’s headcount by 2016
- Atos has announced plans to double its employee strength in India by 2016

While this is not the first instance of service provider restructuring, this time is unique because multiple firms have announced programs at essentially the same time. In addition, there is speculation that other global majors will launch business portfolio restructuring initiatives (i.e., carve-outs, leveraged buyouts).

Why is this happening now? The reasons are relatively straightforward. First, many global providers have experienced reduced profitability in traditional “non-core” businesses. This, coupled with increasing competitive intensity and the shifting competitive landscape is resulting in pricing pressures. Second, next generation capabilities (e.g., social media, SaaS, analytics, and cloud) are poised to become the next growth engines, and all leading players are channelizing their investments in these areas. Finally, most global players are moving toward rationalizing their portfolios for focused investments, due to strained management bandwidth and focus.

But these initiatives will create multiple impacts beyond the obvious strategic objectives. Consider this: over the last eight quarters, the operating margins of the leading global service providers (Accenture, Aon Hewitt, Convergys, CSC, HP Enterprise Services, IBM Global Services, Unisys, and Xerox Services) grew the most in Q2 2014. This restructuring trend will likely continue as some of the long-term benefits translate into improved profitability for global service providers.

Improved profitability of global majors will also impact buyers and other service providers. We anticipate increasing focus by offshore-centric service providers on inorganic growth by acquisitions. They are also likely to scout for more collaboration opportunities to build capabilities, particularly in next generation global services. We also foresee buyers aggressively monitoring provider investments to evaluate sourcing model decisions (i.e., build vs. buy).

Interestingly, one of the unintended after-effects of these restructurings is that the offshore-centric service providers have witnessed better revenue growth than the global majors, and thus have improved in their relative rankings by revenue. For example, TCS recently overtook CSC in terms of overall revenue. And other offshore-centric providers are also bridging the revenue gap with their global counterparts. While this ranking reshuffling has been occurring for some time, the global major’ restructuring initiatives and focus on profitability (sometimes at the expense of revenue growth) has further accelerated this trend.

For more details on these restructuring initiatives and their impact on the global services industry, and other information on leading service providers, please refer to our Market Vista™ Q3 2014 report.

Here’s the Answer Key: India GIC Landscape Crossword Puzzle | Sherpas in Blue Shirts

October 15, 2014

Hope you enjoyed solving the India GIC landscape crossword we posted last week. Below is the answer key to it. (Download a printer-friendly version of the answer key.)

Across
One of the first entrants in the India GIC landscape	Texas Instruments and GE were among the first entrants in the GIC landscape
Number of GIC divestitures in first half of 2014	None. GIC divestiture activity has seen a decline in recent years after peaking in 2011 and 2012
Numero uno country in worldwide GIC market	India has dominant share in the GIC market in terms of revenue (~50%), number of delivery centers and headcount
Tier-1 city with least number of GICs	Mumbai has the least number of GICs among tier-1 cities in India
Buyer geography with maximum number of companies setting up GIC in India	United States-headquarteredfirms have more than 60% share in the Indian GIC landscape
Buyer geography showing decline in GIC activity in India	Share of United Kingdom-based firms setting up GICs in India has declined in the last 2-3 years
_______ a.k.a GIC	GICs were formerly known as captives
Vertical with 2nd largest average headcount in GIC	Telecom is the 2^nd largest vertical after BFSI in terms of average headcount

Down
Top vertical by GIC headcount	BFSI is the largest vertical in terms of overall GIC headcount in India
Top vertical by number of GICs	Technology is the leading vertical in terms of number of GIC set-ups in India
Tier-1 city with highest share in number of GICs	Bangalore has the maximum number of GICs in India
Leading tier-2 city for GIC set-ups	Pune is the leading tier-2 city in terms of number of GICs and has seen lot of GIC activity in the recent past
Why companies started GICs?	Companies started GICs to capture cost arbitrage
Alternative to the GIC model	Outsourcing to service providers in an alternative to the GIC model
Number one function that GICs in India are delivering	Engineering services is the leading function delivered by GICs in India
__________ beyond arbitrage	Value beyond arbitrage
Energy & Utilities GICs firms headquartered here have high share	Within the Energy & Utilities vertical, Europe-based firms have highest share
Sub-function within IT with highest adoption	ADM (Application Development & Maintenance) is the topmost sub-function within IT
Another leading tier-2 city for GIC set-ups	Kochi is also seeing GIC activity among tier-2 cities in India
Cognizant acquired this GIC in 2013	Cognizant acquired ValueSource NV, a subsidiary of KBC Group

Photo credit: Taki Steve

Nearshored GICs Experiencing Significant Growth among UK-based Buyers | Sherpas in Blue Shirts

October 14, 2014

Over the last 18 months, we have seen a significant shift in the global in-house center (GIC) location strategy of UK-based firms, with many more embracing Central and Eastern Europe (CEE) over offshore countries for their GICs.

Factors driving the growth in nearshore locations include:

High attrition rates in offshore locations, and far more expensive talent in onshore regions, make nearshore locations a suitable alternative. Relatively lower-cost locations in CEE are equipped with skilled workforce with multi-lingual capabilities
Nearshore locations offer cultural and geographical affinity, and a favorable time zone
Concentration risk in offshore locations. Realizing the value of diversification, well-known companies such as Barclays, BP, HSBC, PwC, Rolls-Royce, and Vodafone have expanded their location portfolios beyond offshore in-house centers and established GICs in CEE

Some of the popular nearshore locations being leveraged for IT, F&A, and call center (CC) services are depicted in the diagram below:

While some companies are leveraging their existing nearshore offices and expanding them into GICs, others are setting up greenfield centers. Recent examples of new GIC set-ups by UK firms in nearshore locations include:

Barclays opened a human resources service center in Lithuania
Vodafone opened a new shared services center in Bucharest, Romania, to cater to Germany, Ireland, Italy, Spain, and UK-based clients. The center will also provide IT services for the Vodafone Group headquarters in London
PwC opened a service center in Bratislava, Slovakia, to carry out its internal finance function for the CEE region
Toumaz Group opened a software development center in Timisoara, Romania, to develop IT-based solutions for Toumaz and Frontier Silicon, a Toumaz division.

What are the implications of this trend? Are we saying offshore locations will lose their draw for UK-based buyers? Certainly not! Although the CEE region will continue to maintain its growth momentum, several factors will still drive GIC activity in offshore geographies among UK buyers:

For first-time adopters of the GIC model, offshore locations (e.g., India, Philippines) offer a proven and established value proposition
For companies highly focused on cost savings, the arbitrage offered by offshore geographies remains unbeatable
Companies looking to set-up large scale centers (1,000+ FTEs) may not find many scalable options in nearshore regions, making offshore geographies more attractive
Several offshore locations are also becoming attractive for their domestic market opportunities. Thus, some organizations are leveraging offshore centers for dual purposes; for their UK operations and to tap into local sales prospects

Beyond the traditional offshore locations, there is increasing acceptance of South Africa, Egypt, and Mauritius as delivery locations for UK and other European buyers due to accent similarity and strong cultural affinity. But the battleground is now definitely becoming hotter between nearshore and offshore locations.

For more insights into the GIC space, please see the following additional Everest Group research:

Photo credit: Charles Clegg

Crossword Puzzle: Test Your Knowledge of the India GIC Landscape | Sherpas in Blue Shirts

October 8, 2014

We recently published a report on the Global in-house Center (formerly known as captives) landscape in India that provides comprehensive coverage of the GIC landscape in the country. (Download a complimentary preview deck of the report.) India is now home to 700+ GICs delivering a range of IT, business process and engineering services to buyers globally. Would you like to know more key insights from this report?

Let’s play a game!

Below is a crossword that captures 20 key insights from the report. (You can also download a printer-friendly version of the crossword.)

Across

One of the first entrants in the India GIC landscape
Number of GIC divestitures in first half of 2014
Numero uno country in worldwide GIC market
Tier-1 city with least number of GICs
Buyer geography with most number of companies setting up GIC in India
Buyer geography showing decline in GIC activity in India
_______ a.k.a GIC
Vertical with 2^nd largest average headcount in GIC

Down

Top vertical by GIC headcount
Top vertical by number of GICs
Tier-1 city with highest share in number of GICs
Leading tier-2 city for GIC set-ups
Why companies started GICs?
Alternative to the GIC model
Number one function that GICs in India are delivering
GICs are increasingly delivering __________ beyond arbitrage
Energy & Utilities GICs firms headquartered here have high share in number of GIC set-ups in India, within this vertical
Sub-function within IT with highest adoption
Another leading tier-2 city for GIC set-ups
Cognizant acquired this GIC in 2013

Stay tuned! We will post the answer key in a few days.

Photo credit: Jessica Whittle

Are You Familiar with the Offshore GIC Hot Spots? | Sherpas in Blue Shirts

July 14, 2014

If you said Asia Pac, great … but do you know what APAC is particularly good at? And do you know about available alternatives beyond APAC?

We all know location is half the battle (possibly the entire battle). But location selection is difficult – it’s not just about cost arbitrage, talent scalability, and sustainability, but also linguistic and cultural affinity.

The most mature location may not be the best fit for your company or your industry, and you definitely can’t toss a dart and hope to find the right location.

Here’s the battle plan – a map of GIC “hot spots.” Need multi-lingual support? Check out Central & Eastern Europe; Poland alone delivers services in more than 34 foreign languages. Need support in the Technology and Telecom industry? You might want to take a look at MEA (Middle East & Africa). While you’re there, check out Latin America, India, and the rest of Asia, too.

Click on the map to expand the image

Looking for more information on GICs? Check out these three resources:

Cost Competitiveness of Global In-house Centers (GICs) Plus Market Vista™ Q1 Global Services Updates | Attend the webinar on demand
GIC Market Insights | See the full collection
Malaysia: The Emerging Asian Tiger for Global Shared Services? | Read the blog

Slow Growth of GICs… Is the Model Losing Its Sheen? | Sherpas in Blue Shirts

April 30, 2014

The Global In-house Center (GIC, formerly referred to as captives) market was once thriving with unprecedented statistics – 97 new GIC set-ups in 2009, 105 in 2010, and 103 in 2011. Then there was a dip, with only 75 new centers in 2012, and 69 in 2013. This, coupled with numerous acquisitions of GICs by service providers, (e.g., KBC Group’s financial arm by Cognizant, Bayer’s Indian IT operations by Capgemini, and Hutchison Whampoa’s India-based call center operations by Tech Mahindra), is likely to raise questions and concerns about the future of the in-house model.

Let us look at the ground realities of the GIC model’s growth and evolution:

Indeed, the rate of growth of GIC set-ups has slowed down. However, this can largely be attributed to a weak economic scenario and slow decision-making cycles, and should not be construed as weakening confidence in the GIC model. As the future outlook of the global economy is positive, we expect the GIC market to gain momentum in the near future
Established GICs are evolving in their journey to be a partner of their parent firms, rather than just an offshore cost-saving entity
The success of the GIC model in pioneer delivery locations such as India and the Philippines is leading buyers to explore and diversify to other locations
- CEE countries are witnessing increased activity due to aggressive government incentives, the language advantage, and the nearshore proposition
- Relatively untapped regions in the Middle East and Africa reported an astonishing eight GIC set-ups in the last year alone
- Firms are expanding their GIC operations to tier-2 and 3 cities due to saturation in tier-1 cities in mature locations such as India

While the technology, manufacturing, distribution and retail, and BFSI industries continue to have a strong foothold, other verticals – such as conglomerates, business services, hospitality, and printing and publishing – have emerged to gain a noticeable share of the GIC market.

Further, while buyers’ moves from an outsourced to an in-house model rarely receive considerable fanfare, they do paint a picture of the health of the GIC model. For example, HP had been General Motor’s main IT vendor per a US$2 billion contract awarded in 2010, but in 2012 the automaker decided to insource a huge amount of its services as part of its new strategy, leaving HP with only a few. AstraZeneca plans to reduce its outsourcing work, which is currently spread across multiple Indian software service providers. BT plans to have more control of its processes by taking back its outsourcing contracts from service providers, and increasing its capacity in existing shared services centers in India and Malaysia.

The bottom line is that while GIC set-up growth may be slowing, the model continues to be an integral component of organizations’ sourcing strategy. Firms continue to leverage both sourcing models (service providers and GICs) based on best fit with their sourcing needs, cost and value objectives, and services demand profile.

For more insights on the GIC model landscape, please refer to our recently released report “Global In-house Center (GIC) Landscape Annual Report 2013.” The report provides a deep-dive into the GIC landscape and a year-on-year analysis of the GIC trends in 2013, comparing them with trends in the last two years. The research also delivers key insights into the GIC market across locations, verticals, and functions, and concludes with an assessment of strategic priorities for GICs.

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Author: RitikaDhingra