Category: Blog

Service Provider Portfolio Strategies: Less is More in the Next Normal | Blog

Historically, large buyers of outsourcing services, i.e., Fortune 500 firms, outsourced their mid- and back-office functions to a single service provider. In the late 1990s, when BP outsourced its business processes to PWC, it was the largest F&A contract in the history of outsourcing, and PWC served BP in multiple geographies. This outsourcing construct was part of a consistent outsourcing wave – many companies outsourced their non-core operations and moved work out to one or two service providers, achieving cost savings as well as the leverage of being able to focus on their core operations.

As outsourcing became increasingly common, buyers began distributing the workload between multiple service providers to create pricing and performance pressure on incumbents. They also started treating their suppliers with a heavy-handed approach, demanding the best price from them, continuously pitting them against their competitors, and expecting optimal service at all times. While this strategy created competitive pressure and mitigated concentration risks, it also led to turf wars between service providers and increased administration costs for companies, resulting in lower efficiency, less control over quality, and ultimately, higher costs as the number of suppliers grew.

Procurement professionals are known to spend their time slicing and dicing through their spend and supply base and observing it from multiple angles to identify ways to drive savings and optimize their supply base. Interestingly, uneven distribution of spend across suppliers and large amounts of tail spend are still key factors that emerge as problems from a thorough spend assessment. Many firms are known to struggle with hidden costs related to non-strategic maverick purchases, which could be better managed if there were clear visibility and alignment on channeling spend through select few suppliers. Additionally, depending on the size of a firm, these purchases can represent hundreds and thousands of suppliers, who are often engaged to fulfill local demands or are part of just a few transactions.

Circa 2020-21, history has returned. Many companies seeking to drive efficiencies across their supplier portfolios are implementing consolidation strategies wherein they are moving towards fewer, more capable service providers. Mostly seen in contact center outsourcing, over the last several years, buyers have been moving away from smaller contracts with multiple providers to a select group of large providers handling larger parts of their operations. There has also been an increase in multi-geography contracts, which indicates buyers are consolidating their global engagements across multiple countries to simplify their operations and offer a consistent customer experience. These large providers (such as Accenture and TCS) can be typically characterized as having a large scale of operations, greater than 100,000 FTEs, a delivery presence across multiple geographies, and greater than $1billion in revenue. As larger service providers have established a global footprint, concentration risks are not a major cause of concern for buyers anymore in outsourcing constructs. During the pandemic, the surge in outsourcing demand accelerated some improvements related to supplier portfolios – a major impact was companies restructuring their supplier portfolios. The pandemic triggered organizations who outsource to increase their focus on risk management, as well as increased their need to digitally transform – which requires a set of new capabilities from providers. As a result, companies are looking for ways to balance needs while reducing costs by restructuring their portfolios. In 2021, 76 percent of companies we surveyed planned to make changes to their service provider portfolios.

In one example of a supplier consolidation activity that we observed in the past, a large software company underwent a supplier consolidation program aligned to its broader supplier relationship management strategy intending to reduce risk to the business, deliver cost savings, and improve supplier performance. Suppliers were segmented in line with the firm’s internal stratification model (strategic, core, and others), which led to the elimination of many tail suppliers, choosing to award business to strategic or core suppliers where they possessed the same or similar capabilities as a tail provider. Throughout the process, the team identified several potential obstacles and built strategies to mitigate them.

Needless to say, supplier consolidation is beneficial for the larger (and more capable) service providers as they receive the bulk of operations from tail providers. Thus, it is not surprising that outsourcing momentum was continuously high despite the pandemic last year for these select leading service providers.

Image source: Market Vista™: 2020 Year in Review and Outlook for 2021

In general, supplier consolidation offers multiple benefits:

  • Reduced risk: By having a smaller number of suppliers, the exposure to risk through data breaches, financial irregularities, or other risk factors are reduced and can be managed proactively. For instance, a firm in a regulated industry discovered their supplier was undertaking fraudulent billing practices – the supplier was found billing for eight resources on a project when just five were real. This was uncovered when the same five people would show up to meetings, and three names were fictional. Another firm found that their supplier exposed clients to ransomware, causing several systems to be taken offline. In a WFH context, firms are reducing the number of relationships to minimize the potential threats that surface
  • Cost reduction: When a firm channels spend through suppliers they consider strategic and engage them as partners to the business, it is likely that the supplier reciprocates and makes the firm their preferred customer. This allows companies to get better payment terms, service quality, improved quality of products, and comfort of having never to worry about delivery quality of services. While channeling greater spend, companies can obtain negotiated rates that capitalize on a greater spend with a smaller number of suppliers resulting in lower costs and book of business discounts. We have observed that firms typically achieve 22-28 percent savings purely through supplier rationalization efforts for outsourcing partners
  • Improved performance: Working with a smaller set of suppliers enables the company to select the best performing suppliers by category and to be able to closely manage performance and easily monitor business KPIs and SLAs agreed with the supplier. It enables the company to define supplier management processes and reporting to track performance and engage suppliers to drive performance improvement activities where gaps are identified through continuous improvement sessions with suppliers
  • Increased efficiency of operations: By having a smaller number of suppliers to manage, it can improve the performance of the internal supplier management organization, increasing efficiency and leading to reduced internal costs, including supplier management costs and transaction processing costs. Furthermore, the ease of knowledge transfer, use of proprietary technologies, and improved relationship management at a global level are sure shot benefits of moving toward fewer service providers

 While undertaking supplier consolidation, a recommended approach is to start from the basics.

  1. Firms generally start by developing an understanding of the supply base to identify the spend and type of work placed with existing suppliers and the departments conducting the work
  2. The next step is to examine the needs of the business for each spend category versus the performance and cost structure of current suppliers. Those that deliver a niche service (for instance, providing a skill set that is not available in the marketplace) may be retained if performance is strong. Consolidation opportunities may exist if certain activities could be performed effectively by multiple suppliers. Balancing competition is important to ensure costs stay in line and there are incentives to perform
  3. Decision-makers need to ask themselves a defining question about the services they are buying. For example, “If I didn’t already own this, how much would I spend to buy it?” Answering this with cost modeling tools and competitive bidding helps build a supplier consolidation strategy by identifying which suppliers should be used for key activities and accordingly renegotiate contracts, to take full advantage of a reduced set of suppliers and greater spend with the selected subset

Throughout this process, it is paramount for a firm to implement governance to ensure that the business is complying with supplier consolidation strategy and supplier cost, performance, and continuous improvement initiatives are effectively managed.

A final crucial aspect in supplier consolidation is overcoming stakeholder reluctance to change by involving them early on in the consolidation process to avoid surprises, and continuous stakeholder education on the organizational benefits of consolidation. Overall, top-down communication is key so that these initiatives are not perceived as a “procurement” project but rather as a strategic business initiative.

Taking all these factors into consideration, are YOU making the right decisions with respect to your outsourcing portfolio strategies? We are looking at service provider portfolio decisions in outsourced services categories. Take our study on Portfolio Strategy in Outsourcing to find out more.

Why Business Process-DevOps will be a Transformative Pillar in the BPS 4.0 Era | Blog

Over the past 20 years, the BPS (Business Process Services) industry has conditioned and advanced itself and become a relied upon force, even when the global business environment was in flux. Not only did the proven business model draw in the world’s top enterprises, but the industry successfully evolved in terms of value proposition and associated levers to meet changing business requirements.

The threat of COVID-19 brought disruption, but the industry emerged from 2020 more agile and dynamic, applying its newly learned strengths to build the next generation of evolution — BPS 4.0.

Everest Group’s BPS 4.0 report, Business Process Services (BPS) 4.0: Heralding the Start of a New Era, outlines five strategic levers designed to help industry stakeholders stay on top of business developments as well as new initiatives that organizations can take hold of. One of the new components of BPS 4.0 that businesses will want to pay attention to as they strive to advance and move on from legacy models is a Business Process-DevOps-style approach, wherein cross-functional teams collaborate closely to drive agility and speed in go-to-market strategies and decision-making.

In this blog, we will delve into the Business Process-DevOps (BP-DevOps) lever of BPS 4.0 and further explain why it’s not only a pivotal addition to business processes but how businesses can start thinking to adopt it.

What is BP-DevOps?

BP-DevOps extends the concept and application of DevOps, which originated on the IT side, into the business process operations. It combines development and operations principles across IT and business processes that ultimately increases an organization’s ability to deliver services at a much higher velocity. With a re-thinking of tools, frameworks, team structures, and philosophies, organizations can evolve and improve products and services faster than traditional processes. The speed and efficiency enable organizations to better serve their customers and compete more effectively in the market. There needs to be buy-in at all levels; however, so that there is end-to-end adoption for the model to work to its fullest and companies can gain the most value.

For example, for a function or a sub-set of that function (say, campaign management in marketing), development, IT operations, and business process operations will need to be combined. This cross-skilled team becomes fully autonomous with end-to-end responsibility to build, deploy, run, and improve the overall process with agility. The speed of decision-making and nimbleness to respond to changing market dynamics are the key objectives to get this model right.

Why now is the time to implement BP-DevOps

BPS 4.0 stems from the drivers of BPS 3.0, one of those drivers being a move away from legacy processes and technologies and towards digital and next-gen services across all departments. The goal of becoming the technology-enabled organization is still a top priority, and BP-DevOps can act as a stepping-stone toward digital transformation. This is because the digital era demands business processes and underlying tools and technologies that are more flexible and capable of responding to the changing needs of the businesses, which falls right in line with the BP-DevOps model.

BP-DevOps can also help organizations to remain agile. And if we learned anything from 2020, it was that business models that cannot adapt often get left behind.

Additionally, the report revealed that, of the 550 BPS executives who were polled across industries, a majority (88%) agreed that COVID-19 has hastened transformation, accelerating the speed in which technology is being adopted and on a much larger scale than originally projected, making the agility and flexibility that comes with BP-DevOps models even more coveted.

Where and how to begin adopting BP-DevOps?

BP-DevOps can be adopted across the organization, but areas that are more dynamic (for example, customer-facing functions such as sales, marketing, etc.) are better candidates to start with. Further, given this concept is still relatively early in its maturity, we suggest hitting one benchmark at a time. Consider it like hitting base hits instead of home runs. They also need to make sure that their BP-DevOps roadmap aligns with strategies and alongside other digital transformation efforts.

Discover more about BP-DevOps, the remaining four levers, and how to shape a BPS model using the 5D approach in this on-demand webinar: How to Attain Value from the Next Generation of Business Process Services, BPS 4.0.


The Emergence of Distributed Agile Software Development: an Old Weapon with New Firepower | Blog

Imagine brainstorming your customers’ journey with digital holograms of globally located developers, user experience (UX) designers, and business leaders, all collaborating organically with each other’s 3D replicas – something straight out of Star Wars and other sci-fi films! Such virtual interactions may be coming closer to reality with application software development kits (SDK) like Microsoft Mesh, a photo-realistic AR/VR application SDK for creating holograms, recently released at Microsoft Ignite 2021.

The advent of tools like Mesh makes it clear that the second wave of digital transformations will empower creators and communities and expand economic opportunities for global workforces. This comes as no surprise since the COVID-19 pandemic has driven lasting changes in the enterprise IT operating model as technology further becomes the foundation of doing business.

Enterprise IT functions are now expected to deliver enhanced employee experiences, rapidly adapt to business requirements, and mitigate operational risks to drive sustainable growth. These coincided with the pre-pandemic focus on personalized customer experiences and the pandemic-induced need for work-from-anywhere models.

The evolution of a new Agile

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Agile software development has come a long way from its conception in the Agile Manifesto near the turn of the century. Since then, the traditional and widely accepted model with offshore and onshore delivery has helped many enterprises derive value out of their software and operations.

The pandemic threw the Agile model into chaos and tested its limits as the lockdowns bound team members to their homes. As enterprises rapidly transitioned into an Agile++ model, they replicated the processes, governance, and workflows of traditional Agile development. The pace of change also pushed the importance of remote collaboration and productivity technologies to connect teams to the forefront.

The increasing need for continuous value delivery alongside risk-efficient, employee-centric operations is driving enterprises to adopt the Distributed Agile methodology. In fact, 40 percent of the enterprises that participated in Everest Group’s 2021 Key Issues in Global Sourcing study are looking to adopt Distributed Agile as their de facto software development model.

True Distributed Agile

The next generation of Agile embraces a natively distributed nature. In a Distributed Agile model, communication, processes, and workflows are optimized for remote delivery. This is achieved by divesting focus from a location-based team model and building virtually proximate global feature pods. The operating philosophy rests on product teams structured as core teams comprised of architects and Agile feature pods. Each feature pod is laser-focused on end-to-end product features with no notions of an offshore-onshore construct. The Distributed Agile model will have a flexible location mesh covering:

  • Hub (key delivery location)
  • Spoke (secondary delivery location)
  • Satellite (tertiary location)
  • Work from home

Benefits of Distributed Agile

Significant cost savings: Contrary to typical apprehensions about the cost implications of Distributed Agile development, a feature pod approach is expected to cut operational costs by as much as 13 percent compared to a traditional Agile model.

Improved talent models: The location-agnostic nature of Distributed Agile helps improve access to quality talent by two to five times compared to traditional models. The overall increase in talent quality will overpower concerns around running virtually and an associated drop in productivity. A wider pool of candidates will make it easier to hire for niche skills in both older and emerging areas.

Enhanced BCP / Resiliency: In the Distributed Agile methodology, the risk of environmental disruptions is apportioned across various regions creating a more resilient business continuity model. The fundamental overlap of skills in a feature pod allows teams to manage short-term disruptions with ease.

Improved delivery model flexibility: The Distributed Agile model helps source talent from multiple locations, creating flexibility in the traditional pyramid. With virtual interaction as its foundation, this model allows firms to shift out of onshore/offshore delivery into location agnostic application delivery.

Societal and environmental benefits: Increased location flexibility allows employees to allocate more time for personal endeavors, thereby improving overall work satisfaction. Spoke and Satellite offices for a distributed workforce can rejuvenate smaller cities.

Setting the foundation for Distributed Agile

Because a Distributed Agile model fundamentally rethinks enterprises’ IT organization, substantial change in processes, people, and structure will accompany the technological shift. It will require a cultural and mindset shift at all levels of the IT organization that prioritize non-invasive governance and autonomy. Such a cultural shift can be built on what we named a foundation of TRUST.

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Transparency: A change effort as extensive as this will compel enterprises to focus on measuring the productivity of adopting teams. Having holistic metrics that track the efficiency, efficacy, and timeliness of the team will equip enterprises with the information necessary to ensure lasting impact. This can be done by adopting practices such as using virtual whiteboard repositories, creating healthy backlogs with well-refined stories, clearly separating work duties, and optimizing the use of overlapping hours across the team locations.

Resilience: A Distributed Agile model creates a new set of vulnerabilities that need to be mitigated through a thorough leftward shift of security in the development process. Inclusion of security early in the development process relies on educating developers and testers on security aspects, including security as a key criterion in user stories, periodic reviews of security practices, and automated security across the CI/CD pipeline.

Understanding: This is about a stronger emphasis on softer work aspects that build psychological bonding between team members. Success in a Distributed Agile model will rely heavily on catering to employees’ self-actualization with critical focus on independent ownership, familiarity with members, and empathy for the individual members’ motivations and challenges.

Self-reliance: Driving self-reliance in a distributed agile setup will require following a ”Team of Teams” construct that provides autonomy to feature pods. Emphasis will also be placed on non-invasive governance through Scrum Masters for each team with a centralized scrum of scrums approach.

Tech bedrock: Technology will need to be seeded as the enabler of the shift to the Distributed Agile model. The IT backbone needs to be supplemented with a wide array of tools to foster collaboration, drive productivity, improve knowledge management, and enable continuous improvement.

As businesses emerge from the pandemic, we expect enterprises to consider shifting gradually to a Distributed Agile model. And we expect initiatives with high people complexity to be prime candidates for the first wave of adoption, followed by those with high project complexity. Enterprises can accelerate their adoption of Distributed Agile by engaging IT service providers to simplify and guide them through the change.

If you’d like to learn more about the Distributed Agile landscape, please reach out to us at [email protected], [email protected], and [email protected].



Enterprises’ Satisfaction with their IT Service Providers Jumped 21 Percent in 2020 | Blog

We’ve been publishing our IT Services Enterprise Pulse Report for four years and have never before seen a 21 percent jump in enterprises’ satisfaction with their IT service providers, but that’s exactly what happened in 2020. Despite – or rather because of – the enormous uncertainty and multitude of challenges enterprises faced with the global pandemic, the participants in our IT Services Enterprise Pulse Report 2021 approvingly recognized that their IT services partners understood their pain points and proactively supported them in adopting a digital-first operating model through their investments in cloud, security, and data. These investments have proven to help fill the supply-demand gap for next-generation digital technologies in the IT services industry.

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 What are enterprises’ future priorities?

As we move ahead into the post-pandemic environment, enterprises are mainly aim to fuel their investments in technology to reduce their costs, grow their revenue, and enhance their risk management and regulatory compliance measures.

Just over 80 percent of the enterprises cited cost reduction as their key focus as they start embracing the shift to a digital-first business model, consisting of increased automation initiatives, accelerated cloud adoption, modernization initiatives, and rationalization of their infrastructure, applications, and platforms landscape.

About 46 percent stated they are looking at innovative ways to grow their revenue channels, mainly through improving customer experience, delivering hyper-personalization, pushing newer products into the market, and expanding into new territories.

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What do they expect from their IT service providers?

The pandemic has created a need for service providers to up the ante and adopt a partnership mindset towards their clients. Enterprises want their service providers to stand beside, not behind them. That means IT service providers need to align their technical decision making with their clients’ strategic interests. They also need to be able to sell the business outcomes of their technology investments to their clients’ senior leadership.

With the increasing number of uncertainties created by the pandemic, enterprises stated that they prefer service providers who adopt a proactive, rather than reactive, approach towards monitoring potential challenges and are highly responsive to changes in the status quo. They want them to bring new and innovative ideas to the table and be up-to-date on the latest technologies and what their competitors are doing.

Businesses around the world struggled with managing onshore attrition and offshore productivity during the pandemic. To ease their talent management woes, the participants in this study made it clear they want their IT service providers to invest in local talent and resources so they can have feet on the street with better understanding of the regional regulations of their business.

The shift in value proposition and expectations

In a separate study we conducted – Recalibrating for Resiliency – 2021 Key Issues in Global Sourcing – Enterprise IT Perspective – we found that the top priorities enterprises expect from their IT service providers are productivity and service quality, followed by flexibility, ability to adapt to new business models, and the ability to bring innovative ideas to the engagement. These all map back to what enterprises stated in the various IT Services PEAK Matrix® reports in our IT Services Enterprise Pulse Report 2021.

Interestingly, more than 70 percent of the participants in our Key Issues study stated that they are optimistic about meeting or exceeding their 2020 targets, and about 70 percent of the participants in our 2021 Pulse Report expressed their satisfaction with their IT service providers.

To sum up, the pandemic has pushed the pace for adopting a digital-first and, in some cases, a digital-only working model for global enterprises. Service providers have made the right investments in cloud, security, and data, which helped fill the supply-demand gap for next-generation digital technologies in the IT services industry. This has led to an increase in enterprises’ satisfaction with their service providers who have fared well in fulfilling the sudden upshift in demand but has also set newer expectations going forward.

To take a deep dive into the specifics of enterprises’ priorities, how the demand is shifting, and how IT service providers need to adapt to changing expectations, read our report, IT Services Enterprise Pulse Report 2021, or reach out to us at [email protected] and [email protected].

The Rise of Core Life and Annuities Insurance Platforms | Blog

Disruption in the Life and Annuities (L&A) insurance industry has been brewing for some time now, and the COVID-19 crisis has added more fuel to the fire. L&A insurance carriers are facing a host of challenges, including a demand slump, profitability pressures, complex regulatory compliance mandates, and an uncertain macroeconomic environment. At the same time, consumers want more direct channels and are demanding digital experiences and products.

L&A insurers’ ability to satisfy their customers’ emerging and evolving needs has been hampered by a plethora of antiquated core systems built on old technologies. Now, carriers are actively looking to jettison this legacy burden by adopting core, cloud-based platform software solutions that have an open architecture and are readily configurable to deliver modern policyholder experiences. Indeed, they are viewing core system modernization as a strategic mandate to enable digital transformation and drive digitalization across the insurance value chain to offer new experiences and improve service quality. They recognize that taking a cloud-based platform approach to modernization will drive improved operational efficiency, agility, scalability, accelerated business value realization, and better front-to-back customer experiences. They also understand that implementing a platform-first operating model will ensure their business operations are more resilient to future challenges and black swan events such as COVID-19.

The technology vendors’ changing value proposition

Technology vendors are responding to L&A carriers’ new requirements by building digital platform capabilities across the insurance value chain and evolving from being just pure-play product vendors to being SaaS players, with a growing portion of their revenues coming from subscription and support services. They are investing heavily in platform solutions with a high degree of cloud-readiness to enable rapid time-to-value for insurance carriers. They are focusing on building modularized platform solutions with a modern technology architecture that are API-driven and microservices-enabled. Enabling business-friendly, codeless configuration while supporting extensive out-of-the-box functionality is also a key vendor priority. That is because it will help carriers reduce platform implementation costs and time, seamlessly make platform enhancements and upgrades, and effortlessly integrate with other B2B partners to harness the immense potential of the insurance innovation ecosystem.

The partner ecosystem

As the market evolves and expands, there is a greater need to rethink partner strategy to succeed. The right set of partners can greatly enhance the value proposition of any core platform for a carrier. As a result, L&A core platform technology vendors are strategically focusing on expanding their partner network with InsurTechs, implementation and SI partners, and other third parties to create more opportunities for innovation for carriers. Having a multitude of options to seamlessly plug-and-play different kinds of offerings – such as unstructured data sources, analytics applications, and automated claims management portals – is a win-win situation for all the parties involved. Thus, bringing in different pre-built solutions from multiple partners, bundling of offerings from InsurTechs, and the depth of integration expertise of technology and system integration partners, are becoming quintessential to beat the competition, enable sustained growth, and drive differentiation for the core platform technology vendors.  Having a sound partnership strategy allows carriers the flexibility to individually pick and choose added functionality from the ecosystem that they want on top of the core.

Core platform systems are the foundation on which insurance carriers run their business. L&A insurers are increasingly recognizing that to compete in the age of digital insurance, they need a cloud business platform with modern, data-driven capabilities that enables rapid product innovation and delivers speed to implementation, speed to market, and speed to revenue. With customer experience becoming a game-changer for the industry, the need for carriers to drive a modernized core is becoming paramount to drive growth and differentiation in a post-vaccine world. This provides core platform vendors a tremendous opportunity to support insurers on their core modernization journey by providing innovative platform solutions to create digital-first stakeholder experiences and drive strategic impact on insurers’ businesses.

To learn more about the ongoing trends in the L&A insurance core platforms market, please read our recently published report, Life & Annuities (L&A) Insurance Core Platform Software Adoption Trends – Unlocking Efficiency and Growth for L&A Insurers. Or, you can reach out to [email protected], [email protected], or [email protected] to talk in more detail about the trends.

Everest Group is also conducting a market study of leading policy administration platforms in the L&A insurance industry. This is the inaugural edition of this study, and we are excited to invite all the leading platform vendors to participate in our research. Please see the invitation here. You can also contact [email protected], [email protected], or [email protected] to learn more about the participation process.

Access the Invitation for participation in Policy Administration Platforms in the Life and Annuities (L&A) Insurance Industry Market Report.

The Next Multi-Billion Dollar Opportunity for IT Services and Consulting Firms as BFSI Enterprises Embrace ESG Integration | Blog

The number of Environmental, Social, and Governance (ESG) investing-related announcements coming today from banks and financial services firms have gained momentum. Banks are continuously building new ESG products and services like green loans, sustainability-linked loans (SLL), and carbon-neutral banking. Capital markets are embracing “green underwriting” while asset & wealth managers are steadily moving towards ESG investing. Goldman Sachs announced an investment of US$750 billion in sustainable finance over the next decade. Additionally, HSBC launched a new strategic ESG solutions group focusing on the bank’s full range of ESG capabilities. Blackrock and Vanguard have expanded their ESG exchange-traded fund (ETF) offerings due to the high demand.

In our previous blogs, The Importance of Integrating Environmental, Social, and Governance (ESG) Mandates into BFSI Enterprises’ Operations, and Choosing the Right Partners in the Expanding ESG Product Ecosystem we highlighted how BFSI firms are setting up ESG priorities for their organizations due to the regulatory push and to support the clients’ growing ESG needs. We also tried to decode the evolution of ESG vendors’ landscapes, specifically in the data and analytics space. In this blog, we discuss the enormous opportunity (exhibit 1) available for IT service providers, technology vendors, and consulting firms to support BFSI enterprises on their ESG agenda.

Exhibit 1: Endless opportunity for IT service providers and consulting firms in the ESG space

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Tap into the ESG demand theme for growth and differentiation

The IT outsourcing and consulting vendor landscape is always finding ways to differentiate itself in the BFSI industry known for its talent and arbitrage play. The present BFSI clients and prospective targets for many IT service providers have listed ESG as a priority area and are planning to invest heavily in this space. The vendors are hence gearing up to build a differentiation story for sustainability, have boldly laid out their ESG priorities, and are making announcements that will help them stand out in the industry not only for their ESG offerings but also as responsible businesses. This becomes important since the vendors will be an extension of the BFSI firms’ own ESG footprint, which they would like to manage better.

BFSI firms are looking at vendors to embrace best-in-class ESG standards, have diversity in talent base, manage the carbon footprint, invest in local communities, and bring exponential value creating ESG initiatives. We do observe IT service providers and consulting firms already trying to display differentiation around these dimensions. In October 2020, Infosys announced its ESG 2030 vision, which outlines its bold vision to become carbon neutral by 2030. SAP has announced that it aims to achieve carbon neutrality within its operations by 2023. IBM intends to leverage blockchain to ensure responsible sourcing of minerals in conflict regions. Capgemini has used AI/ML to help staff rural healthcare with real-time data sharing and efficient economic resource utilization.

ESG readiness will be a make-or-break criterion for mega outsourcing deals

Our research suggests that ESG reputation of the vendor, appropriate disclosures, and the vendor’s resilience to the impact of ESG related issues will become important drivers for awarding large IT outsourcing contracts. A strong ESG standing of the vendor is moving from a “nice to have” to a “must have” factor for mega IT outsourcing and platform contracts. We have already witnessed cases where differentiating ESG standing is helping vendors win deals. For instance, Finastra has been selected by Climate First Bank as its technology partner for a new, full-service, eco-friendly community bank. The Bank evaluates its vendors through an ESG lens, and Finastra stood out for its clear and tangible commitments to redefining finance for good. TISA, the UK’s cross-industry financial services membership body, appointed Atos to build a blockchain-based digital utility for the asset management that will help ease regulatory reporting for MiFID II and ESG. Atos had to demonstrate enthusiasm to be a part of a sustainability-led project to win this engagement.

Integrating ESG requires transforming the entire ecosystem of financial institutions

We believe that ESG transition goes far beyond just ESG data capture, analysis, and dissemination. The financial institutions will have to follow a “practice what you preach” approach as they start prioritizing sustainable investments. The focus should be on transforming their entire ecosystem to:

  • Revamp business strategy to incorporate ESG
  • Develop new financial products
  • Invest in communication and branding initiatives
  • Review front office operations
  • Build ESG databases, KPIs, and frameworks
  • Update risk and compliance systems
  • Grow in-house talent to support ESG initiatives
  • Improve HR, legal, and governance practices
  • Strengthen data science and visualization capabilities
  • Modernize core IT strategy
  • Decarbonize IT infrastructure

ESG is becoming a board-level priority for BFSI firms with C-suite executives as key stakeholders, creating opportunity for vendors to address new budget centers parked for the entire value-chain. These will be an addition to the CIO or digital budgets that have been traditionally used for such use cases.

Gain a first movers’ advantage in the ESG space through new offerings

ESG investing is a market-driven shift leaving room for a lot of product innovation for the IT outsourcing and consulting landscape. It opens opportunity to launch new offerings like:

  • Supporting the transformation of industries towards sustainable futures
  • Helping reduce the carbon footprint of IT, cloud, and software
  • Designing solutions for green buildings and office spaces
  • Data center energy management
  • Building ESG talent strategy
  • Data and analytics for ESG integration
  • Consulting and advisory – ESG investing and disclosures
  • IT transformation across the BFSI value chain
  • Helping launch new ESG based financial products in the market
  • Helping expand existing offerings with ESG value-add

IT service providers and consulting firms are aiming for a first movers’ advantage and have already introduced ESG offerings into the market. Tata Consultancy Services (TCS) announced that it will develop an investment insights solution, leveraging SAP Business Technology Platform, enabling asset managers to have a 360-degree view of the investments, which includes ESG analysis. IBM and The Climate Service (TCS) formed an alliance to help financial institutions measure, quantify, and price risks associated with climate change facilitating reporting. Avaloq has launched a sophisticated ESG investment solution for banks and wealth managers that allows them to build tailored, personalized ESG-compliant portfolios for clients. Microsoft will be launching an ESG Solutions as a Service in 2021 in collaboration with MSCI.

The path forward – BFSI enterprises and vendors should invest in the right ecosystem of partners

Exhibit 2: A sneak peek into the ESG vendor landscape

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The ESG integration journey for enterprises is going to result in massive investments towards data and technology. IT service providers and consulting firms need to create an ecosystem of partners that they can collaborate with to build their ESG offerings and take them to market. Investments in R&D to incorporate emerging technologies like Artificial Intelligence (AI), Natural Language Processing (NLP), Blockchain, and Machine Learning (ML) while creating ESG solutions is needed. They should also concentrate on utilizing the ESG benefits in their offerings across dimensions of IT services delivery, talent, infrastructure, and solutions, and create ways to measure and demonstrate the ESG impact of their offerings to drive higher client adoption.

As BFSI firms accelerate their ESG journey, it becomes critical for them to create the right partner ecosystem. Making the right choice will bring out the difference!

If you would like to have a better understanding of the ESG vendor landscape and offerings, reach out to [email protected], or  [email protected].

We also invite ESG data and analytics providers, IT service providers, and consulting firms to reach out to us to get featured in our upcoming research assessing ESG vendors that serve BFSI enterprises. Please refer to our Research Participation Guide to understand the scope, objectives, and participation process of the research.

This is the third blog in a series that explores the ESG space; find more insights on the topic in the first and the second blogs.

The GBS Market: Performance in 2020 and Shaping Success in 2021 | Blog

Despite the struggles that COVID-19 threw at all industries across the world, the GBS market not only made it out, it advanced in 2020. Now, in 2021, it continues to be an integral element of the sourcing model, accounting for 27 percent of the global services market.

Everest Group’s GBS State of the Market Report: Top 2021 Priorities for GBS explores the current GBS market, how it arrived where it is today, and peak initiatives for 2021. The report examines landscape and adoption trends for a clear view forward for GBS, including top expectations of enterprises and the role that GBS organizations can play to strengthen their influence within the enterprise.

The report is based on Everest Group’s proprietary GBS database of more than 3,500 offshore/nearshore GBS centers. Throughout this blog, we’ll examine a few of the report’s many compelling findings.

Keeping pace with an agile approach

It was encouraging to discover that both outsourcing and GBS models continued to grow in 2020, albeit at a slower pace than in 2019. More than 200 GBS centers were established across onshore and offshore/nearshore locations in 2020, with the addition of 40,000+ full-time employees (FTEs). Some of the new GBS center set-ups in 2020 include Qualcomm, Microsoft, and Barclays, to name just a few.

Enterprises are increasingly leveraging the GBS model to establish digital hubs and ER&D (engineering and R&D) centers to create successful digital customer and employee experiences. The resiliency and growth shown from the GBS market in 2020 helped to deepen confidence from enterprises. For example, when COVID-19 propelled digital initiative adoption forward across most verticals (technology and communication, Banking Financial Services and Insurance (BFSI) firms, manufacturing, retail and CPG, and healthcare and life sciences), GBS organizations saw it as an opportunity to step up and deliver higher value-add digital services for enterprises. These services included expanded digital capabilities in areas such as advanced automation, analytics, cloud, platform-based engineering, etc., to meet evolving enterprise expectations and priorities.

Accelerating digital offerings is one way that GBS organizations can continue to drive operational resiliency and better position themselves as strategic business partners for change management initiatives within enterprises in 2021. This image illuminates how GBS markets are steadily moving in a direction toward digital transformation.

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GBS activity across locations

After the initial shock of the pandemic, Q4 of 2020 witnessed rapid recovery, especially across India, Rest of Nearshore Europe, and Rest of Asia.

The below image portrays GBS market activity by delivery location and the number of new set-ups. Interestingly, only 13 percent of the companies that set up GBS centers in tier-2/3 locations in 2020 already had GBS centers in tier-1 locations; the remaining 87 percent of companies were exploring the offshore GBS model for the first time.

Additionally, 40 percent of GBS organizations in the report are examining geographic diversification, and 30 percent are looking into the adoption of small-scale/satellite centers to better manage both risk and future cost structures.

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GBS across industries and functions

Across industries, the technology and communication vertical continued to dominate the market, contributing to more than half of the new center set-ups in 2020. The BFSI firms were next in line, accounting for one-third of the headcount (FTEs to date), followed by manufacturing.

Forging into 2021 and beyond

The GBS market stood its ground as the pandemic swept through, and in the end, it has come out a more evolved industry with overall improvement in performance. However, GBS organizations will need to continue to evolve in the aftermath of COVID-19 and as the needs of enterprises shift. GBS organizations should focus on:

  • Refining overall productivity as it will be the next frontier beyond scaled arbitrage
  • A robust, futuristic workforce strategy that can unlock high-talent capabilities
  • Taking a larger picture view of WFH to confirm the model aligns with overall talent goals and targeted growth
  • Creating a holistic and design principle-led global workforce strategy
  • A clear path for digital transformation, which will be paramount throughout 2021 and years after
  • Ensuring cost-competitiveness to avoid third-party economic comparisons
  • Opportunities where GBS organizations can strengthen and expand their influence with enterprises and meet evolving expectations, for example, moving from being viewed as just the enterprise’s helper to an entity that can help shape ideation, design, and even influence major initiatives

Explore complete details of the GBS State of the Market Report: Top 2021 Priorities for GBS by downloading the full report here.

We’d love to hear about your GBS strategy, please reach out to us at [email protected] or [email protected].




Synthetic Data – Catalyst for AI innovation | Blog

With a connected world and connected humans, we are on track for a huge uptick in new data creation at an unprecedented level. IoT, digitization, and cloud have brought on the generation and storage of ZBs of data created each day. Data has become the new oil but with some caveats. The tap of this oil is controlled by a few organizations globally, making this data asset scarce and expensive. However, enterprises in their pursuit of digital transformation require this data to get insights for better decision-making.

Shortcut to access data

The next logical question arises as to how we can get hold of this data, which, if utilized to its full potential, has the power to transform enterprises. This is where synthetic data comes to play. It is the form of data that is created inorganically rather than being generated through actual interactions or events. It is usually formed by studying the characteristics and relations between different variables. A total of three types of synthetic data exist, which are shown below.

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Exhibit 1: Types of synthetic data

Why is it required now?

With the cultural shift towards insights-based decision making from gut-based decision making and the onset of data literacy initiatives, enterprises require apt insights, which further require the generation of huge amounts of data. There are a few instances highlighted below which make a strong case for synthetic data.

  1. GDPR mandates stringent regulations for data access which stipulates if a company can utilize it with user content. This makes it extremely difficult to share data creating hurdles to solve business problems
  2. AI models and algorithms require extensive labeled data for training purposes. In the case of self-driving cars, it needs to clock in millions of miles to test computer vision algorithms. This delays the go-to-market for such products
  3. New product development usually requires a lot of data testing before it is introduced in the market. Innovation becomes scarce if quality data from the field is not there

 Techniques to generate synthetic data

There are usually three strategies to generate synthetic data. These include some simplistic techniques as well as methods infused heavily with AI.


Exhibit 2: Techniques to generate synthetic data

Sampling from distribution is simply drawing a lot of random numbers from a normal distribution. Agent-based modeling understands the behavior of the original data. Once the characteristics are defined, it creates new data keeping the behavior constraints in place. Generative Adversarial Network (GAN) models are synthetic data generation techniques usually used for creating image data. These networks have two DL models, one is a generator, and the other is known as a discriminator. For example, GAN can take random noises as its input. Then the generator generates output images, whereas the discriminator tries to find whether the output is fake or real. The more the image is closer to the real one, the output can be considered as real.

Applications across enterprises

An infinite source of data that mimics the real dataset can provide innumerable opportunities to create test scenarios during development.

Synthetic data acts as a beneficiary for enterprises across domains and industries, with some examples shown below.

  1. “Customer is king”: a tag line commonly used in the current environment wherein organizations strive to provide hyper-personalization to customers for better customer retention and to create upsell and cross-sell opportunities. Synthetic data helps enterprises get detailed analysis of each customer without worrying about the consent through GDPR. This data would have properties of real data and can be used for simulations
  1. Agile development and DevOps: Software testing and quality assurance often involve a long waiting period to get access to ‘real’ data. Artificially generated data can assist in eliminating this waiting period leading to reduced testing time and increased agility during development
  2. Research and product development: Synthetic data can be used to create an understanding of the format of real data that does not exist yet and build algorithms and preliminary models on top of it. It can also be used as a baseline for product development and reduce time to market
  3. Robotics: Companies often struggle to obtain quality real-life data sets to execute testing. Synthetic data helps in running thousands of simulations, thereby improving the robots and complementing expensive real-life testing
  4. Financial services: Important elements for any financial service enterprise are fraud protection and detection methods, which can be tested and evaluated for their effectiveness using synthetic data

Limitations of synthetic data

However, the use of synthetic data does not come without its own set of limitations.

  1. At its best, synthetic data imitates the real-life data sets but is not an exact replica. This can result in certain data points that are deviations or exceptions to the overall set, leading to skewed modeling outputs
  2. It is also not an easy task to assess the quality of the synthetic data set generated as it often depends on the complexity of the original data. As a result, the quality assessment parameters need to change in accordance with the variation in the original data point, meaning there can’t be a standard framework to be followed for each synthetic data set
  3. It is difficult for business users to trust the credibility of the synthetic data generated due to a lack of technological understanding leading to slow uptake. This is more so in certain industries such as the healthcare and food industry, where there are direct repercussions to human life

Way ahead

Despite these limitations, enterprises should be keen to adopt synthetic data as they have an opportunity to disrupt the business landscape by utilizing data and its benefits to full potential. It can prove to be the push that was required for AI/ML to penetrate across enterprises and gain more traction.

If you’ve utilized synthetic data in your enterprise or know about more areas where synthetic data can be advantageous and disadvantageous, please write to us at [email protected] and [email protected]. We’d love to hear your experiences and ideas!

The Battle for Supremacy in Industry-Specific Cloud has Begun | Blog

In February 2021, Microsoft CEO Satya Nadella proudly announced the addition of three new offerings to the company’s growing portfolio of industry cloud solutions: Microsoft Cloud for Financial Services, Microsoft Cloud for Manufacturing, and Microsoft Cloud for Non-profit. In December 2020, AWS introduced Amazon HealthLake, a HIPAA-eligible service for healthcare and life sciences organizations; this service will compete head-to-head against Google Cloud’s and Microsoft Azure’s AI-powered solutions for the healthcare and life sciences markets. And all of these companies have other industry-specific cloud solutions. It has become quite clear that savage competition is budding in this fast-emerging cloud segment. Indeed, industry-specific cloud has become the epicenter of new investments as all major cloud vendors have declared “industry-first” focuses.

In a recent blog, we explained the basics of what constitutes a true industry cloud solution. Now, let’s take a look at the different types of industry cloud solution providers and their go-to-market strategies.

The current industry cloud solutions marketplace broadly has four kinds of players:

  • Hyperscalers or the traditional IaaS and PaaS players such as AWS, Azure, GCP, and Oracle doubling down on their vertical strategy
  • Traditional industry-agnostic SaaS players such as Salesforce and SAP entering the vertical cloud market
  • Cloud-native vertical SaaS players and micro-SaaS players such as Veeva Systems, which are developing niche functionalities targeting industries’ specific pain points with heavily nuanced solutions
  • Service providers developing their own vertical solutions, such as Accenture’s INITIENT, which caters to the R&D needs of the life sciences industry

Exhibit 1: The converging landscape of industry cloud solution providers


How are these players equipping themselves for the intensifying war?

While all of these types of cloud solution providers have chosen verticalization as their preferred differentiation strategy, each of them is approaching it differently:

  • The hyperscalers and horizontal SaaS players have largely relied on acquisitions and a growing network of niche channel partners – For example, Salesforce’s acquisition of Vlocity is one of the largest industry cloud takeovers to date. GCP’s acquisition of Looker sheds light on its broader strategy of building differentiating competencies in data management, analytics, and AI as an anchor to enter industries like life sciences with disruptive data solutions like Genome data models
  • The vertical-specific players have adopted an IP-led approach complemented by co-innovation partnerships with enterprises – They’ve focused on utilizing their industry expertise to innovate and evolve their portfolio of IP. And they often collaborate with enterprises to co-develop solutions, which allows them to stay close to the industry and better understand its pain points
  • Service providers are carefully aligning their strategy to find a midway, balancing their portfolio of IP-led solutions while partnering with the hyperscalers, horizontal SaaS players, and the vertical-specific providers to add customization on top of their solutions. For instance, we see Accenture playing the role of crucial strategic partner to SAP industry cloud platform while also investing in developing its vertical-specific offerings such as INITIENT for the healthcare and life sciences industry.

While service providers currently enjoy an excellent relationship with the hyperscalers and vertical SaaS providers as strategic partners in the cloud, their shared desire to lead the emerging market for industry-specific solutions could cast them as competitors in the near future

Key trends to watch out for as the battle gets fiercer

  • The IaaS and PaaS players will aggressively compete for market share in a traditionally SaaS-dominated industry cloud market. The industry cloud market is currently dominated by SaaS players, but the hyperscalers are increasingly building enterprise SaaS offerings and investing in their partnership ecosystems. AWS is still catching up in the race, but other leaders like Oracle, Salesforce, and SAP have jumped onto the industry cloud bandwagon with both feet
  • Vertical-specific partnerships, alliances, and acquisitions will quickly emerge as the horizontal players race to build vertical expertise and grab market share
  • Industry-specialist product vendors are strengthening their position by evolving their offerings from on-premise to SaaS and PaaS solutions. Pure-play technology vendors with deep industry expertise, which have traditionally built industry-specific solutions on-premises, are now collaborating with enterprises and hyperscalers to develop and offer SaaS and even PaaS solutions. For instance, healthcare product vendors such as EPIC and Cerner, which have dominated the on-premise Electronic Health Records (EHR) market, are carving out multi-year strategic partnerships with the hyperscalers – Azure in EPIC’s case, and AWS in Cerner’s case – to build new-age cloud-based suites of solutions powered by AI and analytics
  • As the competition intensifies, we will see an increasing number of vertical-specific players trying to diversify their presence across multiple industries to maintain their growth and tackle crowding in the vertical cloud market. For example, Veeva has already begun expanding its Vault offering to the animal health and consumer goods industries

Industry-specific solutions will evolve and improve at a swift rate as tens of thousands of businesses across every industry begin to rely on them as the strategic digital link to their customers. An increasing number of enterprise CEOs are prioritizing end-to-end digital businesses, data-driven operations, and customer-centric growth.

In our next blog, we will analyze the vertical cloud trend from an enterprise point of view, discussing the key implications for enterprises and how they can source industry cloud solutions that best suit their needs. Meanwhile, please feel free to reach out to [email protected] or [email protected] to share any questions and your experiences.

The Evolution from Robotic Surgery to Digital Surgery | Blog

The robotic surgery market has surged over the last decade. According to an article published by the JAMA Network Open in early January 2020, robot-assisted surgical procedures accounted for 15.1 percent of all general surgeries in 2018, up from 1.8 percent in 2012. And the market has grown even more since 2018. For example, the utilization rate of Intuitive Surgical’s da Vinci robot in US hospitals has grown more than 400 percent in the last three years.

To capture their piece of the robotic surgery market pie, other MedTech giants, including Johnson & Johnson (J&J), Medtronic, Stryker, and Zimmer Biomet have turned to acquisitions and strategic partnerships. Stryker paid a whopping US$1.65 billion in 2013 to acquire Mako Surgical Corp. Zimmer Biomet bought Medtech for its Rosa Surgical Robot in 2016 for US$132 million. J&J and Medtronic acquired Orthotaxy and Mazor Robotics, respectively, in 2018. And J&J subsequently bought Auris Health and Verb Surgical in 2019.

With all this money being spent on robotic surgery company acquisitions, it is clear that the MedTech giants intended to fight head-on with one another to build the best surgical robot.

But building the best surgical robot does not assure market leadership.  Indeed, robotics is only one aspect of the digital surgery ecosystem. In order to excel in the robotic surgery space, companies need to build solutions that complement their surgical robots with digital technology tools and capabilities.

Transforming from robotic surgery to digital surgery

As you see in the following image, the digital surgery ecosystem consists of imaging, visualization, analytics, and interoperability technologies that enhance the capabilities of surgical robots, enabling companies to unlock the full array of potential benefits robotic surgery has to offer – better precision and control, enhanced surgical visibility, remote surgery, better clinician and patient experiences, etc.

Let’s take a quick look at the value each of the digital technologies can bring to robotic surgery.

  • AI/ML and data analytics will help the robots learn from past procedures and ensure better surgery planning and reasoning. They will also help support cognitive functions such as decision making, problem solving, and speech recognition. One real-world example of AI/ML is Stryker’s Mako robot, which learns from past procedures to ensure better positioning of surgical implants for stability
  • Strong network and connectivity will enable real-time data sharing of patient outcomes, best practices, and support remote surgery at a global level
  • Augmented Reality/Virtual Reality (AR/VR) and advanced visualization technologies enhance surgical visibility beyond the naked eye and improve anatomical education and surgeon training modalities through interactive simulations
  • Remote monitoring, sensors, and wearables can assist in intra-operative and post-operative surgical care through real-time data exchange for better clinical outcomes and reduced care costs



Realizing the benefits of digital technologies, MedTech companies are starting to make investments in them to augment their surgical robots. For example, Medtronic in 2020 acquired Digital Surgery, a leader in surgical AI, data and analytics, and digital education and training to strengthen its robotic-assisted surgery platform. Similarly, in 2021, Stryker acquired Orthosensor to enhance its Mako surgical robotics systems with smart sensor technologies and wearables, and Zimmer partnered with Canary Medical to develop smart knee implants. MedTech companies are also starting to change their branding to reflect their move to digital. For example, J&J is positioning its new offerings as digital surgery platforms instead of robotic surgery platforms.

Building a single, connected next-generation digital surgery platform

Building specialized robots for different surgical procedures requires either a huge capital investment to acquire such individualized capabilities or extensive resources and time to develop them in-house. So, it’s neither feasible nor cost-effective to do so. Therefore, it would be ideal for MedTech organizations to focus on developing one robot that supports the entire breadth of surgical procedures.

With their history of robotic acquisitions over the last three years, MedTech giants should be looking at integrating multiple point solutions to build a single, connected next-generation digital surgery platform. The following image depicts our vision of a truly connected digital surgery ecosystem built around a digital surgery platform. It ensures interoperability among all types of surgical robots so they can continually learn and evolve by sharing best practices, surgical procedures, and associated patient data.


J&J has already shared its vision and roadmap for building a next-generation digital surgery platform. It brings together robotics, visualization, advanced instrumentation, connectivity, and data analytics to enable its digital surgery platform to improve outcomes across a broad range of disease states. It has announced its plans to integrate its recently unveiled Ottava platform with the Monarch platform it gained from its 2019 acquisition of Auris Health to build a strong position in the digital surgery market.

With MedTech giants in the initial phase of building their next-generation connected digital surgery ecosystem, they will need to have the right fit of complementary digital technologies to truly scale their impact – alleviating surgeon workloads, driving productivity, enabling personalization, and better clinical outcomes. Service providers that bring niche talent and a balanced portfolio of engineering and digital services will be a partner of choice for MedTech giants in this journey.

Please share your views on robotic surgery and the digital surgery ecosystem with us at [email protected] and [email protected].

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