Tag: BPS

Adoption of Service Delivery Automation in Business Process Services Grows More Than 80%—Everest Group | Press Release

BPS spending impacted by SDA can skyrocket to $10B by 2019 but will require a few kinks to be addressed.

The promise of next-generation benefits is powering explosive growth in the adoption of Business Process Service Delivery Automation (BPSDA), according to Everest Group, which reports that the number of BPS clients with SDA deployments rose by more than 80 percent year-on-year. SDA includes both Robotic Process Automation (RPA) and Artificial Intelligence (AI).

This growth in SDA is being driven not only by traditional drivers, such as efficiency and accuracy, but also by new-age drivers such as the need for enhanced customer experience.

“Increasingly, SDA is being used to enhance customer experience through much shorter response times for handling requests, round-the-clock availability, embedded intelligence, and reduced need to manually bridge gaps in technology,” said Rajesh Ranjan, partner at Everest Group.

However, although many more enterprises are adopting SDA, it is still rather nascent in the Business Process Services market today, says Ranjan. “Contrary to general belief, our data shows that the penetration and scale per BPSDA deployment is still quite low. One of the challenges is the mismatch between buyers’ expectations and reality, partly due to some inaccurate communication from service providers and automation vendors. However, the intrinsic benefits of SDA solutions, especially when combined with other digital components, the rising maturity of adopters and increasing sophistication of providers, suggest these issues will be addressed soon.”

As evidence of this low maturity of SDA, Everest Group points to the relatively meager amount of BPS spending on business processes where RPA has been applied. This amount is estimated to be US$700-800 million in 2016, or 2 percent of the addressable market, but it is expected to skyrocket in the future, reaching US$10 billion by 2019.

Another indicator that enterprises are barely scratching the surface of BPSDA’s potential is that a majority of current deployments (85 percent) involve Robotic Process Automation (RPA) only. Automation based on Artificial Intelligence (AI) is far away from widespread adoption.

These findings and more are discussed in Everest Group’s newly published report, “Business Process Services Delivery Automation (BPSDA)—State of the Market Report— 2017.”  This report provides an in-depth view of the state of the BPSDA industry, offering a market overview, solution characteristics, an analysis of the service provider landscape, and recommendations for buyers and service providers on how to prepare for the future.

Other key findings:

  • Finance and Accounting (F&A) and contact center emerged as the leading areas of application of SDA in BPS, followed by banking and insurance. The banking, financial services and insurance (BFSI) industry accounts for the majority of the clients with BPSDA deployments.
  • Customer satisfaction with BPSDA is rather low, primarily because there is a mismatch between buyer expectations and reality. Also, many providers and buyers look at SDA in isolation and lose sight of the bigger benefits of digital transformation powered by not only SDA but also other digital levers such as cloud and analytics.
  • Encouraging signs abound in the market. Awareness of SDA benefits is increasing, investments in advanced AI-based automation are rising, and recognition of the utility of models such as automation-as-a-service is growing.
  • SDA is likely to significantly impact the BPS industry in the near- to medium-term along five dimensions – service provider revenue and margin; pricing model; shoring model; talent model; and contract composition.
  • In the face of this disruption, enterprises should adopt a set of best practices to ensure success with BPSDA. Service providers must develop robust strategies to ride the wave of BPSDA disruption and back those strategies with smart investments.

***A complimentary 13-page abstract of the report is available for download here.*** (Registration required.)

Stand back – you’re about to get splashed! The impact of digital on global services | In the News

Everywhere you turn today (ok, everywhere in the global services industry) you’ll hear talk of digital. And for good reason – if labor arbitrage had a rock-in-the-pond impact, digital could be a boulder. Which technologies are likely to have the greatest impact? And what do organizations have to do to maximize the benefits of digital for business outcomes?

Read more in Intelligent Sourcing

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

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

Download Presentation Slides

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

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.

Surge in Onshoring Shapes Global Sourcing Market | Press Release

Despite macroeconomic uncertainties and reduced investor confidence, global sourcing industry witnesses stable growth in 2016

The global sourcing industry has experienced a surge in setup activity in onshore locations, according to Everest Group, a consulting and research firm focused on strategic IT, business services and sourcing. The proportion of onshore versus offshore delivery centers jumped from 45 percent in 2014 to 52 percent for the period of 2015-H1 2016.

Onshore setup activity increased among the top 20 service providers, with North America’s share surpassing 2012 levels after experiencing significant declines in 2013 and 2014 due to a global slowdown. North America is the most favored onshore location followed by Continental Europe.

According to Everest Group, the factors contributing to this rise in onshoring include:

  • a need for a deeper talent pool to support complex services,
  • the desire for easier coordination and better alignment/training with clients,
  • new data security regulations
  • tier-2 onshore locations gaining credibility for service delivery.

Overall, the global services market grew at a rate of 8-10 percent in 2015, reaching US$161-166 billion, a slight slowdown compared to the 9-11 percent growth rate of 2014.

“We expect that the global services market growth will be lower in 2016—likely 7-9 percent—due to the overall macroeconomic slowdown, currency fluctuations and volatility in equity and investment markets,” said Anurag Srivastava, vice president and director of the Global Sourcing practice at Everest Group. “Political instability associated with Brexit in the United Kingdom and the Trump presidency in the United States will continue to affect the growth rate as well.”

Global technology spending remained flat in 2015, a statistic that obscures the impact that new technologies are having on the industry.

“Going forward, countries such as India are expected to witness a slowdown in the growth of IT services exports, although digital services will continue to grow at a fast pace,” added Srivastava. “Analytics will be one of the key contributors of growth in the BPS segment; conversely, adoption of technologies such as automation will result in a decline in contract sizes and revenue growth.”

These findings and more are discussed in Everest Group’s recently published report “Global Locations Annual Report 2016: Persistent Growth in Uncertain Times.” This research offers insights into the size and growth of the global services market, global services exports by regions and country, an update of locations activity by region and country, and trends affecting global locations (changes in investment environment and exposure to various risks). It also provides industry-leading comparison and analysis of key changes in maturity, arbitrage and potential of global delivery locations through Everest Group’s unique MAP Matrix™ analysis.

Other Key Findings

  • Asia-Pacific (APAC) share of market has been consistently declining since 2012 but continues to constitute more than 60 percent of the share of the global services FTEs. India and the Philippines account for more than 90 percent of the share in the APAC region. APAC also holds the largest share (more than 70 percent) of the global services market in terms of revenue.
  • India and the Philippines retained their leadership status in the global services market, continuing to hold more than one-third of the share in new delivery center setups globally.
  • Nearshore Europe witnessed strong growth in activity during the period of 2015-H1 2016, emerging as the second largest region after Asia Pacific, with the majority of new center activity in Poland, Ireland and Romania.
  • New center setup activity increased in 2015, surpassing pre-2013 levels and reaching a new high since 2011.
  • All locations witnessed a decrease in GIC activity during the period of 2015-H1 2016. In total, global in-house center (GIC) setups continue to outnumber service provider setups. In terms of percentage share, service provider setups exceeded GIC setups for the first time during H1 2016 since dropping below in 2013.
  • Among all regions, Nearshore Europe witnessed the largest increase in new center setups in 2015 compared to 2014.

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