Tag: Global In-house Center

Global Services Providers in the ‘Right Segments’ Will See Double-Digit Surge in 2018, But Others Will See Revenue Tide Recede—Everest Group | Press Release

Everest Group predicts enterprises will express preference for GICs and make significant shifts in their locations strategies in the year ahead.

 Although 2018 will see a modest increase in demand for global services overall, some leading service providers in select segments will experience a double-digit surge in revenues this year, according to Everest Group. Labor-arbitrage focused service providers will continue to create a drag on the market; however, digital-focused service providers will more than offset that, especially in key segments such as engineering services, business process outsourcing (BPO), and consulting and systems integration.

“Throughout 2017, outsourcing transaction activity was driven by an increased adoption of digital services, and this trend will continue in 2018 as more enterprises move beyond exploration and pilot projects to large-scale digital implementations,” said Salil Dani, vice president, Global Sourcing, at Everest Group. “The industry is ready to act: enterprises have undertaken copious research and testing, service providers have invested in acquiring the digital capabilities needed, and the market is being lifted by availability of funding, cheap capital, tax cuts in the United States, and low interest rates.”

Global In-house Center (GIC) setup activity was at an all-time high in 2017, and Everest Group predicts that the Do-It-Yourself, in-house model will become even more popular in 2018, with small and mid-sized enterprises driving Global In-house Center (GIC) setup activity.

Moreover, large enterprise outsourcing adopters will begin to undertake significant, long-term shifts in their location strategies, including the following:

  • Large-scale consolidation of services, as technology takes away huge sections of demand through straight-through processing (STP), self-service and automation
  • Rebalancing of work across locations
  • High-degree of co-location as growing technology and digital adoption blurs the boundaries between IT, non-voice business processes and voice processes
  • Creation of niche onshore and offshore centers of excellence to handle complex, exceptions-based work
  • Increased focus on onshore delivery due to regulatory changes and the need for agile, co-located innovation teams
  • Gradual shift of offshore centers from delivery of transactional to complex work through upskilling and cross-skilling talent bases.

These findings and more are discussed in Everest Group’s recently published report, “Market Vista™: 2017 Year in Review and Outlook for 2018.” This annual report covers the key forces and metrics defining the global sourcing market, including trends in outsourcing, digital adoption, and Global In-house Centers (GICs), as well as insights into location activity in offshore and nearshore geographies. The report also reviews 25 leading service providers on their annual performance, capability enhancements, merger and acquisition landscape, and other key events.

***Download a complimentary abstract of “Market Vista™: 2017 Year in Review and Outlook for 2018”.***

GICs Accelerating the Automation Gear in Their Digital Drive! | Sherpas in Blue Shirts

In the beginning of the digital revolution, GICs were primarily used as hotspots for analytic services. But in their quest to deliver more value-added services to the parent organization, many are accelerating their ability to serve as strategic innovation partners by significantly expanding their portfolio of digital-focused activity. In fact, our most recent Market VistaTM report showed that digital activity in new setups and expansions jumped 900 basis points between Q4 2016 and Q4 2017.

Automation GIC blog_1

Like most organizations dipping their toe into the digital pool for the first time, GICs initially focused on automating processes through technologies such as Robotic Process Automation (RPA). However, in last couple of years, they have also started leveraging Artificial Intelligence (AI) to improve in areas such as customer experience, operational efficiency, risk management, and development of digital products and services for the market. After realizing the benefits of RPA and AI, some of the mature GICs are also now testing the waters for cognitive computing.

Here is a sampling of the digital use cases coming out of today’s GICs:

Automation GIC blog_2

Of course, changes and challenges abound in the rapidly evolving digital environment. Here are several that will impact GICs in 2018.

  • War for talent: Although they’re upskilling/reskilling their existing workforce, GICs will still need external talent for critical skills such as intuition and innovation, design thinking, pattern recognition, leadership, and problem solving. They’ll struggle to find this talent due to demand-supply imbalances.
  • Ecosystem partnerships: We expect GICs to accelerate their technology adoption through increased partnerships with service providers, technology vendors, start-ups, and educational institutions to deliver new forms of value, such as innovation, automation, and speed to market.
  • Delivery locations beyond India: While India will remain a favored location for enterprises to introduce new technologies, our GIC market activity tracking (see our recently released Market VistaTM report) suggests that other locations such as Brazil, Ireland, Israel, Romania, and Singapore may gain traction in near future. Israel is already progressing to support a range of digital functions such as IoT, AI, and data analytics for customer experience and cybersecurity services.

There’s no question that GICs have the ability to drive the digital agenda for their enterprises. To gain a deep-dive understanding of how they’re doing so today, and what they plan to do in the near future, Everest Group is conducting an online survey. This first-ever assessment will be based on our proprietary Pinnacle ModelTM, which identifies what the best performers are doing to achieve strategic business objectives and deliver increased value. We invite you to participate in this survey.

GICs Anticipate Significant Challenges in Hiring Vital Future Skills | Market Insights™

GIC skll shrtg

Skills such as intuition & innovation, design thinking, pattern recognition, leadership, and problem solving are likely to become highly critical to GICs for service delivery in the future

  • Most GICs believe that they will face severe shortages in availability of talent for these critical skills

The reason for the widening skills-gap include:

  • Limited supply of ready-to-hire talent for these skills
  • Increased competition among firms to hire the right talent
  • Low propensity to train and lack of effective ways of learning & development / training solutions for required skills

Visit the report page

Is Your GIC the Secret Weapon for Digital Enablement? | Sherpas in Blue Shirts

You might recall, back in December we identified digital agility as a key 2018 initiative. In that blog, we discussed how you can create business value by making things easy, reliable, and fast for your customers. The question I would ask GIC organizations for 2018: In realizing that goal, are you part of the problem? Or are you part of the solution?

Our research, Digital Maturity in GICs | Pinnacle Model™ Assessment 2018, seeks to answer those questions.

Most GICs started small and expanded over time as they proved their value. Now that most GICs have realized the fundamental benefits of labor savings, quality and process improvement, and – in some cases – business outcome improvement, it’s time for them to look to their next act.

Our central thesis is that a GIC can be a critical driver in building and running new digital competencies. But we want to hear from you about the functions and processes that are getting the most attention and investment. Which digital technologies are you focusing their efforts on? And what capabilities did you deploy to build out these capabilities?

There are plenty of digital surveys that you can participate in, so – why Everest Group’s? Because we take a different approach that results in more meaningful, useful outputs. Our Pinnacle Model™ approach asks questions about what the very best GICs are doing in terms of real impact and then correlate the capabilities required to achieve those results. And we go beyond the online survey, talking with some respondents to understand their journeys – what worked and what didn’t.

With that information in hand, we identify a set of Pinnacle Practices™ that you can consider deploying in your GIC.

Yes, there is a ton of hype around digital; let’s get beyond the headlines and talk outcomes and practices in your GIC.

Take the survey

Is Perceived Impact Hindering Your GIC’s Growth? | Sherpas in Blue Shirts

The GIC model has evolved significantly over the last decade, and is gearing up for the third wave of evolution – GIC 3.0, as some are calling it – driven by GICs’ strong desire to move away from the “arbitrage-first” delivery model towards a “digital-first” model.

Everest Group describes the journey to mature GICs as progressing through four different stages.

Journey to GIC maturity

GIC maturity for optimal business impact

Our research shows that best-in-class – or Stage 4 – GICs deliver up to six to eight times incremental value beyond arbitrage. Yet, while many of our engagements over the last few years have made it clear that most Global 1,000 GICs deliver value beyond arbitrage, very few track and measure their impact. When they do, it’s typically in a piecemeal, selective manner. Thus, their parent perceives that they are delivering limited business value, beyond arbitrage, to the enterprise.

By educating their parent on their impact, GICs can improve their credibility, and build a case to secure support for expanding their role.

So how can GICs measure and articulate the value they deliver?

We believe that putting a dollar number to the business impact is the most objective and effective way for GICs to showcase their true worth. The framework we use maps value drivers linked to savings, risk, and revenue, quantifying all forms of impact created by the GIC.

GIC business impact model

Here’s an example: a U.S. company’s GIC was able to prove to its parent that it delivered US$20 to 22 million in overall business impact, compared to incremental cost arbitrage of US$4 to 6 million, through increased effectiveness, greater efficiency, and revenue growth. This helped the GIC secure the parent’s buy-in on increasing the scope of functions currently delivered out of their GIC.

A comprehensive quantification facilitates measuring the overall business impact across businesses/LOBs supported by the GIC. A GIC can use these results to:

  • Enable better understanding of its impact/role in the enterprise
  • Guide internal thinking on prioritization of value-add opportunities
  • Map its maturity to the market
  • Achieve greater sponsorship from parent stakeholders

Contact us about Everest Group’s business impact quantification framework, and learn more about our research on in-house delivery models.

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