Service Delivery Automation (SDA) Services Global Sourcing Landscape | Market Insights™
October 6, 2017
Service Delivery Automation (SDA) services global sourcing landscape: Nearshore, onshore, and tier-2 locations in focus
Service Delivery Automation (SDA) services global sourcing landscape: Nearshore, onshore, and tier-2 locations in focus
A decade ago, Everest Group made some predictions about the India global services industry; recently we cracked open the time capsule to check out our predictive capabilities. We found that we got some things right, some things wrong, and some things very wrong. The outcome of our recent analysis, though, is a huge boost in confidence for the prospering India global services industry.
New locations (think Jamaica, Romania, Malaysia, and Singapore) are gaining traction as Global In-house Centers (GICs) and service providers seek to match talent to specific need, as well as to diversify their location portfolios
While APAC remains the dominant delivery location, global services headcount is growing in other locations as GICs and service providers recognize the value of location-specific talent and seeks to diversify their portfolios
Cost of operations for digital services varies widely across key locations for service delivery
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Maturity of digital services varies among established global services locations
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Availability of relevant talent for digital and complex services is driving large setups in Singapore, Romania, Ireland, and Mexico
“For voice work, the Philippines has a better voice/accent environment even though it is at a cost disadvantage to India. For some kinds of work, close proximity and time zones advantage near shore locations is preferred over India,” said Peter Bendor Samuel, CEO of Everest Group, a Dallas-headquartered management consulting and research services firm.
Citing concentration risk as another reason, Samuel said some firms feel that they are overly concentrated in India creating increased risk in the event of natural disasters or large currency swings for these firms a more geographically dispersed location strategy makes sense.
“Although these alternate locations have taken some share from India such as Mexico, Costa Rica and for Europe, Poland, we believe that these share gains will level off as these alternative locations are priced higher than the low cost high skilled Indian labour pool,” Samuel said.
Currently, the industry is dominated by businesses on which the sun may be ready to set. Peter Bendor-Samuel, CEO of US-based research firm Everest Group, adds, “Digital makes up 22% of the Indian services market. The remaining legacy services have shown no growth over the past 12 months.”
“The proposed visa and immigration legislation … will raise the cost to operate by raising the cost of the Indian firms’ landed or onshore costs,” says Peter Bendor-Samuel, CEO of offshoring advisory Everest Group. “Given the hyper-competitive pricing environment, it seems increasingly unlikely that they will be able to pass along the cost to their clients, putting increased pressures on margins.”
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