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Rohan Kapoor

Demand for Next-Gen Services Defining Location Strategies | Blog

By | Automation/RPA/AI, Blog, Outsourcing

Regulatory uncertainty, technological disruption, talent challenges, and a host of other issues have all played significant roles in enterprises’ and service providers’ location strategies for global services delivery over the past couple of years.

The deep-dive analysis we conducted on enormous volumes of 2018 data to develop our Global Locations Annual Report 2019 made it clear that five key trends came into play in 2019, and will continue into 2020:

  • Increased focus on digital and R&D/engineering services
  • Increase in nearshoring
  • Slowdown in headcount growth
  • Increase in onshoring by service providers
  • Growth in emerging locations.

Here’s a quick look at each of these trends.

Digital and R&D/engineering services continue to dominate

Enterprise demand for digital services and the associated R&D/engineering services compelled most global service providers to set up innovation centers and COEs to keep up with the changes in the digital landscape. And there was a significant rise in the number of R&D/engineering and digital service delivery centers – especially in APAC and nearshore Europe – as providers vie to develop data-driven, intelligent, and robust systems using automation, cloud, and AI-based capabilities.

Global services delivery is increasingly being characterized by nearshoring

In a move to rebalance and optimize their existing locations portfolio and comply with data protection mandates, both enterprises and service providers are marginally shifting from offshore to nearshore locations. Nearshore Europe experienced the greatest increase in headcount and new center setups in 2018 due to the availability of complex skills, proximity to customers in Western Europe, increased regulatory oversight, and demand for multi-lingual support.

Poland, Ireland, and Scotland will continue to dominate the global services landscape in nearshore Europe, followed by Ukraine, the Czech Republic, and Romania.

Global services headcount continues to grow, but modestly

Increasing use of automation for low complexity, high volume services is having a considerable impact on the talent landscape. While growth in digital services will lead to newer job and skill profiles, the headcount required for newer digital jobs will be significantly lower than that required for low complexity jobs, and the growth will be slower due to technological advances and the shortage of talent for new-age technologies.

Service providers continue to grow in onshore geographies

Leading service providers have been continuously growing their presence in onshore geographies. This is in large part due to increasingly stringent data protection laws and mounting pressure from clients to have local delivery centers. The United States and continental Europe continue to remain the destination of choice for setup activity across onshore locations. The lion’s share of the work delivered from these onshore centers is in IT services.

We expect the United States to continue to grow in the wake of uncertainty around visa regulations and increased pressure from clients to have local delivery centers for ease of coordination, better alignment/training, and promoting customer intimacy. And, we also expect growth in digital services to push providers to continue to expand in other onshore locations – such as Belgium and Switzerland – due to availability of skilled talent and the ability for extensive collaboration with Europe-based clients.

Growth in emerging locations for global services delivery

While use of the traditional delivery locations continues to grow, other locations are picking up steam, including:

  • Jamaica continues to grow in setups for voice services
  • Ghana and Kenya are being leveraged to support the East and West Africa regions
  • Israel is growing significantly for delivery of R&D/engineering and high-end IT services
  • Lithuania is also growing as a destination for delivery of IT (largely digital) and R&D/engineering services.

To learn more about the dynamics shaping the global services locations landscape, please read our recently published report, “Global Locations Annual Report 2019: Demand for Next-Gen Services Defining Locations Strategies.” We developed the report based on deep-dive discussions with the regional investment promotion bodies, leading shared services centers, service providers, recruitment agencies, and other market participants.

Four Key Trends in Social Media Content Moderation | Blog

By | Automation/RPA/AI, 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.

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

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

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

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

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

Existing Landscape

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

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

Major digital services Tier 2 3 blog

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

 

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

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

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

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