We recently partnered with the IT & Business Process Association of the Philippines (IBPAP) for its International Innovation Summit. The conference was a huge success despite prevailing uncertainties, bringing together global experts and leaders from the IT-BPM industry. The sessions were engaging and captured how the IT-BPM sector adapted to the disruptions caused by the pandemic and what lies ahead for the industry.
Here are our key takeaways from the conference.
Organizations’ success will depend on how they capitalize on opportunities arising from the pandemic and how quickly they adapt to the evolving business landscape. In all forms of adversity, there is increased need for reliable leadership that puts people and customers first, and treats profit as an outcome rather than the goal. More than ever, it has become important to co-create with the client and culturally adapt to them.
While there’s an immediate and critical need to redesign the worker, workplace, and workways to accommodate the new reality, different organizations are in different places in their comfort and readiness to adjust to the disrupted world. Hence, a single future of work strategy will not be effective for all organizations.
There are, however, some common themes for a successful future of work strategy. It should not be limited to work-from-home (WFH) enablement; it is important to consider the interplay of WFH with other decisions related to work. Organizations need to come up with an integrated approach involving the worker, workplace, and workways to adapt and progress in this dynamic environment.
COVID-19 has compelled enterprises to accelerate digitalization. While business transformation is fueled by increased adoption of digital technologies, the success of digital transformation is not rooted in technology.
A successful digital transformation initiative considers multiple factors – fostering a culture of continuous learning and innovation, embracing an agile operating model, creating a well-connected and collaborative workplace to enable higher output, among others.
At the core of accelerated digital transformation remains talent and, hence, the importance of future-proofing the workforce with digital skills. Talent will be the key differentiator, as work will follow where there is readily available skilled talent. The new digital era calls for increased focus on upskilling and reskilling, which can only be possible through a multi-stakeholder coalition of government, industry, and academia.
Every business and organization is experiencing some degree of pandemic-driven disruption. The crisis has redefined the meaning of Business Continuity Planning (BCP), and organizations need to rethink their BCPs to ensure necessary resilience.
This future resiliency will be characterized by dependability on teams and leaders, creating/fortifying a nerve center that’s enabled and empowered to respond quickly to various situations, enabling organization and delivery structure, and empowering teams on the ground. There’s also an increasing need to become more agile and cooperative with competition and more consultative with clients.
The Philippines IT-BPM industry has shown resilience amidst the challenges arising from COVID-19. The fact that the industry was allowed to operate even during the Enhanced Community Quarantine – as these services were deemed essential – demonstrates the government’s commitment to the industry.
The Philippines will continue to remain a key destination for services delivery due to cost arbitrage and a steady supply of young and tech-savvy workers. The industry is focusing on enhancing digital capabilities and will focus on upskilling talent – for example, one planned initiative is the National Upskilling and Reskilling program, which intends to upskill one million workers over the next five years.
The country launched the Digital Cities 2025 program to promote countryside development and build IT-BPM sector resiliency. The Philippine telecom providers are working in partnership with the government to mitigate the limitations on the retail telecom infrastructure exposed by the WFH model. And the Philippines will continue to improve its infrastructure to provide a more robust ecosystem for existing and new players.
Overall, the IT-BPM industry in the Philippines is well positioned to deliver services at a large scale due to its large talent supply, strong language proficiency, attractive cost savings, robust ecosystem, and strong government support. The industry also plans to take proactive measures to address some of the challenges exposed by the pandemic. It’ll be interesting to see the developments in one of the leading global locations for IT-BPM services delivery.
Read more about Everest Group’s latest research on the impact of COVID-19 on delivery and location strategies; our perspectives on services delivery from the Philippines; and/or IBPAP.
Service providers see declining revenues and margins; cybersecurity, desktop and mobility services gain traction as enterprises adapt to work-from-home
Q2 results are in, and Everest Group reports the Global Sourcing industry is suffering from the negative business impacts of the COVID-19 pandemic. Two trends illustrate this: First, the worldwide setup of Global Business Services (GBS) centers, also known as Global In-house Centers (GICs), fell sharply (more than 48%) as offshore/nearshore activity dropped 46% and onshore setups dropped 52% for the quarter. Second, although overall outsourcing activity ticked upward slightly (2%) for the quarter based on the number of deals signed, service providers reported a decline in both revenues and operating margins.
In offshore and nearshore locations, GBS market activity declined from 44 in Q1 to 24 new setups in Q2. In onshore locations, GBS market activity decreased from 33 new setups in Q1 to 16 in Q1 2020. New center setup activity in India reached an all-time low, after seeing only 8 new setups in Q2 as compared to 16 in the previous quarter.
Based on financial reports from Q1 2020, the consolidated revenue and operating margin of service providers witnessed a decline, -1.5% and -21% respectively, in comparison to the previous quarter.
“The global services industry is certainly feeling the pain of the economic downturn caused by COVID-19,” said H. Karthik, partner at Everest Group. “Enterprises and service providers functioning in sectors such as travel and hospitality, aviation, retail, automotive and manufacturing sectors have been hit the hardest in this quarter due to extremely low demand and supply constraints. Further, delays in new project renewals and cancellations of ongoing outsourcing projects have been witnessed in a number of cases. This has been followed by cost optimization measures that included layoffs for several enterprises and service providers.
“However, governments across the world have announced stimulus packages and relief measures,” continued Karthik “The G20, for instance pledged to infuse over US$5 trillion to support economies and protect workers and businesses. This infusion of support provides hope for recovery, and we continue to expect that significant containment in the spread of the virus will lead to further recovery of sourcing activity as lockdowns and travel restrictions can be eased.”
These global sourcing trends are detailed in Everest Group’s recently released Market Vista™: Q3 2020 report. The report shines a spotlight on transaction trends and outsourcing deals, GBS-related developments, offshoring dynamics, location risks and opportunities and key service provider developments.
***WEBINAR, Thursday, September 10***
Everest Group is hosting a complimentary 60-minute webinar, “Impact of COVID-19 Beyond WFH: The Future of Delivery and Locations Strategies.” Everest Group experts will provide a fact-based view of the already-visible effects of the pandemic and discuss the implications of these developments on future delivery and locations strategies, including key changes to delivery portfolios, trends in onshoring versus offshoring, locations portfolio consolidation versus diversification, rise in large scale hubs versus small scale centers, and adoption of a remote or work-from-home delivery model.
The live webinar will be held on Thursday, September 10, at 9 am CDT. Register here.
Highlights of the Market Vista Q3 Report:
***Download a complimentary 8-page abstract of the report***
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com/.