Category: Press Releases

Salesforce Services Market Booms at 28% Growth as 70% of Enterprises Struggle with Salesforce Integration | Press Release

North America, largest Salesforce services market, posts 18% CAGR; markets outside North America grow faster with 35% CAGR.

Although Salesforce dominates the US$57 billion global customer relationship management (CRM) software market with a 22% share, Everest Group reports that 70% of enterprises struggle with integrating Salesforce with other applications and platforms within and outside the Salesforce ecosystem. Accordingly, Everest Group predicts that Salesforce service providers who focus on building solutions to accelerate time-to-market and guide enterprises on the change management journey will be tomorrow’s market leaders.

Enterprise expectations from Salesforce adoption now go beyond customer experience and CRM software implementation to creating a competitive advantage. Recent Everest Group research reveals the high expectations of Salesforce users:

  • 45% expect their Salesforce adoption to enable them to identify new revenue streams
  • 60% expect that Salesforce will provide a single source of truth for customer data to expedite decision making
  • 55% expect faster and easier integration of Salesforce with both upstream and downstream industry-specific systems.

For assistance in realizing these objectives, enterprises frequently engage third-party Salesforce service providers for consulting, implementation, maintenance and support services. The global Salesforce services market is estimated at US$14.5 billion, growing at a CAGR of 28% over the past three years. The market is also one of the largest and fastest growing in the broader enterprise platform services landscape.

“Enterprises now look to the CRM function to create a 360-degree customer view, but this requires a level of integration and organizational change that few enterprises have been able to achieve thus far,” said Yugal Joshi, vice president of Everest Group. “Organizations are aspiring to become an ‘intelligent enterprise,’ and this requires a ‘unified data fabric’ that encompasses their ecosystem, a fabric that weaves together all relevant data sources and leverages advanced analytics. Salesforce is expanding their offerings to help companies achieve this vision, particularly with products like Einstein for analytics and Mulesoft for integration. With changing enterprise expectations and the evolving Salesforce tech landscape, Salesforce service providers can play a critical role in helping enterprises derive maximum business benefit from the platform.”

These findings are discussed in more detail in Everest Group’s recently published report “Salesforce Services – Solving for the Missing Link.” The report includes insights on the market trends for Salesforce services, including deal trends and enterprise spend characteristics, based on the firm’s analysis of about 300 large Salesforce services deals.

Key Trends in the Salesforce Services Market

  • North American Salesforce services market logged 18% CAGR since 2018, whereas the markets outside North America increased exponentially at 35% CAGR.
  • While Salesforce has increased the revenue guidance for 2021, Everest Group estimates that due to COVID-19 the overall growth of the services market will be negatively impacted in FY2021. This will primarily be due to large-scale transformation projects that may be kept on hold in industries such as travel, energy and utilities, and manufacturing, which will, in turn, negatively impact the demand for Salesforce consulting and implementation services.
  • Salesforce adoption is growing fastest (35% year-on-year) in the healthcare and life sciences industry. Regionally, Asia Pacific is fastest growing economy (~35% YOY), and marketing cloud is the fastest growing Salesforce product (~40%YOY).
  • Service providers are investing in building strong industry-specific solutions and integration frameworks to expedite time-to-market for clients.
  • Service providers are taking a strong inorganic approach with tuck-in acquisitions to fill gaps across their Salesforce services portfolio and further enhance their geographic footprint.

***Download Complimentary Abstract***

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com/.

Collaboration Is the Path to Realizing Blockchain’s Benefits at Scale | Press Release

Everest Group predicts network-level adoption of blockchain will give rise to Network Resource Planning (NRP) applications which will span the boundaries of business function, companies and industries.

It takes a village to build a blockchain, according to Everest Group. The firm has released a new report that declares inter- and intra-industry collaboration to be the key for mature, production blockchain deployments that deliver benefits at scale.

“The future of blockchain is firmly rooted in the network model, and we foresee the market moving toward use case-specific networks with cross-industry collaboration,” said Ronak Doshi, vice president at Everest Group and one of the report authors. “Over time, we expect blockchain networks to begin replacing certain narrow functions of enterprise applications, eventually forming the foundation of a new class of Network Resource Planning (NRP) applications.”

NRP applications will fall into one of two categories:

  • Capsule networks: highly application-specific and verticalized blockchain networks with fixed boundaries. Examples include food and ingredient tracking, inter-bank payments reconciliation, and counterfeit drug tracing.
  • Super networks: extremely horizontal blockchain networks that cater to a broad set of industries and use cases. Examples include public services, digital identity, central bank digital currency, and citizen services.

Everest Group shares these findings in its new report, “Enterprise Blockchain State of the Market 2020 – Rise of the Network Resource Planner (NRP).” This report describes the market climate for blockchain networks and services, informed by the impact of COVID-19. The report also lays down a structured path for enterprises to overcome the business challenges in adopting blockchain networks.

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

In the report, Everest Group assesses the market state of 11 key industry networks powered by blockchain, including the following:

  • Compliance: A blockchain network that helps federal agencies and banking institutions reconcile, validate, and verify an entity’s financials and tax compliance.
  • Healthcare: A network that comprises healthcare providers, insurers and federal agencies that collaborate on patient records management, invoicing and reconciliation, and claims adjustment.
  • Inventory/component tracking: A supply chain track-and-trace network that can be used to validate the quality and authenticity of a component or material.
  • Telecom: Networks that anchor digital identity, preventing spam calls, enabling remittances, and settling roaming charges. These networks can comprise communication service providers (CSPs), networking original equipment manufacturers (OEMs) and federal agencies dealing with identities.
  • Trade finance: Networks that help effectively execute trade transactions by making Letters of Credit more accessible, enabling faster settlements, robust pre-defined contracts, and better compliance for both the lender and the creditor.

Impact of COVID-19 on the Blockchain Market

In the short-term, the coronavirus pandemic is expected to stifle investments in blockchain initiatives due to disruptions in cash flow. However, in the medium and long term, the pandemic and ensuing economic crisis is a catalyst for acceleration of innovation, as enterprises seek to build resilient and risk-optimized operating models and finding ways to create differentiated value. As enterprises rethink the blockchain business case for the next normal, the blockchain adoption wave will accelerate.

*** Visit Everest Group’s COVID-19 page for a Global Service Delivery tracker, recent reports, webinars, and more.***

Additional blockchain market insights:

  • The global blockchain services market generated between US$1.81 billion and US$1.83 billion in 2019.
  • Government backing and strong legislative movements have propelled the Asia Pacific (APAC) region as the leading geography with blockchain network adoption. Europe is the second largest blockchain market, followed by Middle East and Africa (MEA), which has emerged as the next big growth hub. Legislative gridlock and lack of government interest will continue to keep North America lagging behind.

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.

Only 1 in 4 Enterprises are Equipped to Thrive in the Next Era—New Everest Group Report | Press Release

For 68% of enterprises, digital initiatives have failed to deliver the fundamental objectives of achieving operational efficiency, cost optimization and process improvement

A new report from Everest Group delivers the ominous news that only one in four enterprises are equipped to thrive in the next era, despite mainstream adoption of digital technologies over the last decade. The disconnect is attributed to enterprises taking superficial approaches to technology investments without paying necessary attention to organizational readiness.

Everest Group surveyed 188 enterprises with US$1 billion or more in global revenue and found that:

  • 68% of enterprises have still not been able to realize the desired impact from their digital initiatives.
  • 44% of enterprises witnessed worsening of or no improvements in their operational capabilities or metrics in the last two years.
  • 20% of enterprises witnessed reduction of or no improvement in employee productivity in the last two years.
  • 57% of enterprises witnessed an increase in or no improvement in their operating costs in the last two years.

Everest Group warns that enterprises must adjust their strategies for digital adoption or continue to suffer from limited return on investment.

“A significant proportion of enterprises have not experienced any substantial benefits relative to their digital investments, as their heavy focus on technology disregards the softer aspects of digital transformation,” said Nitish Mittal, vice president at Everest Group and one of the report authors. “For successful digital transformation, enterprises need to rethink their strategies and adopt a digital operating model that, in addition to being built on a strong foundation of technology and talent, must prioritize governance, culture, and change management.”

Everest Group addresses strategies for making digital transformation a success in its new report, “Digital Services Market Report 2020: Digital Transformation: Triumph Beyond Technology Adoption.” The report addresses different digital transformation operating models and the parameters that govern them. In addition, the report offers an analysis of the digital services landscape by geography, industry and technology and assesses the digital maturity of enterprises as a whole.

***Download a complimentary 9-page abstract of the report here.***

Highlights of the Digital Services Landscape:

  • North America (46%) continues to dominate the global market share, closely followed by Europe (31%), where the United Kingdom is the leader accounting for 33% of the deals across Europe.
  • The split of digital services deals across different industries is slightly different in comparison to the overall IT services market. The banking, financial services and insurance industry (BFSI) continues to dominate the market (20-25%) followed by electronics and hi-tech (17-20%).
  • AI and cloud continue to be the most coveted and invested in technologies in the market with an adoption of 48% and 31% respectively.

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 Reports 30% Uptick in BFSI Sourcing Deals in Q1 as Consumer Demand for Mobile Banking Surges During COVID-19 Pandemic | Press Release

Rising enterprise demand for desktop services provides another bright spot in an otherwise sedate global sourcing market

The banking, financial services and insurance (BFSI) vertical segment of the global sourcing industry posted a 30% increase in transactions in the first quarter of 2020, reporting 116 deals compared to 89 in Q4 2019. According to Everest Group, this can be attributed to an increase in deals across North America as consumer demand for digital banking surged amid the COVID-19 pandemic. The BFSI vertical accounted for the largest share of deals during Q1 in both the information technology outsourcing (ITO) and business process outsourcing (BPO) markets.

Demand for desktop service also increased as enterprises looked to enhance workplace transformation services to enable and support a remote workforce.

Otherwise, Q1 activity in the global sourcing market was slightly depressed.

  • In Q1 420 transactions were reported, down slightly from 424 in Q4 2019 and marking the fifth straight quarter of decline in total outsourcing market activity.
  • The Global Business Services (also known as Global In-house Center) segment witnessed a significant decline in new center setups in both onshore and offshore locations owing to a substantial decrease in center setups by manufacturing companies in Europe and the Middle East and Africa (MEA) region. North America continued to dominate GBS activity in onshore locations, with new centers devoted primarily to engineering and business process services.
  • Overall location activity saw a decline across both offshore and onshore geographies driven by a significant reduction in center setups in the European region, comprising Central and Eastern Europe (CEE), Rest of Nearshore Europe (RONE) and Western Europe.
  • Activity across both tier-1 and tier-2/3 locations fell in Q1 2020 as compared to Q4 2019.

These global sourcing trends are detailed in Everest Group’s recently released Market Vista™: Q2 2020 report. Market Vista Q2 2020 includes data, analysis and insights on transaction trends, major outsourcing deals, Global Business Services (GBS) market dynamics, trends in offshoring from emerging destinations, and service provider developments (including latest developments on next-generation technologies such as digital services). The report also includes insights from the Standard Locations Database, which tracks 23 leading offshore locations.

***Download a complimentary 9-page abstract of the report***

Special Focus: COVID-19 Spillover Effect
The impact of the COVID-19 pandemic is being felt throughout the global sourcing industry. The Market Vista: Q2 2020 report includes a summary of key developments in 16 countries.

“The COVID-19 pandemic is very likely to lead to a global recession in the world economy, as nation-wide lockdowns have resulted in the collapse of value chains across sectors,” said report author Hrishi Agarwalla, practice director at Everest Group. “The global services industry is facing growing concerns in this downturn, particularly with respect to operating challenges such as employees’ inability to work remotely (especially in offshore locations), disrupted supply chains, and a larger proportion of benched employees. These challenges will certainly impact revenue growth and will add to cost pressures that will be visible in the next quarter. Hence, enterprise and service providers would be compelled to reassess their global sourcing strategy and increasingly leverage newer technologies during these harsh and testing times.”

For more information about the impact of COVID-19 on global sourcing, visit Everest Group’s COVID-19 page for complimentary access to a Global Service Delivery tracker, recent reports, webinars, and more.

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 Nails Global Services Growth Predictions for 2019, Names Most Attractive Sourcing Locations for the Year Ahead | Press Release

Enterprise focus on digital, engineering and R&D will be growth drivers in 2020, but pandemic, other macroeconomic trends will dampen growth rate yet again.

Everest Group’s predictions that the global services market would witness slightly lower growth in 2019 than 2018 was right on the money. Revenue growth in 2019 was 5%-7% as compared to 6%-8% in 2018. The slower pace of growth can be largely attributed to the global macroeconomic slowdown, volatile currency fluctuations, and the tightening legal and regulatory landscape, with Brexit in the United Kingdom and the European Union’s General Data Protection Regulation (GDPR) as two notable examples.

Looking ahead to 2020, these factors will continue to dampen growth even more, compounded by the disruptive impact of the coronavirus pandemic, apprehensions about an economic recession, trade conflicts between the U.S. and China, and decreased demand for traditional services due to digitalization and automation.

“We believe that the 2020 outlook for the services market remains uncertain,” said Parul Jain, practice director at Everest Group. “Enterprises will continue to rebalance portfolios to bring more critical pieces of work in-house, and leverage low-cost alternatives for non-core workstreams.”

Everest Group shares these findings in two recently published reports: Global Locations State of the Market 2020: Moving Forward in Turbulent Times and 2020 Location Predictions: Confronting the Impending Slowdown. Collectively, this research explores the nuances of the global services locations landscape and interprets locations-related developments and trends to help organizations design a best-fit locations portfolio strategy.

Selected Findings

  • Market activity for new center setups was high across regions, though new center setups grew at slower pace in 2019 over 2018.
  • For new center setups, engineering/research and development (R&D) and IT services continue to experience the highest growth.
  • Growth in Asia Pacific (APAC) locations is expected to be slower in 2020 than in the past few years due to the global macroeconomic climate, the impact of the coronavirus outbreak on Asian markets, and tightening laws in the data protection space.
  • Growth in Central and Eastern Europe (CEE) locations is expected to continue, albeit at a lower rate, given the region’s high-quality talent pool, geographical proximity to buyer locations and increasing leverage of digital technologies. Locations in Middle East and Africa (MEA) are likely to witness increased traction as companies look beyond the established delivery locations to unlock next wave of cost savings.
  • Moderate growth is expected in the Americas, given increasing nearshoring. Multiple players are setting up new centers across Latin American locations to provide voice-support due to the time-zone advantages.

Also included in the Global Locations State of the Market report is Everest Group’s Locations PEAK Matrix®, which provides a comprehensive view of the attractiveness of global delivery locations (cities) in terms of cost, talent availability and risk. The most attractive service delivery locations are deemed by Everest Group to be “Leaders”; “Major Contenders” are considered moderately attractive in terms of cost-savings and have a sufficient talent pool to support mid-to large-sized centers; “Aspirants” typically have lower maturity but offer low cost of operations and considerable opportunity if players invest in talent development. Locations that witnessed significant new center set-up activity by leading Global In-house Centers (GICs) and third-party providers in the past year are dubbed “Star Performers.”

Highlights of Locations PEAK Matrix®

  • Asia Pacific (APAC): Tier-1 locations in India maintain their “Leader” and “Star Performer” positions in English-language delivery functions. In India, tier-2 locations are being leveraged to a higher degree for access to an alternate talent market and higher cost-saving potential, especially for transactional business process services (BPS) and contact center work; however, large-scale delivery of complex functions such as digital services and engineering/R&D services continues to happen primarily from tier-1 cities. The Philippines are “Leader” for English-language contact centers, transactional BPS, and IT-ADM (application development and maintenance) functions.
  • Europe, Middle East & Africa (EMEA): Poland is “Leader” in European-languages BPS and a “Major Contender” for most functions. Poland also maintains its position as a “Star Performer” for BPS functions. Ireland is being leveraged considerably for judgment-intensive functions and European-languages BPS. Ireland also continues to witness high growth in engineering/R&D and digital delivery (including analytics, artificial intelligence and machine learning).
  • Americas: Argentina is “Leader” in bilingual BPS delivery and a “Major Contender” in other functions, such as IT-ADM, contact center and overall business processes. Costa Rica is “Leader” for bilingual BPS work and “Star Performer” for transactional and judgment-intensive BPS functions. Jamaica, Mexico and Guatemala maintain “Major Contender” positions for most functions.

***Download a complimentary abstract of “Global Locations State of the Market 2020: Moving Forward in Turbulent Times” here.***

About Everest Group

Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

Online Tool Uses Everest Group Data to Track COVID-19 Impact on Delivery Locations for IT and Business Process Outsourcing | Press Release

Tracker shows enterprise and service provider leaders how COVID-19 is affecting leading offshore and nearshore locations around the world.

Everest Group has created a dynamic and interactive tracker that provides a comparative view on COVID-19 risk exposure across locations and also how the risk has evolved in the last two months across 37 countries. The tracker is updated every weekday.

***Bookmark this page: https://www.everestgrp.com/covid-19-dynamic-tracker ***

COVID-19 has turned business continuity planning into a boardroom conversation topic and has enhanced the need for risk management. This is especially true in the IT outsourcing (ITO) and business process outsourcing (BPO) services industries, where—despite significant advancements in automation and AI—people still manually deliver the work.

“Enterprises and services providers have widely used the cost arbitrage model and expanded their delivery sites in offshore and nearshore locations globally,” said Sakshi Garg, vice president at Everest Group. “Everest Group developed this dynamic tracker to help organizations better track COVID-19 risk exposure to various delivery locations and thereby evaluate options to diversify their operational risk.”

Enterprises who are outsourcing or operating Global Business Service (GBS) centers can select the locations of their choice or locations in their existing portfolio and monitor risk exposure. They can also use the tool to select locations not in their current portfolio to assess options for medium- to long-term risk diversification.

Garg explained, “The tracker also helps leaders understand the IT-BPO delivery profile of the locations in terms of market size, nature of delivery (that is, IT or BPO or both), and evidence of adoption by other enterprises and service providers.”

The tracker has been built by combining publicly available data on COVID-19 cases, mortality rate, and recoveries with Everest Group’s proprietary data on delivery locations, which is based on ongoing tracking of 150+ locations across dimensions of talent, cost, market activity, and nature of work delivered.

About Everest Group

Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

6 Innovation Myths Busted by Everest Group Research on Global Business Services | Press Release

May 7 Webinar to Address How GBS Organizations Can Leverage Innovation to Prepare for Economic Downturn

For those enterprises striving to create a culture of innovation, Global Business Services divisions* can be an enormous asset, markedly accelerating the innovation journey and driving the enterprise innovation agenda, according to Everest Group research.

In its newly published report, Innovation in GBSs: Pinnacle Model® Analysis, Everest Group examines 51 GBS organizations and identifies Pinnacle™ (best-in-class) GBS centers—those entities that are achieving superior outcomes because of their advanced capabilities.

Collectively, Pinnacle GBS organizations debunk six common myths associated with innovation.

1.    Myth: Bigger and older GBS centers are not agile and lean enough to deliver better business outcomes. Reality: Bigger and older GBS centers deliver better business outcomes.
2.    Myth: GBS centers should not focus on in-house technology development. Reality: Pinnacle GBS centers primarily develop mature technologies in-house while leveraging ecosystem partners for niche technologies.
3.    Myth: Mature GBS centers deliver only high-end innovation. Reality: Pinnacle GBS centers focus mostly on incremental innovation.
4.    Myth: The GBS innovation team should have more leadership members to ensure better outcomes. Reality: Pinnacle GBS organizations exhibit a balanced team structure while other GBS organizations are more top-heavy.
5.    Myth: Centralized innovation teams in GBS centers and parents are essential to deliver business impact. Reality: A hybrid team structure at the parent level and an innovation head or dedicated steering committee at the GBS center level have proved to be more successful.
6.    Myth: Service providers and technology vendors are the most important value creators in the innovation ecosystem. Reality: Pinnacle GBS organizations extensively leverage a mix of service providers, technology vendors, and startups for driving innovation.

“The entities we’ve identified as Pinnacle GBS centers are adept at leveraging their unique position and capabilities to help their parent organizations build truly disruptive innovation capabilities,” said H. Karthik, partner at Everest Group. “This is demonstrated by significantly higher ROI and cost savings as well as operational and strategic impact.”

Pinnacle GBS centers have been able to achieve significant business impact by effectively driving their innovation engines. Here are a few examples:

  • Cost impact: Pinnacle GBS centers generated 1.5X higher return on investment (ROI) and cost savings than other GBS centers. An example of an innovation initiative with cost impact is identifying potential opportunities to consolidate multiple product lines and processes, thereby realizing the benefits arising from economies of scope.
  • Operational impact: Pinnacle GBS centers have achieved 1.9X greater operational impact than other GBS centers. For instance, a leading Banking, Financial Services and Insurance (BFSI) GBS organization built a smart contracting platform to seamlessly process unstructured data and automate multiple transactional processes, reducing FTE time.
  • Strategic impact: Pinnacle GBS centers delivered 1.6X more strategic impact than other GBS centers. An example of a GBS center having significant impact is a leading electronic and hi-tech GBS organization who leveraged next generation technology solutions to revamp its existing cold chain to preserve and increase the shelf life of perishable goods and chemicals, ensuring the quality through last-mile delivery to the end customer.

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

May 7 Webinar: How GBS Centers Can Leverage Innovation to Prepare for the Economic Downturn

Everest Group is hosting a complimentary webinar to assist senior enterprise executives in understanding how they can effectively leverage their GBS organizations for driving the enterprise innovation agenda. The webinar will address these questions:

  • For what kinds of innovation initiatives are enterprises leveraging the GBS model?
  • How does the current uncertain environment present a significant opportunity for GBS centers to build and demonstrate innovation?
  • What business outcomes have Pinnacle GBS centers delivered for their organizations?

The live webinar will be held on Thursday, May 7, at 9 a.m. CDT.

***Register here.***

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

*Note: For the purposes of this report, Everest Group uses the term GBS to include Shared Services Centers (SSCs), Global In-house Centers (GICs) and Global Capability Centers (GCCs), although distinctions in these business models can be made.

GBS Share of Market Expands to 27%, with 54% of New Setups Focused on Digital Services | Press Release

Setups of Global Business Services centers outpaced outsourcing growth in 2019 as enterprises looked in-house for high-value contributions beyond arbitrage

Everest Group reports that the Global Business Services (GBS) market1 commanded a 27% share of the US$210 – $212 billion global services market in 2019, outpacing the growth of outsourced services and continuing the segment’s gradual increase in share of market over the last decade.

Enterprises are extensively leveraging the GBS model to accelerate enterprise-wide digital transformation initiatives, with approximately 54% of new GBS centers focusing on digital services. In particular, GBS centers in the engineering services and research and development (R&D) space have gained traction during the last couple of years, with focus on building deep capabilities in areas such as machine learning (ML), artificial intelligence (AI), internet of things (IoT), mobility, analytics, cloud, and cybersecurity.

GBS organizations are also undergoing changes in their operating and governance models, driven by three key needs: building greater alignment with business teams, building agile organizations, and improving performance reporting mechanisms. As a result, GBS organizations are increasingly:

  • moving from a horizontal to a vertical reporting model.
  • shifting to dual-responsibility leadership roles where the site-head’s responsibilities are entrusted (or co-trusted) to other functional leaders.
  • collapsing IT and operations silos into integrated teams focused on business objectives.
  • taking global ownership roles across various domain or functional areas.
  • deploying a wide array of metrics to measure value beyond costs.

“GBS organizations are evolving to become strategic partners to enterprises, playing a significant role in enterprise digital transformation journey as they continue the move from an ‘arbitrage-based model’ toward a ‘value-based model,’” said Rohitashwa Aggarwal, practice director at Everest Group. “We see GBS organizations building deep domain capabilities and shifting to operating models that allow them to build “agile” into their core philosophy and to work closely and freely with key global business leaders. Another major shift is in evaluation—GBS organizations are linking their goals to business- or domain-specific targets and shifting beyond cost-arbitrage as the key metric of performance to a wide array of operational, financial and innovation-related indicators.”

Everest Group shares these findings in its recently published report, GBS State of the Market Report: Evolving Operating and Governance Models to Build GBS of the Future. This report analyzes the GBS landscape, sharing key insights on the GBS market across locations, verticals, and functions.

Additional Findings

  • The GBS market continues to experience strong growth, with 3,300 offshore and nearshore GBSs established until 2019.
  • The GBS model continues to attract new adopters. Around two-thirds of the companies that established GBS centers in 2019 were new entrants with no existing offshore or nearshore GBS facility. At the same time, there are several global companies that have divested their GBS operations, mainly due to talent-related challenges, especially for IT services.
  • India dominates delivery, with a 35-40% share of the overall GBS market. U.S.-based companies are especially inclined towards leveraging India; approximately 58% of the total GBS centers in India are set up by U.S.-based companies.
  • European firms prefer the Central and Eastern European (CEE) region (39% of GBS centers in CEE belong to European firms) due to geographical and time-zone proximity. However, in 2019, the share of U.S.-based companies in the mix of GBS setup in CEE increased considerably.
  • APAC-based firms experienced an increase in overall GBS activity, driven by an uptick of 80% in R&D GBS centers set up by enterprises in China.
  • GBS setups by small companies (annual revenue less than US$1billion) have increased on the back of higher demand for R&D and innovation. In 2019, small companies’ GBS setups increased by 22% over 2018.
  • A majority of GBS centers focus on delivering a single function, such as information technology (IT) or voice-based business process services (BPS), but many (44%) have multi-functional capabilities such as a combination of R&D and IT capabilities.
  • Technology and communication firms lead GBS activity in terms of the number of GBS centers (38%); but the banking, financial services and insurance (BFSI) sector dominates in terms of scale (34%).

***Download a complimentary abstract of this report.***

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

1Everest Group uses GBS as the preferred term for in-house Global Business Services setups, which are also referred to as Global In-house Centers (GICs), shared services, global capability centers, or captives. The scope of this research does not include GBS centers serving the domestic market.

Everest Group Predicts Significant Slowdown in Revenue for Third-Party Administrators as Needs of Insurance Industry Shift | Press Release

Insurers’ extreme focus on employee and customer experience is forcing TPAs to adapt their offerings beyond commoditized services by leveraging digital technology.

Some third-party administrators (TPAs) are building the requisite capabilities in talent, technologies and data to address the changing needs of the insurance industry, but most TPAs lag behind. Everest Group reports that the top 10 US TPAs suffered a significant drop in year-on-year revenue growth, falling from 20% for 2017-2018 to 5-10% for 2018-2019. Everest Group predicts the slowdown will continue in the year ahead under the impact of the COVID-19 crisis as TPAs look to battle against the falling demand and the changing requirements of insurers.

“Insurers’ extreme focus on employee and customer experience is forcing TPAs to adapt their offerings beyond commoditized services,” said Skand Bhargava, practice director at Everest Group. “Most of the digital-led use cases that TPAs have implemented thus far are low on the sophistication scale when compared to the use cases implemented by insurance IT or Business Process Outsourcing providers. However, some leading TPAs have showed signs of change, making intensified digital investments in more new-age partners and technologies, such as the use of IoT sensors, artificial intelligence, predictive image analytics, telematics and predictive modeling. As a result, these more innovative TPAs are reaping differentiation in the market and positioning themselves for success amidst recessionary pressures because of the greater value they are providing for their clients. Going forward, those TPAs who deliberately commit to well-executed digital transformation will not only deliver a more progressive value proposition to clients but also secure the relevance of the overall industry, especially considering the current environment.”

Third-party administrators are commonly used by health insurance providers as well as enterprises or healthcare organizations who fund their own health plans for employees. TPAs assist these organizations with claims administration as well as premium billing, customer enrollment, and other day-to-day operations of insurance programs.

Currently, the Top 10 TPAs in the U.S command only 3-5% of a $270 billion market, with some of the largest TPAs functioning on single-digit operating margins and very few keeping pace with digital transformation. By leveraging digital technology, TPAs can improve margins, drive differentiation, address operational challenges, enhance talent throughput and ensure client retention. In the longer term, digital adoption can help TPAs adjust to changing risks and move up the value chain to manage critical tasks.

Everest Group shares these findings in its recently published report, Third Party Administrator (TPA) State of the Market Report 2020: Industry Facing an Urgent Mandate to Transform. This report examines the global TPA market, particularly the property and casualty (P&C) and workers’ compensation insurance segments, including changes in client demand patterns and delivery requirements from TPAs, and the role and adoption of digital levers.

Additional Findings

  • For property and casualty (P&C) and workers’ compensation insurance, TPAs are primarily restricted in the value chain to end-to-end claims management.
  • For employee benefits—both life and pension (L&P) and health insurance—TPAs play a more end-to-end administration role.
  • While there are multiple growth drivers for the TPA industry, such as expansion in the scope of services and carrier outsourcing, there are a number of impending challenges as well that restrict the growth opportunities.
  • Intelligent automation, mobility, predictive analytics, drones, and cloud-based modern claims platforms are the five key digital and technological enablers for the transformation of the TPA industry.

***Download a complimentary abstract of this report.***

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

Growing at a Steady 9% Pace, IT Services in Life Sciences Drives Advancements in Pharmaceuticals, Medical Devices, Supply Chain | Press Release

Nearly $4.5 billion of life sciences IT services deal up for grabs over 2020-2021

Speed to market is the primary focus of biopharmaceutical and medical device firms when it comes to their investment in life sciences IT services (ITS), a market which is expected to grow at a steady 9% compound annual growth rate (CAGR) through 2025, according to Everest Group.

Nearly $4.5 billion of life sciences IT services deal are up for grabs over 2020-2021. Everest Group research shows that these deals will be led by digital initiatives such as artificial-intelligence-assisted drug discovery, leveraging real-world data (RWD) and real-world evidence (RWE) to make clinical trials more accurate, industry 4.0 to automate manufacturing, and responsive supply chains.

Everest Group reports that although biopharmaceutical companies and medical device firms have traditionally devoted the largest share of their ITS investments to manufacturing (31% share) and sales and marketing (25% share), research and development (R&D) has become the fastest growing segment of life sciences ITS expenditures. ITS investments in clinical/device trials and drug discovery/device product development are expected to grow at rates of 15% and 12% respectively through 2025.

“Rising drug prices have become a major concern for healthcare payers, governments and patients, especially since drug and device efficacy and outcomes have not been improving in line with the increasing prices,” explained Nitish Mittal, vice president at Everest Group. “As life sciences firms face pushback on pricing as well as pressure from competitive forces, they can and will look to the IT services landscape for innovative platforms and solutions for R&D functions. As a result, we expect the life sciences R&D segments to witness a healthy growth in demand for IT services in the 12-15% range, compared to an 8-9% growth rate for the life sciences ITS market as a whole.”

Digital transformation has been identified as a strategic imperative by many life sciences enterprises, with particularly emphasis on leveraging enormous amounts of health data now available from electronic health records (EHR), clinical trials, wearables, health apps, genomic sequencing, social media and many other sources. Enterprises are looking at AI-driven systems to leverage this RWD. For example, about 60% of biopharmaceutical companies currently use machine learning to analyze RWD; 95% expect to use it in the future.

ITS providers are significantly ramping up their digital capabilities to cater to this need. Everest Group predicts that numerous high-growth segments in the life sciences ITS market will exceed 10% CAGR from 2020 to 2025, including the following:

  • Clinical trials management (13-15%): Top demand themes will be pharmacovigilance (PV) automation, pragmatic trials using real-world data (RWD) and real-world evidence (RWE), and virtual trials enablement.
  • Personalized and efficient drug discovery (14-16%): Top demand themes will be genomics data analysis and drug repurposing solutions.
  • Patient engagement (16-18%): Top demand themes will be digital therapeutics and Software as a Medical Device (SaMD), including mobile apps, patient portals and smart devices. Patient monitoring and health interventions will be top demand themes as well.
  • Omni-channel marketing support (10-12%): Top demand themes will be customer analytics to measure success of different marketing channels, and customer cohort segmentation and engagement through customized digital marketing campaigns.

Everest Group shares these findings and more in its recently published report, Life Sciences State of the Market – Key Trends, Service Provider Performance in 2019, and Outlook for 2020. This report examines the global 2019 life sciences ITS service provider landscape and covers themes expected to garner greater interest in 2020. It analyzes key market trends and provides a snapshot of all the life sciences IT services PEAK Matrix® assessments carried out in 2019.

***Download a complimentary 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. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

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