In-demand Technology Skills
Every large firm in North America, Europe, and the industrialized world is going through a fundamental transformation to emulate how tech companies operate. We’re early in this transition, but this new way of operating and competing is so fundamental that it will continue even during a recession. The demand for IT and engineering services won’t slow and will far exceed other industry sectors, even in a recession. Although this is comforting for companies selling tech products and services, it poses a number of dilemmas for other companies.
With the continued talent shortage creating demand for contingent workers, staffing firms are experiencing new opportunities to expand and diversify their services. Many are joining forces to seize growth, as seen by a flurry of mergers and acquisitions in this dynamic space. To learn more about the challenges, opportunities, and outlook for the US staffing industry, read on.
The US staffing industry and contingent workforce have become integral to the economy. Driven by the unique employee recruitment environment over the past year with the Great Resignation and dramatic labor pyramid shifts, staffing firms are being presented with new growth opportunities as they help fill the talent gap.
On the back of strong economic growth in 2021, the staffing industry grew significantly. However, this momentum is expected to drop off due to a myriad of internal systemic challenges and increased competition from traditional and non-traditional players.
Despite the anticipated slowdown, the market is still expected to remain above pre-pandemic levels as enterprises increasingly turn to the contingent workforce in the next 12 to 18 months, according to Everest Group’s Future of Work 2021 survey.
Additionally, the fear of a looming economic downturn and associated layoffs will further add to contingent talent demand because enterprises will not want to invest in full-time hiring with the uncertainty.
Given such rapid fluctuations in the market, staffing firms must navigate various challenges to sustain their growth trajectory, including:
The combination of the above factors results in commoditization and difficulties in creating and sustaining differentiation in a highly fragmented industry with low entry barriers
While current market conditions present a significant number of challenges and disruptions for staffing firms, many of these obstacles can be pre-empted if staffing firms begin to differentiate themselves.
While staff augmentation is largely commoditized, going up the value chain is one of the main ways through which staffing firms can differentiate themselves. Staffing firms can also invest in areas such as associate upskilling/reskilling, technology integration with services, and Diversity, Equity, and Inclusion (DE&I) to stand out. Based on their historic growth and penetration levels, staffing firms may explore opportunities to diversify across the following areas
The staffing industry has been very dynamic in recent years, with service providers expanding their capabilities and diversifying their portfolios, both organically and inorganically. Service providers have been quick to capitalize on the opportunity offered by the pandemic and moved quickly to expand their capabilities and portfolios via mergers and acquisitions. Some of the most interesting and significant developments include:
Thus, the staffing space continues to provide opportunities for staffing firms to diversify their portfolios into new geographies, skill categories, and managed services solutions through M&A activity. As the economic environment is frequenting between crest and trough, the staffing industry will continue to remain dynamic. Additionally, fears of looming recessions and funding freezes across industries will offer a unique opportunity for well-capitalized staffing providers to pursue M&A targets at attractive valuations.
To discuss the US staffing industry and contingent talent, contact [email protected], [email protected], and [email protected].
Learn more about workforce changes, read the blog, Deconstructing the Future of Work Trends.
Enterprise adoption of low-code platforms has been invigorated in recent years by its potential to drive digital transformation. This fast-rising platform solution offers promise to democratize programming with today’s talent shortage and help companies develop applications and enhance functionalities faster. While the opportunities are clear, charting a path to successful adoption is ambiguous. Learn the 4Cs approach used by best-in-class enterprises for selecting and adopting the right-fit low-code platforms in this blog.
As many as 60% of new application development engagements consider low-code platforms, according to Everest Group’s recent market study. Driven by the pandemic, the sudden surge in demand for digital transformation accelerated low-code annual market growth to about 25%. Considering its potential, low code is appropriately being called the “Next Cloud.”
Interest by investors also has accelerated, further driving R&D spend for new product development. Funding activities in 2022 to companies featuring low code in their profiles already amounts to $560 million across 40 rounds.
Platform providers are responding to these elevated expectations with equal fervor by building platforms with deep domain-specific expertise, while others are providing process-specific solutions for enterprises’ customization requirements.
While these markets have resulted in a proliferation of low-code platforms to choose from, it also has led to confusion and inefficiencies for enterprises. As more and more enterprises explore the potential of these platforms, IT leaders are faced with numerous questions and concerns such as:
“How do I select the platform that can address my current and future requirements?”
“Which platform will work best in my specific enterprise IT landscape?”
“How can we optimize the investment in this technology?”
“How do I compare the pricing structures of different low-code platforms?”
“How do we ensure governance and security of the IT estate with these new tech assets?”
In addition to the high-priority use cases that initiate the adoption, enterprises should consider the platform’s scalability potential, talent availability for support and enhancement, and integration with the broader IT landscape to make the right selection.
Additionally, low-code platforms are intended to address the requirements of the IT function as well as business stakeholders. Considering the drivers, expectations, and requirements of both when making the selection is essential. A collaborative decision-making set-up with the central IT team and key Line-of-Business (LoB) leaders is critical for a successful platform selection. Let’s explore the 4Cs to low code success.
The key steps to ensure successful low-code platform selection and adoption are:
This approach can provide a roadmap for enterprises with distinct outcomes. We have witnessed enterprises either adopting the best-fit approach resulting in a platform portfolio or leveraging a single platform as a foundation for an enterprise-grade innovation engine.
For instance, the Chief Technology Officer (CTO) of a leading bank in the US invested in establishing a low code Center of Excellence (CoE) that uses different platforms for process automation, IT Service Management (ITSM), and enabling point solutions for business users.
On the other hand, a large US commercial insurer built its entire end-to-end multi-country app on a single low-code platform. This comprehensive, business-critical application managing claims, billing, and collection is accessible by all underwriters and service personnel.
Next, we explore how to best compare platforms based on their offerings and capabilities. The tables below illustrate the top five business and technology-oriented parameters to consider when evaluating platforms, along with their relevance and enterprise expectations.
Factors associated with the platform’s technical robustness are of key importance to IT decision-makers. Integration and UI/UX capabilities are at the top of enterprise’s technology priorities when comparing multiple platforms.
For instance, Appian ships with 150-plus Out-of-the-Box (OOTB) connectors. Appian SAIL, a patented UI architecture, takes declarative UI definitions to generate dynamic, interactive, and multi-platform user experiences. It also makes the applications more secure, easy to change, future-proofed, and native on the latest devices.
Assessing these parameters is important to understand whether low code can be sustained and scaled long-term and if it addresses the business users’ expectations. Pricing and security constructs are at the top of the list for businesses looking to adopt a low-code platform.
Let’s consider Salesforce as a case-in-point. Salesforce has security built into every layer of the platform. The infrastructure layer comes with replication, backup, and disaster recovery planning. Network services have encryption in transit and advanced threat detection. The application services layer implements identity, authentication, and user permissions. In addition, frequent product updates that help it to align its product offering with changing market demands put Salesforce as one of the go-to platforms for all the CRM needs of enterprises.
The plethora of options makes it difficult for enterprises to zero down their investments on a particular low-code platform. Enterprises must also leverage their network of service partners for guidance in this decision-making process.
Talent availability for implementation and enhancement support is critical to keep in mind during the platform selection. For the same reason, multiple system integrators are now taking the route of inorganic growth to bolster their low-code capabilities.
This is the time to hop on the low-code bandwagon and establish low code as the basis for enterprise digital transformation.
Everest Group’s Low-Code Application Development Platforms PEAK Matrix® Assessment 2022 provides an overview of the top 14 platforms based on vision, strategy, and market impact.
To share your thoughts and discuss our research related to low-code platforms, please reach out to [email protected] and [email protected].
Four-day weeks, on-demand pay, “rural” talent, and digital workers – in recent times, we’ve heard these ideas accompanied by seemingly teleological questions about work as a construct. With the work landscape rapidly evolving, questions arise about what the future of work will look like. Read on to learn more about how technology, location, and talent can be utilized to reconstruct our understanding of work, as well as gain positive lasting effects for companies.
With the rise of digital labor pyramid issues, the after-effects of a global pandemic, and the desire for more meaning in work and convenience through remote work, the work landscape is being met with a promising possibility of re-examining and perhaps reconstructing work for the new era. But, beyond the clarion call, what exactly does it entail? How do we understand the future of work trends and how do we design for them? Fundamentally, we can break it down into three distinct components: the how, the where, and the who. Let’s take a look at the trends shaping the future of work.
As we look at the adoption of cloud and AI technologies in the workplace, it becomes clear that the nature of work will change considerably. Robotic process automation (RPA) and Artificial Intelligence (AI)-based automation can significantly reduce the number of transactional tasks delivered manually, in addition to a few judgement-oriented tasks. The universe of tasks that can be automated or simplified will expand as these technologies mature and systems of record become more scalable, data pipelines are streamlined, and meaningful data itself becomes more accessible. This further enhances our ability to use data to derive insights and make informed decisions.
Everest Group’s future of work research shows adoption of these technologies has accelerated during the pandemic. More than 70% of organizations have invested in digital in the past 12 months, and about 50% expect to invest more in the next six to 12 months. Naturally, all of this has implications for the kind of work that then falls to the human workforce. With transactional tasks largely automated, judgement-, expertise-, and empathy-oriented tasks and related skill sets (including “soft skills”) become more important. But this is not a doom and gloom job-loss scenario; digital hardly ever is. Digital will also create jobs for talent who can acquire skills related to automation, AI, analytics, and the cloud.
In essence, the nature of work is changing. Enterprises will need to prepare for these eventualities by ensuring they have adequate skilling programs in place, starting by building skill taxonomies for the future, assessing current skill sets, and building out continuous learning, upskilling, and reskilling programs to enable a future-ready workforce.
Our research indicates that over half of today’s enterprises expect more than 40% of their employees to continue to work from home over the next two years or so. The pandemic has dispelled certain notions about remote work while highlighting its challenges. No longer do we question if remote work is efficient or even a possibility; video calling and conferencing tools, collaboration technologies, and the potential of the metaverse have meaningfully reduced the friction that deterred work from home. Employees have benefitted from shorter commute times, greater flexibility, and proximity to family.
On the other hand, 55% of enterprises see employee engagement as a key challenge in a remote-only environment, and 50% see organizational culture as difficult to maintain with full-time work from home. The middle ground (hybrid work) seems destined to be lasting among the future of work trends. Enterprises need to redesign physical and virtual workspaces, embedding information security as needed and changing management styles to accommodate the hybrid working model.
As remote working has gained more acceptance and mature economies have aged, the time has also come to de-link talent from geographic locations. Beyond the US and India, emerging technologies such as AI and automation have sizeable talent pools in multiple countries across the world. The enterprise of the future should seek to leverage this talent, applying similar guiding principles as those for hybrid work with an additional focus on local compliance, managing cross-cultural teams, and customizing policies.
As work and workplaces evolve, so will the talent we need. We already spoke to the need for a geographically distributed and suitably skilled talent. The future workforce will also be diverse, equitable, and inclusive. Diversity will, in some ways, be necessitated by the need for a variety of in-demand skills sets and changing labor pyramids, but beyond that, it is a fairly well-established fact that diverse workforces simply do better and bring a variety of perspectives to the table, enabling enterprises to serve their clients better too. From this perspective, in the digital age, organizations will need to bolster their diversity, equity, and inclusion programs, define concrete goals and metrics, and mobilize internal and external resources to help meet these goals. DE&I will be among the trends shaping the future of work to watch for.
As we look to fulfill specific skillsets for future work, organizations will also do well to consider contingent or temporary workers in addition to traditional permanent ones. Contingent workers are in greater supply now and will offer a good pool of talent to tap into, particularly for in-demand and next-generation skills. This will require careful consideration on the part of enterprises, as not all roles will be suitable for fulfillment. Even among the contingent workers, some skillsets will be in higher demand.
Attracting talent also will pose a challenge for enterprises. Today, a large portion of contingent programs are run through procurement. A holistic program run by HR (including contingent and permanent workers) that can communicate the employer value proposition well, help with engagement, and leverage data to improve program management might just be needed as we transition to this new construct.
The future of work is neither esoteric nor mundane – it is somewhere in between, and it is here already. It will require us to question well-established paradigms, rethink the framing of work in our lives, and push us to redesign and reconstruct. Enterprises that move the needle now stand to gain a lasting competitive advantage.
To learn more about the future of work trends, contact us or reach out to Everest Group Partner, [email protected].
At Everest Group, we help clients navigate their digital transformation journeys and provide assistance in implementing digital technologies. Currently, we are offering assistance to companies that are launching Web 3.0 and Metaverse initiatives with a complimentary outline of definitions and use cases. Request a summary.
Attracting and retaining a talented tech team is the most important success factor for the long-term success of CIOs and their agendas. But it is also their most difficult, nettlesome challenge, especially in today’s hot, cutthroat marketplace for IT and engineering skills. Companies have reached out to Everest Group for help understanding the complex issues they must navigate and are seeking our comprehensive analysis on how other companies handle these issues.
Access the on-demand webinar, which was delivered live on June 7, 2022.
The pandemic undoubtedly accelerated digital transformation worldwide, creating a booming demand for tech talent that is not slowing down. Businesses need technology-focused workers to help execute existing and evolving digital transformation, adopt new processes, and innovate.
Creating a standout employee value proposition is now a cornerstone of success for recruiting and keeping tech talent. But that’s not the endgame. In this ever-evolving work environment, employers need to constantly refine organizational practices, levers, and metrics to drive productivity among tech workforce and maximize potential.
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A year ago, I blogged my predictions about the acute IT and engineering talent shortage busting budgets and explained the situation would get worse in 2022. We’re there now, and wages and attrition are spiking at enterprises and at third-party service provider firms. In this current blog, I want to share what executives need to know about how to handle this situation.
With increased cyber attacks and data breaches post-pandemic, cyber insurance to protect against the rising digital threats is growing in demand. Cyber insurers can benefit by partnering with service providers to seize opportunities for growth and profitability in this fast-growing market. Read on to learn how.
Cybersecurity continues to be a top priority for enterprises across all industries, primarily driven by increased cyber attacks and data breaches in the wake of COVID-19. Enterprises are increasingly strengthening firm-wide cyber defenses and turning to cyber insurance as a mitigating measure to counter the rising threats in today’s increasingly digitized world.
In particular, the pandemic has accelerated the severity, frequency, and complexity of ransomware attacks. Data from the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) suggests the total value of suspicious activity reported in ransomware-related incidents during the first six months of 2021 was US$590 million, more than the US$416 million reported for all of 2020. The frequency has also gone up, with 658 ransomware-related suspicious incidents being reported during the first six months of 2021, representing a 30% increase from the total reports filed for 2020.
Costs associated with cyber attacks also are rising. According to the IBM Cost of a Data Breach Report, the average data breach costs rose from US$3.86 million to US$4.24 million in 2021.
All of these factors have led to a substantial increase in cyber insurance pricing across the world. An analysis by Marsh shows US cyber insurance pricing increased 96% year-over-year during the third quarter of 2021, which also represented a 40 percentage point increase from the second quarter of the year.
Image 1: US insurance market pricing change – overall commercial vs cyber insurance segments
Direct premiums for US-domiciled insurers stood at US$2.75 billion in 2020 – less than 1% of the overall direct written premium in the US property and casualty (P&C) insurance market – reflecting the runaway growth in cyber insurance. This segment has also grown at a decent pace over the last five years, registering a compound annual growth rate (CAGR) of 13.3% during that period.
Standalone cyber insurance policies are gaining prominence and have seen faster adoption than packaged policies sold as add-ons to other insurance products/policies. This can be attributed to enterprises’ need for broader coverage and a better understanding of policy terms and costs.
While most carriers have mainly serviced corporate clients, they are now starting to focus on the retail segment by providing standalone cyber insurance products that have typically been sold as add-ons to homeowners insurance. For example, Chubb recently launched Blink, a new personal cyber protection offering that covers expenses related to identity theft, fraudulent wire transfer, cyberbullying, and ransomware extortion.
Insurers are also offering joint go-to-market (GTM) products to provide comprehensive cyber risk management solutions to enterprises. In 2021, Allianz and Munich Re partnered with Google Cloud to launch a solution for Google Cloud customers that combines the risk-transfer expertise of Allianz and Munich Re with Google’s security capabilities to provide clients tailored coverage.
The insurtech space has recently witnessed increased activity where most newcomers are catering to specific segments like small to medium enterprises. Insurtechs are leveraging their tech capabilities to make the underwriting process more streamlined and automated while incumbents continue to face legacy issues.
However, insurtechs lack the capital resources of their traditional counterparts and hence are forming alliances with traditional insurers to combine their respective capabilities. Some insurtechs are also offering coverage on behalf of incumbents through the Managing General Agent (MGA) model.
While cyber insurers have experienced significant top-line growth, profitability remains a major concern as payouts have outstripped premium growth. The increased payouts have led to higher loss ratios. The loss ratio for US cyber insurers increased from a 42% average during 2015-19 to 73% by 2020. Insurers are responding by narrowing the cyber coverage scope and limiting cyber capacity. They also are imposing sublimits for ransomware coverage and adding coinsurance requirements to cyber policies.
Image 2: Insurers narrowing cyber coverage scope and limiting cyber capacity
Partnering with Business Process Services (BPS) providers can help cyber insurers in the following ways:
Providing underwriting talent: As the adoption of cyber insurance grows, it will also lead to higher volumes for carriers. Service providers can provide support by standardizing parts of the underwriting process to enable carriers to handle increased work volumes. This can include deploying straight-through processing by standardizing the intake process and applying rule-based engines for low-premium policies to free up time for underwriters to focus on larger policies. They can also take over non-core pre- and post-underwriting work and help create scalable Centers of Excellence (CoEs) at profitable locations.
Enabling technology: As carriers tighten their underwriting requirements with an increased focus on analyzing enterprises’ history of ransomware incidents and cyber breaches, they will heavily rely on third-party tools and public data sources to evaluate the insureds’ level of risk. This provides an opportunity for service providers to work with carriers to provide such tools and applications to help them assess risks associated with a particular firm.
Ensuring compliance: Amid the ever-evolving cyber threat landscape, governments and regulators across the globe are introducing new cybersecurity-focused legislation. The US Congress passed a new cybersecurity law in March mandating critical infrastructure entities to report cybersecurity incidents and ransomware payments to the relevant authority within 72 and 24 hours, respectively. Service providers can support carriers on various compliance-related matters. While some providers have compliance-specific expertise in licensing and filings, others have dedicated teams for compliance review and obligations. Third-party BPS providers can leverage these resources and work with carriers to ensure compliance.
As carriers seek growth in the cyber insurance market, they will need to strike the right balance to also achieve profitability. At the same time, service providers will have to keep up with the evolving market and appropriately build their cyber capabilities.
By working together, carriers and service providers can address some of the current market challenges and capitalize on the opportunities in the cyber insurance space to achieve sustainable growth.
For more information, please read our comprehensive assessment of the players in the P&C Insurance BPS segment, Property and Casualty (P&C) Insurance BPS – Service Provider Landscape with PEAK Matrix Assessment 2022.
To discuss opportunities in the cyber insurance market, please reach out to Somya Bhadola at [email protected] and Dinesh Singh Udawat at [email protected] or contact us.
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