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Outsourcing Demand Falls, Global In-house Center Setups Grow in Q1 2019 According to Everest Group Report on Top Trends in Global Sourcing | Press Release

By | Press Releases

Enterprises increasingly outsourcing engineering services, including software engineering, mechanical engineering, and embedded engineering.

The global sourcing industry posted a decline in transactions in the first quarter of 2019 as compared to Q4 2018, dropping from 551 transactions to 501, according to Everest Group. Conversely, Q1 saw Global In-house Center (GIC) activity increase vis-à-vis Q4 2018, with the number of new GIC setups and expansions increasing in onshore as well as offshore and nearshore locations.

Everest Group also identified these Q1 global sourcing trends in its recently released Market Vista™: Q2 2019 report:

Large financial services firms, especially banks, are increasingly looking to expand their in-house IT teams and insource parts of their outsourced IT services portfolios.

The United Kingdom witnessed a significant decline in outsourcing activity, primarily due to a decline in contracts signed by banking, financial services and insurance (BFSI) enterprises in anticipation of Brexit.

Western Europe saw increased activity driven by an increase in set-ups of engineering-focused GICs in Germany by manufacturing firms and an increase in IT-focused service provider delivery centers in the Netherlands given its skilled and multi-lingual talent pool and well-developed digital infrastructure.

Indian-heritage service providers increased product-focused investment, mainly driven by next-generation technologies and competition from global majors. For example, Genpact acquired RiskCanvas to access its suite of Anti-Money Laundering (AML) solutions, and Tech Mahindra partnered with Rakuten Mobile Network to open a next-generation (4G and 5G) software-defined network lab.

Market Vista™: Q2 2019 features a profile of enterprise spending on engineering R&D (ER&D) and the increasing adoption of outsourcing services in this industry segment. Business ER&D spending stood at over US$739 billion in 2018, with global engineering sourcing constituting 10.9%, or approximately US$80.5 billion. Engineering service providers command a 51% share of this sourcing segment, while GICs account for 49%.

“Since 2016, engineering service providers have grown at a compound annual growth rate of 16.5%, while GIC activity expanded only 6.8% in this same three-year period,” said H. Karthik, partner, Global Sourcing, at Everest Group. “We’re definitely seeing a trend here as enterprises such as Google, Samsung, and Ford explore engagement with engineering service providers and reap the benefits of offshoring. We’ll see this trend continue as service providers invest in building their capabilities in software engineering, mechanical engineering, and embedded engineering.”

Market Vista™: Q2 2019 also addresses major outsourcing deals, Global In-house Centers (GICs) developments, location risks and opportunities, and service provider developments (including latest developments on next-generation technologies such as digital services).

***Download a complimentary 20-page abstract of the report***

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.

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Panaya Is Back In Business At Infosys With Fresh Push | In the News

By | In The News

More than a year after Infosys put automation software company Panaya up for sale and failed to find a buyer, the Bengaluru based software services exporter has begun to invest in the Israel-based company again as it looks to make the Vishal Sikka-era acquisition successful.

“In the end, the long-term strategic value exceeded the price they were offered. By doubling down, they are attempting to repair an asset which does, in fact, fit well into their digital direction. They still have the significant learning curve to come down on how to run a product company next to a services company,” said Peter Bendor-Samuel, CEO of IT consultancy Everest Research.

Read more in Economic Times

Polska trzecia w usługach | In the News

By | In The News

Mimo to Everest Group, firma badawcza zajmująca się tym rynkiem, przewiduje, że Polskę czeka świetny rok – podaje “Puls Biznesu”.

“W latach 2019-20 liczba pracowników usług biznesowych urośnie o 12-14 proc., a Polska przeskoczy Kanadę i stanie się trzecią spośród najważniejszych lokalizacji na świecie, po Indiach i Filipinach” – oceniła dyrektorka w Everest Group Parul Jain cytowana przez gazetę.

Read more in londynek.net

Only 10% of Enterprises Have Effective Applications Strategy | Press Release

By | Press Releases

Transformative enterprises balance application development and modernization of legacy apps to drive agility, better customer experience

In an ideal world, enterprises that invest in application services capabilities would see a return in the form of application quality, operational efficiency and speed to value, but only 10% of enterprises are achieving this, according to Everest Group. The firm recently surveyed 194 C-level officers of global enterprises with revenues over US$1 billion and found that nearly 90% of global enterprises are unable to achieve the desired business outcomes of their application portfolios.

“Unfortunately, too many enterprises focus entirely on either investing in new technology stacks or blindly replacing their legacy applications, and this unbalanced approach is highly ineffective,” said Yugal Joshi, vice president, Information Technology Services, at Everest Group. “In contrast, 10% of enterprises are able to achieve significant improvement on their business metrics as a result of their applications strategy. What these leading organizations have in common is that they take a balanced view of their legacy and new application investments.”

Everest Group identified four more elements of effective applications strategies that leading organizations share:

  • Alignment of business and IT objectives
  • Outcome-oriented organizational structure
  • Robust talent strategy for legacy and new applications
  • Investment in strategic automation

These results and other findings are explored in a recently published Everest Group report: “Business Transformation: A Confluence of New and Legacy Applications – Annual Report 2019.” This report gives insight into the current applications services landscape, providing a fact-based analysis of buyer trends by geography, industry, and revenue size, and also offers an outlook for the application services market in the global ITS industry.

***Download a complimentary abstract of the report***

Other Key Findings

  • Application Services, which comprises application development, maintenance and testing services, accounts for approximately 32% of the US$539 billion global information technology services (ITS) outsourcing market, which is expected to continue growing at 2% per annum.
  • Application services are the fulcrum of the ITS industry, with 79% of ITS deals having some form of application services in the scope. Stand-alone application services deals have been growing consistently and contribute the largest share (68%) to the IT services market.
  • Enterprises are not shying away from making long-term investments. Deals with longer duration (longer than three years) have seen an increase at the expense of deals with shorter durations.
  • Average deal sizes in most verticals have plummeted, except for healthcare and life sciences, which saw a marginal increase in deal sizes.
  • Multi-region deal signings decreased sharply from 11% in 2017 to 2% in 2018.

About Everest Group

Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.

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Polska w światowej czołówce usług dla finansów i IT | In the News

By | In The News

Pod względem zatrudnienia w centrach usług biznesowych i IT większe od nas są już tylko Indie i Filipiny – podaje “Puls Biznesu”.

“W latach 2019-2020 liczba pracowników usług biznesowych urośnie o 12-14 proc., a Polska przeskoczy Kanadę i stanie się trzecią spośród najważniejszych lokalizacji na świecie, po Indiach i Filipinach” – powiedziała dyrektorka w Everest Group Parul Jain cytowana przez gazetę.

Read more in pulshr.pl

Digging Deeper | Azim Premji: The End Of An Era | In the News

By | In The News

A few days ago, Azim Premji, the executive chairman and MD of Wipro, announced his retirement. He will serve until the end of July. Media reports indicated that Abidali Neemuchwala will be appointed Managing Director of Wipro Ltd from July 31. Azim Premji’s son, Rishad A Premji, who is currently chief strategy officer, will be reappointed Whole-Time Director as well as Executive Chairman of the company. Premji will continue as non-executive director and founder chairman.

So while the digital portfolio paid off, accounting for about 35 percent of the total revenue, Wipro’s legacy business has not improved. An analyst pointed out that profitability was also affected as the company is still shedding unprofitable businesses. However, they are in a much more stable position now, compared to three years ago. Yugal Joshi, Vice President, Everest Group, a consultancy firm, said, “The key challenge for Rishad and Neemuchwala is to bring market-leading growth…They will also have to invest in talent who can orchestrate such large deals for them, understand clients better, enhance their thought leadership and value proposition for the new world.” This means that to keep up with changing trends, Wipro needs to balance next-gen services, which typically come at lower tickets and the traditional business, that usually yields large deals.

Read more in Money Control

Five Ways To Improve Your Digital Transformation Efforts From The Top Down | In the News

By | In The News

Most executives would probably say digital transformation is imperative. But they might be hard pressed to cite an example of a successful digital transformation.

Another reason I believe it’s hard to point to successful digital transformations is that few actually exist. Everest Group analyzed the digital transformations of more than 328 companies in 2018 and found that 73% failed to get a sustained return on their investments.

Read more in Forbes