Though never dominant, Defense transactions per quarter have declined by 60% in the past year
To date, the global services industry in 2014 has all the signs of being a “son-in-law.” As many parents will tell you about their prospective son-in-law: “He’s nice, but … I was hoping for something a little better.”
2014 arrived with so much promise, both in IT and BPO. Europe’s economy was improving. We hoped the U.S. economy was ready for robust expansion. We hoped we would see a surge in discretionary spending. And we hoped that the uncertainty that characterized the past four years would recede. We also anticipated that disruptive technologies and new solutions in cloud, big data and analytics would generate robust growth opportunities in the services space.
All these things happened. The economy has stabilized and new technologies are generating growth opportunities.
But as we look at the net results of the first quarter, well — it’s nice … but it does feel like a son-in-law. We were hoping for something a little better.
We were recently a sponsor at the 18th annual Shared Services & Outsourcing Week conference in Orlando (part of SSON, the leading event for shared services). The significant portion of attendees that are just embarking on shared services for the first time and opening up new shared services capabilities was striking to us. It raises this question: Why are we seeing a new wave of shared services situations?
There are two perspectives for shared services and outsourcing: (1) two sides of the same coin or (2) differing vehicles to achieve the same goals. Either way, most of us now think of shared services as a mature space with companies refining their shared services.
So it’s certainly interesting to see new shared services starts on the upswing, especially since BPO in 2013 certainly performed less robustly than we had hoped for in terms of growth.
Are organizations moving to favor shared services? Or are we going to see a re-acceleration of outsourcing as companies move to build hybrid models (both outsourcing and shared services) going forward?
We’ll be watching this trend. But there can be no doubt that based on this conference we are seeing a pick-up in new shared services starts.
Photo credit: SSON
The Energy & Utilities (E&U) vertical recorded all-time high activity in Q4 2013. Volumes in this vertical increased by 10% during Q4 2013 compared to the previous quarter, and 69% over Q4 2012.
High activity in the E&U vertical was driven by a large number of systems integration deals awarded by buyers looking to achieve cost efficiency, reduce operating costs, and improve customer satisfaction. Going forward, rising energy prices and environmental concerns may lead to some traction in smart meter and smart grid implementations, which is likely to provide a short-term boost in transaction activity.
Over the past five quarters, outsourcing market activity has seen a slow but steady rise, while GIC set-up and expansion activity has been uneven.
Visit the report page
Nearly 80% of all Managed Service Provider (MSP) contracts account for only 40-45% of the total market spend, averaging less than US$50 million in managed spend. (more…)
©2023 Everest Global, Inc. Privacy Notice Terms of Use Do Not Sell My Information
"*" indicates required fields
