Tag: customer satisfaction

Why Are Organizations Leaning on Contact Center Outsourcing Providers to Tackle Their Social Media Analytics Challenges? | Sherpas in Blue Shirts

Our last blog on social media analytics outlined the challenges organizations can face in developing and launching their social media analytics capabilities. The challenges ranged from organizational issues to technology solutions. Given that many organizations channel their social media interactions through contact centers, it’s not surprising that an increasing number of companies have turned to contact center outsourcing (CCO) providers to help them get their social media house in order. Here’s why.

Among all non-voice contact center channels, spending on social media support, while the smallest at 3.4%, is the fastest growing, at 53% CAGR. This spending occurs both within existing CCO engagements with expanded scope thatinclude channels beyond social media, as well as those engagements developed specifically around social media interaction. At the same time, Everest Group has seen the inclusion of customer analytics as a defined element of CCO engagement double in the past five years, from 19% of deals including analytics to now 40% inclusion. These two developments are clearly linked.

Realizing the stakes in play of a successful social media effort versus one that fails, clients often seek specific benefits from their working relationship with CCO providers. The table below outlines the key challenges in play and how CCO providers can address these.

Key Client Social Media Challenges and CCO Solutions

Social media challenges and CCO solutions

CCO providers have been on the frontline of social media and analytics adoption – in fact they’re ahead of the curve on this one. Providers have proactively invested in best practices, staff training, and technology capabilities in order to meet clients’ current needs and help them envision the path forward. These engagements will often begin with a consultative phase to determine strategy and run through implementation and service delivery.

One key area of investment by CCO providers has been in enabling technology in support of social media, which can be both proprietary in nature (60%) and through partnership models (40%). Below we capture examples of proprietary technology tools developed by CCO providers specifically to take on their clients’ social media and analytics needs.

Investments in social media and analytics by ownership model

Share of instances

Investment in social media and analytics by ownership model

If you take a close look at these solutions, a few identifiable trends appear:

  • Social media interaction tools and analytics tools tend to be closely paired. The ability for analytics to shape and govern the unstructured nature of social media and drive value from these interactions is a key consideration here
  • CCO providers have taken a total solution approach in order to address the various social media needs of clients including channel monitoring, proactive issue resolution, and integration with other channels
  • Providers of CCO are ahead of the market. More specifically, with the exception of a limited number of mature adopters of social media, client organizations needing social media and analytics support perceive CCO providers as a means to access technology capabilities and expertise they lack internally

The level of investments made by the service providers clearly outpaces that of most organizations and provides a solid starting point for those that like to go-it-alone. Along the evolving frontier of social media and analytics, for some organizations, their CCO providers are valuable scouts leading their explorers to brighter horizons.


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Service Providers are Killing the Goose That Lays Golden Eggs | Sherpas in Blue Shirts

I blogged last year about the growing anti-incumbent bias in the services industry. That’s not to say that clients are biased against incumbent providers, but there are more clients who want to switch out providers than there used to be. This is true across every segment of global services (applications, infrastructure and BPO). We can trace at least some of this client mindset back to providers’ actions that are similar to the farmer in Aesop’s Fable who killed his goose that laid golden eggs. In their haste to get more golden eggs (more profitability), providers unintentionally kill the golden substance inside their goose (existing client base).

At the heart of the issue is providers’ wrong view of their clients. As a result, they take actions that cause clients to believe the provider exploits them, as the actions benefit the provider’s revenue. When a client believes the provider is only interested in maximizing its revenue, the client no longer sees the provider as a trusted advisor.

Here are three examples I’ve observed in which providers appear to act for their own interests, which results in clients no longer trusting them.

  1. The provider moves from an FTE-based model to a transaction-based model, but the provider’s revenue stays the same. Basically the provider finds a way to charge the client more for volume, which wouldn’t need to happen under the FTE-based model. Clients see through that, and the provider loses its trusted position. Clients realize the provider is exploiting them rather than serving them.
  1. The provider moves to a productivity model, promising to support portfolio apps at lower cost through a managed service. What actually transpires? The provider nickel-and-dimes the client, which ends up paying more money over time. Functions that were delivered in the FTE model are now a la carte, outside of the new model; so the client actually pays twice for the service.
  1. The provider flattens out its factory model and optimizes it to use junior resources instead of senior resources. The net result for the client is churn in the provider’s resources, so the provider doesn’t build client or industry knowledge. On top of the churn, the client actually ends up with lower productivity because junior people now do what senior people were doing.

And that’s how providers kill the goose that laid golden eggs.


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Is Infosys Repositioning as a Silicon Valley Company? | Sherpas in Blue Shirts

At Everest Group, we’ve heard industry rumors that Infosys CEO Vishal Sikka – formerly on SAP’s Executive Board and global lead for products and innovation – recently hired two former SAP executives based in Silicon Valley. This move comes on the heels of Sikka planning to invest in startups in Silicon Valley. What does all this mean for Infosys and for the rest of the services industry?

Upon hiring Sikka from SAP, we knew Infosys was changing its direction to become an IP company, and we expected him to make significant changes. In addition to his former exec role at SAP, he earlier worked in Xerox’s research lab in Palo Alto in the Valley. He is a well-known figure in the American software world, and he continues to be based out of Silicon Valley.

As I predicted in a blog three months ago, Sikka had begun the transformation and I thought his next step would be to build on the Infosys talent pool by bringing in selected additional talent. Now he has done that and is using his relationships at SAP in Silicon Valley to recruit other executives to join him at Infosys.

This move means a number of things. Most importantly, it means that Infosys drinks its own champagne. Following Cognizant’s example, Infosys is establishing North American headquarters – but going one better. Rather than basing its business in New Jersey as Cognizant did, Infosys is building on its next-generation theme and basing its American business in Silicon Valley. This strategy has a number of potentially positive attributes for Infosys.

Commitment to disruptive technology wave 

First, it helps reinforce the brand that Infosys is committing to the “leading technology” aspect of its new-and-renew strategy. And lining up Silicon Valley executives to supplement the Infosys leadership team is another clear demonstration of its strategy.

Significantly, having North American headquarters in the middle of the Silicon Valley ecosystem allows Infosys to tap into the Valley’s rich innovation talent pool as Infosys moves from its traditional labor arbitrage-based model to an IP-based model. It also places Infosys close to its customer base. Soon to be gone are the days of the factory control from Bangalore dictating to customers how to use services.

I think this speaks volumes around the provider’s commitment and willingness to stay the course and pace as the services industry evolves with the digital world’s new technologies and new business models. Infosys is trying to catch that wave of next-generation digital disruptive technology that emanates from Silicon Valley’s ecosystem.

Sikka talks about Design Thinking, which puts him right into the heart of how Silicon Valley thinks and tries to behave. Infosys is making a commitment to be at the heart of the Valley’s ecosystem to better leverage that thinking. Bangalore is a long way from that ecosystem. New Jersey is closer, but Infosys chose to be in the heart of it, right in the Valley.

Will Infosys succeed in these new moves? 

I think this starts to ask hard questions of the rest of the industry, and I believe the rest of the industry will watch Infosys intently to gauge its success. In the event that Infosys succeeds in making this pivot, I think we can expect other Indian pure-plays to follow suit quickly.


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Silver Bullets Don’t Drive Growth in Services | Sherpas in Blue Shirts

Every service provider is looking for the one, simple thing they need to do to change their growth trajectory. They think they may need to change their messaging or perhaps they should incorporate automation into their finance and accounting offering. Or they think moving from FTE-based pricing to transaction-based pricing will grow their business. If a silver-bullet answer existed for the question of how to grow a service business, it would be a wonderful thing. But here’s the sad truth: none of these actions will change the game.

Insanity is doing the same thing again and again and expecting a different result. Are service providers going insane? It appears so, since they keep looking for simple, one-dimensional answers over and over again. I think by now they should be willing to step back and realize that their growth problems are much bigger than getting their messaging right or delivering the right combination of offshore and onshore resources or even adding a host of new service offerings in cloud, as-a-service, digital and automation platforms.

We talk with providers that are very enthusiastic about their new offerings and say they’ve signed dozens of new deals. But when we ask how much revenue comes from the new deals, the answer paints a very different picture. Often these are small sales, pilot situations and small revenue with the hope that they will grow into something larger. That may be where the market is heading, though not always.

Does a provider’s future success depend on moving to new technologies, new offerings? Providers need to recognize they can drive bigger sales by focusing on well-established areas that customers are already buying. For example, businesses will spend small amounts of money experimenting with cloud and social media, but they will spend huge amounts of money extending their CRM system so it supports the provider’s new offering. Evolving established technologies drives much larger revenue than experimenting with new technologies or new business models. That said, this still won’t change the game.

I believe providers need to stop their insane search for silver bullets and look, instead, at the fundamental tenets of how their customers perceive them and then change the nature of those relationships.

Providers that want to change the trajectory or the nature of their customer relationships and move into a deeper relationship on a larger scale likely need to change how they treat customers. Today’s customers want deeper, more intimate relationships.

But when we at Everest Group talk to providers about this reality, we find very few service providers are willing to step back and do that. Providers tell us they can’t afford to allocate more resources to customer relationship development and customer care functions because their cost of sales will rise too fast. So they just keep treating customers the same way but expecting a different outcome.

The dilemma for service providers is that they have a shareholder mandate to drive growth today. Sure, they get rewarded for growth in the current quarter, but their future ability to drive growth depends on their ability to position themselves should new technologies catch hold. When that happens, having already established deep, intimate relationships with customers will drive growth.

If I Were the Man You Wanted | Sherpas in Blue Shirts

Singer/songwriter Lyle Lovett wrote a song with the line “If I were the man you wanted, I would not be the man that I am.” With apologies to Lyle Lovett, I think this is a very appropriate line when applied to IT infrastructure services today. Clients’ changing expectations of their incumbent IT infrastructure service providers leave the providers lamenting like the forlorn cowboy in Lovett’s song.

It’s only natural for companies to want their incumbent service providers to bring them cloud offerings. Their expectations are set by what they read and see from Amazon, Microsoft and Google. They want the infrastructure services price dropped, the benefits of elasticity and flexibility of the cloud model and usage with no commitment. Companies are trying to persuade or force their infrastructure providers to bring cloud offerings.

But IT infrastructure providers are unable to provide what they want.

The “gotcha”

The clients helped created the underlying problem. The incumbents’ services are bespoke, unique, and have been dictated through client contracts in a different kind of delivery model. In this model, costs rise every year through COLA rather than plummeting like the price of public cloud. The cost of public cloud services had been dropping around 20 percent per year but is now accelerating with the latest adjustment between 60-80 percent in a single downward-pricing adjustment by Google, quickly followed by all the major cloud players.

The pricing components are not apples to apples, and companies understand that. But plummeting prices play into client expectations. Expectations of business users that they ought to be able to have deflating costs with elasticity and flexibility and limited or no long-term commitments just cannot be met in the traditional outsourcing base.

The incumbent providers’ delivery model is a recipe of the client’s own making. Clients dictated where the provider can provide services from, what kind of service the provider must deliver and demanded customization to address their needs. As a result, providers have huge stranded investments tied up in providing what the clients demanded.

Dose of reality

There is no “they lived happily ever after” end to this situation. Among infrastructure clients, the situation causes increasing unhappiness as their unmet expectations further diverge from the reality of the services their incumbent providers deliver. But because of contractual obligations and because of their orientation, the incumbent service providers simply cannot change.

So, like the forlorn cowboy in Lyle Lovett’s song, the lyrics resonate with great poignancy among today’s service providers … “If I were the man you wanted, I would not be the man that I am.”


Photo credit: Cristian Viarisio

Tech Mahindra Puts Satyam to Bed | Sherpas in Blue Shirts

Tech Mahindra has run the gauntlet of stabilizing after its acquisition of the corrupt-ridden Satyam. The fully integrated companies have a unified leadership team, the client base is satisfied and stable, and Tech Mahindra has a robust brand. The provider is now turning its focus to growth.

When Satyam imploded through a well-documented set of corruption cases, Mahindra stepped forward to acquire its assets and, by extension, stabilize the Indian heritage services industry.

It has been a long, difficult journey for Tech Mahindra, more difficult than anticipated. Mahindra had to wrestle with rooting out the corrupt practices, getting the books restated, negotiating with the regulatory bodies and shareholder lawsuits, satisfying a concerned customer base, dealing with a nervous employee base and transitioning from the tainted Satyam brand to the robust but less well known Tech Mahindra brand.

Although there was some client flight, many clients chose to stay and wait it out. These clients are now satisfied and pleased with the progress Tech Mahindra has made.

Kudos to Tech Mahindra for enduring the journey to a successful outcome. We’ll watch with interest as they now focus on growth.

Snowflakes in the Global Services World | Sherpas in Blue Shirts

There is increasing skepticism and cynicism in the customer ranks in the hyper-competitive environment of the services world. As a customer commented to me, “Providers are like snowflakes. They all think they are unique, but they look just like everybody else. And if you put them under pressure, they all become the same thing.”

The customer was referring to being bombarded with providers’ offers in PowerPoint presentations and the fact that many of the presentations are “paper thin and aspirational.”

Providers come in with the latest hot topic (especially digital, cloud or cloud orchestration) or what they’ve heard at a conference, spinning that into a PowerPoint presentation. But, as the customer explained, it very quickly becomes apparent that the provider has no real experience or only limited experience in the service touted in the presentation. At best there are one or two examples of having done something similar. The offer is more PowerPoint than reality.

There is another problem with these thin PowerPoint offers. These presentations are all about the provider — how smart it is, how capable it is and the complications involved in the provider delivering the service. But this information is of limited interest to the customer, who wants to talk about their own business issues.

The offer overload showing thin experience results in customers’ increasing cynicism. And the focus on the provider creates further barriers for good conversations. Adding to the negative impression, providers usually offer these aspirational PowerPoint multiple times; but essentially, this accomplishes only one outcome: it reduces the customer’s willingness to entertain new offers.


Photo credit: Andrew Magill

Banks Get the Old Adage Right: The Customer Is King | Sherpas in Blue Shirts

“A customer is not an interruption in our work. He is the purpose of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”

….Mahatma Gandhi

The above quote by Gandhi takes a whole new meaning in the current banking and financial services (BFS) landscape. There was a time when banking customers were plagued by issues such as obscure contract terms, hidden costs, and protracted complaints handling. While this may still continue to be the case, a confluence of different forces has created a new era in which all efforts by banks seem to point in one direction – customer centricity.

Exhibit 1: Key forces driving customer centricity in banking and financial services 

Key forces driving customer centricity in banking and financial services

Drivers of discretionary IT spending in BFS

In such a scenario, almost all banks are investing in one or more customer-centric initiative to enable a differentiated customer experience and servicing:

  1. Data management and customer data analytics: Aggregation and analysis of customer information lying in silos across different departments helps to personalize products/services, offer better customer service, conduct customer due-diligence, manage risk, and drive loyalty programs. Creating a 360° view of the customer has become essential
  2. Mobile banking: Banking has been brought to customer’s fingertips. Key investments include mobile payments, applications, websites, mobile wallets, etc.
  3. Omnichannel experience: Enables uniform experience for customers across different communication channels such as retail branch, ATMs, mobile, online banking, call center, etc. A customer should be able to initiate a transaction in one channel and finish it in another
  4. Front office modernization: Banks have equipped their salesforces with mobile devices and tablets to offer a unique selling experience to customers. Banks are also undergoing modernization of their core banking platforms. All of this leads to better customer service

The table below shows select examples of technology initiatives taken by banks and financial institutions to drive customer centricity.

Exhibit 2: Key customer-centricity focused IT outsourcing transactions announced in 2013

Investment theme Buyer Service provider Deal value (US$ million) Duration (years) Scope of services (Among other things)
Data management and customer data analytics Banorte IBM 1,000 10 Investment in master data management (MDM) software to create a 360-degree view of the customer
Janalakshmi FS Accenture N/A 5 Implementation of CRM software and MDM enabling customer onboarding
Springleaf Financial Acxiom N/A N/A Customer/prospect database management support, including customer acquisition, engagement, and development through analytics
Mobility ING Vysya Bank IBM N/A N/A Development of mobile banking channel to reach into untapped markets, such as remote cities and rural areas
Omni-channel experience Industry Bancshares FIS Global N/A N/A Upgrade of core banking system which enabled real-time access to customers across various channels
Large Middle East Bank Atos N/A 3 Atos implemented Backbase Customer Experience Platform enabling a multi/omni-channel environment for the bank
Front-office modernization, omnichannel experience BBVA Group Accenture 25 4 Upgrade of core technology for the bank. Improved customer service through reduced account opening time, centralization of customer account information, creation of a multichannel environment
Front-office modernization Maybank Singapore NTT,  Dimensions Data 47 N/A Upgrade of Maybank’s IT infrastructure to improve service reliability and customer user experience

Source: Everest Group’s proprietary Transaction Intelligence Database

Service providers have identified the market need for technology that enhances customer experience and have developed capability accordingly either organically, inorganically or through partnerships.

But we challenge the providers to further think how they can become partners in achieving business outcomes for their clients. As for the banks, how successful have they been in implementing these initiatives? In the current whirlwind of regulatory compliance and governance, are some finding it too difficult to innovate customer facing functions?


Photo credit: 10ch

Digital Transformation: The Non-sense of Customer Centricity! | Sherpas in Blue Shirts

Have you ever spoken to a “digital transformation” enthusiast? The first thing you will notice is the person cannot exactly define digital in any meaningful way. The second thing is that the discussion will invariably include citation of popular consumer mobile apps, portals, and other things such as Facebook, Google Glass, the Internet of Things, PayPal, Pinterest, TripAdvisor, and Uber.

The third, and perhaps the most intriguing, is their obsession with customer engagement. The focus is so extreme that it pretty much excludes anything that is perceived not to be glaringly customer-related. This fixation, which means a sole focus on the front-end sales and marketing engine, fails to take into account that a digital strategy must pervade the entire value chain – customer engagement, business processes, technology operations, and organizational policies – and that a success requisite is transformation of the less attractive, unseen back-end.

Unfortunately, buyers have limited spending appetite and budget, and CIOs coming under intense pressure to add business value are vigorously channelizing these budgets into development of front-end-centric digital initiatives. I believe this myopic strategy is flawed, and will show its glaring weakness in the coming years.

Consider the impact of a sole focus on front-end digital initiatives without augmenting business process or technology operations. For example, a bank’s mobile sales force can open a customer account in 10 minutes or sell financial products using a banking mobile app, However, as the back-end operations and other business processes needed to make the account functional are still the same, the customer does not get the true benefits of this banking mobility. Or, when an online retailer develops a mobile app where customers can place orders, but the back-end processes and technology operations are same as customers placing an order through the online portal, the availability of one more access point for customers does not fundamentally impact the business.

Enterprises need to go full hog to leverage the disruptive power of digital services. A piecemeal approach will eventually hit a wall, and business leaders’ frustration will grow. To ease this, business leaders must understand and collaborate with the operations department, and push the operations manager to introduce digital transformation within the core technology operations and business processes.

Customers have always been at the center of the universe for successful companies, and digital transformation will not change that. However, extreme customer-centricity without suitable investment in back-end operations or business processes that drive customer delight will result in a grand failure. Enterprise buyers need to judiciously invest in technology solutions across their business and internal processes to create a vibrant “digitally aware” organization that understands the impact of this transformation. The impact should be pervasive and touch upon each aspect of the business.

Digitization of business processes across an organization presents a tremendous opportunity to leap ahead of the competition. But make no mistake…it’s a high investment, high risk, and high return game. Organizations that have the required mettle to make technology pervasive in their front-, middle-, and back-end operations will not only survive, but thrive.

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