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Outsourcing Activity Fell Slightly in 2019, According to Everest Group Report on Top Trends in Global Sourcing | Press Release

By | Press Releases

Bright spots in global sourcing for Q4 include GIC setups, Middle East and Africa locations, digital services, and service provider revenues

Everest Group reports that the global sourcing industry posted a 5% decline in outsourcing transaction activity for Q4 2019, culminating a year of steadily declining quarterly transactions that resulted in a year-on-year drop of 3% between 2018 and 2019. However, Q4 2019 did have some bright spots: global in-house center (GIC) setups increased in Q4, as did acquisition and alliance activity, and both global service providers and offshore-heritage service providers experienced a bump in revenue for the quarter. Digital services continued to dominate outsourcing activity, driven by cloud-based deals.

“We continue to see that the majority of outsourcing deals include digital services, as opposed to traditional services only,” said H. Karthik, partner at Everest Group. “Seventy percent of outsourcing transactions conducted in fourth quarter 2019 included digital services. Of these, 50% included cloud services. Robotic process automation, artificial intelligence, analytics, mobility and cybersecurity were also prominent features of these deals. Less commonly included but certainly worth noting were other digital services such as IoT, social media, blockchain and digital interactive components.”

Everest Group also identified these Q4 2019 global sourcing trends:

  • Cloud demand in the retail and consumer product goods (CPG) sector increased as enterprises looked to enhance omnichannel customer experiences by leveraging cloud technologies.
  • GIC setup activity increased across both offshore/nearshore and onshore locations, largely driven by the manufacturing sector.
  • The Middle East and Africa (MEA) region witnessed a jump in activity, primarily driven by growth in engineering-focused GIC setups.
  • Center setups activity rose in tier-2/3 locations as both GICs and service providers are increasingly exploring smaller cities, especially in mature markets such as India, Ireland and Poland.
  • Service providers announced numerous acquisitions and partnerships to enhance their IoT offerings and partnered with third parties to strengthen their mobility capabilities.
  • These developments in the fast-evolving outsourcing market are detailed in Everest Group’s recently released Market Vista™: Q1 2020 report. The report includes an analysis of outsourcing transaction trends, health of
  • GICs, location risks and opportunities, and service provider developments. A special section is devoted to outsourcing activity in the engineering/R&D space, with a focus on Verification & Validation (V&V) activities.

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

Complimentary Webinar: The 5 Most Important Global Services Trends in 2020
Everest Group is delivering a complimentary webinar on what lies ahead for the global services industry. The webinar, “The 5 Most Important Global Services Trends in 2020,” will be delivered on Thursday, March 5, at 9 am CST (10 am EST; 3 pm GMT; 8:30 pm IST). Everest Group hosts Michel Janssen, chief research guru, and H. Karthik, partner, will preview the firm’s upcoming Market Vista™ Annual Report 2020, sharing likely trends for 2020 and the keys to success in the context of rising uncertainty.

***Register for complimentary webinar***

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.

The Best Enterprises Are Averaging 200% ROI on Intelligent Automation, but Not by Reducing Headcount—Everest Group | Press Release

By | Press Releases

Everest Group identifies Pinnacle Enterprises™ in Intelligent Automation (IA) adoption maturity, industry leaders set apart by advanced capabilities, superior outcomes.

Enterprises that are truly capitalizing on intelligent automation (IA) solutions are—in some cases—achieving ROI of 200% or more, and the impact of IA on reducing jobs is highly exaggerated, so enterprises should not view IA’s primary benefit as being headcount reduction. These and other insights in research from Everest Group indicate that enterprises have generated the most cost benefits from IA via additional capacity created by productivity improvements and with minimal layoffs. Everest Group reports that the key drivers for IA adoption continue to be operational effectiveness and enhanced employee and customer satisfaction.

IA refers to solutions that combine robotic process automation (RPA) and artificial intelligence (AI) to automate processes.

“Enterprises that are leading the way in adopting intelligent automation have important lessons to share with those that aspire to capitalize on IA solutions,” said Michel Janssen, chief research guru for Everest Group. “These companies are achieving operational improvements and significant costs savings, with ROIs of about 200%. But, more than that, they are delivering strategic business impact over time, particularly in terms of top-line growth, creation of new business models, and decreasing time-to-market. We’ve explored in great detail not only how these companies are leveraging IA technology but also what implementation strategies are helping them achieve success far beyond their peers.”

These lessons are shared in a new Everest Group report—Enterprise Intelligent Automation Adoption Maturity–Pinnacle Model Analysis—which explores the journeys of companies achieving exceptional results through IA adoption. The report provides insights into the key enablers needed to achieve desired outcomes and points to the investments required for the greatest speed to impact.

“This is the second time we have done this study, and it is amazing how far organizations have come in the past 18 months in terms of building out capability and achieving outcomes,” said Amar Modi, practice director for Service Optimization Technologies at Everest Group. “The average scale of IA deployments has increased threefold over those past 18 months.”

After surveying enterprises about their adoption of intelligent automation, Everest Group identified eight Pinnacle Enterprises™—organizations distinguished by their advanced intelligent automation capabilities and their superior outcomes. Pinnacle Enterprises significantly exceed other enterprises across three key impact areas:

  • Cost impact: On average, Pinnacle Enterprises generated approximately 1.4X return on investment (ROI) and cost savings and broke even faster than other enterprises. The Pinnacle Enterprises have reported over 60% cost savings through IA initiatives with about 50% saving more than US $50 million.
  • Operational impact: On average, Pinnacle Enterprises reported 67% improvement in operational metrics, compared to 48% improvement reported by other enterprises.
  • Business impact: Pinnacle Enterprises experienced 1.7x impact in strategic areas—such as top line, time-to-market, customer and employee experience, and new business models—compared to other enterprises.

Siemens is one of the companies profiled as an Intelligent Automation Pinnacle Enterprise. Through the systematic exploitation of technologies such as RPA, AI, business process management (BPM), advanced data analytics and IoT, Siemens has achieved superior business results, including the following:

  • More than 450 IA use cases successfully deployed, resulting in 650,000 automated hours per annum.
  • Up to 40% cycle time reduction by implementing BPM use cases along end-to-end business processes.
  • IoT, data analytics and RPA combined to lift Industry 4.0 automation to the next level (for example, predictive machine maintenance).
  • Digital Companions successfully introduced across multiple functions, handling up to 30% of customer queries fully automatically while improving the customer experience measurably.

“Siemens is honored to be named by Everest Group as a Pinnacle Enterprise in Intelligent Automation,” said Hannes Apitzsch, CEO of Global Business Services, Siemens AG. “This recognition acknowledges the success of our systematic approach at Siemens Global Business Services to leveraging digitalization forces across the globe. We not only have built a mature, solid architecture and ecosystem for advanced technologies, but also have established a strong, inclusive innovation culture. All of those elements are required to succeed with IA, and Siemens is certainly reaping the tangible rewards of the collaborative digital transformation efforts of our global team.”

Based on the best practices of Pinnacle Enterprises including Siemens, Everest Group shares in its report more than a dozen ways enterprises can accelerate their intelligent automation adoption journey and also provides assessments organizations can use to compare their capabilities and investment priorities with those of Pinnacle Enterprises.

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

About the Pinnacle Model®
Everest Group’s Pinnacle Model® approach explores what the very best organizations are doing in terms of optimizing costs, improving operations, and delivering strategic impact. The journeys of these best-of-the-best companies provide insights into the key enablers needed to achieve desired outcomes and point to the investments required for the greatest speed to impact. By examining what Pinnacle Enterprises™ have in common, others can learn how to succeed, whether they desire to make incremental changes or achieve major transformations.

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 empower 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./

Life & Pensions Insurers Mired in Legacy IT Must Put Customer Experience First, Break Free by Leveraging BPaaS | Press Release

By | Press Releases

Although 60% of insurers believe customer experience delivery would have the highest impact on competitive positioning, many don’t pursue progressive CX or other digital strategies because they are shackled by legacy IT infrastructure

Although 60% of insurers believe improving customer experience (CX) would have the highest impact on their competitive positioning, many don’t pursue progressive CX strategies because they are shackled by legacy IT infrastructure. According to Everest Group, the solution to this dilemma is clear: To enable core modernization and subsequent digital transformation, life and pensions (L&P) insurers should establish strategic business process as a service (BPaaS) partnerships with third-party IT and business process service providers.

“L&P insurers know that to remain competitive they need to evolve to customer demands, especially to the demands of the millennial segment, but they are stymied by legacy infrastructure that restricts their ability to innovate and modernize,” said Skand Bhargava, practice director, Business Process Services, at Everest Group.

“It’s no wonder insurers are slow to modernize: revamping infrastructure is expensive, time consuming for overstretched internal resources, disruptive to business continuity, and sometimes a stretch for in-house talent. Plus, unfortunately, many decision makers place undo consideration on sunk costs,” explained Bhargava. “An insurer’s best path forward is to partner with BPaaS providers to free themselves from the burden of legacy without capital-intensive investments. Service providers can fill the gap and help establish the business case for adopting modernization efforts.”

Many leading insurers are beginning to see the advantages of the BPaaS approach. The L&P insurance sourcing market in 2018 reached US$2.6 billion, with 44% represented by BPaaS engagements. The compound annual growth rate of the L&P insurance BPaaS market from 2015 to 2018 was 12-14%.

These findings are discussed in more detail in “Life and Pensions (L&P) Insurance BPO Annual Report 2020: Escape Legacy and Embrace Digital through BPaaS.” This report deep dives into the looming need for modernizing legacy architectures in the Life and Pensions (L&P) insurance industry and its relevance for the industry’s overall digital transformation. Further, it puts forward the case for BPaaS in L&P insurance and how digitalization can make a significant impact through platform modernization efforts.

In the report, Everest Group cites numerous examples of L&P insurers who successfully tapped third-party partners for core modernization initiatives in the past few years:

  • DXC partnered with Metlife to take over the administration of seven million closed block policies onto its platform and streamline customer service (2016).
  • TCS partnered with M&G Prudential to migrate 5.8 million policies from insurer’s multiple legacy systems and consolidate those on its BaNCS platform (2018).
  • TCS partnered with Transamerica to convert insurer’s policies from legacy platforms to its proprietary platform to help accelerate digitalization of policy administration (2018).
  • DXC partnered with Brighthouse Financial to support the transition of the latter’s 1.3 million in-force policies from multiple legacy systems onto a more consolidated IT infrastructure (2018).
  • Atos extended its previous partnership with Aegon to migrate and administer the insurer’s 1.4 million closed block policies on a modern platform. While Atos does not own a policy administration platform, it partnered with Sapiens for the latter’s technology (2018).
  • Infosys partnered with Pan-American Life Insurance Group to provide administration services for the insurer’s new Indexed Universal Life product on its VPAS platform (2019).
  • SE2 partnered with Nassau Financial Group to convert and administer policies on its digital platform (2019).

Everest Group also stresses that BPaaS forms a foundation for future scaling of digital transformation efforts. “The ultimate goal of BPaaS investments should be to create a connected digital ecosystem on top of a modern, unified platform architecture in order to drive stakeholder experience,” said Bhargava. “By leveraging BPaaS to shift away from legacy systems and siloed units of operation, insurers can take build a platform that enables them to implement the digital technologies that are going to be critical to drive the next level of impact.”

***Download the complimentary report abstract.***

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.

Everest Group Announces Winners of 2020 PEAK Matrix Service Provider of the Year Awards | Press Release

By | Press Releases

Accenture takes No. 1 for fourth straight year; TCS, Cognizant, Wipro and Capgemini round out the Top 5 IT service providers based on broad-based capabilities and successful service strategies

Everest Group—a consulting and research firm focused on strategic IT, business services and sourcing—today announced the winners of the 2020 PEAK Matrix® Service Provider of the Year awards for IT services. The awards, now in their fifth year, recognize IT service providers who have demonstrated consistent leadership in the PEAK Matrix reports issued by Everest Group in the previous year.

Topping the Top 20 IT Service Providers list for 2020 are Accenture, TCS, Cognizant, Wipro and Capgemini, in that order. Accenture retains its position at the top of the leaderboard for the fourth straight year. TCS, Cognizant and Wipro also retained their positions from the 2019 list. Capgemini joins the top five in the No. 5 slot, edging out HCL Technologies.

“The Top 20 IT Service Providers list identifies the best of the best – IT service providers with strong broad-based capabilities and successful services strategies that align well with the evolving enterprise IT demand,” said Chirajeet Sengupta, partner at Everest Group. “Throughout the year, Everest Group evaluates service providers’ market success, their business strategies and how they are investing in the future. By taking all of that into account, these PEAK Matrix Service Provider of the Year awards recognize the IT providers that truly set themselves apart.”

Six service providers improved their rankings:

  • Capgemini moved from 6 to 5
  • Atos moved from 12 to 11
  • Tech Mahindra moved from 13 to 12
  • Virtusa moved from 14 to 13
  • Mphasis moved from 15 to 14
  • Deloitte moved from 19 to 15

UST Global entered the Top 20 IT Service Providers list this year at No. 19, and there were no exits from the list (Syntel, now part of Atos, is no longer featured as a separate entity). Overall, six service providers improved their rankings, four service providers slipped, and nine service providers maintained their position.

***All winners are listed in the report, “2020 PEAK Matrix Service Provider of the Year Awards,” available for complimentary download here.***

Everest Group’s 2020 PEAK Matrix Service Provider of the Year Awards
also honor the Top ITS Challengers. This list recognizes the top 10 IT service providers with annual revenue of less than US$2 billion. The Top 3 ITS Challengers 2020 are Virtusa, Mphasis and LTI.

“Although smaller in size, these challengers are credible alternatives to the leading players in the industry in certain niches,” said Abhishek Singh, vice president at Everest Group. “Challengers have successful service strategies that focus on specific solution segments, geographies or industries that align well with enterprise needs.”

Other Award Highlights:

Everest Group publishes the PEAK Matrix Service Provider of the Year Awards to recognize consistent top performers across PEAK Matrix assessments. In 2019, Everest Group published 26 PEAK Matrix reports, evaluating a total of 108 service providers in these eight segments of the IT services market:
1.    Healthcare
2.    Life sciences
3.    Banking and financial services
4.    Insurance services
5.    Application services
6.    Cloud and infrastructure services
7.    Digital services
8.    Enterprise platform services

In addition to recognizing top performers overall, Everest Group acknowledges Leaders and Star Performers in each of the eight industry segments. Leaders are determined by the number of leader positions an organization holds in the PEAK Matrix reports published across each category. Similarly, Star Performers recognize those organizations who achieve the greatest cumulative upward mobility from the previous year in the PEAK Matrix reports for each industry segment. A complete list of segment winners is included in the complimentary report.

About the PEAK Matrix™

The Everest Group PEAK Matrix® is a proprietary framework for assessing the relative market success and overall capability of service providers based on Performance, Experiences, Ability and Knowledge. Each service provider is comparatively assessed on two dimensions: market success and delivery capabilities. Market success is measured by revenue, number of clients and year-over-year growth. Delivery capability is measured by scale of operations, scope, technology and innovation, delivery footprint and buyer satisfaction. The resulting matrix categorizes service providers as Leaders, Major Contenders, and Aspirants. Companies that demonstrate strong upward movement in successive reports are recognized as Star Performers.

About Everest Group

Everest Group is a consulting and research firm focused on strategic IT, business 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.

HR Execs Rank Analytics and Automation as Top 2 Priorities—Everest Group | Press Release

By | Press Releases

Multi-process HR outsourcing (MPHRO) market experiences steady growth as enterprises seek cloud-based, next-gen solutions for improving cost control, talent management, customer experience

Analytics and automation rank as the Top 2 priorities of enterprise human resource functions, according to a recent Everest Group survey of senior executives in HR operations. Rounding out the top five key objectives cited are “move toward cloud,” centralization of HR processes, and cost reduction.

“Cumulatively, these priorities reflect that access to digital solutions is a paramount concern for buyers of MPHRO solutions,” said Priyanka Mitra, practice director at Everest Group. “These digitally focused priorities also align with a clear shift we’re seeing in enterprise HR operating models as organizations seek innovative and flexible solutions to tackle tough HR challenges such as reducing operating costs, finding talent, and improving employee experience.”

Asked to classify their HR operating models, the executives surveyed by Everest Group described a continuum of capabilities that is clearly moving toward cloud-based and next-generation models. Twenty to 30% described their operations as fragmented (State 1); 15-25% described their operations as centralized (State 2); 45-55% chose the cloud-based model as the most descriptive of their operations (State 3); and nearly 10 percent claimed to have achieved a next-generation operating model (State 4).

“Enterprises are looking for opportunities to undergo end-to-end transformation of their HR processes, and they are demanding that their service providers evolve from administrators to strategic partners that can help orchestrate a next-generation approach,” said Mitra. “Providers are responding by making heavy investments in technology, particularly analytics and automation. In addition, providers are also expanding their capabilities by widening their geographic reach and by adding high-end, value-added services such as talent management and advisory services.”

Everest Group reports that the MPHRO market registered a healthy growth rate of approximately 5% between 2017 and 2019 and is expected to remain steady at 5-8% for the next two years, crossing the $5 billion mark by 2021. However, looking ahead to 2021, Everest Group cautions that a potential recessionary wave may lead enterprises to delay decisions to outsource additional HR functions.

These findings and more are explored in Everest Group’s recently published report, “Multi-Process Human Resources Outsourcing (MPHRO) Annual Report 2020 – Preparing for a Digitally Enabled Decade.” This research provides comprehensive coverage of the 2017-2018 HRO market and analyzes it across various dimensions such as market overview, evolving market situation, and buyer adoption trends.

***Download Complimentary Abstract***

Additional Findings:

  • New deal activity: Mid-market buyers are developing substantial interest in the MPHRO market as they realize the benefits of outsourcing HR services. New deals signed in 2018 witnessed a drastic shift toward the mid-sized market with a growth rate of more than 50% in the number of deals signed.
  • Geographic distribution: North America continues to dominate as the primary decision-making location; however, its share is slowly being acquired by other geographies such as Asia Pacific and Latin America.
  • Industry adoption: While manufacturing and financial services still lead the adoption in MPHRO, non-traditional adopters such as healthcare and retail have witnessed significant growth.
  • Process scope: With enterprises taking a more strategic outlook toward HRO, there has been a marked increase in the inclusion of talent management processes such as recruitment and learning in their deals.
  • Shoring mix: The market continues to witness steady inclusion of offshoring and nearshoring within deals. India still retains its position as the most favored offshore location; however, providers are also investing in Eastern Europe and Latin America.
  • Global market shares: Alight Solutions leads the market in terms of annual MPHRO revenue, followed by Accenture, IBM and ADP. ADP, Accenture and TCS are the only providers that appear among the top five service providers across all industries and buyer segments.

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business 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.evererstgrp.com.

 

Data & Analytics (D&A) Market Among Fastest Growing in Services Industry, Clocking Nearly 20% Growth | Press Release

By | Press Releases

By 2022 more than 70% of enterprises expect to be using AI to automatically generate business recommendations—Everest Group.

The global Data & Analytics (D&A) market is one of the fastest-growing markets in the services industry. Everest Group predicts double-digit growth (17-19%) for the D&A market with annual services revenues expected to cross the US$100 billion mark by 2022. Further, in an Everest Group survey of 200 global enterprises across multiple industries and geographies, more than 70% said they are either currently using AI systems to automatically generate business decision recommendations or expect to be doing so by 2022.

“Enterprises across all industries and geographies are dealing with an explosion of data—data that is made available by digital transformation, cloud and IoT and made useful by analytics, artificial intelligence and machine learning,” said Vishal Gupta, practice director at Everest Group. “One of the most exciting shifts we are seeing among leading enterprises today is recognition of the need to democratize all of this data to build a data-driven, decision-making culture.”

More specifically, key drivers for growth of the D&A market include the following trends:

  • Enterprises are exhibiting a strong demand for migration from legacy systems and increased adoption of cloud-based services.
  • Data has become the central theme in CXO-level discussions across enterprises in all verticals.
  • New regulations such as GDPR and the California Act are driving demand for data security, privacy and governance.
  • Next-generation technologies are transforming the asset-heavy industries by showcasing the value of data captured by Internet of Things (IoT) sensors across devices.
  • Enterprises are expressing increasing need for data orchestration, data democratization, and quick insight generation to make real-time impactful business decisions.

These findings and more are discussed in Everest Group’s new report, “Data & Analytics (D&A) – State of the Market Report 2020.” This research provides comprehensive coverage of the D&A market, including a market overview and an in-depth look at adoption trends across industries and geographies, key factors driving adoption, the deal landscape, the service provider landscape, and key emerging themes in D&A services.

Additional highlights:

  • The D&A market is growing at a healthy rate. The global D&A market witnessed a robust growth of 18-20% in 2018, touching the US$57-US$62 billion mark in annual revenue. The demand for D&A services remained strong from traditionally leading markets of North America and EMEA, as well as from the emerging APAC market.
  • Banking, Financial Services and Insurance (BFSI) and retail, distribution, and CPG are the most mature industries from an adoption standpoint and together account for almost 45% of the market. Industries such as healthcare & life sciences and hi-tech & telecom showed high momentum caused by regulatory requirements and service providers’ increased focus on developing verticalized solutions beyond mature industries.
  • India continues to be the most preferred location for D&A delivery, given significant talent availability and low-cost advantage. Beyond the tier-1 cities, service providers have started to leverage tier-2/3 cities to further enhance their talent pool and manage costs.

***Download the complimentary report abstract.***

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

Life & Pensions Insurance BPO Will See 9-11% Growth in 2020 as End-to-End Third-Party Administration Grows—Everest Group | Press Release

By | Press Releases

L&P insurance BPO scope of services will expand beyond traditional policy administration to value-additive services such as product launch and distribution channel expansion.

Everest Group predicts 9 to 11% growth in the Life and Pension (L&P) insurance business process outsourcing (BPO) market in 2020 on the heels of 9% growth in 2019. Everest Group projects the industry’s most prominent trend in 2020 will be a growth in demand for end-to-end third-party administration (TPA) services and Business Process as a Service (BPaaS).

The L&P insurance BPO market has seen a consistent pace of year-on-year growth in the range of 9 to 10% since 2014 as the industry has experienced a modest evolution in buyer-service provider relationships. L&P insurance third-party outsourcing arrangements are moving beyond transactional services to strategic business growth and transformation support. For example, high-growth services include new product launches, expansion of distribution channels, and customer financial advisory services.

Service providers’ expansion of capabilities to more value-additive services is also absolutely necessary for competitive differentiation, since higher straight-through processing, self-service, and automated process will make the traditional policy administration services more standardized across providers.

To differentiate and also accommodate the growth in demand for end-to-end TPA/BPaaS services, almost all the major service providers continue to invest in core policy administration platforms, digital augmentation applications and talent capabilities.

“In 2020, buyers in the L&P insurance BPO market will significantly favor service providers that have shifted their core value propositions to align with buyers’ strategic growth priorities,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “In the coming year, we will see third-party outsourcing partnerships redefined around customer satisfaction, digital transformation, operational optimization and innovation in product development and distribution. Many of these demands require digital capabilities, including cloud-based platforms, analytics, and robotic process automation. As a result, we inevitably will see those service providers who have invested in these capabilities widen the competitive gap in the service provider landscape.”

These findings are discussed in more detail in “Life and Pensions (L&P) Insurance BPO: Annual Deal Trends Report 2020.” This report provides a detailed analysis of the L&P insurance BPO market size and growth, buyer adoption trends, solution characteristics, and service provider landscape; it also features a focused analysis of the annuities and pensions BPO market.

Other Key Findings:

  • While new contract signings are declining, the end-of-life legacy systems and the need to free up capital for new-age investments are collectively contributing to larger deals in the market.
  • Apart from the traditional geographies, such as North America and the United Kingdom, the emerging markets are also witnessing decent activity. Asia Pacific and Latin America, with their L&P insurance market growth prospects, would provide greater opportunities in the long term
  • There is a general trend toward expansion of onshore delivery as it allows for quality engagements with buyers.
  • Output-based pricing continues to dominate the market; new-age models such as gainsharing are also witnessing increased interest.
  • The annuities market constitutes more than 35% of the overall L&P insurance BPO market and has been growing at above the market average rate.

***Download the complimentary report abstract.***

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.

Outsourcing Demand Shrinks for Third Consecutive Quarter, According to Everest Group Report on Top Trends in Global Sourcing | Press Release

By | Press Releases

Bright spots in global sourcing for Q3 include GIC setups, digital services and revenues for offshore heritage providers.

The global sourcing industry posted a 6.7% decline in transactions in the third quarter of 2019, dropping to 444 transactions from 476 transactions recorded in Q2, according to Everest Group. This marks the third consecutive quarter of declining transactions in 2019. From a year-on-year perspective, transactions declined 15.6% from 526 in Q3 2018 to 444 in Q3 2019.

Everest Group also reports these Q3 statistics indicating suppressed growth in the global sourcing market:

  • The total spending on outsourcing contracts fell across the US and Europe (especially the UK) owing to global recessionary sentiments.
  • Offshore heritage service providers have announced considerable layoffs in this quarter to streamline their delivery pyramids and reduce costs.
  • The revenue for global services providers decreased marginally.
  • Both merger and acquisition (M&A) and alliance activity witnessed a decline.

However, within the global outsourcing activity for Q3, a few bright spots appeared:

  • India witnessed growth in activity driven by an increase in new global in-house center (GIC; also known as shared services center) setups, specifically for supporting engineering and digital-focused services.
  • The volume of digital-focused new centers increased both in the onshore as well as the offshore region, with artificial intelligence (AI) continuing as the leading segment across both regions. The activity was largely driven by India and China in offshore/nearshore regions and by the United States in the onshore region.
  • Technology and communication remained the most active sector in offshore/nearshore and onshore locations and accounted for 63% and 50% of total new center setups, respectively. During the quarter, the retail and consumer product goods (CPG) vertical gained traction in onshore locations with nine new setups, compare to four in Q2.

These global sourcing trends are detailed in Everest Group’s recently released Market Vista™: Q4 2019 report. The Market Vista report provides data and analysis highlighting the key trends in the fast-evolving offshoring and outsourcing market. Market Vista captures the key developments across outsourcing transaction trends, health of GICs, location risks and opportunities, and service provider developments.

Special Focus: Engineering/R&D Sourcing
The Market Vista: Q4 2019 report profiles outsourcing activity in the engineering/R&D space, including an overview of spending and a growth outlook across sectors. In 2018, the enterprises featured in the ER&D Top 200 across eight industries accounted for 56% of the overall ER&D spend globally. By sector, software vendors emerged as the highest spender ($127 billion), edging out the automotive sector, which led in 2017.

“In 2019, we expect the software product industry to remain in the top spot for ER&D spending, probably in the 15% growth range, as enterprise software vendors continue to explore offerings around emerging tech themes,” said H. Karthik, partner, Global Sourcing, at Everest Group. “The medical device sector is expected to experience the next highest growth rate in engineering/R&D spend, driven by software integration in medical devices and the growth of the wearables sector.”

***Download a complimentary 14-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.

‘Uncertainty Rules Supreme in 2020’ Predicts Everest Group, Based on Survey of Enterprise Execs | Press Release

By | Press Releases

Three trends will gain momentum, shape enterprise investments next year: customer experience (Cx), digital & data, and the contingent workforce.

Based on a November market survey of enterprise executives, Everest Group predicts that uncertainty will rule supreme in 2020, despite current positive market conditions and better-than-expected enterprise performance in 2019.

With 2020 fast approaching, Everest Group polled 130 senior enterprise stakeholders from Global 1000 companies on their thoughts about growth prospects, investment priorities and challenges they expect for the new year.

The good news from the study: Senior enterprise stakeholders ended 2019 with a slightly more optimistic sentiment about their 2019 performance as compared to their original expectations for the year. Forty-three percent of respondents indicated they had a slightly better than expected (32%) or fantastic (11%) year.

The bad news: Despite positive market conditions that should be creating certainty and high optimism for 2020 — such as historically high stock market, low unemployment, and low interest rates ― market UNcertainty continues to create a drag on industry optimism. In fact, Everest Group reports that organizations are bracing for slower growth in 2020.

Only 45% of enterprise executives surveyed this year are optimistic about growth in 2020, as compared to 57% who expected growth in 2019. Twenty-eight percent of enterprise executives interviewed this year expect flat performance or even a decline in 2020, an increase from 22% who held a negative outlook for 2019.

Whereas enterprise executives projected 2019 revenue growth of 7.6% and headcount growth of 5.1%, executives today project lower growth rates for 2020: 5.4% revenue growth and 3.9% headcount growth.

Based on responses to questions about investment priorities and challenges anticipated for next year, Everest Group predicts that 2020 will be the year when three major trends gain momentum:

1. Customer experience is king. Forty-five percent (45%) of respondents selected customer experience as the top investment priority and the most critical change that must be made in their business model. This remains true even in an economic downturn. When asked to identify top investment priorities for 2020 should the economy strengthen versus if the economy weakened, senior enterprise executives typically had two very different lists, except for their top priority—customer experience—which remained the same for both scenarios.

2. Enterprises do digital and data, or die. Enterprises either learn to do tech or fall too far behind to survive. Rapid technology advances are a key lever to improving customer experiences. To that end, analytics, cloud solutions and automation (RPA) rank highest (in that order) among the capabilities enterprises most seek to develop.

3. The contingent workforce becomes a powerful force for change. A shortage of next-generation skills remains a huge challenge for enterprises. Organizations must treat the contingent workforce not as an inconvenient fringe element in their businesses but as a strategic asset. The contingent workforce is a key part of the labor pool in many organizations, especially for groups like IT. In fact, Everest Group research indicates that 36% of enterprises classify more than 16% of their workforce as contingent workers, a workforce segment that is increasing in size and scope.

“Despite the uncertainty facing enterprises in 2020, the opportunity to win remains, and the stakes to capitalize on the right investments are higher than ever,” said Michel Janssen, chief research guru for Everest Group. “For example, we know that digital transformation is a key investment priority, and rightly so. However, even the best companies are still unable to take advantage of the dizzying array of new digital technologies – and the gap grows for the rest. We’ll see the same dichotomy play out in the areas of customer experience and contingent workforce as well. Those who invest and successfully execute will be few, and the rest will lag behind. Should the uncertainty and slow growth that enterprise executives predict truly bear out in 2020, the gap between leaders and followers will be all the more pronounced.”

***WEBINAR: Thursday, December 5, 9 am CST. ***

The results of this research will be presented by Janssen and Eric Simonson, managing partner at Everest Group, during a complimentary webinar on Thursday, December 5, at 9 am CST. The webinar — “2020 Enterprise Key Issues in Global Sourcing: Setting Course When Uncertainty Rules Supreme” — will cover:

  • Common sentiments expressed by enterprise executives during Everest Group’s recent market survey on enterprise key issues
  • Leading implications for enterprises engaged with service providers and key value propositions to consider for both insourcing and outsourcing
  • Potential enterprise adjustments around service provider portfolio consolidation, deal size, and value realization

Register here: 2020 Enterprise Key Issues in Global Sourcing: Setting Course When Uncertainty Rules Supreme.

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.

Rapid Adoption of Multi-Country Payroll Solutions Continues, Driving 19% Growth in Worldwide Market—Everest Group | Press Release

By | Press Releases

Enterprises still love the cost savings and compliance offered by MCP solution providers but also demand analytics, AI, RPA to improve employee experience with unified HR and payroll systems.

Multi-Country Payroll (MCP) solutions—one of the fastest-growing markets in the human resources (HR) outsourcing space—will continue to grow rapidly, reaching US$3.3 billion by 2021, according to Everest Group.

The MCP solutions market witnessed approximately 20% growth between 2017 and 2018. This growth was driven primarily by mature providers offering traditional process efficiency benefits. As enterprises seek compliance, security and cost savings in their MCP processes, they are confidently turning to several mature MCP service providers who dominate the market today.

In addition, the MCP solutions market has received a boost from the rise in regulatory requirements across many regions, which is encouraging many first-time adopters to outsource their payroll to service providers. This has given rise to new players in the market, catering to the small-sized buyers of MCP solutions, which are typically multinational corporations spanning two to five countries.

“Although MCP service providers have performed well with respect to the traditional drivers such as cost reduction and compliance, buyers expect more in terms of next-generation technologies and strategic support,” said Anil Vijayan, vice president, Business Process Services, at Everest Group. “In fact, the drivers for adoption of MCP solutions are slowly shifting from traditional to next-generation expectations. These include offering a better employee experience, gaining insights through analytics, and the application of digital solutions such as artificial intelligence and robotic process automation. As the market evolves, service providers will need to continue to innovate and differentiate themselves to provide a better payroll experience to clients and maintain a strong foothold in the market.”

Everest Group explores these findings and others in a recently published report: “Multi-Country Payroll (MCP) Solutions Annual Report 2019 – Moving Toward Unification of Payroll and HR Services.” This research provides a comprehensive analysis of the global MCP solutions market across various dimensions, including a market overview; trends in buyer adoption, transactions and solutions; and the service provider landscape.

Additional key findings in this report include:

  • The market trend is for enterprises to unify payroll and HR services, typically comprising four elements: consolidation of geographical operations, integration with HR services, integration with wellness and benefit offerings, and the tie-up of payroll and other ancillary processes.
  • Europe has emerged as the dominant market in terms of MCP solution revenue. The North American and Asia Pacific markets closely follow suit.
  • The overall technology model for payroll has largely been skewed toward the integrated hybrid and single platform model as service providers look to provide a seamless payroll experience to clients with more focus on self-coverage.
  • The leading players in the MCP solutions landscape have constantly innovated and invested in developing technological capabilities to differentiate themselves from other players in the market.

***Download a complimentary report abstract.***

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 https://www.everestgrp.com.