Enterprises’ Biggest Service Provider Concerns Going Into 2021 | Market Insights™
January 15, 2021
Enterprises’ Biggest Service Provider Concerns Going Into 2021
Enterprises’ Biggest Service Provider Concerns Going Into 2021
Most Important Supplier Performance Areas for Enterprises’ 2021 Business Priorities
Supplier Performance Measurement and Tracking Tools Prevalence in Enterprises
I previously blogged about the need for a new third-party services operating model that would be more productive and agile and focus far more on results. Though the industry was on the verge of moving to a new model, adoption was slow at first. Now, attraction for the move to a new model is picking up in the marketplace, but enterprise customers and service providers define expectations differently.
Last Friday, May 29, Wipro appointed Capgemini’s former COO, Thierry Delaporte, as its new CEO and MD. This is an intriguing time for Wipro to change its leadership. The third-party services industry is now at an inflection point, and there are typically opportunities for market share shifts to happen at these points. Here is my point of view on the inflection point, the impact of the COVID-19 crisis, and other main factors at play, which shape Delaporte’s challenge and Wipro’s opportunity.
This is the second in a series of blogs that explores a range of topics related to these issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.
These insights are based on our ongoing interactions with organizations operating in impacted areas, our expertise in global service delivery, and our previous experience with clients facing challenges from the SARS, MERS, and Zika viruses, as well as other unique risk situations.
To date, over 99 percent of the officially confirmed total of 45,000 (61,000 if the Chinese authorities’ newly expanded definition is used) Covid-19, or Coronavirus, cases are inside China. The impact of the virus is pronounced in a core group of ten Chinese provinces: Hubei, where the virus originated, the six neighboring provinces of Shaanxi, Heinan, Anhui, Jiangxi, Hunan, and Chongqing, plus the adjacent coastal provinces of Guangdong, Fujian, and Zheijiang. As of February 9, these areas account for 90 percent of the total reported confirmed cases and 92 percent of China’s new cases.
While supply chain organizations in these provinces are facing severe impacts due to closures, we believe the level of exposure to risk of disruption for service delivery organizations is limited because the service delivery centers are largely servicing internal customers, which are themselves operating at reduced capacity or are closed completely until further notice.
Data from Everest Group Market Intelligence (EGMI) shows that there are 51 Global Inhouse Centers (GICs) – or shared services centers – and 20 service provider delivery centers located in these 10 provinces. Of the seven GICs in Hubei at the epicenter of the outbreak, two, owned by FedEx and UPS respectively, are thought to deliver internal shared services to domestic and near-Asian employees. The rest are technology research or innovation centers.
In view of restrictions imposed by the Chinese government, provincial governments, or companies implementing business continuity protocols, it is highly likely that most, if not all, of these delivery centers are closed and will remain so until further notice.
Examples of the restrictions imposed by the authorities or by companies themselves that have been in place for at least two weeks and look set to remain include:
As an example of specific defensive measures businesses are taking, all businesses and public facilities in Singapore, in accordance with government guidelines issued on February 10, are now:
It is possible that some enterprises will use the disruption caused by the outbreak as justification for cost cutting and capacity reduction, but we don’t yet see clear evidence of that.
Visit our COVID-19 resource center to access all our COVD-19 related insights.
Organizations buy services from a wide variety of service providers — ranging from managed services for IT applications and infrastructure, contingent labor to supplement gaps in skills and availability, cloud services, business process services, and more. We at Everest Group looked at the administration of these contractual relationships and discovered that most organizations leave tens of millions of dollars on the table. Why does this happen and what is the answer to this dilemma?
Companies today hold all business functions to a mandate for innovation. Innovation should create business value (a better experience for employees, customers, and partners). It should create agility and speed. It should make business functions more easily adaptable, easier to change. And it should also lower the cost of the functions over time. The benefits are clear and obvious. But the truth is innovation is illusive and hard to get.
As corporate technology leaders pursue their digital transformation strategies, many are looking to IT service providers as potential partners in those change efforts. However, a one-size-fits-all approach to outsourcing providers is not likely to serve CIOs well in meeting innovation goals. In fact, bigger doesn’t necessarily mean better in the digital change era.
“Traditionally, size was a good proxy for capability, especially when technology was viewed fundamentally as an enabler of efficiency,” says Jimit Arora, partner in Everest Group’s IT Services practice.
As summer quickly fades from our memories, and we turn our attention to the end of 2018 and planning 2019, Everest Group conducted a survey of service providers to gather their thoughts on where the market has been, where it is, and where it’s headed. The results were expected … and surprising.
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