Tag: globalization

Everest Group Warns ‘Wait and See’ Won’t Cut It in New World Disorder | Press Release

Everest Group and other global services experts convene to discuss challenges of managing in uncertain times 

Washington is a fitting if not symbolic location for Everest Group’s next On Point Summit – “New World [Dis]Order: Managing in Turbulent Markets.”  Everest Group experts and other global services executives will convene at The Watergate Hotel in the U.S. capital on May 17 and 18 to discuss the rapidly evolving landscapes of globalization, automation, immigration and digital transformation.

The two-day event exclusively for enterprise sourcing executives features a slate of renowned thought leaders:

  • Uri Dadush, former director of international trade for the World Bank, will deliver the keynote address, “Globalization: Curve or Cliff?”
  • Peter Bendor-Samuel, CEO of Everest Group, and Rod Bourgeois, head of research for DeepDive Equity Research, will present “Immigration: The Latest and What to Expect”
  • Bill Price, first worldwide vice president of customer service at Amazon, author of “The Best Service is No Service,” and partner at Antuit, will join a panel to discuss “Digital Disruption: Pain or Gain”
  • Everest Group’s Jimit Arora, partner, IT services research, and Sarthak Brahma, vice president, pricing assurance, will discuss “Outsourcing Market: Pricing Collapse and Shifting Provider Landscape”

Other speakers include senior executives at leading North American financial institutions, digital retailers, natural resources companies, and more.

“Times of uncertainty can be career inflection points for senior executives who are armed with actionable data and insights and able to offer wise strategies for navigating perilous waters,” said Eric Simonson, managing partner at Everest Group. “So at this gathering of global services executives, we will put the facts on the table, exchange war stories, and engage in provocative discussions. The goal is to equip and inspire these executives to provide invaluable leadership, helping their companies not only to survive but also to emerge from the disorder as successful market leaders.”

***Enterprise executives may apply to attend the event at http://www1.everestgrp.com/OnPointSummit-May2017.html. ***

That’s My Story and I’m Sticking to It! | Sherpas in Blue Shirts

It’s going to happen. I’ve been blogging since last May that the current U.S. immigration status is unsustainable and change will happen. And when it does, here’s what’s at risk: the heavy use of offshore talent in the landed model, as practiced by the big Indian service provider firms. Although at times on this issue I’ve felt like John the Baptist — the lone man crying in the wilderness — I continue to see signs that both political parties are preparing to take action on immigration reform.

The House is now talking about immigration reform again, just like I blogged they would. In addition, The New York Times reported recently that two congresswomen are reaching across the aisle to work on immigration overhaul. (Rebecca Tallent is a key player guiding John Boehner and House Republicans; Esther Olavarria is working with the White House to find a compromise.) And President Obama in his State of the Union address cited independent economists’ assessment that immigration reform would reduce deficits by almost $1 trillion — a top agenda item for Republicans.

Although the prevailing belief in the services industry through 2013 was that immigration and visa reform would not get through Congress, I say again that the pressures are too great and there is a material and growing chance that immigration/visa reform will happen. The political parties are aligning, and I also observe that the lack of strong support for the aggressive use of H-1B and L-1 visas in the landed model continues.

And when it happens, we believe the existing comfortable status quo of using H-1B and L-1 visas in the landed model will come under threat.  I’ve mentioned in previous blogs America’s rise in protectionism. Although this mindset and immigration reform won’t stop the outsourcing model, it will change the economics for the providers that aggressively use H-1B and L-1 visas in their landed model. It will level the playing field and bring their economics more in line with their domestic competitors.  That’s the issue.

The End of Globalization? | Sherpas in Blue Shirts

“Have we reached the end of globalization?” Fareed Zakaria, the host of CNN’s weekly international affairs show, asked last week. He points to two factors — 3D printing and the rise in protectionist policies — as forces that combine to challenge the globalization movement of the last 30 years.

From a services perspective, we at Everest Group have similar worries.

But instead of 3D printing and protectionism, cloud and automation transform the global services world. These forces give rise to compelling possibilities that pose a threat to low-wage service models. The results could be transformative: more cost-effective and higher-quality services without having to reach across borders.

Of course, cloud and automation aren’t a complete substitution for everything companies have sent offshore during the past 30 years. There is, however, ongoing adoption for these more cost-effective models. And I’d wager we’re further along the adoption curve than in 3D printing.

Protectionism, Policy and Posturing

We also see the prospect of protectionism rearing its ugly head in the services world. It’s something we blogged about last year, focusing on immigration and H-1B visa reform. We need look no further than Senator Durbin to see one of the proponents of protectionism.

We believe this trend is far from finished, and we predict more work moving away from third-party providers as a result of the Fed’s comment about outsourcing.

These sorts of political statements and trends create a worrying backdrop that allows other protectionist statements to create more relevance.

Too Early to Worry? No.

It may be too early to call globalization to an end, but these factors certainly present challenges. We’ll continue watching both these trends carefully. Although they are in early stages, combined they can prove a substantial threat to the globalization that has driven the services model since the mid-1990s.

Genpact’s Partnership with a City Government in China – A Move to Learn from! | Sherpas in Blue Shirts

On November 16, 2011, Genpact signed a five-year strategic partnership agreement with the government of Qingdao to help foster the globalization of Chinese corporations. According to the agreement, Genpact will set up a global process innovation center, and the local government will facilitate establishment of partnerships between Genpact and domestic multinational enterprises. Genpact will provide high-end services and business models to these companies from the center by leveraging its global expertise and implementing industry best practices

Qingdao ChinaQingdao is a relatively new face in China’s global services arena, and has not really experienced notable market activity from ITO-BPO services providers and buyers (captives). Before we talk about the implications of Genpact’s foray into Qingdao, let’s take a quick look at this city located in the Eastern part of China.

Qingdao is a major seaport, naval base, and industrial center in the Shandong province in China. Key industries in the city include household electrical appliances and electronics, petrochemicals, and automotive components.

As an important trading port in the province, Qingdao has witnessed significant foreign investment and international trade. In particular, South Korea and Japan have made extensive investment in the city. According to estimates, Qingdao has the second largest population of Koreans in China – approximately 100,000 – bested only by Beijing.

Coming back to this strategic partnership, it helps Genpact make further inroads into China by expanding its existing six-city presence as part of a journey that started in 2000, including its proactive establishment of delivery centers in the Tier-2 cities of Changchun, Foshan and Kunshan. In addition to the benefits of lower operating costs, access to additional talent pools, and a toe hold in the domestic outsourcing sector, governments in Tier-2 cities are often more flexible in offering incentives. These considerations are likely to have played a pivotal role in Genpact’s investment decision, and has helped place Qingdao on China’s global services map.

For the local Qingdao government, having one of the large global BPO players open a center in their city is a welcome move. It will not only bring process expertise to domestic companies, but also lead to notable job creation in the region. Moreover, it will help build Qingdao’s credentials as a delivery base for global services, enabling the city to find a place on the radar of other global services investors on the lookout for new locations.

This agreement is also evidence to the fact that there is a strong push from government at all levels in China to develop the global services sector. In fact, as part of Everest Group’s Market Vista Q3 2011, we talked about the role the Chinese government is playing through its “1,000-100-10” project to provide thrust to its global services industry and attract investments in the sector.

China's 1000-100-10 Project
Click to Enlarge | Source: Everest Group Captives Database; Everest Group analysis

The Genpact-Qingdao government partnership also underlines important characteristics of China’s global services sector, and presents lessons for broader global services stakeholders:

  • Tier-2 cities in China are becoming important evaluation candidates for service providers and captives. Indeed, Chinese Tier-2 cities already have a significant share among the service provider and captive set-ups, and a higher share than Tier-2 cities in other countries such as India and the Philippines. This has been enabled to a large extent by the wider reach of the government’s incentive programs, and the cities’ robust infrastructure growth.
  • The domestic global services sector opportunity in China is huge. Everest Group estimated the domestic opportunity for global services to be US$20 billion in 2010 (for more details read Everest Group’s Global Locations Compass – China). This is driven both by Chinese enterprises’ need to remain globally competitive and the government’s impetus on outsourcing.
  • Service providers often adopt a partnership model while framing their China go-to-market strategy. This construct involving collaboration with a local partner helps get the plans off the ground quickly, aids in learning the rules of the (local) game, and mitigates risk. In this case, Genpact’s partnership with local government will help it collaborate with domestic multinationals like Haier, Tsingtao Beer, and Hisense in Qingdao. This agreement is potentially a win-win strategy for Genpact, the Qingdao government, and domestic companies alike.

In summary, the Genpact-Qingdao partnership epitomizes the key nuances of China’s global services sector, and reiterates the fact that China can be leveraged not only as an offshoring destination but also a location in which third-party providers can serve the domestic market. It also demonstrates that Tier-2 cities in China are a must to keep an eye on!

How can we engage?

Please let us know how we can help you on your journey.

Contact Us

"*" indicates required fields

Please review our Privacy Notice and check the box below to consent to the use of Personal Data that you provide.