Category: Blog

Deciphering Voice Networks – Unravelling an Often Misunderstood Aspect of Enterprise Networking

Enterprise buyers frequently misunderstand voice network services and incorrectly group disparate services under a single resource unit (RU). Accurately defining and pricing RUs is essential to ensure both the enterprise and service provider benefit. To shed light on this often-cloudy aspect of enterprise networking, read on.

Voice technologies like Private Branch Exchange (PBX) and Voice over Internet Protocol (VoIP) have been integral to enterprise operations for many years now. Network voice managed services can make up a sizable portion of an enterprise’s IT infrastructure outsourcing expenditure – consisting of up to 10% of the overall network managed services spend and as high as 5% of the overall IT infrastructure outsourcing spend.

Historically, outsourcing voice managed services has been trickier than network services. From our observations, enterprise buyers typically are unaware of the depth and nuances involved with voice services. Let’s explore this further in this blog.

While traditional network RUs like switches, routers, etc., are well understood and standardized, blind spots exist across the industry over defining RUs and pricing voice managed services. Enterprises often lack a comprehensive understanding of all the RUs involved in voice managed services and group disparate services under a single resource unit, such as voice endpoints.

This broad classification can create the following two types of challenges:

  1. An enterprise may overpay for services because the intricate details were disregarded.

An internal enterprise telephony service can have a significantly different price point and RU compared to an external-facing contact center. Service providers also have distinct price points for on-premises versus cloud-based versions of the same services.

For instance, prices for an on-premises CUCM-based VOIP system can vary widely from a Cloud Cisco Webex-based system. Similarly, an on-premises contact center will attract a completely different price point than one that is cloud-based.

Elements like voice gateways and session border controllers that require additional management effort and pricing can further amplify the complexity of voice networks. This creates a scenario in which the chances of applying an inappropriate RU rate are very high.

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Fig. 1. Cloud-based instance of the same technology can be priced differently compared to the on-premise instance

  1. Combining different services under one RU can also lead to scope misalignment and ambiguity regarding the responsibilities of the enterprise and service provider

This may cause issues during the actual delivery and lead to unanticipated renegotiation between the parties.

Appropriate RU definition and pricing is important because it ensures mutual value is created between the enterprise and service provider and neither comes away from the engagement feeling shortchanged.

Below are some common RUs and the associated pricing metrics that should be leveraged when outsourcing voice managed services:

Resource Unit

Pricing Metric

PBX System (Legacy) Per device
VOIP (such as CUCM-based systems)      Per endpoint
VOIP – Cloud-based phone systems      Per endpoint
Cloud contact center Per agent
Session Border Controller  Per device
Voice Gateway      Per gateway
Video Conference System  Per device
Video Conference System with Telepresence  Per device

Table 1. Commonly used voice network resource units

Enterprise buyers or service providers of voice managed services who want to better understand the pricing model and price benchmarks across geographies, please email [email protected].

Don’t miss our webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to learn major concerns, expectations, and trends for 2024 and provide recommendations on how to drive accelerated value from global services.

Exploring the Paradigm Shift of Experience Level Agreement-based Contracting and its Impact on Enterprises | Blog

Experience level agreements (XLAs) can foster service provider innovation and collaboration if structured with rewards for risks. While once a potent force, the XLA has lost its power as enterprises have transitioned to a penalty-only model, essentially reducing it to a standard service level agreement (SLA). Delve into the ramifications of this change and the potential dangers it poses to enterprises in this blog.

Employee experience is critical to the success of any organization. Companies that prioritize employee experience see higher employee engagement, lower turnover rates, and improved business outcomes.” — CIO of a Fortune 500 company

41 % Enterprises have identified improving EX as the top objective of workplace transformation1

Undeniably, experience holds immense power and significantly influences business operations. The introduction of the Experience Level Agreement (XLA) (refer to exhibit 1) offers a method to quantify and subsequently enhance intangible aspects such as Employee Experience (EX), capturing the interest of businesses and senior stakeholders worldwide.

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Nonetheless, recent trends suggest that the way enterprises approach XLAs has notably shifted, moving from a risk-reward model to a penalty-only one. The full implications of this change seem to be lost on enterprises. In this blog, we will delve into this shifting approach to XLAs, discuss the associated risks, and clarify why, before making this decision, enterprises should err on the side of caution.
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Deciphering the Significance of an Experience Level Agreement: Navigating the distinction between SLAs and XLAs

Recently, there has been some uncertainty about the role of XLAs, with suggestions that they might replace SLAs or represent its next evolutionary phase. It is important to clarify that XLAs are not intended to replace SLAs but rather to complement them. Understanding the differences between the two, as presented below, is critical.
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Demonstrating the intended version of XLA-based contracting

Before the introduction of XLAs, experience was pursued on a best-effort basis, with no means of measurement. However, now with enterprises contractually committing to XLAs, it placed the onus on SPs to take ownership of the user experience and actively seek avenues for improvement.

By formally incorporating XLAs into contracts, both enterprises and SPs established well-defined roles and responsibilities, fostering a collaborative partnership with mutual advantages.

Initially, XLAs operated under a risk-reward framework (refer to Exhibit 2), providing SPs with strong incentives to exceed predetermined performance standards. Penalties for non-compliance motivated SPs to improve service quality, ultimately benefiting enterprises. Furthermore, enterprises had the authority to impose penalties.

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The current landscape of the Experience Level Agreement risk-reward model approach

This risk-reward model seemed to be the ideal path for both enterprises and SPs to follow. However, macroeconomic factors and a heightened cost-saving focus led enterprises to push for a penalty-only XLA model to save costs.

While SPs were hesitant, they ultimately agreed to this model. This has created the scenario where SPs are offering penalty-only XLA contracting by default for all digital workplace deals.

However, SPs diluted the XLA-based contracting construct by accepting lenient performance benchmarks and minimal penalties, eliminating their motivation to work beyond the agreed-upon baseline benchmarks. Additionally, SPs began templatizing XLAs, inadvertently diluting their fundamental intent and purpose.

The change in XLA contracts has ultimately led to a pyrrhic victory for enterprises. Although they might have succeeded in eliminating rewards in the short term, overall employee experience and innovation may suffer in the long term.

In essence, this has now become dangerous for enterprises, as illustrated below:

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The way forward

This shift in approach diminished a once powerful tool in the hands of the enterprises, reducing XLAs into just another SLA, transforming a mutually beneficial partnership for growth into an environment fostering mediocrity.

Hence, enterprises must exercise caution in their approach towards XLAs. Instead of viewing XLAs as a means to cut costs or penalize providers, they should view them as a collaborative avenue for fostering innovation and driving growth.

Everest Group will continue to follow the evolution of the experience level agreement. To discuss your XLA journey or for help within an XLA co-creation workshop, please reach out to [email protected] and [email protected].

See our webinar, Forward-looking Sourcing for 2024: Outsourcing, Location, and Pricing Strategies in APAC, for 2024 outsourcing portfolio strategies.

1. Based on CXO responses from 442 enterprises with revenue greater than US$1 billion

2. Everest group research with 50 digital workplace providers

Source:  Everest Group (2023)

Everest Group’s AI Top 50™ List: Who’s Leading a Decade of Disruption? | Blog

With its first-ever AI Top 50™ list, Everest Group recognizes the exceptional business performance of AI technology providers globally. This valuable ranking serves as a useful tool for enterprise decision-making and provider comparisons. Continue reading to learn more about the leading AI-first providers featured, as determined by Everest Group’s comprehensive research.

Everest Group has launched its inaugural AI Top 50 list of the most prominent technology providers worldwide that prioritize artificial intelligence (AI) at their core. The list was determined by evaluating rigorous, objective criteria, which include AI revenues, total funding secured, share of funding received in the past two years, and company valuation. This vital report will be released annually.

See Everest Group’s Top AI 50 list.

Why is the Everest Group AI Top 50 important today?

In the past decade alone, over 5,000 AI technology providers have emerged with different specializations across various domains and geographic regions. The remarkable growth underscores AI’s critical role in shaping the future of technology and its enduring impact on daily lives. Recently, the introduction of large language models (LLMs) has further sparked an innovation wave across various industries, shaping interactions and decision-making and revolutionizing everything from chatbots to content creation.

With this rapid progression in the past few years, and even months, businesses across all industries are rushing to gain insight into the technology to stay competitive as it reshapes industries, streamlines processes, and redefines interactions between humans and machines.

The list will assist enterprises in identifying AI technology providers that have achieved notable scale. Businesses, investors, and industry professionals can gauge the providers’ competitive positioning and potential in the ever-evolving AI industry. Additionally, the ranking is a resource for AI-first technology providers to benchmark themselves against industry peers.

How does Everest Group define AI?

To define the terms in the report, we used a multi-faceted approach, drawing on a combination of exclusive proprietary data, including insights gathered directly from AI technology providers. Along with that, the methodology incorporates publicly accessible information such as reported revenue, total funding, and valuation data obtained from publicly accessible sources. This thorough methodology ensures the accuracy and breadth of the data.

How is the Everest Group AI Top 50 list determined?

From a database of 2500-plus AI providers, we narrowed the pool to 250 firms after initial preliminary screening. The selected AI technology providers were then evaluated and positioned based on a set of qualification criteria. The research findings provide a comprehensive snapshot of their standing in the dynamic AI landscape.

The AI Top 50 list represents AI technology providers that meet the following criteria:


All the companies listed develop and integrate AI as a central and indispensable component of their products and solutions. In other words, their offerings would be fundamentally incomplete without AI.


The featured providers develop and offer software-based AI solutions as their primary offering, meaning their core focus revolves around delivering AI through software applications.

Business-to-business (B2B) focus/offerings

The providers on the list tailor their software products and solutions to meet the technology needs of other businesses.

With AI becoming a more essential component of business and individuals’ daily lives, the Everest Group AI Top 50 list empowers organizations to navigate this dynamic field. See the Everest Group AI Top 50 list.

To learn more about the 2023 Everest Group AI Top 50, reach out to Priya Bhalla, [email protected], Vishal Gupta, [email protected], and Niraj Agarwal, [email protected].

Contracting for Value: Balancing Expectations and Reality in Outsourcing Engagements | Blog

Everest Group’s Strategic Engagement Reviews (SERs) reveal several key trends that hinder enterprises from realizing maximum value from business process services (BPS) contracts. As enterprises rethink their outsourcing strategies, reevaluate current contracts, and rebalance work, these findings are highly relevant. Read on for insights into the research.

Connect with us to discuss BPS contracting.

Recently, when reading the Aesop fable The Tortoise and the Hare to my toddler niece, I was struck by its resemblance to the current state of outsourcing engagements. During the pandemic, service providers were in emergency mode to ensure business continuity for their clients, which increased satisfaction scores in 2021. However, providers faltered in maintaining the same momentum going into 2022 during the period of the Great Resignation. Providers were not prepared for the sudden large-scale attrition in the services industry, resulting in inconsistent service delivery quality and, consequently, impacting client satisfaction.

Decreased buyer satisfaction from key issues study

Fast forward to today, we see the recent banking collapse already casting a haze over the business landscape. As the saying goes, “Where there’s smoke, there’s fire.” Enterprises are investing more cautiously, given the current cost pressures along with fears of an economic slowdown and uncertainty. With every dollar being scrutinized, enterprises are rethinking their outsourcing strategies and evaluating the value realized from their outsourcing engagements. Let’s explore this further.

Key observations from strategic engagement reviews (SERs)  

Over the past year, Everest Group has supported many leading enterprises in evaluating their outsourcing contracts across different functional areas and benchmarking them against industry standards by leveraging our proprietary Strategic Engagement Review (SER) framework. The framework enables 360-degree assessment of outsourcing engagements with analysis across various dimensions, including solutions, pricing, contract terms, provider delivery and performance, and transformation.

While most of these contracts remain operational with transactional/tactical processes, outsourcing complex and upstream work has increased. We also observed the scope is expanding into adjacent and/or non-traditional areas such as risk management and compliance and environmental, social, and governance (ESG). These advancements are the result of joint efforts by enterprises welcoming providers as strategic partners and providers building robust capabilities to support the judgment-intensive processes.

Strategic Engagement Reviews (SER) framework

While benchmarking commercials remains a high priority for enterprises, the focus is shifting to understanding how to enhance the value from outsourcing engagements (beyond cost) and transform operations through best practices and digital adoption.

Below are a few observations from these engagements:

  • Most of these contracts inaccurately reflect client satisfaction due to irrelevant tracking metrics and unclear communication between parties regarding outcomes
  • Most of the contracts lack innovative commercial constructs that often impede full value realization out of the engagement
  • Both enterprises and providers need to fulfill certain existing gaps to embrace and implement more mature transformation models
  • This can be achieved by considering dedicated change management practices as the heart of any outsourcing engagement

Are performance dashboards merely a facade?

Indeed, performance dashboards tracking Service Level Agreements (SLAs) look as green as the proverbial “grass on the other side,” but the reality is not as rosy for a myriad of reasons. This phenomenon is often called the “watermelon effect.” Much like a watermelon that is smooth and green on the outside, hiding a red core, service metrics can be on target on the surface, but underneath, they may indicate poor service delivery and enterprise dissatisfaction.

Unclear communication regarding outcomes that lead to contract value leakage is the primary reason for this occurring. With the focus on client-centricity and winning deals, providers often commit to almost all client demands without properly clarifying how the “value gains” will be achieved. This leads to incongruity between the implementation and the client’s vision. For instance, productivity gains can be achieved either through digital resources or full-time equivalents (FTEs). Failing to mention these intricacies often results in difficulty in agreeing on the realized value after the implementation.

Aligning on well-defined outcomes won’t necessarily lead to maximum value realization without identifying and tracking the right metrics to govern the service delivery quality. We often find contractual SLAs that measure activity and workflow steps without aligning with the strategic business outcomes. Measuring irrelevant metrics may dilute the service level credit mechanism, which determines the provider’s fees tied to SLAs.

The holy grail for measuring outcomes and avoiding excess provider payouts is tracking relevant metrics that truly represent the end business goal. For example, if the goal is process standardization, then operational metrics such as payment processing accuracy might be relevant. For more mature organizations looking for large-scale transformation for topline improvement, outcome-oriented metrics, such as Days Sales Outstanding (DSO) could be better.

Sharing is indeed caring – the need for gain-sharing commercials

Enterprises often are dissatisfied with providers’ lack of proactiveness in bringing in innovation for transformation. This stems from the prevalence of the typical time-and-value commercial construct, which doesn’t incentivize the provider to exceed contractual commitments.

By embracing a gain-sharing pricing model that incentivizes providers to bring in more value-adds, enterprises can ensure providers have skin in the game. This approach not only fosters collaboration between the provider and enterprise but also builds an alliance as both parties work hand-in-hand towards a common goal. Moreover, this strategy further establishes the pathway for improved trust within the relationship, which is essential for the provider to act as a strategic partner.

It takes two to tango! Two to transform!

To draw a parallel about these engagements, a contract is like two rowers wading a boat through a turbulent river – it takes joint efforts to row through the perilous journey to reach the shore safely! Likewise, the onus of creating a sustaining long-term outsourcing relationship with maximum value realization lies with both the provider and the enterprise.

While the lift-shift-fix transformation model appears to be the most prevalent, there are profound reasons more mature transformation models are not being implemented. Although enterprises want providers to proactively pitch their technology solutions, the reality is that the willingness to embrace these contributions is limited! The reason enterprises are reluctant to adopt provider technology beyond point solutions is simply because this typically entails heavy provider ownership of the technology infrastructure. Consequently, enterprises want to avoid operational dependency that might increase future switching or termination costs.

On the other side, we also see providers being a bit risk-averse about challenging the in-house enterprise technology landscape to maintain good relationships with their clients by avoiding ruffling the features of the enterprise infrastructure!

While this type of arrangement minimizes provider intervention and operational dependency, it also limits cost efficiencies and business value that comes from leveraging provider technology. True value realization from outsourcing engagements will be achieved when enterprises provide more ownership of processes, visibility into organizational data, and greater flexibility to operationalize providers’ transformation initiatives. Concurrently, providers need to outline a clear transformation roadmap for enterprises, enabling them to visualize their journey ahead.

It’s high time that we see the “C” in change management as an underrated pivot to outsourcing

The change management aspect of resources is often underestimated in outsourcing relationships. Enterprises report that poor change management initiatives from providers can lead to disgruntled employees, resulting in employee attrition that indirectly affects the outsourcing project quality. Therefore, it is important to take a more proactive and structured approach to increase employee engagement and productivity in the outsourced service function, rather than approaching change management reactively and on an ad hoc basis.

What is the best way forward?

As enterprises plan for renewed growth, it will be intriguing to see how the outsourcing landscape evolves amidst the anticipated geopolitical unrest and recessionary environment. Some questions we’ll be following are: Will organizations need to rebalance work? Will increased provider rates challenge the cost advantages of outsourcing? Will large-scale transformation initiatives take a back seat to increased demand for short-time-to-value products in the near term?

To benchmark your current outsourcing contract, contact Everest Group. For more information, reach out to Prateek Singh, Practice Director, BPS, and Asmita Das, Senior Analyst, BPS.

Join our webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to discover insights into the current perspectives of IT-BP industry leaders and the major concerns, expectations, and trends for 2024.

The Talent Market’s Tight but the Candidate’s Not Right | Blog

I’ve never seen such a mismatch of supply and demand in the shared services space. While new enterprises are adopting the model at what seems to be an unprecedented pace post-COVID, at the same time, there are a surprising number of experienced shared services professionals out on the street. Is this down to an imbalance of skillsets or seniority? Have desirable capabilities in the GBS world morphed as the model has matured? Or are some of our most talented and tenured industry colleagues just shooting themselves in the foot when they go into the job market?

I suspect it’s a bit of all three…

Today, I had another two requests for talent discussions, giving rise to the belief that shared services is in a period of unprecedented career mobility. The topics are either about the capabilities necessary to succeed in a GBS career, concerns about future-proofing the organization, succession planning or those give-it-back chats with seasoned professionals looking for their next gig, or guidance about how to navigate their careers (AKA, “I am looking for a new job”).

Most of my convos are with folks in the last category. Finding themselves out in the world after a few years in a seller’s market is tough. And there are reasons for this: firstly, some of the mobility is due to the fact that when the last job was accepted, the candidates lost sight of how it would affect their career progression. In some cases, during the COVID career feeding frenzy, the hiring officer grabbed the first professional they could attract, without thinking through the capabilities actually required to do the job. Or blame remote work; many who thought “virtual was forever” are finding themselves asked to move, or once they work in person with their colleagues, find they didn’t join the organization they thought they did.

As a result, the market is flush with talent, and much of it is a mismatch with requirements. Job seekers are having a hard time wrapping their heads around stabilizing compensation, in-office requirements, and more selectivity on the part of the hiring officer.

This is not to say that there aren’t great shared services roles out there—but rather that the hiring calculus is changing, leaving some candidates finding that days outstanding without a job may be getting longer and longer.

As someone who looks for patterns in almost everything, I’m starting to see the same search scenarios playing over and over. Is there a way to break the pattern and find the right role? Absolutely—with a bit of self- and market-awareness.

How should a shared services job hunter up their chances for success?

  • Focus on the how, not just the what: All too often, I see professionals touting savings that they achieved in their last jobs as their sole calling card. But smart hiring officers now know what shared services should aspire to deliver;  now they want to know how it was delivered. Did the professional change the delivery model? Streamline operations by changing the role of the GPO? Upskill talent who needed development? What levers created success? How were they orchestrated? And will the same playbook work in a new context?  In the interview process, spend time discussing how you delivered value.
  • Cease the bragging: The shared services industry is healthily skeptical about the ability of an individual hero to deliver the goods. Don’t say you saved the enterprise $50 million in nine months from a cold start because that’s likely not true. Likely, any change or savings was already in motion.
  • Manage your brand: It’s a self-referencing industry—no one has to hold a formal reference call to find out a lot about a job seeker. It’s a very small world. Everyone knows everyone and has an opinion about whether they are skilled/good leaders/self-aggrandizers or simply whether their track records have legs. It’s always a good idea to ask someone trusted to tell you how the market perceives you—which can be painful but instructive.
  • Decide what gets you up in the morning: Too often, I hear a litany of “I can do this and this and this,”… which equates to every role in the shared services roster. It’s not up to the hiring officer to pick the role for a new member of the team; decide what you are good at and where you can best add value. When a candidate is hedging their bets to secure a job by saying they are an expert across the board, they are looking for a job, not managing a career.
  • Don’t believe the old saw that smart people can do anything: All too often, colleagues apply for jobs for which they have limited qualifications. Never been a transformation leader? Don’t apply for a role where success is based on a distinguished track record. Only led finance shared services in one country? Likely, a role as a global business services leader is not in your gift in the next move.
  • Have a narrative for short-term gigs: While the days of working for one company in excess of five years at a senior level are usually over, all too often, those looking have tenures of 18 or even nine months in a job, then on to the next for another short stint. Unless these gigs are bona fide interim roles, hiring officers look askance at rapid job hopping. Make sure you have plausible explanations for short tenure and references that can honestly back you up.
  • Understand the power of recency: Often, someone who held a shared services role four or so years ago, then followed other pursuits, perhaps in a consulting firm or provider, may think it’s easy to flip a switch and reenter the shared services fold. It isn’t. The shared services industry changes so fast that recency—what did you deliver in your last role that helps me believe that you are current and can do it again for me—is a key evaluation criteria.
  • Stay engaged even if it’s not as an employee: The good news is that it’s no longer 1990 when folks either had a job or were relegated to the ranks of the unemployed. The shared services industry knows that tenures can be short due to the nature of the model, and, through no fault of one’s own, mobility is often the name of the game. It welcomes participation. Post on LinkedIn. Grow networks. Keep current with developments.
  • Be prepared to go back to the office: The days of working in sweats are somewhat over. Increasingly, enterprises are requiring shared services leaders to spend time in the office every week. The days when every hire was virtual are over; as a result, relocation is now in order for many roles. And please don’t expect a company to fly you in every week at their cost; it rarely happens.
  • Acknowledge that global mobility is dropping: On paper, shared services harnesses the power of a global talent pool, but the reality is somewhat different. Visas are hard to get;  many employers won’t even try. Relocation costs are skyrocketing. And the days of juicy expat packages are all but over. Employers tend to disregard candidates several continents away. If an international posting is a goal, for all but a few shared services leaders,  it’s usually easier to get an internal transfer than a new international role.

And last, a measure of humility is in order. Too many seekers portray themselves as the best thing since sliced bread, erroneously thinking it’s the right way to snag a juicy role. The truth is, the marketplace now understands that shared services success is a team sport; while leadership sets the North Star, the business context in each company is unique, and the interdependencies between roles are what drives shared services success. Be seen as a shared service leader who fosters successful models. It always works.

Good hunting!

Egypt: A Safe Bet in the MEA Region in Unstable Times? | Blog

Given the current unrest in the Middle East and Africa (MEA) region, Egypt can potentially be a reliable choice for businesses seeking stability. Egypt’s support for US interests and its impartial stance in conflicts make it an appealing option for ally-shoring. To better understand the pros and cons of selecting Egypt for service delivery now, keep reading.

The MEA region is currently experiencing significant turmoil characterized by ongoing conflicts in Syria and Yemen, strained relations between Israel and Iran, and persistent tensions between Lebanon and Israel.

The Israel-Hamas conflict that began on October 7 has further intensified the regional instability, leading many global companies to temporarily close offices or implement remote work policies. For example, Bank of America closed its Tel Aviv office, while Citigroup and JP Morgan Chase instructed employees to work remotely.

The prevalence of gray swan events in the MEA region has noticeably risen and become more common, leading to the increased likelihood of unforeseen events. As a result, organizations need to find innovative solutions to maintain stable operations in the MEA’s complex geopolitical landscape.

Considering this challenging situation, a compelling hypothesis emerges: Egypt could be a viable alternative for organizations seeking stability. Owning to its neutral stance in the conflict, Egypt has remained stable with no reported service delivery disruptions or harassment of foreign nationals or tourists. To navigate this complex landscape, Egypt must balance its domestic politics – the geopolitical game of thrones – while pursuing economic growth.

From a global services perspective, Egypt offers several advantages. It has become a key player in the MEA region, attracting various organizations from diverse sectors. Egypt’s service delivery value proposition includes a large, educated, and multilingual workforce of approximately 250,000 full-time equivalents (FTEs), capable of supporting over 20 languages in both voice and non-voice business process services (BPS).

In the relatively less mature MEA region, Egypt stands out as a global services delivery hub, hosting global enterprises and providers offering diverse services, including customer experience management (CXM). Egypt is also expanding its services into IT and technology solutions, exemplified by Luxoft opening a center in New Cairo in the third quarter of 2023.

Additionally, Egypt can serve as a strategic satellite hub for companies seeking to diversify from potentially risky locations in the MEA region. This is primarily due to sharing the same time zone with Israel, which facilitates collaboration.

Moreover, Egypt is experiencing growing demand for BPO talent, surpassing other prominent offshore/nearshore locations, as illustrated below, which demonstrates its increasing delivery capabilities.


Learn more about Everest Group’s artificial intelligence (AI)-powered insights platform, Talent Genius.

The complications with Egypt

At the same time, Egypt possesses its share of economic and political challenges. The country has been confronting multiple macroeconomic obstacles as the economy recovers from the double whammy of reduced tourism due to COVID-19 (impacting a massive income source for the country) and the global uncertainties exacerbated by the Russia-Ukraine conflict.

In 2022, the Egyptian Pound lost approximately 50% of its value and remained one of the worst-performing currencies in the first half of 2023 due to a lack of foreign reserves. It is expected to further depreciate by the end of 2023, putting pressure on policymakers to devalue it even more.

Other economic indicators paint a grim picture, with urban consumer inflation reaching 38% in September 2023. Egypt’s high debt-to-GDP ratio led Moody’s to downgrade its government bonds to the substantial risk Caa1 bracket, seven rungs into junk territory in October. The International Monetary Fund (IMF) has imposed stringent terms for Egypt to address the economic crisis, including selling state assets and further currency devaluation.

This presents a challenge for Egyptian policymakers, as upcoming year-end elections may make currency devaluation and asset sales unpopular with the public, even though Abdel Fattah El-Sisi is predicted to secure a third term as president.

Ally-shoring – a prudent choice during uncertain times

Against the backdrop of these economic woes, global geopolitics have been marked by black swan events since 2020. These include the Hong Kong national security law, the COVID-19 pandemic, the Russia-Ukraine conflict, and the ongoing Israel-Hamas tensions in the MEA region.

This has made the already complex MEA region more challenging to navigate. Ongoing conflicts in countries like Syria and Yemen and the Israel-Hamas dispute further complicate matters. As a result, the much-anticipated Israel and Kingdom of Saudi Arabia peace deal is on hold, and the United States’ detente with Iran, particularly regarding oil supplies, faces threats that could impact the global economy.

In response to these uncertainties, organizations are turning to “ally-shoring” as a strategy. Ally-shoring involves establishing delivery centers in allied nations to build lasting relationships that protect both economic and national security interests. U.S. companies have increasingly embraced this approach, with Mexico in Latin America and Portugal and Spain in Europe becoming popular choices. The Ukraine conflict and trade tensions with China have partly contributed to this shift.

The situation could potentially result in a higher penetration of US-headquartered companies in Egypt in the near and medium term. Let’s explore the reasons for this possible trend:

  • First, a longstanding military alliance exists between the U.S. and Egypt, facilitating the smooth movement of US military assets via the Suez Canal
  • Second, shared concerns about Iran’s regional influence and its support for proxy terrorist groups contribute to this choice
  • Third, Egypt’s limited likelihood of actively participating in conflicts, given its struggling economy and dependence on Western economic aid, positions it as a stable option
  • Lastly, Egypt’s proactive efforts to attract companies, particularly in the IT sector, as part of its 2030 vision, have led to impressive growth, with a 16.7% increase in 2021/2022 and a 5% contribution to GDP, despite global economic challenges. These growth indicators are driven by digital infrastructure investments and improved business conditions, making Egypt attractive for companies looking to establish centers in the region

In the near future, Egypt’s business environment appears stable, although concerns persist related to its neutral stance in ongoing conflicts, potential refugee issues, and economic challenges. Nevertheless, the overall risk to business operations remains low. Pro-Palestine protests in Egyptian cities have been peaceful and have not disrupted daily activities. Egypt’s role as a mediator between the West and the Arab world through the Rafah border is noteworthy, but its likelihood of becoming a major player in conflicts remains low.

The outlook

Egypt’s alignment with US interests and its neutral stance in conflicts make it an attractive ally-shoring option. However, businesses should be mindful of Egypt’s economic challenges, including a depreciating currency and high inflation, exacerbated by political pressures due to upcoming elections. Despite these threats, Egypt offers a strategic advantage, supported by a growing global services sector and government initiatives for business development in these uncertain times.

Everest Group’s dedicated team of analysts tracks 30-plus cities in India and more than 300 cities globally from a global services perspective. If you have questions or would like to discuss global services destination topics, please reach out to [email protected] or [email protected].

Contact us to learn more about popular global services locations.


Enterprise Generative AI Adoption: Risk Evaluation for Competitive Advantage | Blog

The adoption of generative AI technology poses four major types of threats to enterprises: data privacy and security, reliability and explainability, responsibility and ownership, and bias and ethics. By assessing current risk levels and implementing practices, tools, and systems to manage these challenges, enterprises can realize the most value from this transformative technology. Learn more about evaluating generative AI risk to gain an edge in this blog.  Learn more about our Generative AI Risk Assessment.

Generative Artificial Intelligence (AI) has captivated popular imagination like nothing else, promising a future filled with endless possibilities. For the first time, this technology can create art, synthesize human voices, and generate human-like responses to questions.

Open AI’s ChatGPT triggered the mainstream adoption of generative AI, racking up more than 100 million monthly active users within just two months of its launch. Today, more than 300 startups are developing various generative AI-related applications.

Enterprises globally have recognized generative AI’s emergence as a watershed moment and are scrambling to identify the best way to leverage its capabilities. Numerous use cases across industries and functions have already emerged and are being piloted.

Many technology providers have incorporated generative AI as an integral part of their solutions, and others are forging relevant partnerships to jump on the bandwagon.

However, while many organizations are excited about long-term generative AI adoption, few fully consider the potential risks. In this blog, we will delve deeper into the importance of generative AI risk assessment.

To realize maximum value from generative AI adoption, enterprises must undertake a structured incremental approach (as illustrated in Figure 1). This framework involves prioritizing use cases, assessing adoption risks, identifying suitable providers, adapting existing operating models, providing effective governance and change management, and reviewing performance against expectations.

Figure 1: Generative AI adoption framework
Figure 1: Generative AI adoption framework

Generative AI risks

Generative AI’s ease of usage has accelerated its adoption, highlighting both its value and its risks. Broadly, generative AI risks can be grouped into four categories: data privacy and security, reliability and explainability, responsibility and ownership, and bias and ethics (as shown below in Figure 2).

Figure 2: Generative AI risk categories
Figure 2: Generative AI risk categories

Let’s look at how these risks typically manifest and some examples:

Data privacy and security: Regulatory fallout from undisclosed data collection and retention is a key issue with generative AI models. This stems from the practice of developing AI models that can address a broad range of topics, rather than training data for a specific purpose. Further concerns include employees inadvertently sharing confidential enterprise data through user prompts or training data. In some cases, unfiltered prompts may allow employees access to data beyond their purview. From a cyber threat perspective, generative AI raises the risk of data breaches through malware, phishing, and identity theft

Samsung employees pasted confidential source code into ChatGPT to look for errors and optimize the data, inadvertently adding it to ChatGPT’s training data pool that can possibly be accessed by others.

Reliability and explainability: The quality and representativeness of training data greatly influence the accuracy of output produced by generative AI models. Deficiencies in the training data manifest as errors in generated content that may have serious legal ramifications beyond eroding customer trust. Furthermore, in the absence of required information, generative AI models may even fabricate information to answer a question. This leads to a false sense of expertise and can mislead the average user. Without a confidence score that estimates the likely accuracy of the generated content or some other equivalent mechanism, enterprises will need to develop and operationalize fact-checking of AI-generated content

During Microsoft’s Bing chat demo, the search engine was asked to analyze earnings reports from Gap and Lululemon and in comparing its answers to the actual reports, the chatbot missed some numbers and made some up. 

Responsibility and ownership: The legal ownership of a piece of content produced by generative AI raises complex questions. Does it belong to the enterprise that licensed the generative AI product or the company that owns the generative AI product? Moreover, do individuals or organizations whose content was used to train the AI model partially own any subsequent content produced by the AI? These legal quandaries currently lack clear answers. An evident problem is generative AI producing output that contains distinct and identifiable pieces of Intellectual Property (IP) owned by others. This can lead to potential legal fallout for the entity that deployed the generative AI model. Enterprises need to work with their legal teams to evolve their IP management amid widespread generative AI adoption

“Zarya of the Dawn” is a graphic novel written by Kris Kashtanova who used an AI based image generation software called Midjourney to create illustrations for the novel. After having initially given full copyright protection for the novel, the US Copyright Office later restricted the copyright to only the text and the arrangement of the illustrations and not the illustrations themselves. The justification provided was that copyright protection could only extend to human creators. 

Bias and ethics: An AI trained on biased data will propagate those biases, potentially leading to the generative AI producing discriminatory and stereotypical content. Failing to identify and preemptively remove such content through effective moderation can lead to severe reputational and legal ramifications for the enterprise and the generative AI provider.

Widespread generative AI adoption has the potential to ramp up carbon emissions from training and operating AI models. This can have significant implications for an enterprise’s Environmental, Social, and Governance (ESG) goals

In a study conducted by Bloomberg on Stable Diffusion (an AI-based text-to-image software), the rendering of more than 5,000 images for people with high- and low-paying jobs was full of racial and gender stereotypes. The results indicated men and individuals with lighter skin tones accounted for most high-paying roles.

How can enterprises assess their risk exposure to generative AI?

While the risks emanating from generative AI usage are notable, its benefits are too significant for enterprises to ignore. Consequently, enterprises that can leverage generative AI’s strengths while effectively mitigating its risks will outperform their peers. To effectively draw up a risk management plan for generative AI, enterprises need to first assess their current risk exposure to generative AI.

Everest Group has developed a multi-dimensional risk assessment framework (see Figure 3) to help enterprises take stock of their current risk profile for generative AI adoption. This framework is deployed through a tool that comprises 21 questions spanning the four risk categories mentioned above.

Figure 3: Everest Group’s generative AI risk assessment framework
Figure 3: Everest Group’s generative AI risk assessment framework

Responses provided by the enterprise across the four categories are weighted and aggregated to arrive at a risk score (see Figure 4).

Figure 4: Generative AI risk assessment outcomes
Figure 4: Generative AI risk assessment outcomes

Evaluating the risk exposure from generative AI is a necessary step to successfully implement and leverage generative AI to create value for customers. Incorporating appropriate risk management practices, tools, and mechanisms in the generative AI ecosystem can instill the confidence needed to take bigger bets, create differentiation, and fully harness this transformative technology.

Deploy our Generative AI Risk Assessment Tool. To discuss this tool and generative AI adoption strategies, please reach out to: [email protected], [email protected]; [email protected]; [email protected]; [email protected].

Check out our 2024 Key Issues webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to learn the major concerns, expectations, and trends for 2024 and hear recommendations on how to drive accelerated value from global services.

Where Sustainability Unites: Climate Week NYC, UNGA, and CGI | Blog

Everest Group proudly participated in three noteworthy global sustainability events in Manhattan this September: Climate Week NYC, the 78th session of the UN General Assembly (UNGA 78), and the Clinton Global Initiative (CGI) annual meeting. These events centered around economic inclusion, climate change, health access, biodiversity, and other critical concerns. Read on for insights from our analyst team, who attended and presented at these pivotal gatherings that fostered collaboration and dialogue with the international community to advance sustainability efforts.

Climate Week NYC

This year’s Climate Week NYC was the largest climate event globally, bringing together 500 events and uniting over 10,000 people with a theme of “We Can. We Will.”

The week-long event from September 17-24 focused on accelerating action to achieve net zero emissions by 2050 and building a more just and equitable society. We are seeing businesses across industries planning their paths to net zero, while also focusing on the “people” aspect of sustainability by actively working toward diverse and inclusive workforces and social and economic equity.

Climate Week NYC presented many opportunities to engage with like-minded individuals and organizations actively working towards a more sustainable and resilient future. Capgemini invited Rita Soni, Everest Group Principal Analyst, Impact Sourcing and Sustainability Research, to speak on a panel about technology companies’ unique role in addressing biodiversity entitled, Data & AI for Climate: Biodiversity Buzz.

Representatives from governments, businesses, and civil society convened to discuss innovative solutions and concrete commitments to reduce carbon emissions, preserve ecosystems, and transition to a low-carbon economy.

Climate Week NYC serves as a powerful reminder that despite the immense challenges of climate change, an incredible amount of collective will and ingenuity dedicated to finding solutions exists.

At Everest Group, we assist enterprises by guiding them toward forward-thinking strategies such as the circular economy. This innovative model of production and consumption focuses on making the most of resources. By adopting frameworks like the circular economy, enterprises can effectively handle material resources, minimize waste, and seamlessly incorporate sustainable principles into their operations.

Additionally, we are helping businesses embrace crucial initiatives like carbon accounting and Environmental, Social, and Governance (ESG) reporting. Companies are increasingly prioritizing ESG reporting to manage risk, enhance their reputation, and comply with regulations.


During the UNGA meeting, global leaders reaffirmed their commitment to the Sustainable Development Goals (SDGs) adopted by the United Nations in 2015 to work toward creating a more equitable, sustainable, peaceful, and prosperous world.

While leaders are intensifying efforts to reach the SDGs by 2030, global progress has been hindered by multiple critical issues, such as the ongoing pandemic, the war in Ukraine, and the looming climate crisis. However, the imperative to achieve these goals has never been more pronounced.

Our analysts participated in global and domestic discussions, including two particularly impactful events:

  • Delivering Development: Journeys, Directions, and Lighthouses, hosted by the Permanent Mission of India to the UN, highlighted recent development progress and considerable efforts to meet the SDGs.
  • The National Wildlife Federation hosted the premiere of the documentary film, Where it Floods: Planting Hope in Coney Island. The film and panel discussion covered the devastation from Superstorm Sandy in October 2012. It also showcased local non-profit organizations’ work with children to restore the waterfront while raising climate change awareness.

CGI Annual Meeting

Held during UNGA and Climate Week NYC, CGI’s annual meeting focused on the need to “Keep Going.” CGI is a “community of doers taking action on the world’s most pressing challenges, together.”

Everest Group shared the industry’s progress on its 2022 commitment to grow the impact sourcing market to half a million people in three years. Impact sourcing is a growing practice where businesses intentionally train, hire, and nurture people from a wide range of excluded and marginalized groups, such as people with disabilities, the long-term unemployed, individuals from rural/forgotten communities, and veterans.

We proudly announced that in just the first year of the commitment, the global services industry is within striking distance of the three-year target. The number of impact workers has increased from 350,000 to at least 430,000, representing faster growth than traditional hiring, even during this tumultuous year of economic uncertainty.

Everest Group’s pledge to inclusive talent

To uphold our pledge, Everest Group has enlisted support and partnership pledges from more than 50 prominent global employers, service providers, and enabling organizations. Together, we are embarking on a collaborative mission to enhance lives through impact sourcing. With the backing of CGI, this group is poised to expand its reach and ultimately impact more lives by bringing employment opportunities to those affected by discrimination, inequality, or systemic poverty.

Why impact sourcing is good for business

What makes this initiative so remarkable is that Everest Group’s research shows impact sourcing has mutual benefits for workers, employers, and buyers. For impact workers, this endeavor opens doors to newfound opportunities and a sense of purpose. As they engage in meaningful employment, workers not only gain valuable skills and financial independence but also experience personal growth and empowerment.

Companies that employ impact workers are making strides toward achieving their sustainability objectives and witnessing increased sales as consumers seek products with a greater social purpose. Moreover, companies are enhancing their employer brand proposition as potential employees are drawn to organizations that champion causes beyond profits. By prioritizing impact sourcing, businesses not only attract top talent but also inspire existing employees to be more engaged and committed to their work.

How your company can get involved

With the implementation of evolved impact sourcing practices and performance indicators, impact sourcing’s true potential lies in its widespread adoption at scale beyond the initial commitment. To fully harness its power:

  • Buyers must actively demand impact sourcing with timelines for growth
  • Service providers and enterprises need to:
    • Integrate inclusive talent strategies across locations and job roles
    • Establish a growing ecosystem of skilling institutions, recruitment firms, non-government organizations (NGOs), and government agencies to provide the necessary support

As emerging technologies like generative Artificial Intelligence (AI) and other yet-to-be-developed advancements become mainstream, the talent market will face both opportunities that will expand certain roles and reduce others. Impact sourcing can provide a viable workforce solution for the jobs of tomorrow.

Everest Group looks forward to partnering with employers, service providers, and recruitment and sourcing firms to leverage impact sourcing’s many opportunities and promote the benefits of a globally relevant and inclusive talent model. To join the movement and make a difference to individuals, families, communities, and businesses, learn more here.

Check out our 2024 Key Issues webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to learn the major concerns, expectations, and trends for 2024 and hear recommendations on how to drive accelerated value from global services.

12 Steps to Effective Change Management in Global Business Services | Blog

Global Business Services (GBS) organizations are at the forefront of driving transformation and efficiency across enterprises. However, they often fall short in one critical aspect: change management. Learn why GBS leaders must begin implementing change management strategies today, starting with a comprehensive 12-step program.

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Change is inherent in GBS, affecting processes, technology, relationships, and many other aspects. To succeed, GBS organizations must focus on helping stakeholders understand and embrace the change that the GBS model continually creates.

Everest Group research reveals that GBS leaders recognize the pivotal role of change management, with 75% of GBS organizations viewing change management as critical. Unfortunately, many struggle to manage change effectively or just don’t know how to do it well, leading to significant, long-term challenges.

To get to the bottom of why GBS organizations struggle to master change management, Everest Group surveyed 58 prominent GBS organizations worldwide. This important research reveals key insights into the strategic and operational aspects of current GBS change management practices. The findings also unlock a 12-step guide that will help GBS leaders through the pitfalls and roadblocks many currently face. Let’s explore this further.

The 12-step program covers vital aspects as change management adoption, work scope, internal alignment, organizational models, staffing and talent strategies, measurement approaches, and resource allocation to enhance change management competency within GBS. Below are the highlights of the key steps:

Step 1: Make systemic change management part of everything GBS does

Recognize that change is not a one-off event but a continuous process in GBS. Every team member should be trained in change management. Change must become a core capability that is integrated from the outset of every initiative.

Step 2: Communicate the importance of change management from the top

Emphasize the significance of change management by sending a GBS directive from high leadership levels. This ensures that change is recognized as a critical driver of GBS success and not treated as a temporary solution for individual projects that lack methodologies or measurements to take its ongoing pulse.

Step 3: Rethink the scope of change management

Expand change management to encompass communication, branding, business engagement, and stakeholder management as well as user and business support. A comprehensive approach can create a more significant impact for the enterprise.

Step 4: Understand change management is more than communication alone

While communication is essential, it should complement a well-thought-out change management strategy. By combining effective communication and change management, organizations can achieve maximum impact from their efforts.

Step 5: Align the GBS team with the imperative

Aligning the internal team with the need for change management is crucial. Emphasize that successful GBS change management is a team effort. Cross-training and rotating team members through the change function can help organizations develop a change-ready workforce and resolve resource challenges.

Step 6: Establish the right organizational structure for change management

Design a suitable organizational structure with fixed and variable staffing, dedicated full-time equivalents (FTEs) for methodology development, and ongoing change monitoring within the enterprise. Organization models that utilize interim workers, consultants, and gig employees may be beneficial in certain situations, but they don’t result in a sustainable, valuable change management organization in the long run.

Step 7: Acquire the right talent for change management

Ensure the right talent for change management. Avoid hiring resources who lack strong change management capabilities. While junior program managers may be suitable for getting the job done with strong direction from the top, they rarely have solid change management capability or the experience to provide leadership or best practice guidance. Consider GBS rotations or cross-training to build an effective change management team and to break down internal change management resistance.

Step 8: Promote staff development and retention by putting GBS career paths in place

Establish clear career paths for change managers within GBS and across the enterprise. This will encourage talented individuals to stay with the organization and contribute to the long-term change management success.

Step 9: Compensate GBS leaders appropriately

Recognize the value of experienced change managers and pay them competitively. Acknowledge that attracting and retaining top talent is critical for effective change management.

Step 10: Develop a deployable methodology

Create and consistently deploy an actionable methodology for change management. Focus on creating frameworks and playbooks tailored to the enterprise’s context and ensure the entire GBS team is appropriately trained on the approach.

Step 11: Establish measurable change management metrics

Move beyond measuring happiness and focus on metrics that reflect the true impact of change management, such as scope expansion, avoiding rework, and meeting milestones. This will provide a deeper understanding of the benefits derived from change management.

Step 12: Rethink funding strategies

Invest strategically in change management, considering its direct impact on the return on investment (ROI). Avoid relying solely on communications and inexperienced resources due to budget constraints. Recognize that skilled change management leaders are worth their cost.

To learn more and access the complete comprehensive steps, download our report, State of Play in GBS Change Management.

Adopt these change management strategies starting today

GBS organizations play a pivotal role in bringing value to modern enterprises – this part has been mastered – but success hinges on effective change management. Our study found that a significant number, one-third of respondents, do not have an organizational change management capability.

Neglecting change management can lead to attrition, rework, lost opportunities, and a cycle that can be difficult to break. Therefore, we recommend GBS leaders reflect on and potentially change the way they introduce, carry out, and measure enterprise change.

To better understand how successful change management is implemented, we recently hosted a webinar with Victoria Roehrich, Senior Director of Strategy, Transformation, and Change Management at PepsiCo. In the webinar, we discuss change management challenges and share best practices and examples of impactful initiatives. Hear PepsiCo’s change management evolution story here: Why GBS Change Management is the Key to Added Value and ROI.

To learn more about effective GBS change management strategies, reach out to Rohitashwa Aggarwal, [email protected], or Arushi Gupta, [email protected]

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

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

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

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

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

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

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

1. Macroeconomic uncertainty subdued industry growth in 2023

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

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

Picture1 2

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

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

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

Picture2 1

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


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

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

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

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


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

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

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

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

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

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

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

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

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

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