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BPO

Impact of Digital on the Future of Business Process Services (BPS) Industry – What, Where, and How? | Webinar

By | Webinars

Tuesday, October 10th, 7:30 PM IST, 3 PM BST, 10 AM EDT, 9 AM CDT

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Digital has emerged as the biggest disruptive force challenging existing business models and shaping the new ones. The BPS industry is no exception. However, most studies in this space have taken an overarching view rather than unraveling the specifics in terms of clearly identifying various digital components and their maturity, and quantifying their likely impact on BPS segments individually and collectively.

During this one-hour webinar we will focus on:

  • “The WHAT”: What digital technology levers are most critical for the BPS industry and will that change in the future?
  • “The WHERE”: Which segments of BPS industry will be most impacted in the next few years and why?
  • “The HOW”: How deep will be the impact in terms of future market size and growth?
  • Implications of these changes on your business and sourcing model

Presenters:

Michel Janssen, Chief Research Guru – Everest Group
Rajesh Ranjan, Partner – Everest Group

Who should attend?

  • Service providers: CEOs, CXOs, BPO strategy heads, head of outsourcing, IT/BPO department heads, senior pre-sales and sales executives, and solution teams and leaders
  • Buyers: BPS/BPO relationship owners and sponsors, procurement managers, global sourcing mangers, vendor managers, and GIC/shared service leaders

Is Big Bad? Two Sides of the Coin for Scaled-up BPS Providers in the Digital-First World | Sherpas in Blue Shirts

By | Blog, Digital Transformation

One of my favorite quotes is “Disruption doesn’t discriminate.” And you’d have to be living under a rock if you hadn’t noticed the fundamental shifts taking place in the global services market due to digital disruption. We know that digital disruption is generally chaotic. It shakes up the existing business models, (likely destroys them), and paves the path for new ones. And it creates a set of opportunities not apparent earlier, while eliminating those we took for granted.

In general, big incumbents find it difficult to change, (change is hard, really hard when you are large – just ask prehistoric dinosaurs!), thus creating opportunities for smaller, nimbler ones that embrace it. Is this the case in the Business Process Services (BPS, also called BPO) market as well? Are the large incumbents necessarily in the disadvantageous position? The answer is actually more nuanced. Here are two big themes that highlight two very different sides of the coin:

  • Curse of Incumbency The rise of automation (especially RPA) is creating the biggest challenge for incumbents in their existing business model. Everest Group research shows that on a like-to-like basis, buyers are expecting the price per unit of work delivered in transactional BPS to reduce by at least 25-30 percent. If the incumbent shows reluctance, buyers are not hesitant to move the work to others. To put things in perspective, it means a USD $1 billion BPS company would see its base shrink by at least USD $100-120 million every year on an as-is base account basis (assuming an average five-year contract term, 40 percent of the portfolio will each year face pressure coming from renewal (20%) or a mid-term benchmarking (20%) situation). In reality, providers with the right approach and strategy will be able to mitigate this through scope expansion and new wins. Nonetheless, the pressure on an existing large book of business is tremendous.
  • Benefit of Data As I highlighted in a blog last year, scaled-up providers are sitting on a treasure trove of data that is ready to be exploited and monetized from a benchmarking and associated analytics perspective. Some of the providers have started to make the right moves here. The next frontier is leveraging it for artificial intelligence (AI). One of the big challenges of making AI tools enterprise-ready is helping them learn fast. Injecting the AI tool with variety, volume, and contextual data is key to making this happen. Large incumbent providers are uniquely positioned to exploit this opportunity. Combined with their deep domain expertise, this can act as a powerful differentiator, and help them create significant value for their client, and, in turn, for their own business.

Big is not bad. It is about identifying the digital disruption opportunities while managing the risks proactively. Speaking of size, my next blog will discuss what sized providers seem to be well positioned to exploit the opportunities created by digital disruptions. Stay tuned.

Capital Markets BPO: Provider Selection Pricing Considerations | Sherpas in Blue Shirts

By | Banking, Financial Services & Insurance, Blog, Outsourcing

Capital markets BPO (Business Process Outsourcing) is one of the fastest growing industry-specific verticals within the BFSI segment, with a market size of over $2 billion in 2016. Investment banking is the largest line of business within the capital markets BPO. Asset management, custody and fund administration, and brokerage are the other key lines of business in this space.

Enterprises typically look to partner with third-party pureplay service providers such as Cognizant, EXL, Genpact, Infosys, and TCS to remain competitive in the marketplace, and simultaneously manage their regulatory, risk, and cost concerns. But the BPO majors are facing stiff competition from specialist capital markets BPO providers such as Avaloq, eClerx, and Xchanging, which are more focused and have deeper domain expertise.

Against this backdrop, what pricing considerations should enterprises take into account when selecting a specialist or a pureplay Business Process Outsourcing provider?

What to consider when selecting a Business Process Outsourcing provider

  • Specialists come at a premium: Specialist providers typically charge a premium price. The premium is nominal for low complexity processes such as static and dynamic data management, client onboarding, low value reconciliations, trade capture, and exception matching. Yet, it rises considerably for high complexity capital markets BPO processes such as OTC derivatives, syndicated loans, and alternative investments. Specialist capitalist providers’ expertise in niche and complex services gives them significant pricing power leverage over pureplay BPO providers.
    BPO-Business-Process-Outsourcing
  • Pureplay BPO providers on the move: However, pureplay BPO providers over the last couple of years have moved swiftly, and gained meaningful ground in terms of building competence in high value services. This increased, more head-on competition has reduced the pricing differential to some extent.
  • Pricing model induced rate differential: FTE-based pricing is most common in capital markets BPO contracts, closely followed by the transaction-based model. Typically, contracts with transaction pricing have a higher Annual Contract Value (ACV) per FTE, as the service provider agrees to share some of the buyer’s risk, and thus bakes the risk premium into the pricing. Additionally, the scope of work for capital markets BPO deals with transaction-based pricing is usually higher value and more complex, pushing up the average ACV per FTE further.

Pureplay BPO providers VS. specialists

Net-net, specialist providers, which at least as of today handle more high-value services, come at a higher price than their pureplay BPO peers. And, at least as of today, buyers appear ready and willing to pay this premium.

Enterprises in this space typically tend to value and favor specialists when it comes to finding a partner for their capital markets BPO operations. And they tend to be particularly selective, as most service providers –  both pureplay and specialist— do not play in all the segments, but instead focus on building deep capabilities around one or two of the four key business lines.

Are you working with a pureplay or specialist provider in the capital markets BPO space? To what extent did pricing play into your provider selection? Do you think specialists have an edge over pureplay BPO providers in terms of capabilities?

 

Game on in P&C Insurance! Genpact Acquires BrightClaim | Sherpas in Blue Shirts

By | Banking, Financial Services & Insurance, Blog, Mergers & Acquisitions

Challenging macroeconomic conditions, demanding digitally-savvy consumers, and rising fraud are pushing P&C insurance carriers to be more demanding than ever of their service providers. Carriers not only expect optimization of cost of insurance operations, but also assistance in gaining and retaining market and customer mind share. This is forcing service providers’ hand to move from an arbitrage-first to a digital-first model.

Meanwhile, insurance BPO service providers’ origins in the arbitrage-first world and their strategic choices in large P&C product categories, such as personal lines, worked well for a while. But with the U.S. and U.K. markets maturing, service providers are being forced to reconsider their strategy. They now not only need to focus on the customer experience, their digital footprint, and lowering TCO, but also on developing deeper domain expertise to drive growth and remain differentiated in the market.

As we talked about in our report, “Property and Casualty Insurance BPO – Annual Report 2016: The Dawn of Transformational Era – Adapt and Evolve to Succeed,” this leaves them with three options to avoid falling into the no-growth trap:

  • Develop capabilities in judgment-intensive processes (i.e., trod the path taken by Third-Party Administrators, or TPAs)
  • Take the plunge to develop capabilities for handling more “exotic” P&C product categories (such as insurance of dump trucks!)
  • Explore under-penetrated (emerging) markets

Genpact (a Leader on Everest Group’s P&C insurance BPO PEAK Matrix-2017) clearly decided to pull the trigger on this conundrum, announcing on 3 May that it had acquired BrightClaim. BrightClaim’s suite of services includes property claims management (including catastrophe claims), claims adjusting, TPA services, and contents pricing services.

With this acquisition, Genpact has gained deeper domain expertise in U.S. P&C insurance claims market, and has strengthened its portfolio of digital technologies and fraud detection capabilities.

The acquisition also includes National Vendor, a BrightClaim associated company, which has a nationwide network of contractors and offers carriers a direct repair program along with content fulfillment. Genpact can leverage this to provide cost-effective and faster claims settlement services, which is expected not only to reduce claims payouts for insurers, but also to improve the customer experience.

Genpact’s top competitors in the U.S. P&C market are Cognizant and EXL. With both of them continuing to augment their capabilities and developing deep domain expertise, it was imperative for Genpact to make a move. As a favorable by-product of this acquisition, Genpact has further strengthened its onshore delivery capability with centers in Atlanta, GA and Austin, TX.

Prima facie, the deal looks accretive and has the potential to enable Genpact to challenge other Leaders in P&C insurance BPO space.

How will other providers in this segment respond? Game on! We’d say….

Pharma BPO: What Justifies Premium Resource Pricing? | Sherpas in Blue Shirts

By | Blog, Healthcare & Life Sciences

The global pharma industry, hit hard by the rise of generics and the patent cliff on branded drugs, has been in cost-cutting mode, especially since the beginning of this decade.

With the rising costs of R&D and new drug development, pharma corporations began looking at streamlining manufacturing operations through Contract Manufacturing Organizations (CMO) and de-risking their R&D efforts via Contract Research Organizations (CRO).

CROs, which were initially sought out by pharma companies to cope with ad hoc/transient requirements such as additional capacity, have now emerged to cater to a whole host of services in the pharma outsourcing construct. These include clinical trial management, clinical data management, medical/clinical writing, bio- statistical programming, pharmacovigilance, and regulatory report writing.

Offshoring has also gained considerable traction in the last few years. Indeed, many global pharma giants have increasingly looked to low-cost locations such as India, as evidenced by the establishment of various home-grown CROs and Indian arms of global CROs, and some Tier 1 Indian BPO providers’ scaling up their capabilities in this space.

Given their nature and complexity, pharma industry processes typically command a substantial FTE cost premium over judgment-based sub processes in functional areas. For example, the following chart compares Clinical Trial Management FTE costs within those in Financial Planning and Analysis and Procurement Outsourcing.

Typical price variation: FP&A, Sourcing and Clinical Trial Management services

Pharma BPOWhat’s behind these premium prices?

  • Skill profile: Even in the fairly early stages of outsourcing, pharma companies entrust some of their core work, such as clinical research, pre-clinical trial management, and certain activities in drug discovery, to their service providers. The necessary niche skill-sets typically require a background in clinical research, medicine, biotech, etc. Thus, the FTE rates are higher than those for even highly educated business analysts.
  • Nature of deals/projects: Pharma projects are relatively shorter in tenure than those in other BPO functions, especially deals involving medical writing and bio-statistical programming, where average tenure may range from four to eight months. Thus, the average utilization is significantly lower. This lower hour base to recover costs/margins leads to a higher hourly billing rate.
  • Service provider margins: While the highly mature and commoditized F&A, HR, and Procurement outsourcing markets have margins in the 10-20 percent range, pharma BPO is still relatively nascent and thus commands margins of25-50 percent.
  • Technology cost: In some deals, we’ve seen pharma BPO service providers bearing the cost of technology licensing, which further increases the FTE pricing.
    We expect that pharma BPO will likely continue commanding a premium pricing compared to other BPO functions for two key reasons.

First, pharma companies are gaining increased confidence from strengthening clinical and medical infrastructure and the stabilizing regulatory and business environment in India. This is resulting in outsourcing more core activities such as the entire spectrum of services pertaining to drug discovery and development. And second, Indian CROs and BPO providers are augmenting their capabilities to move beyond pharmacovigilance, bioequivalence, and bioavailability services, and challenging global CROs in areas such as end-to-end drug discovery and product development.

What’s your take on the premium pricing in the pharma BPO industry? Is it justified?

Impact Sourcing Case Studies

By | Uncategorized

Impact Sourcing Case Studies

Learn how organizations have done better by doing good

africa sunrise with single tree

How Does Impact Sourcing Help?

Enterprises and service providers have discovered that impact sourcing is not only a socially responsible BPO answer, but can also deliver positive results to their organization’s bottom line

Impact Sourcing Helps Aegis Build a Stable Pipeline of Entry-Level Talent

Convinced of the benefits of impact sourcing, Aegis has developed an extensive learnership program to hire Impact Sourcing (IS) workers, creating a constant pipeline of entry level talent in the process

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ripple in pond water

Coracall Uses Impact Sourcing to Access an Alternative High-Potential Talent Pool

Coracall recognizes the value of Impact Sourcing (IS) workers in expanding talent supply for the offshore BPO market and has been hiring IS workers both intentionally and unintentionally

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Building a Stable and Sustainable Workforce Through Impact Sourcing

The contact center division of a leading South Africa-based bank experienced better adherence, lower absenteeism, and significantly lower attrition among Impact Sourcing (IS) workers versus their traditional workforce

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delicious red apple

Training Academies Are an Integral Part of the Impact Sourcing Ecosystem in South Africa

South Africa has a mature ecosystem for impact sourcing with several specialized training academies that support BPO companies and buyers in intentional adoption of impact sourcing

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WNS Sets Up a BPO Learning Academy to Promote Skills Development in South Africa

WNS provides specialized training and development for the specific skills requirements of the South African BPO industry through Ucademy, a focused skills development inittiative

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white dandelions blowing in wind

Strong Business Case Drives Adoption of Impact Sourcing

Having experienced success with impact sourcing during the pilot program, Webhelp is now scaling up hiring of impact sourcing workers in South Africa

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Taking Impact Sourcing to the Global Stage

Having experienced success with impact sourcing in its domestic BPO operations, Teleperformance RSA is now expanding it to its international BPO operations in South Africa

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ripple drop in pool of water

A Measured Approach Produces Strong Results

CCI Group’s CCI Call Centres, one of the largest and longest established contact center outsourcers in South Africa, overcomes its talent shortage by setting up a training organization to provide skilled labor from an alternative talent pool

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Impact Sourcing: Low Cost Talent Model with Social Benefits

Big-4 firm, Deloitte, diversifies its workforce in South Africa by hiring previously unemployed workers through government agencies and discovers a sustainable recruiting model to fill its entry-level positions with highly motivated employees at relatively lower cost

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oil drops in water

Recipe to Make Impact Sourcing Work

Leading legal services provider, Pangea3, partners with India-based impact sourcing provider, B2R, to offer high quality, technical services at low cost, and discovers an alternate delivery model with high-energy, low attrition workforce

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Solving Problems, Locally and Globally

RuralShores leverages impact sourcing to enable unemployed rural youth to find gainful employment, providing in-demand, high quality services to global organizations right from their own communities

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sunshine through clouds

Gaining Competitive Advantage Through Impact Sourcing in the Cloud

SureHire Partners, a Canadian occupation testing services company, partners with CloudFactory, a cloud-based impact sourcing provider in Africa, and achieves improvements in cost, quality, accuracy, and turnaround time

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Doing Good Transforms to Doing Well

TCS, a leading BPO-IT service provider, collaborates with government entities, NGOs, and others, to create a training program for socio-economically disadvantaged youth and builds a whole new recruiting model around the resulting high quality, highly motivated talent pool

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small green plant shoots growing from brown dirt

Impact Sourcing: A Challenge with Big Rewards

Aegis discovers a new recruiting model and improves its workfroce by leveraging impact sourcing in South Africa

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Passion to Perform

Teleperformance business imperative improves service delivery and drives social development through impact sourcing in South Africa

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RPA Implemented! But Where are The Benefits You Were Promised? | Sherpas in Blue Shirts

By | Automation/RPA/AI, Blog

Consider this situation: the head of operations for the finance function at a leading insurance company had heard from both his BPO provider and several technology companies claims of robotic process automation’s (RPA) ability to deliver significant operational efficiencies and cost savings. He decided to take the plunge, obtained leadership buy in, made elaborate RPA implementation plans, set the investment rolling, and finally directed his team to implement RPA across the function in all geographies. A year after deployment, he was still struggling to see significant evidence of the promised benefits. Have you heard stories like this before? Perhaps experienced it in your own organization? Unfortunately, it’s all too common. Various factors contribute to the glaring gap between expectations and reality. They can be broadly categorized as follows:

  • Process – This includes lack of process standardization and an improper process viability study for automation. For example, process-specific differences due to delivery location-specific nuances require greater RPA tool customization. This drives costs higher, and can significantly impact the automation ROI and expected benefits.
  • Delivery – This includes factors such as service placement across locations that can affect the automation levels in a process. For example, if FTEs are fragmented across different locations, they cannot be released because of minimum FTE requirements to service those locations.
  • Governance – Similar to any major transformation initiative, success with RPA depends upon various governance specific factors like buy in from IT, organization alignment, etc. For example, we have seen IT departments causing considerable delays in providing the prerequisite security clearances for RPA environment setup and deployment.

Automation assessment, or lack thereof, is the most critical factor

The paramount contributing factor to a successful – or unsuccessful – implementation of an automation project in your enterprise is automation discovery, i.e., the assessment of automation potential in your organization’s unique environment. In all too many cases, BPO or RPA tool providers look first just at process viability, e.g., if the process consists of rules-based, rather than judgment-based, activities, and then base their assessment on experiences with other clients or on a pure numeric automation benchmarking exercise provided by an analyst firm. However, mere replication of the same RPA tool across a similar process will not necessarily deliver similar automation benefits.

Our recommendations for enterprise buyers on how to help optimize their RPA investments and achieve the potential ROI include:

  • Make sure your RPA vendor or BPO service provider addresses topics specific to your particular environment, including an assessment of impact of a fragmented technology landscape, regional language-specific nuances to be considered, etc.
  • Obtain a robust automation benefits benchmark mapped to your organization’s context, and safeguard yourself, if possible, with contractual obligations
  • Set the right expectations with internal stakeholders on potential benefits

Our primary recommendation for service providers looking to satisfy their clients’ expectations is to leverage a comprehensive automation benefit benchmarking model that is based on benefits delivered and the underlying context of RPA delivery. This will help them not only better estimate but also realize the potential benefits on their clients’ behalf. Service providers that correctly estimate, communicate, and deliver these benefits consistently will ultimately have more RPA success stories to tell.

Do you work for an enterprise or service provider that has implemented RPA? If so, our readers would love to hear about your automation journey experience, and if/how you were able to achieve the intended benefits!

BPO Industry Challenged: Outsourcing Giant India Losing to China, Small Countries | In the News

By | In The News

“For voice work, the Philippines has a better voice/accent environment even though it is at a cost disadvantage to India. For some kinds of work, close proximity and time zones advantage near shore locations is preferred over India,” said Peter Bendor Samuel, CEO of Everest Group, a Dallas-headquartered management consulting and research services firm.

Citing concentration risk as another reason, Samuel said some firms feel that they are overly concentrated in India creating increased risk in the event of natural disasters or large currency swings for these firms a more geographically dispersed location strategy makes sense.

“Although these alternate locations have taken some share from India such as Mexico, Costa Rica and for Europe, Poland, we believe that these share gains will level off as these alternative locations are priced higher than the low cost high skilled Indian labour pool,” Samuel said.

Read more at the Hindustan Times

Business Process Offshoring Forum — February 27 | Event

By | Events

Vice President of Location Optimization Salil Dani will be a featured speaker at the Philippine Health Information Management Business Process Offshoring Forum. He will host a session titled “Assessment of the Philippines as a Leading HIM Services Delivery Location.”

The purpose of the forum is to provide learnings about new developments in the Philippine offshoring industry and to exchange ideas with US and Philippine healthcare industry stakeholders.

When

February 27, 2017
9:00 a.m. – 2:00 p.m. PT

Where

San Francisco Marriott Union Square
Ballroom
480 Sutter St., San Francisco, CA 94108

Speaker

Salil Dani
Vice President, Location Optimization
Everest Group