Business process management (BPM) firms say they are increasingly moving towards outcome-based deals, or tying sourcing strategy to business results, in keeping with clients’ requirements and changing efficiencies brought on by automation and adoption of digital.
Peter Bendor-Samuel, CEO of research firm Everest Group, said the progress claims made in outcome-based pricing by BPM firms are often exaggerated, as the contracts are difficult to negotiate and often leave one of the parties feeling like they have been taken advantage of.
“Having said that, pricing has evolved with most clients preferring to move to some form of usage or “as a service” model, where the client pays a fee on the usage it makes of the service. This can take the form of number of seats, or number of transactions or some other usage measure. Clearly the old FTE model is giving way to this more “as a service construct with clients eager to drive adoption,” he added.
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London, 4 April, and Intelligent Sourcing was delighted to co-host a dinner with The Everest Group in the Royal Horseguards Hotel. Speakers were uniformly excellent and the willingness of the guests to join in with a discussion (Chatham House Rule so no names) was a joy.
There will be a report in the “Out and About” section of the next issue of the magazine, due in June, but it’s worth highlighting a few points. Everest vice president (and Intelligent Sourcing contributor, we feel importantly) Anurag Srivastava outlined where the current state of digitalization was in and blew up the myth that the millennial generation is putting pressure on customer experience; it may be that they are pointing out what’s possible but by now every generation has huge expectations. Vice president (and Intelligent Sourcing magazine contributor as before) Sarah Burnett pointed to the amount of money there was in the channel – with UI Path recently being valued at £7bn there was no question that people were expecting a lot of growth.
In 2009, before things fell apart, Satyam Computer Services was more than twice the size of Tech Mahindra. Then among India’s top five IT firms, its strength lay in the enterprise segment. Tech Mahindra, being a niche player, derived its revenues almost entirely from the telecom sector. There was almost no overlap and no synergies. An important development, however, would pitchfork Tech Mahindra into the limelight.
Other technology firms, though, scaled up faster during this period (see box), with analysts saying Tech Mahindra had the potential to overtake HCL to the fourth spot if revenue growth had not slowed. In 2011, HCL bought Axon, a British consulting company, aggressively pursuing clients and focusing on growth at the cost of margins. The results paid off, with FY18 revenues of about $8 billion. “They (Tech Mahindra) could have scaled the enterprise business better,” says Pareekh Jain, founder, Pareekh Consulting. Even in its traditional telecom business, loss making contracts in its unit Lightbridge Communications Corp (LCC) hit Tech Mahindra, while the company also rejigged its legacy contracts in other verticals. The firm had to also face public wrath when an audio recording of a person who was being sacked went viral, forcing chairman Anand Mahindra to intervene. “Tech Mahindra was a little late to investing in and building digital capabilities, but they are trying to move faster now,” says Chirajeet Sengupta, partner, Everest Group. “Most companies are moving to a mix of a services plus IP-led business model. The company is experimenting with this approach…”
The 2019 Economic Report of the World Employment Confederation shows that while agency work remains a core activity within the private employment industry, other services gained traction in 2017. Overall, the industry recorded positive growth rates, expanding its footprint worldwide. The evolution is also positive across all regions with countries like Mexico, Brazil, Spain, Italy and Japan becoming strong performers.
“We are constantly striving to improve that process and for this 2019 edition, we have updated our methodology to deliver a more accurate picture of our industry. We also work with external partners such as Staffing Industry Analysts and Everest Group to ensure the most complete assessment of the different HR services.”
A new report from Texas-based research firm Everest Group analyzes the factors contributing to suboptimal direct spend management.
The report — “Is It Time to Outsource Direct Spend Categories?” — aims to provide a process for enterprises to begin changing their approach to direct spend management.
In recent decades, Everest Group explains, the procurement function has evolved as enterprises have streamlined their processes for buying goods and services.
After several quarters of slow growth, IT major is seen to have regained the momentum with the clinching of the $1.6-billion Alight deal earlier this month.
The contract has not only cemented the position of its chief executive officer (CEO) Abidali Neemuchwala, it has also proven the ability of the current management to successfully chase and close larger deals that are becoming scarcer in the market.
“This is the second mega deal for in the past four years after the Taken together, these deals help address the persistent growth issues that has experienced in the past couple of years,” said Peter Bendor-Samuel, founder and CEO of global advisory firm, Everest Group. “As these factors take hold, we anticipate that Wipro’s growth prospects are improving, and will start to look more similar to its peers,” he added.
Indian budget hotel chain OYO has managed to impress the US company that had inspired it in the first place.
On April 01, the world’s largest short-term home-rental firm Airbnb confirmed investing in the Gurugram-based OYO. While the companies did not disclose the quantum of the investment, reports have pegged it at around $200 million (Rs1,386 crore).
“The concept of frenemies is gaining currency as companies try to keep up with the pace of disruption and they can’t innovate as fast on their own,” said Yugal Joshi, vice-president at Texas-based consulting firm Everest Group, citing other examples like China’s Didi Chuxing investing in south Asian cab-hailing company Grab.
A global recognition has just been handed to the South African business process services (BPS) sector. Industry analysts suggested that global demand for the country’s provisions is largely due to affordable prices.
Industry stakeholders have been promoting South Africa’s BPS sector as part of the scheme to lead investors into the fold and the plan includes providing cost-efficient offers, IT News Africa reported. Research from Everest Group revealed that the country’s BPS sector saw an annual growth of 22 percent for four consecutive years.
India prides itself on being the world’s third-largest startup ecosystem after the US and the UK. But the country’s techies, it seems, aren’t really sold to the idea.
Fewer than 10% of Indian engineers want to work at startups, according to an employability report by the Mumbai-based pre-employment assessment firm Aspiring Minds. The report is based on a survey of over 170,000 engineers who graduated in 2018 from over 750 colleges in India.
Moreover, India’s startups are caught in a bubble, with nine in 10 failing within five years of founding. “…when the unviable astronomical valuations of startups come down and the dust settles on true business cases, especially in B2C, and when more B2B tech product companies gain traction, more engineers may want to work there,” said Yugal Joshi, vice-president of consultancy Everest Group.