Tag: BPS

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.

Using Advanced Analytics to Design Tomorrow’s Business | Virtual Roundtable

Wednesday, September 14, 2016 | 11:00 a.m. – 12:30 p.m. ET

request to attend dk blue

Enterprises today are using advanced analytics (predictive and prescriptive) better than ever before to understand their customers, markets, and regulatory environments. This groundwork is helping them to prepare their businesses today for tomorrow.

Participants will discuss their experiences in leveraging advanced analytics to tap into market and customer insights to prepare for the future, including how participants have structured their organizations – from the data, talent, and change management perspectives – to fully exploit the potential of analytics.

Who Should Attend
Global business leaders and executives wishing to understand how leading businesses are utilizing advanced analytics to prepare for the future.

What You Will Learn
This session will help participants gain a glimpse into the art-of-the-possible with advanced analytics solutions available today.

Please note that this event is for buyers only (no service providers).

Request to attend

4 Things to Think about as a Service Provider in 2016 | Sherpas in Blue Shirts

Management consultant and bestselling author Peter Drucker wrote, “The only thing we know about the future is that it is going to be different.” That is, indeed, true for service providers, as new technologies increasingly adopted this year are a catalyst for change in nearly all aspects of the services business. Here are four things that service providers need to think about in light of threats or opportunities in 2016.

1. Automation

The first thing to think about is the role that automation will play in your service delivery model. It’s clear at this point that between RPA, neural computing and cognitive computing, businesses can automate a significant portion of their service delivery network. And customers expect it. So whether your business focuses on IT apps, infrastructure or BPO / BPS, automation stands to be increasingly disruptive in 2016.

2. Talent model

The second thing to think about is how your talent model will change. As automation, cloud and other disruptive technologies continue to play, they will challenge providers’ existing talent models. We see the market moving to cross-functional teams, which will take over a larger share of work and will thus will stress the specialized talent factories that providers have built over the last 15 years.

3. Business model

Another big upcoming change to think about is how the increased emphasis on using persistent teams rather than a leveraged pyramid will lead to change in your business model. Clients are increasingly looking for continuity in a services team over several years, not over several months. As providers seek to accommodate this demand, it will both challenge the offshore labor models that rely on constant input of freshers and create implicit churn of talent as those people move through the pyramid.

4. Location

The fourth operational aspect to think about in 2016 is location. I’ve blogged frequently about the impact of new technologies on labor arbitrage. Although I’m not predicting the end of labor arbitrage by any means, I expect more pressure on location decisions and clients desiring to move more workloads closer to their business. There will be pressure to not move workloads offshore and to move work currently offshore back on shore.

Shaping the future

None of these four aspects of change will individually remake the current services model. But I believe they will cause the model to evolve and definitely put stress on long-held beliefs and assumptions. It’s something to think about in 2016 when building for success in services.

Introducing the Everest Group BPS Top 50™ | Sherpas in Blue Shirts

The global third-party BPS industry has evolved rapidly over the past decade or so, in breadth and depth of services. What started as largely a cost optimization play focused on non-core back-office business processes today has expanded to encompass the entire business process value chain supporting a wide variety of business objectives, including agility, flexibility, compliance, and improved business outcomes, among others.

With that evolution has come growth – the BPS industry today is valued at about $150 billion – and, as you might anticipate, interest among service providers from a broad range of backgrounds and heritages. In fact, Everest Group estimates that there are more than 200 service providers with more than US$50 million in revenues around the globe, some pure-play BPS providers, some that offer BPS as part of a broader portfolio, some focused on a particular domain or geography, some broad-based.

Yet, with all that expansion, what’s lacking in the industry are reference points to identify and compare the largest providers by size globally. Until now.

Everest Group is unveiling our first ever BPS Top 50 to fill this gap. With this list, enterprises can now identify the largest providers and their functional coverage. Service providers can now compare themselves against others in the industry. In the coming years, all industry stakeholders will be able to understand the broad dynamics of the growth and success in the industry.

 
Download the BPS Top 50
 

Everest Group Introduces Global Top 50 List of Business Process Services Providers | Press Release

See the current BPS Top 50™ for 2018. You can also check out the BPS leaders for 2017 and 2016.

Related: See our full coverage of the business process services industry

Xerox, ADP and Teleperformance top the inaugural ranking of the world’s largest third-party BPS providers for 2015

DALLAS, October 27, 2015 — Everest Group, a consulting and research firm focused on strategic IT, business services and sourcing, today announced the launch of “The Everest Group BPS Top 50™,” an annual ranking of the world’s largest third-party providers of business process services (BPS). Identifying the largest BPS service providers, their growth and coverage cutting across geography, domain and buyer size, the list is the first of its kind for the global industry, which is valued at more than US$150 billion.

“An industry that is this important to the global economy needs a reference point of leadership, and that’s the gap we are filling with the launch of The Everest Group BPS Top 50,” said Rajesh Ranjan, partner at Everest Group. “This ranking will help enterprises identify the largest providers and their functional coverage, and it will help BPS service providers compare themselves against others in the industry. Over the coming years, we also expect the list and associated analysis to help stakeholders understand the broad dynamics of growth and success in this industry.”

Everest Group estimates there are more than 200 service providers with more than US$50 million in revenues offering BPS services around the globe. What started as a cost optimization concept focusing on “non-core” and “back-office” business processes today permeates the entire business process value chain, addressing a wide variety of business objectives. Topping the 2015 list of BPS providers are these 10 leaders, which collectively represent 2014 revenues of US$39 billion:

  1. Xerox
  2. ADP
  3. Teleperformance
  4. Accenture
  5. Capita
  6. Convergys
  7. Aon Hewitt
  8. IBM
  9. Paychex
  10. Atento 

***Download the complete 2015 Everest Group BPS 2015 report.***

When It Comes to IT-BPS, the Philippines Knows Its Strengths | Sherpas in Blue Shirts

I was introduced to the Philippines about two years back when I started working in the global services sector. And frankly, I was a bit startled by how little I knew about this giant of the contact center services market – I always thought India was the world’s largest contact center market. But its colonial heritage, accent neutrality, cultural affinity with the west, and BPS-conducive environment puts the Philippines at an altogether different level.

I began following the Philippines IT-BPS markets more regularly as I worked on this location for several client engagements. I observed how this country is a perfect example of the “playing on your strengths” approach. It is incredible how the government, iBPAP, and other partner associations have worked together to achieve the growth potential we highlighted in the Roadmap we developed in association with then BPAP and Outsource2Philippines back in 2009. Indeed, the market has doubled in size in less than six years. Today, the Philippines employs over a million FTEs, and is the second largest offshore services delivery location, next only to India.

While voice-based services have always been Philippines’ strength, it has experienced remarkable success in other areas, such as IT services, which grew at ~25 percent CAGR since 2010, and now accounts for ~10 percent share of country’s entire offshore market. While service providers have been key drivers of the growth in IT, Global In-house Centers (GICs) have pushed for growth in FAO and banking services. Several global banking companies, such as American Express, ANZ, Citibank, Deutsche Bank, HSBC, ING Group, JP Morgan Chase, and Wells Fargo, have established sizable centers in the country. Even though Bank of America has exited the country (it shut down its shop in 2014 as part of a global GIC restructuring), and JP Morgan Chase is scaling down owing to global cost cutting, overall outlook remains positive. The country has also made good use of its strong nursing talent—the largest pool of U.S.-licensed nurses outside of the U.S.—and is now the largest healthcare services provider to the U.S. The healthcare BPS sector has grown at over 40 percent YoY since 2012.

Another success area for the Philippines has been its ability to attract global companies. Over 100 have set up their GICs in the country, and close to one-fourth of them are on the Fortune 500. These GICs are expanding their Philippines strategy beyond cost arbitrage, and establishing regional hubs/HQs/CoEs. The U.S. remains the leading buyer market, with ~70 percent total demand. However, demand from Asian markets has been increasing steadily, with several Japanese and Australian companies establishing their captive centers in the metro Manila region.

With increasing emphasis on adoption of digital globally, government agencies (such as iBPAP and PSIA) are making proactive efforts to ensure that the Philippines stays ahead of the curve. It is already investing in building capabilities – from teaching the right curriculum at the universities to supporting companies’ development of required infrastructure to setting up training labs at colleges and universities –  to deliver mobility, analytics and cloud-based services. We have seen some evidence of companies already delivering mobility (focused application development services for mobile) from the Philippines in the last year or so. Digital has been the buzzword in the majority of our interactions with our clients looking into the Philippines lately.

Having done well so far, I am intrigued to see how the Philippines will sustain its growth in the evolving IT-BPS ecosystem. It needs to adapt to rapidly changing consumer needs, e.g., the adoption of digital, development of multi-channel delivery systems, and a multi-skilled labor force. It also needs to ensure continuous growth in other service lines, such as banking BPS, FAO, HRO services, animation and gaming, and creative services, by leveraging its interpersonal, voice-based, and strong domain-specific skills to build scale.

It will be interesting to watch what lies ahead in the years to come. Can the Philippines continue shaping its own destiny in the global services market?

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