Tag: outsourcing

HR Tech Market India – The Adolescent In the Adult World! | In the News

The exciting growth and potential of HR tech market have started attracting investors globally. According to the recent estimates by Everest Group in the report “The Promise Of Human Resources Outsourcing In India: A Goldmine Of Growth For Service Providers That Adapt”, the current market which is of the size of 0.5 B USD is expected to grow at the rate of about 25% in the next 5 years. Thanks to this growth and immense potential (which will rise not only through increase in employment numbers in the country but also an increase in ‘formal’ workforce,) we enjoy the interest of VC firms today. Not only this, there are many PE firms looking for HR investments, and even banks are ready to give line of credit. There are some HR-focused funds and angel funds supporting and focusing on HR/workforce entrepreneurs.

Read more at People Matters

Outsourcing Trends to Watch in 2017 | In the News

This year, we saw outsourcing integration challenges multiply, production workloads and enterprise systems hit the cloud, and security hit the top of the agenda.

So what’s ahead for 2017? Uncertainty for one thing. Industry watchers expect a number of shifts in the IT and business process services space — not least of which will be the initiation of more flexible outsourcing terms as the world watches and waits to see what happens once president elect Donald Trump takes office and Brexit takes hold.

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Reimagining RPO through the RPA Lens | Sherpas in Blue Shirts

The economic downturn following the financial crisis of 2008 forced companies to look at their internal costs and find ways to rationalize spend on various business activities. Recruitment was quickly identified as an area ripe for significant cost cutting, and in subsequent years Recruitment Process Outsourcing (RPO) was widely adopted by enterprises.

While cost reduction had long been RPO buyers’ main aim, in recent years they’ve been facing another set of problems – talent shortage and hard to fill roles.

Employers are always on the lookout for better candidates with niche capabilities. However, these desirable employees can be hard to find, especially in a timely manner. To fulfill their hiring requirements, many employers hire contract or offshore recruiters. Unfortunately, hiring additional contract recruiters results in additional expenses, and offshoring results in loss of personal touch. And in both cases, the recruiters spend a substantial amount of their time on transactional tasks, rather than on professional recruiting activities.

The answer to this problem is robotic process automation (RPA). RPA is being used to automate a wide variety of repetitive, low touch recruitment-related tasks and processes including data entry and validation, file and data manipulation, multi-format message creation, web scraping, text mining, workflow acceleration, etc. Through RPA, the productivity of the recruitment team can be improved manifold, resulting in better and faster hiring.

Processes where RPA can be leveraged to improve the effectiveness of the recruitment process:

RPA - RPO - Recruitment Process Outsourcing

There’s little question that RPA helps reimagine the whole recruitment value chain. RPO providers and buyers that make investments in RPA, and automation in general, thereby enabling their recruiters to handle the professional aspects of recruiting, will differentiate themselves by more quickly and efficiently identifying, securing, and onboarding the most desirable candidates.

For more information on how RPA can improve various recruitment-related processes, please refer to Everest Group’s RPO Annual Report, 2016.

Global Sourcing Activity Declines in Q3 2016, But GIC Setup Activity Marks All-Time High | Press Release

Trend to watch: Leading service providers are accelerating investments in cybersecurity as enterprise adoption of digital services continues to rise.

Location activity in the global sourcing industry declined significantly in Q3 2016 from the previous quarter, with 404 deals in Q3 compared to 429 in Q2, according to Everest Group, a consulting and research firm focused on strategic IT, business services and sourcing.

Although outsourcing activity across North America increased during the quarter (with share of transactions jumping from 31 to 37 percent), there was a 24 percent decline in the number of deals across Europe (except in the United Kingdom, which reported no change in activity), and the rest of the world experienced a decline as well.

Conversely, Global In-house Center (GIC) setup activity reached 37 setups in Q3 2016, an all-time high, led by new adopters setting up their first delivery centers. GIC activity on a year-to-year basis also witnessed increased traction, reflecting the growing importance of in-house centers to enterprises.

Key Trend to Watch

Everest Group’s Q3 2016 research suggests that a key trend to watch is increasing service provider investments in cybersecurity. Between 2015 and 2016, service providers have ramped up their cybersecurity portfolios via strategic acquisitions, organic growth and collaborative alliances with technology firms.

“As enterprises increasingly adopt digital services, robust cybersecurity programs are becoming ‘must have,’” said H. Karthik, partner at Everest Group. “This, in turn, is forcing service providers to continuously evolve their offerings and move toward end-to-end cybersecurity services.”

“Baseline cybersecurity capabilities of service providers include having personnel that can follow a client’s security initiatives and use basic security tools and products to manage the security of applications and infrastructure. But service providers are moving quickly beyond that to develop more sophisticated services, ranging from designing security architecture to providing insights through security analytics. Leading service providers are pushing the envelope even further, looking to provide even more advanced support, such as pre-emptive threat intelligence, localized managed security services and incident response.”

Market Vista™: Q3 2016 These findings and more are discussed in Everest Group’s recently published report, “Market Vista™: Q3 2016.” This report provides data and analysis highlighting the key trends and developments in the fast-evolving global offshoring and outsourcing market. The research captures the key developments across outsourcing transaction trends, the health of Global In-house Centers (GICs), location risks and opportunities, and service provider developments.

A review of the Market Vista Q3 updates is offered in a webinar: “The Impact of Philippine Political Changes on Global Services, PLUS Market Vista™ Q3 Updates.” This one-hour session hosted by Karthik and Salil Dani, vice president at Everest Group, provides the latest insights on the global services industry, including:

  • Major contributors to global services market growth in Q3 2016
  • Demand geographies contributing to market growth
  • New segments that are driving growth
  • Supply geographies best suited to support incremental demand
  • The market outlook for the remainder of 2016

In addition, the webinar features commentary and analysis on the impact of recent changes to the political climate in the Philippines.

Forces Driving Change in the Services Industry | Sherpas in Blue Shirts

The outsourcing industry is at an inflexion point. It reminds me of Bob Dylan’s hit song from the 1960s, “The Times They are A-changing.” I believe the industry will undergo dramatic change over the next two to three years.

Three forces are driving the change. The first is a shift in user and company expectations. I’ve blogged before about the watermelon phenomenon. Although performance dashboards indicate green for service levels and KPIs, the true picture is often red when it comes to user satisfaction with IT services.

Why is the satisfaction indicator red? One reason is a shift in users’ perception of what value is. Companies historically thought about value as a function of quality and cost. Quality was defined in service levels. Cost was defined as unit costs (per hour, per transaction, per server, etc.). But user’s focus on value has shifted from to the value of the business function.

As an example, consider the business function of employee onboarding. Value used to be viewed as the cost of providing the applications and the quality of the apps (reliability and resilience, and whether they provide the necessary functionality). But the perception of value shifted. For example, now it could be tied to how the new employees view their onboarding experience and whether or not the process results in employees that are well prepared to work in the company. It used to be viewed as the cost

Another reason the user satisfaction indicator is red is the dimension of speed. Companies have always been aware of the need for speed, but historically quality took precedence over speed. Increasingly we find users value speed more. It’s not speed in developing an application; it’s the speed to change the business functionality (such as the employee enrollment system in the example above). It doesn’t matter how quickly an IT group or a third-party service provider can make a change to the application or server; it’s how quickly they can change the functionality.

Users no longer associate value with the delivery components that make it up (such as the infrastructure uptime).

This shift in user’s perception of value is a fundamental reason why the services world is changing, and it’s driving different behaviors and decisions.

One way the change is manifesting is that companies that have outsourced processes now want to bring the work back in house so they can better focus on the business value and less on the service delivery components. The preference for insourcing and GICs is gathering momentum. This is evident in statements of leaders at leading companies such as:

  • “Shell is clearly on a path to insource our project delivery capabilities.” (Jay Crotts, CIO, Shell)
  • “We believe having our own center and doing more of the work ourselves will lead to lower turnover of people, we’ll have people who really understand our systems, people who are passionate.” (Therace Risch, CIO, JCPenney)

Historically, GICs or captives performed only low-cost delivery work. But they’re now gaining share in the marketplace for sophisticated work. Companies are investing in their GICs as they recognize the need for stronger alignment between IT and business users to drive value. The GICs are still located offshore, but the functions are back in house instead of performed by a third party.

The times, they are a-changing. In my next blog post, I’ll discuss two other forces driving change in the services industry.

Impact of Brexit on the UK Outsourcing Industry | Sherpas in Blue Shirts

There’s no doubt that Brexit created a slowdown in European outsourcing during the last two quarters, especially in the UK. How long will the slowdown last? Let’s look at what’s really going on.

The reason Brexit contributed to slowdown is because it created indecision and senior management attention was captivated by the unthinkable prospect of the UK exiting the EU. That indecision caused the slowdown.

Having just returned from the UK and talking to UK leaders, I believe that the indecision has passed and decisions are reversing back to their normal rhythm. I expect there to be a little ongoing hangover; but going forward, I expect an increasingly low impact on outsourcing growth due to the UK exiting the EU. Yes, it’s still uncertain as to how the UK will exit, but that’s different from the indecision based on whether or not it would actually happen. I’m seeing signs that the indecision and senior management attention necessary to do outsourcing deals has now reverted back to running the business.

On their earnings calls, a number of outsourcing executives called out that they expect Brexit will create an imperative to do more outsourcing and to accelerate deals. I see no indication that is likely to happen. Here’s why:

  • The UK has a mature outsourcing market, which is already well along in its shift to cloud, automation and cognitive computing.
  • The imperative for UK businesses to save more money due to Brexit is likely to be resolved in an acceleration of the automation strategies, not an acceleration of further outsourcing in the labor arbitrage model. Work that has been available to move offshore has already moved, so I don’t see an uptick in demand for further offshoring. If Brexit has an effect, I believe it will accelerate the move to automation, which provides even greater savings than labor arbitrage.

Summing up, Brexit has had a modest impact on growth of UK outsourcing; but I think that impact is lessening dramatically by the day and will have little or no impact within a month. Where it does have an impact, and counter to well-publicized prophecies, I believe Brexit will not lead to further growth in the labor arbitrage space, but it’s likely to impact the transition to automated solutions.

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