Tag

digital services

Outsourcing Transactions, Global In-house Center Setups Grew in Q4 2018 According to Everest Group Report on Top Trends in Global Sourcing | Press Release

By | Press Releases

Digital services—especially automation, analytics and cloud—continued to dominate outsourcing activity

The global sourcing industry posted healthy numbers for Q4 2018, marked by an 8 percent increase in outsourcing transactions and a 13 percent increase in Global In-house Center (GIC) setups and expansions over the previous quarter, according to Everest Group.

Digital services continued to dominate the outsourcing activity in Q4, with 74 percent of all outsourcing transactions comprising digital-focused services as compared to 26 percent of transactions focused on pure traditional services. Cloud services were included in 44 percent of all digital-focused transactions for the year.

  • The majority (55 percent) of offshore and nearshore service delivery centers set up in Q4 were focused on digital services. Fifty-six percent of new centers established in Q4 supported automation and 33 percent included analytics services.
  • GICs were increasingly leveraged for digital services in Q4, with 59 percent of GIC setups and expansions including digital services in their scope. Automation continued to account for the maximum share (63 percent) of the total digital-based GIC setups during Q4, reflecting the significant degree to which enterprises are seeking to leverage automation to improve efficiency, deliver business value and reduce cost beyond traditional means.

“The global services industry enjoyed a fourth consecutive quarter of growth in Q4 2018, with digital services activity continuing its upward trend,” said H. Karthik, partner at Everest Group. “Two key areas of service provider activity in Q4 demonstrate this strong emphasis on digital services. First, service providers such as Accenture, DXC Technology and TCS announced acquisitions of startups to enhance their interactive digital content capabilities. Secondly, several service providers announced innovative partnerships with educational institutions in their attempts to bridge the digital skills gap. For example, Accenture announced a partnership with Georgia Institute of Technology, IBM is teaming up with IIT Delhi, and Infosys is joining forces with Cornell. We will continue to see service providers investing in acquisition and partnership strategies to strengthen their digital services capabilities in the year ahead.”

Everest Group discusses these and other fourth-quarter developments in its recently released Market Vista™: Q1 2019 report. The quarterly report highlights the trends in the fast-evolving global sourcing market, exploring the key developments across outsourcing transactions and Global In-house Centers (GICs), as well as location risks and opportunities, and service provider developments.

Additional highlights from the Market Vista: Q4 2018 report:

  • Themes such as design, customer experience, automation and cloud were prominent in Q4 2018.
  • The uptick in outsourcing activity was led by the Banking, Financial Services and Insurance (BFSI) sector.
  • Q4 saw substantial growth in adoption of GICs by small enterprises, with a particular focus on specific services rather than multi-functional centers.
  • The Asia Pacific region witnessed a significant rise in research and development (R&D) GIC setups by manufacturing enterprises, demonstrating a preference to insource next-generation engineering services.
  • To build niche capabilities, service providers focused on the acquisition of startups as opposed to partnerships. As many as 70 percent of acquisitions in Q4 were startups compared to 50 percent in Q3.
  • Key location risk/opportunity trends identified for Q4 2018 include South Africa announcing a new GBS incentive scheme to improve the country’s value proposition; Lithuania attracting a multitude of players looking to innovate and deliver FinTech services, increasing competition from service providers for engineering services sourcing, and significant investment from the Canadian government, likely to boost attractiveness of British Columbia for digital services delivery.

Learn More

  • Download a complimentary 16-page abstract of the report findings here.
  • In the recent webinar, “The 5 Most Important Global Services Trends for 2019,” Everest Group experts shared the context for many of the highlights of the Market Vista™: Q1 2019 report as well other key market trends. Watch the replay or download the webinar deck here.

Can Indian Tier-2/3 Cities Fit the Bill for Digital Services Delivery? | Sherpas in Blue Shirts

By | Automation/RPA/AI, Blog, Shared Services/Global In-house Centers, Talent

India continues to offer an attractive service delivery location proposition for global companies, given its unique combination of a low-cost, scalable English-speaking talent pool, and the breadth and depth of available skills.

As the global digital services industry matures, and with increasing competition in the tier-1 cities, companies are looking to reduce the costs of talent and access additional untapped talent pools for digital services delivery.

Can tier-2/3 cities in India fit the bill? Let’s start by looking at the current state of digital services delivery in these cities.

Existing Landscape

Today, India is the largest destination for digital services delivery, with 75 percent of the market. Tier-2/3 cities in the country currently hold 14-16 percent of the market share, and we expect this proportion to grow by 15-20 percent in the next couple of years. Ahmedabad, Chandigarh, Coimbatore, Indore, Jaipur, Kochi, Lucknow, T-puram, and Vadodara are the top nine tier-2/3 locations, accounting for 55-60 percent of the digital services headcount in tier-2/3 cities.

Tier-2/3 cities are mostly leveraged to provide social & interactive (41-43 percent), cloud (21-23 percent), analytics (16-18 percent), and automation (10-12 percent) related services. When it comes to sophisticated digital technology services, such as cybersecurity, mobility, and Artificial Intelligence (AI), service providers still prefer tier-1 locations such as Bengaluru.

Major digital services Tier 2 3 blog

Now, let’s evaluate how tier-2/3 Indian cities’ value proposition stacks up against tier-1 cities.

 

What’s ahead for India’s Tier-2/3 Cities?

 Here are some of the key findings from our recently published report, “Will Tier-2/3 Indian Cities Carve a Niche in the Digital Story?

  • Tier-2/3 cities will continue to be leveraged predominantly as spokes to major hubs in tier-1 cities for the next two to three years
  • Because of a lack of skilled talent, delivery of advanced digital services such as machine learning, cyber security, and mobility from tier-2/3 cities will remain a distant dream for the next few years
  • An increasing number of enterprises will set up global in-house centers (GICs) or shared services centers for delivery of digital operations, due to increasing confidence and improvements in infrastructure quality
  • Reskilling/upskilling for digital capabilities will be paramount for companies operating in these cities
  • A few large service providers will invest in training talent, and benefit from early mover advantage by becoming distinguished employers in a less competitive market

To learn more – including the metrics around availability of talent, market maturity, cost of operations, business and operating risk environment, and implications for market participants including buyers, service providers, investment promotion councils, and industry bodies – please read our recently published report, “Will Tier-2/3 Indian Cities Carve a Niche in the Digital Story?.” We developed the report based on deep-dive discussions with leading shared services centers, service providers, recruitment agencies, and other market participants.

Is Your Shared Services Center / GIC Driving the Digital Agenda? | Webinar

By | Webinars

Complimentary 60-minute webinar held on Tuesday, October 16, 2018 | 9 a.m. CDT, 10 a.m. EDT, 3 p.m. BST, 7:30 p.m. IST

DOWNLOAD THE PRESENTATION

Questions we’ll address:

  • For what kinds of digital initiatives are enterprises leveraging the shared services / GIC model?
  • How are shared services / Global In-house Centers (GICs), and corporate digital teams working together?
  • What supporting programs should you implement to develop and retain top digital talent?
  • How much are organizations investing in digital initiatives, and are they satisfied with their investments?

Businesses around the globe are exploring and adopting digital services at a record pace, driven by changing consumer demands, emerging disruptive technologies, evolving regulations, and increasing cost/margin pressures. Many organizations are finding that their shared services centers / GICs are ideally positioned to orchestrate their digital services management and development, enabling tight integration between the delivery center(s) and the core business while also ensuring optimal growth.

Who should attend, and why?
This webinar will offer real-world insights into how organizations can effectively leverage their delivery centers for digital enablement.

The content is geared to senior enterprise executives – CIOs, CTOs, Chief Digital Officers, Heads of the Global In-house Center (GIC) / Shared Services Center (SSC) / Global Business Service (GBS), Senior Strategy Executives, and Global Sourcing Managers.

Presenters
Michel Jannsen
Chief Research Guru
Everest Group

Rohitashwa Aggarwal
Practice Director
Everest Group

Parul Jain
Senior Analyst
Everest Group

Moderator
Alan Wolfe
Senior Vice President
Everest Group

7 Keys to Transformational Outsourcing Success | In the News

By | In The News

With digital transformation all but mandatory across industries today, that innovation imperative is impacting every part of IT, including its outsourcing engagements. However, many CIOs are struggling to integrate third-party IT services deals into their long-term business strategies. Indeed, a recent Everest Group survey found that 61 percent of enterprises pursuing digital transformation were dissatisfied with their service providers.

More than a quarter of revenues for the top 20 outsourcing providers are generated by digital services, according to Jimit Arora, partner in Everest Group’s IT Services practice, with those markets growing as the traditional services market is shrinking.

Read more in CIO

78% of Enterprises Fail to Scale and Sustain Their Digital Transformation Initiatives. Everest Group Says ‘Old School’ Operating Models are to Blame | Press Release

By | Press Releases

New Everest Group report finds enterprises are adopting digital and seeing initial success, but struggles come in scaling and sustaining the transformation effort.

As many as 78 percent of enterprises today fail to scale their digital transformation initiative and achieve the desired return on their digital investments. Despite increasing digital adoption by enterprises and reports of initial successes, enterprises are struggling to scale and sustain their transformation efforts. According to Everest Group, a misalignment between an enterprise’s digital strategy and its “old school” operating model is often to blame.

“In recent years, enterprises increasingly have been undertaking digital transformation initiatives, leveraging digital tools to improve revenue, reduce costs and enhance customer experience,” said Yugal Joshi, vice president, Information Technology Services, at Everest Group. “Enterprises are typically quite encouraged by initial successes, but the majority don’t actualize the return on investment they envisioned in the long term. The struggle comes when enterprises try to scale and sustain their transformation initiatives. Typically, one of the biggest problems lies in ‘old school’ forms of operating models. If the enterprise’s operating model is not modernized and aligned with the digital strategy, the desired returns from a transformation initiative simply cannot be achieved.”

The following findings are also symptomatic of the all-too-common misalignment of operating model to digital strategy:

  • 73 percent of enterprises failed to realize sustained returns on their digital investments.
  • 69 percent of enterprises consider organization structure as a barrier while scaling up their digital initiatives. A complex organizational structure reduces transparency and creates silos, making it difficult for organizations to sustain their digital initiatives.
  • 82 percent of enterprises do not have a culture of collaboration and innovation. Lack of 360-degree communication channels and innovation culture leads to poor adoption of any change as the organization battles fear of uncertainty.
  • 87 percent fail to implement their change management plan for digital transformation.
  • 89 percent have a narrow scope of technology investments limited to particular products or functions. This impedes the organization-wide, long-term view required for digital transformation.

Everest Group has assessed the digital transformation success and failure cases of more than 328 enterprises to arrive at the best practices that enterprises need to adopt to transform their operating model into a digital operating model. The findings and recommendations are shared in the newly released report, “Digital Services – Annual Report 2018: Future Operating Model to Scale Digital.”

In this report, Everest Group introduces a simple “FIRE” framework that describes four key characteristics of the type of operating model needed to support digital transformation:

  • F: Fluid organizational structure—the enterprise should aim to create a self-organizing, ownership-driven and skill-centric organizational structure.
  • I: Innovative systems and culture—the enterprise should enable experiments, leverage technology, crowdsource ideas, and value the taking of measured risk as an asset
  • R: Responsive-by-design workplace—the enterprise must improve communication and collaboration and digitize internal processes
  • E: Experience-centric focus—the enterprise must move beyond siloed technology investments and identify areas across the value chain where end-to-end digital transformation efforts are required.

The report also describes in detail an approach and roadmap enterprises may use to transition to a digital operation model.

***Download a complimentary 12-page abstract of the report here.***

Trends in Third-Party Service Providers Transitioning To Digital Services | Sherpas in Blue Shirts

By | Blog, Digital Transformation, Outsourcing, Pricing

Third-party service providers are redefining how they compete in the new digital world. The pressure to gain market-leading positions intensifies as the new digital business model threatens to shift market share and upend existing market leaders. At the heart of this new business model is a shift away from labor arbitrage and its FTE pricing to a software-defined model and consumption-based pricing., It’s a new world, and I believe it’s important for companies seeking to buy services to be aware of how of service firms are investing to position themselves for the digital market.

Read more in my blog on Forbes