Tag: GIC

471 Global Services Deals in Q1 Exceeds industry Expectations | Press Release

Webinar identifies “talent hotspots”– locations well positioned to lead in the delivery of digital services

Global outsourcing demand exceeded industry expectations in Q1 2016, according to Everest Group, a consulting and research firm focused on strategic IT, business services and sourcing. Most service providers reported sequential growth in revenue, and transaction activity increased significantly, with more new deals reported in Q1 than in any of the previous eight quarters.

Growth in the IT outsourcing market was a key contributor to the outsourcing industry’s strong performance in Q1, with banking, financial services and insurance (BFSI) and manufacturing, distribution and retail (MDR) verticals leading the way. Service delivery automation, an ongoing trend among service providers, is helping replace a substantial amount of human yields, resulting in significant cost savings for enterprises.

Everest Group presented these and other highlights of the global services market in Q1 2016 in a one-hour live webinar on May 12. The webinar, “Key Insight on Digital Service Delivery ‘Talent Hotspots’ PLUS Market Vista™ Q1 2016 Update,” featured Everest Group experts offering insights on the delivery locations that are positioned to become the “talent hotspots” for the delivery of digital services.

“Service delivery automation continues to shape the industry, and we are beginning to see a clear demarcation of leading providers who have witnessed significantly greater impact on the revenue, cost and productivity,” said Salil Dani, vice president at Everest Group. “Best-in-class providers are reporting some remarkable milestones, such as a 24 percent reduction in net headcount addition, cost savings between US$100 to $300 million annually, and up to 50 percent improvement in productivity due to automation.”

Other Key Takeaways

  • The increase in demand continued to be led by the “traditional buyer geographies” of Europe and North America
  • GIC activity was high, with setups concentrated in Europe for buyers looking to leverage the nearshore proposition
  • Overall location activity also remained high with increased center setups in Latin America compared to previous quarters. Interestingly, India’s share in new center setups decreased for the first time in many years
  • Service delivery automation (SDA) adoption is leading to lower headcount addition by leading service providers, compared to 2015

Global In-house Center (GIC) Landscape Grows as GICs are Recognized for Role in Driving Innovation | Press Release

Annual number of new GIC setups reaches four-year high, driven by enterprise demand for digital skills

The global sourcing market continued to evolve and grow rapidly in 2015 to cross the US$160 billion mark. While buyers leveraged a variety of sourcing models, the Global In-house Center (GIC), also known as captive center, model continued to be an integral component of this evolution, accounting for 25 percent (US$38-42 billion) of the global offshore services market.

The success of the GIC model in India and the Philippines led buyers to explore its application in other locations. While both these countries continue to lead GIC activity, companies also established GICs in other parts of Asia, Central & Eastern Europe (CEE), Latin America, and Middle East & Africa (MEA). The CEE region, in particular, is becoming a preferred delivery location for GICs as it offers an attractive cost-talent-operating environment proposition.

Besides the geographic diversification, the GIC market also expanded across verticals and functions. The manufacturing, distribution and retail (MDR) vertical continued to dominate, logging maximum growth and the most new setups in comparison to other verticals. Business process services continued to be the predominant function served by GICs; however, IT and R&D/engineering services witnessed traction due to growing importance of digitalization.

“We expect GIC activity to continue on its growth trajectory, because GICs are no longer seen as only a support unit or cost-saving mechanism for their parent entities,” said Sakshi Garg, practice director at Everest Group. “GICs are being considered a strategic unit for driving innovation. To that end, we increasingly see GICs expanding their ecosystem of partners to include start-ups. The retail and technology verticals are leading this trend, leveraging start-ups in areas such as mobility solutions, business intelligence, cyber security, process automation, and customer experience. ”

Other findings in the research:

  • The GIC market has now grown to reach more than 2,101 centers and one million FTEs across leading offshore and nearshore locations
  • Overall, the GIC market continues to be dominated by U.S.-based large (revenue exceeding US$10billion) companies; however, small firms (revenue less than US$10 billion) are also witnessing an increase in GIC activity
  • A multi-GIC footprint is observed primarily among technology and MDR companies.
  • Technology, MDR, and BFSI (banking, financial services and insurance) firms lead the GIC activity. Emerging verticals such as consulting and professional services, conglomerates, hospitality, media and entertainment, legal and leasing sectors are also adopting the GIC model to support both business process and IT needs.
  • GIC activity in tier-2/3 locations increased; however, tier-1 cities witnessed a marginal decline.

***Complimentary Download of Report Preview***

The research supporting these findings is summarized in a preview report, “Global In-house Center (GIC) Landscape Annual Report 2016 – A Million FTE Strong and Growing!” available for complimentary download here.

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