Digital Transformations: 5 Emerging Trends in the Intelligent Process Automation Market

August 4, 2022

The pandemic’s effects on the digital landscape are long-lasting. Businesses are evolving to rely on the intelligent process automation market (IPA) to promote growth and keep up with competitors. Read on to learn more about five growing IPA trends.

In a world becoming increasingly reliant on technology, financial services organizations are digitizing and automating more processes to keep up with the competition. The intelligent process automation market, growing by about 20% across all fields, is now becoming ubiquitous.

IPA is defined as automation in business processes that use a combination of next-generation automation technologies — such as robotic process automation (RPA) and cognitive or artificial intelligence (AI)-based automation, including intelligent document processing and conversational AI. Solution providers are offering solutions across RPA, Intelligent Document Processing (IDP), and workflow/orchestration, as well as crafting innovative solutions such as digital Centers of Excellence (CoE) and investing more in as-a-Service offerings.

In our recent Intelligent Process Automation (IPA) – Solution Provider Landscape with PEAK Matrix® Assessment 2022 report, our analysts ranked IPA technology vendors and looked at the market for IPA solutions. Based on the research, the growth of IPA technology and reliance will expand to around 25% over the next three years.

Five intelligent process automation market trends enterprises should know

The question of how to become faster, more efficient, and more resilient is the focus for just about any organization undergoing digital transformation. Very often, the answer to this question is at least, in part, intelligent process automation. In the near future, we can see five emerging IPA trends:

IPA will get smarter

A greater proportion of cognitive elements is finding its way into the intelligent process automation market. About 60% of new automation projects involve more advanced cognitive tools such as IDP, conversational AI and anomaly detection. As the maturity of AI-based solutions increases, cognitive automation will be in greater demand. All-round adoption of IPA will be fueled by providers entering new geographies and organizations starting IA initiatives.

IPA will be more scalable

Although many organizations are trying to adopt intelligent process automation, the real question is if it can be scaled up or, in other words, if it can be brought across the organization. To help enterprises scale automation, solution providers are investing in expanding their partner ecosystem, strengthening technology capabilities, and enhancing their services portfolio.

Providers are also expected to help enterprises scale up through more effective change management and CoE set-up strategies. Aided by the prevalence of process intelligence solutions to form robust pipelines and orchestration tools to facilitate holistic automation, enterprises are better equipped now to move away from siloed applications of IA to scaled-up automation implementations.

Citizen development will grow

Many organizations are experimenting with what they can do with citizen development, especially with the current talent shortage. Citizen-led development also holds the power to disrupt the current state of building automation and addresses the issue of talent availability. Solution providers are expected to invest in citizen development and low-code/no-code technologies enabling business users to build automation, consequently also addressing the talent shortage in the market.

Solution and technology providers are also expected to invest substantially in developing the low-code/no-code capabilities of their platforms to enable business users with limited technical exposure to build automation solutions on their own. A few solution providers are implementing citizen development programs in their own organizations and are planning to leverage the learnings to develop effective governance programs for enterprises.

IPA service providers will bring IPA solutions packages to the market

Packaged solutions are gaining traction in the IPA market due to their ease of implementation and quick Return on Investment (RoI). Solutions for F&A are the most prevalent in the market. These solutions will need training on particular data sets to make them functional for a particular process, but they will speed up implementation. Providers are expected to take conscious steps toward promoting sustainable AI by developing solutions complying with environmental, social, and governance (ESG) parameters. They are also investing in AI solutions that are transparent about their working and usage of data.

IPA service providers will pre-build connectors to legacy and other systems

There are a host of technologies, including RPA, conversational AI, process mining, and process orchestration in the IA ecosystem. Very often these IA solutions need to talk to the various other systems. Many IPA service providers are driving innovation and crafting new solutions to keep pace with the fast-moving IPA market and create a more holistic integration process. One such method is offering enabling capabilities like pre-built connectors for a faster and less complex implementation.

If you would like to learn more or discuss the intelligent process automation market and IPA trends, reach out to [email protected].

Learn how the healthcare industry is utilizing intelligent automation, digitalization, and telehealth as fundamental driving forces to transform and evolve in the webinar, How Intelligent Document Processing Is Transforming the Healthcare Industry.

The Ukraine-Russia War is Impacting Global Sustainability Initiatives and Derailing Progress in Meeting SDG Goals | Blog

August 4, 2022

The Ukraine-Russia War has hindered the progress of nations and businesses toward achieving global sustainability goals. Along with its humanitarian and economic consequences, the crisis has altered investment in energy, defense, and autocratic states. Can the enthusiasm the world felt just seven years ago about reaching Sustainable Development Goals (SDGs) be recaptured, and what does the future hold for sustainability enablement service providers? Read on to find out.

The optimism around achieving SDGs, also known as the Global Goals, has waned since its adoption by the United Nations in 2015 with the promise of improving people’s lives and preserving natural resources.

Global sustainability initiatives have been impacted by the Ukraine-Russia War, the pandemic, and supply chain issues. According to the UN, income for about 60% of the global workforce declined during the pandemic. Supply chain issues further exacerbated the economic contraction and humanitarian losses by inflating food and fuel prices.

The war is impacting progress in accomplishing SDGs, directly through its humanitarian and economic consequences, and indirectly through its effect on Environmental, Social, and Governance (ESG) investments.

The following three major challenges have emerged due to changing perceptions about ESG investments in light of this crisis:

The war has ramifications on global energy transition

The Ukraine-Russia war has slowed down the global energy transition to renewables in two ways:

Increased metal and gas prices slowing renewable technology investment – The region is a leading supplier of “energy transition metals” like nickel, palladium, copper, and lithium. Russia accounts for 7% of the world’s mined nickel and 33% of the world’s mined palladium, which are used in electric vehicle batteries and to reduce automobile emissions, respectively. Ukraine is the largest supplier of noble gases like krypton, which is used in renewable technologies. The war has reduced the already sluggish rate of renewable technology investment by increasing the prices of these metals and gases.

Ramped up coal production and fossil fuel investment – Russia accounts for 17% of the world’s natural gas supply, which is perceived as a transition fuel globally. Before countries develop sustained sources of renewable energy, natural gas is replacing fossil fuels due to its lower carbon emissions. The issue is more pronounced in Europe, as about 80% of Russia’s natural gas is exported to Europe, fulfilling about 40% of Europe’s gas demand. The war has inflated gas prices. Although the US has agreed to supply more gas to the region, this raises the question of sustained gas supply and puts pressure on European governments to accelerate their net-zero strategies. The market is optimistic that Europe will transition to clean energy faster than expected because it needs to become energy self-reliant.

Slow investment in renewable energy has further dipped since 2018. While renewable energy requires patient and risk-tolerant investors, fossil-fuel investment generates considerable returns quickly due to the massive existing hydrocarbon infrastructure. In the war’s wake, fossil fuels are seeing an investment frenzy, with Canada, the US, Norway, Italy, and Japan increasing production. Many countries across Europe again are ramping up coal production to avoid depending on Russian gas. In the short run, it seems that the world has taken steps back on global warming

Investment in defense is being reclassified as sustainable

Before the war, steering away from investing in arms and ammunition was considered prudent and ESG conforming. However, the war has brought back fears of traditional warfare. Now, many nations have started taking a U-turn from this narrative by categorizing defense investment as sustainable for national security and global alliances. Many global defense suppliers’ share prices spiked upward the first day Russia invaded Ukraine.

Many European nations, including Germany, Poland, and Sweden, have announced increases in their defense budgets. SEB Investment Management, a leading asset-management firm in the Nordics, has revised its sustainability policy to allow some of its equities and corporate bonds to be invested in the defense sector. With skepticism associated with traditional warfare restored, investors and governments are bound to pump more money into arms and other defense products.

Investors are steering away from autocratic states

Investors are facing heightened reputational risks for associating with authoritarian regimes. The boundary between investing in government bonds of an autocratic state and investing in companies conducting business in/with the autocratic states is now blurred for investors. Western investors are striking Russia off their investment list, especially if the investment is ESG-compliant. This can dampen investments in other autocratic states and the businesses associated with them.

How does the war impact sustainability enablement service providers?

The war has temporarily derailed the uptake of renewable energy investments. To start, this will impact enterprises’ Scope 2 emissions reduction goals. Scope 2 emissions are generated from purchased electricity, and reducing these emissions requires enterprises to turn towards renewable electricity sources.

The sustainability enablement technology industry also will experience a short-term supply crunch of semiconductor chips, which is an important input in producing sustainability technologies.

To deal with these choppy waters, organizations will need help from consulting and technology providers to shift their sustainability mix to access net-zero strategies to still achieve their committed targets for global sustainability initiatives.

Moreover, as the sustainability ecosystem matures, forward-looking investments in scaling undertakings such as enhancing trust in data and reporting (avoiding greenwashing claims), scaling operations to accelerate net-zero targets, and creating persistent governance systems will continue to create momentum.

To further discuss global sustainability initiatives, contact [email protected], [email protected], and [email protected]

You can read more about the impacts of Russia’s military action in Ukraine on services jobs and global sourcing in our blog, “Will Ukraine’s Invasion Have a Domino Effect on Other Geopolitical Equations?”

Deconstructing the Future of Work Trends

July 13, 2022

Four-day weeks, on-demand pay, “rural” talent, and digital workers – in recent times, we’ve heard these ideas accompanied by seemingly teleological questions about work as a construct. With the work landscape rapidly evolving, questions arise about what the future of work will look like. Read on to learn more about how technology, location, and talent can be utilized to reconstruct our understanding of work, as well as gain positive lasting effects for companies.

With the rise of digital labor pyramid issues, the after-effects of a global pandemic, and the desire for more meaning in work and convenience through remote work, the work landscape is being met with a promising possibility of re-examining and perhaps reconstructing work for the new era. But, beyond the clarion call, what exactly does it entail? How do we understand the future of work trends and how do we design for them? Fundamentally, we can break it down into three distinct components: the how, the where, and the who. Let’s take a look at the trends shaping the future of work.

Nature of work – how will work be done?

As we look at the adoption of cloud and AI technologies in the workplace, it becomes clear that the nature of work will change considerably. Robotic process automation (RPA) and Artificial Intelligence (AI)-based automation can significantly reduce the number of transactional tasks delivered manually, in addition to a few judgement-oriented tasks. The universe of tasks that can be automated or simplified will expand as these technologies mature and systems of record become more scalable, data pipelines are streamlined, and meaningful data itself becomes more accessible. This further enhances our ability to use data to derive insights and make informed decisions.

Everest Group’s future of work research shows adoption of these technologies has accelerated during the pandemic. More than 70% of organizations have invested in digital in the past 12 months, and about 50% expect to invest more in the next six to 12 months. Naturally, all of this has implications for the kind of work that then falls to the human workforce. With transactional tasks largely automated, judgement-, expertise-, and empathy-oriented tasks and related skill sets (including “soft skills”) become more important. But this is not a doom and gloom job-loss scenario; digital hardly ever is. Digital will also create jobs for talent who can acquire skills related to automation, AI, analytics, and the cloud.

In essence, the nature of work is changing. Enterprises will need to prepare for these eventualities by ensuring they have adequate skilling programs in place, starting by building skill taxonomies for the future, assessing current skill sets, and building out continuous learning, upskilling, and reskilling programs to enable a future-ready workforce.

Work location – where will work be done?

Our research indicates that over half of today’s enterprises expect more than 40% of their employees to continue to work from home over the next two years or so. The pandemic has dispelled certain notions about remote work while highlighting its challenges. No longer do we question if remote work is efficient or even a possibility; video calling and conferencing tools, collaboration technologies, and the potential of the metaverse have meaningfully reduced the friction that deterred work from home. Employees have benefitted from shorter commute times, greater flexibility, and proximity to family.

On the other hand, 55% of enterprises see employee engagement as a key challenge in a remote-only environment, and 50% see organizational culture as difficult to maintain with full-time work from home. The middle ground (hybrid work) seems destined to be lasting among the future of work trends. Enterprises need to redesign physical and virtual workspaces, embedding information security as needed and changing management styles to accommodate the hybrid working model.

As remote working has gained more acceptance and mature economies have aged, the time has also come to de-link talent from geographic locations. Beyond the US and India, emerging technologies such as AI and automation have sizeable talent pools in multiple countries across the world. The enterprise of the future should seek to leverage this talent, applying similar guiding principles as those for hybrid work with an additional focus on local compliance, managing cross-cultural teams, and customizing policies.

Talent model – who will do the work?

As work and workplaces evolve, so will the talent we need. We already spoke to the need for a geographically distributed and suitably skilled talent. The future workforce will also be diverse, equitable, and inclusive. Diversity will, in some ways, be necessitated by the need for a variety of in-demand skills sets and changing labor pyramids, but beyond that, it is a fairly well-established fact that diverse workforces simply do better and bring a variety of perspectives to the table, enabling enterprises to serve their clients better too. From this perspective, in the digital age, organizations will need to bolster their diversity, equity, and inclusion programs, define concrete goals and metrics, and mobilize internal and external resources to help meet these goals. DE&I will be among the trends shaping the future of work to watch for.

As we look to fulfill specific skillsets for future work, organizations will also do well to consider contingent or temporary workers in addition to traditional permanent ones. Contingent workers are in greater supply now and will offer a good pool of talent to tap into, particularly for in-demand and next-generation skills. This will require careful consideration on the part of enterprises, as not all roles will be suitable for fulfillment. Even among the contingent workers, some skillsets will be in higher demand.

Attracting talent also will pose a challenge for enterprises. Today, a large portion of contingent programs are run through procurement. A holistic program run by HR (including contingent and permanent workers) that can communicate the employer value proposition well, help with engagement, and leverage data to improve program management might just be needed as we transition to this new construct.

The future of work is neither esoteric nor mundane – it is somewhere in between, and it is here already. It will require us to question well-established paradigms, rethink the framing of work in our lives, and push us to redesign and reconstruct. Enterprises that move the needle now stand to gain a lasting competitive advantage.

To learn more about the future of work trends, contact us or reach out to Everest Group Partner, [email protected].

At Everest Group, we help clients navigate their digital transformation journeys and provide assistance in implementing digital technologies. Currently, we are offering assistance to companies that are launching Web 3.0 and Metaverse initiatives with a complimentary outline of definitions and use cases. Request a summary.

GSA Global Festival of Sourcing

July 5, 2022

in-person event

GSA Global Festival of Sourcing 2022

July 5 - 6, 2022 |

Ravens Ait, Kingston Upon Thames, London

Everest Group Partner Nitish Mittal will be participating in the opening panel of GSA’s Festival of Sourcing in which they’ll discuss the current state of the sourcing industry in a session titled “An Analyst View of the Current State of the Industry.”

Nitish Mittal

Partner

LEARN MORE ABOUT THE EVENT

IT Procurement & Sourcing Summit Nordic | Event

June 8, 2022

IN-PERSON EVENT

IT Procurement & Sourcing Summit Nordic

June 8 - 10, 2022 |

Radisson Blu Scandinavia Hotel, Copenhagen

Everest Group is a proud sponsor of the IT Procurement & Sourcing Summit Nordic, which takes place from 8 – 10 June at the Radisson Blu Scandinavia Hotel, Copenhagen.

David Rickard, Vice President, Sourcing Vendor Management & Business Process Services and Ricky Sundrani, Vice President, Pricing Assurance will be leading a Challenge Your Peers workshop on “How sourcing can impact your ESG strategy.”

David and Ricky will also be joining the pre-event ice-breaker, the networking dinner and all interactive sessions and presentations on both days.

Use our discount code (VIPCLIENT@EVERESTGROUP) to get a free Standard Event Pass (value €2,595) here.

David Rickard

Vice President

Ricky Sundrani

Vice President

REGISTER FOR THE EVENT

5 Intelligent Process Automation Trends to Watch | In the News

June 3, 2022

Financial services organizations are digitizing and automating more processes to keep up with competition, and intelligent process automation (IPA) — which has been growing in use about 20% across all fields — is now becoming ubiquitous. Market research firm Everest Group in a recent report ranked IPA technology vendors and looked at the market for process automation.

Rising Prominence of Africa in Technical Support and Other Value-added Services

May 30, 2022

While not a newcomer to service delivery, Africa has recently been experiencing a surge from buyers and service providers in adoption and investment, making this a region to watch for technical support and other value-added IT and business process services (BPS). Read on to learn why perceptions of Africa have changed, and explore six factors fueling Africa’s growth and its emerging delivery locations.

Africa has been part of the sourcing strategy of numerous Information Technology (IT) and BPS leaders in Europe, the Middle East, and Africa (EMEA) for quite some time. Lately, Everest Group has witnessed a sudden uptick in interest and adoption of Africa by both buyers and service providers.

More importantly, Sub-Saharan Africa has moved from primarily being leveraged for transactional services and low complexity customer experience (CX) queries to accelerated adoption of specialized operations and judgment-intensive processes as part of the region’s delivery portfolio mix.

Enterprise (business-to-business) technical support is one such area where buyers and service providers are proactively investing in Africa. We have noted several new technical support locations being set up in Sub-Saharan Africa by third-party outsourcing providers serving European and other English-speaking global markets.

Let’s take a look at what is contributing to this increased higher-level activity.

What factors have changed the perception of African talent and delivery sites?

STEM-focused education – The African Union (AU) has repeatedly reinforced its commitment to science, technology, engineering, and mathematics (STEM) education among member countries. The High Level Panel on Innovation and Emerging Technologies (APET) encourages AU Member States to implement STEM education regionally. Some emerging and nascent sourcing destinations, like Rwanda, have taken significant steps in this direction by introducing STEM education in 2019 at all education levels through its “New Competence-Based Curriculum,” focused on STEM and Information and Communications Technology (ICT)-led education
Investments by leading technology players to develop a local talent pool – Several multinational companies have set up delivery centers in the region to deliver services to Europe and North America, and tech giants including Google, Microsoft, and Netflix are leveraging it for global services delivery. These companies have invested heavily through well-designed upskilling programs with a focus on technology and digital services, creating a pool of managerial expertise as well as technology delivery capability for complex technical support and other value-added services in BPS and ITS
Acceptance of the remote work environment and related experience – The past two years have proven the remote and distributed work environment is as effective as traditional on-premise office setups. Service providers now have greater flexibility to enable their agents and managers to gain experience by working with global teams while delivering from Sub-Saharan Africa. This has significantly lowered the talent barrier for agents and supervisors

Six factors fueling Africa’s adoption

While the above factors have been instrumental in changing the perception and quality of the region’s talent pool, the following additional macro factors are driving the increased adoption of Africa:

Favorable demographic – As one of the youngest regions in the world, Africa boasts the greatest youth population in the world, with more than 60% of its population younger than 25 years of age, according to the World Population Perspectives of the United Nations. By 2035 the working population in Sub-Saharan Africa is expected to be larger than the rest of the world combined. This becomes even more relevant when viewed from the prism of the aging population elsewhere, including India
Cost arbitrage: Some countries in Africa offer highly-attractive cost arbitrage compared to onshore locations in Continental Europe (CE) and North America (NA). For example, Egypt, Nigeria, and Kenya’s pricing come in at 70-80% less compared to onshore locations in CE and NA, although Nigeria and Kenya are primarily leveraged to serve domestic markets. South Africa (for non-voice Finance & Accounting) and Morocco (for voice-based services) offer cost savings of 40-60% over onshore locations
Strong domestic market: The latest African trends show that consumer spending growth in Africa is projected to rise to $2.1 trillion by 2025 and $2.5 trillion by 2030, according to market forecasts. This is expected to create a fast-growing and lucrative local market for contact center and ancillary services, further fueling growth in Africa’s CXM delivery landscape
Increased confidence due to the presence of global enterprises: Some of the world’s largest brands from across industries, such as Accenture, Daimler, Google, Microsoft, Standard Chartered, and Teleperformance, are leveraging Africa as the destination of choice for global service delivery. This has given a lot of confidence to prospective companies as they look at Africa while exploring new delivery locations
Proximity to Europe: Proximity to various European countries is a big selling point of many African locations. Companies are increasingly leveraging Morocco for French and Spanish voice-based BP services because it offers both cultural and geographical proximity to France and Spain. Additionally, since most African countries share similar time zones with Europe, delivery and client teams can collaborate in real-time, optimizing work in both geographies
Business Continuity Planning (BCP) measures: Expansion into Africa further diversifies delivery location risk, which has become even more important in light of COVID-induced disruption in traditional delivery locations in Asia. Enterprise buyers of CX services are keen to balance their locations portfolio to manage business continuity risks for nearshore and offshore services
Government and regulatory support: African governments have progressively aligned the local data security laws with global standards, particularly the European Union General Data Protection Regulation (EU GDPR). For example, Nigeria released its Nigerian Data Protection Regulation 2019, which is aligned with EU GDPR. Similar laws, with regional variations but common intent, have been implemented by countries such as Egypt, Kenya, Rwanda, and Mauritius, providing potential investors and customers comfort around data privacy standards. Besides regulation, the government has also invested in infrastructure and security measures to boost outside investment

Emerging delivery locations in Africa

The map below highlights key locations leveraged by global enterprises and service providers for global service delivery. Of these, established locations such as Egypt, South Africa, and Morocco are quite mature and may house 20,000 to 100,000 full-time equivalents (FTEs), while emerging/nascent locations may have less than 20,000 FTEs.

Illustration 1: Emerging delivery locations throughout Africa | Source: Everest Group

Below is a snapshot view of key emerging/nascent delivery locations:

Nigeria: Boasts a huge graduate talent pool with 460,000 to 465,000 graduates every year. It has significant IT services delivery in addition to inbound/outbound customer services. Nigeria has the potential to support multi-lingual contact center delivery in French and English as well as meet significant domestic demand for CX services

Rwanda: Utilized for both voice and non-voice business process services and French and English language support. It is increasingly being leveraged for IT service delivery across global markets with a strong government focus, excellent infrastructure, and educated talent pools

Uganda: Used extensively to support African countries and also to provide some support to US markets. Uganda supports both voice and non-voice service delivery (inbound and outbound customer service, Finance and Accounting Outsourcing (FAO), etc.). It has the potential to deliver complex IT skills, given the huge ICT talent availability
Mauritius: Leveraged for IT (Application Development & Maintenance (ADM) and infrastructure), non-voice business process services, and R&D services to serve French and Canadian markets. This location offers a favorable business environment, with government incentives for the IT-BPS sector, such as tax-free dividends and foreign tax credits

Kenya: Leveraged primarily for voice-based services and providing support to the US and Canada. While it has relatively low maturity for IT-based services, it can serve as a gateway/regional hub for organizations looking to expand in the East/West Africa region

With these positive conditions shaping its future, it will be interesting to see how the next decade fares for Sub-Saharan Africa. If the current trends continue, many countries in Africa are set to emerge as a close competitor to India and the Philippines for technical support and other value-added services delivery as long as it can successfully overcome misconceptions about safety, security, and talent. Continued public-private partnerships like the ones described in some countries above will need to continue for the region to accelerate its growth in this vibrant sector and positively impact Africa’s broader industry.

If you have any questions or would like to discuss global service delivery in Africa further, please reach out to Rananjay Kumar, [email protected], or David Rickard, [email protected].

Why a Data Strategy Is Key as Businesses Implement AI | In the News

May 26, 2022

Nitish Mittal, Partner in the digital transformation practice at Everest Group, commented on this, he said: “I can’t stress this enough: data or the lack of the right data strategy is the number one bottleneck to scaling or doing anything with AI. When clients come to us with what they think is an AI problem, it is almost always a data problem. AI depends on viable data to prosper. That’s why it’s important to think about the data first.”

Europe Embarks on a New Technology Regulation Wave

May 25, 2022

Big changes are coming as Europe moves toward digital empowerment by 2030. Governments are building frameworks for the regulation of emerging technologies to protect consumers and companies while promoting innovation and digital leadership. What impact will the drive toward technology sovereignty have on BigTech providers, buyers, and investors? Read on for the latest in our series on technology sovereignty.

In our last blog, we explored the emerging and growing focus on technology sovereignty in the United Kingdom and Ireland (UK&I) and European markets. Let’s continue our discussion of this important topic.

The focus on Europe’s data sovereignty is back in the spotlight as a result of new European Union (EU) rules to limit big online platforms’ market power. The risk of global cyber-attacks by Russia as retaliation against Ukraine also has made this an issue to watch.

Europe’s latest moves for technology regulation are not in isolation. Representatives from business, politics, and science from Europe and around the globe have already been working together since 2019 to create a federated and secure data infrastructure through the GAIA-X initiative.

With data security, privacy, and technology sovereignty becoming key issues for the region, Europe is setting up new regulatory frameworks to protect consumers and companies, while trying to ensure a competitive market and encouraging innovation.

What does the Digital Markets Act (DMA) entail?

Under consideration by the European Commission, the DMA intends to ensure a higher degree of competition in the European Digital Markets, by preventing large companies from abusing their power and by allowing new players to enter the market.

Beyond the hyperbole that surrounds any technology regulation, the DMA provisions include:

New regulations on BigTech companies providing “core platform services” that are most prone to unfair business practices, such as social networks or search engines. These companies that have a market capitalization of at least €75 billion or annual revenue of €7.5 billion are considered gatekeepers
To be designated as gatekeepers, these companies must provide services such as browsers, messengers, or social media, which have at least 45 million monthly end users in the EU and 10,000 annual business users
Sizable messaging services (such as WhatsApp, Facebook Messenger, or iMessage) will have to open up and interoperate with smaller messaging platforms, if users ask, promoting more choice
Combining personal data for targeted advertising will only be allowed with explicit user consent from the gatekeeper. Similar to instant messaging, allowing users to freely choose their browser, virtual assistants, or search engines will be required
If a gatekeeper does not comply with the rules, they can receive fines of up to 10% of total worldwide turnover in the preceding financial year and 20% for repeated infringements. Companies who systematically violate the regulations could be banned from acquiring other companies for a certain period

In addition to DMA, the EU reached a consensus on the Digital Services Act (DSA) in April, which focuses on setting up a standard for the accountability of online platforms regarding illegal and harmful content. If voted into law, the DSA will apply across the EU within fifteen months or from January 1, 2024, whichever is later. Meanwhile, the DMA likely will go into effect next summer.

The battle for sovereignty and security is just getting started

While these acts are significant steps in Europe’s focus on curbing the perceived monopolistic power of BigTech, they are part of larger movements such as:

A growing global reckoning exists around BigTech companies that control multiple industries, such as enterprise cloud computing, consumer-oriented economies, and media and advertising, to name a few. Complicating this further is the way their roles (especially social platforms such as Meta, Twitter, etc.) are evolving into digital town squares, and the subsequent impact on democracy, free speech, and bullying
Most BigTech companies originated in North America but are now global businesses. There’s a degree of circumspection in how Europe views this shift in innovation and control and reining it in. These acts are a natural successor to Europe’s previous foray into data protection through the General Data Protection Regulation (GDPR), which came into force in 2018. It subsequently inspired other acts globally, including the California Consumer Privacy Act (CCPA)
The region’s increasingly fragile geopolitics is creating new implications for cyberwarfare and rogue state actors, fueling the desire to shore up digital resilience. We can also expect this to have a knock-on effect on other regions (the US is considering similar steps and Australia took measures to regulate the relationship between BigTech and traditional media, to name a few)

We expect this conversation on the regulation of emerging technologies to evolve and shape the future of technology spending and strategies in the region.

Implications of technology regulation for the European ecosystem

Owing to these triggers and the broader conversation around technology regulation, sovereignty, and BigTech reach, we expect the following three implications for buyers, providers, and investors in the European technology space:

Buyers should include sovereignty requirements in sourcing decisions: We are starting to see enterprise buyers of technology and services embed sovereignty of the tooling and service providers they choose in RFPs. Expect this to continue and become a hygiene factor for technology providers to showcase in the sourcing process
Establish regional market partnerships: BigTech companies are smart and understand they can’t be upstaged overnight. They are already establishing partnerships and tweaking their business model to ensure compliance with the evolving European regulatory environment. Look for more partnerships with specific players in the region to play by these rules (for instance, Google Cloud and T-Systems partnering on cloud sovereignty in the region). IT service providers will also train more people on BigTech technologies as a result
Look beyond sovereignty-washing: As with any big shift and trend, new and existing competitors to BigTech will latch on to this market theme. We foresee more press releases announcing the amped up focus on sovereignty. Investors, buyers, and partners should look beyond this marketing hype and truly understand how these firms are solving these issues. For instance, are they embedding sovereignty at the application or data layer? Where does the data reside, and who owns it? Answering these questions can help buyers spot the real innovators

We anticipate a floodgate of activities as we approach implementation timelines in the next 12-18 months. This will create a one-time discontinuity in the market and result in additional spending on compliance. However, market participants will be wise to consider the long-term impact of technology regulation in Europe on their strategies.

To discuss further, please reach out to [email protected] or contact us.

You can also tune in to our webinar, Discover 5 Ways to Transform Your Workforce and Location Strategy Amid Global Uncertainties, for key insights and strategies that global talent leaders can use to readjust their workforce strategies.

What You Need to Know in Europe’s Next Wave of Technology Regulation | In the News

May 24, 2022

Europe technology and data sovereignty are back in the spotlight because of two recent events, the war in Ukraine and its cyberwarfare implications and EU lawmakers agreeing to new rules to limit the market power of Big Tech platforms through the Digital Markets Act (DMA) and Digital Services Act (DSA). Everest Group Partner, Nitish Mittal, discusses this topic in his article, What You Need to Know in Europe’s Next Wave of Technology Regulation.

Everest Group Engage 2025 – London: Gain practical insights that drive global impact.

Tag: Europe