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2012 Global Services Compendium - GS100

The 2012 Global Services Compendium analyzes the outsourcing industry, highlighting challenges and shifts due to economic turbulence and political reactions against outsourcing. It discusses the significance of cloud computing, analytics, and technological advancements in reshaping services and the emphasis on value creation for clients. The report introduces the GS100 list, reflecting the performance and leadership of companies across various IT and business process outsourcing segments.

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www.globalservicesmedia.com Annual Issue 2012 Annual Global Outsourcing Industry Analysis 2012 Global Services Compendium GS100 Survey þ GS100 List þ GS100 Categories þ ITO Segments þ BPO Segmentsþ
editor’s note Facing the New Realities The impact of the turbulent global economy on the growth of the services industry continues to be a widely discussed topic. The other such topic is the possible impact of the political backlash against outsourcing. While the latter can be dismissed as political rhetoric in an election year, the former requires some re-strategizing and deftness on the part of service providers. Growth rates are in single digits in the mature economies and the emphasis is on shorter term, single- function deals. Labor arbitrage is still important and service providers continue to seek low-cost locations. Our conversations with many companies during the GS100 survey re- vealed that while companies are seeking acceleration in revenue growth, profits, and other performance parameters; they are more engaged in acquiring the new capabilities required to address technological and social shifts influencing their customer’s business. n Enterprise software enters a phase of renewal driven by mobility, cloud computing and Software as a Service (SaaS), software manufacturers, and developers are turning Ed Nair, Editor to experts in product development. ed@cybermedia.co.in n Contact center outsourcing is seeing renewed growth with customer interactions moving over to non-voice channels and social media. n The HR space is being redefined with greater breadth of cloud-based offerings rang- ing from recruitment to talent management. The impact of social media in managing workforce also requires major reorientation in terms of policies and practices. n The real hotspot is analytics outsourcing. Developments on the technology side in the form of cloud, big data, and business intelligence tools have simplified the area but there is still the need for data scientists to perform analytics. This makes the case eminent for outsourcing analytics. n With increasing number of organizations demanding application’s functionality as a cloud-based services rather than on-premises infrastructure, ADM vendors are of- fering more technology as subscription-based solutions and “pay as you go” ADM offerings. These shifts require major investments for both organic and inorganic scale up. Mostly, global service providers are rich with good financial reserves. Therefore, there would be a slew of M&A deals when services companies would acquire technology companies to own pieces of technol- ogy that would help them offer differentiated services. The current model of GS100 is based on market performance and leadership, breadth of services, spread of global delivery capabilities, and customer leadership. Next year, we would extend the model to measure how service providers move towards leveraging platforms and solutions to deliver the next wave of business value. Congratulations to all the GS100 companies!
Contents 46 27 Segment Analysis n Application Development & Maintenance: On The Road To Recovery/ 27 n OPD: Market is Expected to Reach $19B/ 38 38 n Infrastructure Management Services: Cloud Comes With a Promise/ 46 n ITO: Status Quo Sustained/ 56 66 n Contact Centers: Growth Momentum Continues Amidst Turbulence/ 66 n FAO: All Signs Suggest Maturity/ 75 75 n ISBPO: Being Explored 56 Aggressively/ 86 n PO: The Expanding Scope of PO 94 Contracts/ 94 n HRO: From Cost Savings to Strategic 86 Advantages/ 100 106 n Analytics Outsourcing: Inside The World of Numbers/ 106 100   |  September 2012 GlobalServices
6 Survey Analysis The 2012 Global Services 100: Defining Leadership in Global IT and Business Advertisers Lists Ø Hildebrando 3 Ø Quatrro 7 GS100 Lists Ø Endava 13 Ø The GS100 List/ 13 Ø Belatrix 17 Ø The GS100 Category Lists/ 19 Ø Hexaware 21 Editorial Team Gulnar Oberoi Ed Nair gulnaro@cybermedia.co.in Ø IBA 29 Editor, ed@cybermedia.co.in Smriti Sharma Design Team Ø Prokarma 31 smritis@cybermedia.co.in Bhagbat Pattnayak Smita Vasudevan Harnek Singh Ø Cybage 36 smitav@cybermedia.co.in Pramod S Rawat Sourabh Chandra Pushp Ø Harbinger 41 Sourabhc@cybermedia.co.in Cover: Pramod S Rawat Ø Great Idea 44 Pradeep Gupta Sales Marketing Ø Mexico IT 49 Chairman MD Satish Gupta Hoshie Ghaswalla AVP, satishg@cybermedia. Ø EPAM 53 CEO, Media Business co.in Ibrahim Ahmad Gary Bindra Group Editor Ø Luxoft 59 gurdeep@cybermedia.co.in GlobalServices September 2012  | 
SpecialReport Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis   |  August 2012 GlobalServices
Advertorial Quatrro Global Services– Spearheading BPO Industry to “Beyond the Existing” Quatrro has realized the benefits of first mover by offering state-of-the-art platform based solu- tions to its clients. It’s businesses are remarkably different compared to most of the other players in the industry whose focus continues to be on headcount, utilizing client owned technology for process delivery and cost reduction while Quatrro’s value proposition is primarily centered on utilizing Quatrro owned / customized technology, platform based services and revenue enhancement. Quatrro leads its peers by at least 3-5 years in servicing the mid market through right shore delivery. Stressing that SMB needs are remarkably dif- ferent from large enterprises, Raman says, “Mid market clients are value conscious and actively seek a lower total cost of ownership. Focusing on cost and transformation led value proposition alone will not help the service providers fulfill the mid market needs. The focus needs to be on enhancing the business value for SMB clients”. Q Illustrated below are various drivers that em- uatrro is recognized as one of the power Quatrro deliver significant value to its mid leading Business Process Outsourc- market clients: ing companies, focused on offering Commenting on Quatrro’s current success, Raman platform based services to Small and adds,” The adoption of our services by over 11,000 Medium Businesses (SMBs) globally. The company SMB / SOHOs and leading multi- national companies which is spearheaded by the Guru of Indian BPO for their franchise operations is a colossal endorse- industry, Raman Roy, has taken rapid strides over ment of our business strategy. This has been further the years and has lent true meaning to its tagline endorsed through the alliances that we forged with “Beyond the Existing”. It currently has over 130 various technology players in taking their services to enterprise clients, 11000+ SMB SOHO custom- the mid-market, otherwise found unviable by them.” ers and 500,000+ individual customers in multiple Summing up, Raman says that Quatrro has geographies with diverse services covering Risk architected the birth of yet another industry in Management, Financial Processing, Technical Solu- the services space – the industry of platform based tions, Mortgage Processing, Interactive Entertain- business services that have no geographic barriers ment and Knowledge Services. or limitations.
cover story The 2012 GS100: Defining Leadership This is neither in Global IT a study of 100 companies nor a survey aimed and Business at choosing hundred best companies Process based on financial performance. Hundred best Outsourcing companies they are; chosen through a rigorous methodology...   |  September 2012 GlobalServices
survey analysis T his is neither a study of 100 companies nor IT Outsourcing Segments a survey aimed at choosing hundred best Total- $21.2B companies based on financial perform- SO Others 4% 5% ance. Hundred best companies they are; Testing 5% chosen through a rigorous methodology that eval- OPD 7% uates each company across multiple dimensions, ADM 38% measured both quantitatively and qualitatively. ES The study presents a complete view of the dynam- 8% ics of the most significant segments that make up the IT and business process outsourcing industry. IMS This is not a list of the 100 largest outsourcing 14% vendors. This list reflects the diversity and overall EA 19% landscape of the service provider community in terms of company sizes, countries of origin and BPO Segments countries of delivery. Total- $11B FAO The GS100 Methodology 8% HRO I/S Companies who opted to participate in the sur- 20% 5% vey were asked to share exhaustive information through an online survey done during 05/12 and KPO 06/12. The top 100 list and the names in the catego- 9% CC ries are derived using a scientific research method- 53% PO ology based on several qualitative parameters. 4% CONTRACT SIZES Customer Base- ITO BPO IT Outsourcing (# Customers, 130 Cos.) Upto $5M 15444 2586 $5M to $19M 357 165 New Customers-2011 Existing Active Customers $20M to $34M 177 54 $35M to $50M 55 28 Others 987 342 IT Strategy $51 M to $99 M 23 27 and 809 420 Consulting Total IT O/S $100M to $299 M 14 3 1775 583 IM $300M to $499 M 4 3 2876 285 OPD $500M to $749 M 4 7 1586 697 ES $750M to $ 1B 3 8 885 551 EA $ 1 B to $ 2 B 1 2 4021 967 ADM 1474 More than $ 2 B 0 5977 0 1000 2000 3000 4000 5000 6000 7000 8000 (# of contracts, 130 companies) GlobalServices September 2012  | 
cover story survey analysis Revenue by Geographies Customer Base- BPO ($65B, 130 cos.) (# Customers, 130 Cos.) North America New Customers-2011 South America Existing Active Customers Europe Africa ME Asia Japan Industry-specific 960 328 Australia Australia Japan KPO 3809 780 5% 2% Asia 14% Procurement 222 60 Africa North ME CC 3145 610 America 3% 47% HRO 396 34 Europe 733 96 FAO 24% South 0 1000 2000 3000 4000 5000 America 6% Verticals Row 4 Telecom 11.11 Retail Consumer Products 12.93 Media Information Services 8.40 Manufacturing 10.45 % Rev. 2011 Life Sciences 9.11 Insurance 7.24 High Tech 11.26 Healthcare 8.27 Government 5.86 Energy, Resources Utilities 6.48 Banking Financial Services 15.84 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 10  |  September 2012 GlobalServices
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2012 GS100 List 2012 GLOBAL SERVICES 100 COMPANIES Sl. No. Company Name 1 Achievo Corporation 2 Aditya Birla Minacs Worldwide Limited 3 Aegis Limited 4 Affinity Express 5 AJUBA iNTERNATIONAL LLC 6 Altisource Portfolio Solutions S.A 7 Aspire Systems (India) Pvt. Ltd. 8 Auriga Inc. 9 Beyondsoft Corporation 10 BLEUM INC. 11 Blue Star Infotech Limited 12 Capgemini 13 Chinasoft International Ltd. 14 CiT 15 Ciklum 16 City Park Technologies 17 Collabera Inc 18 CompuCom Systems Inc. 19 Convergys Corporation 20 Corbus, LLC 21 CSC 22 Cybage Software Private Limited 14  |  September 2012 GlobalServices
2012 GS100 List Sl. No. Company Name 23 DataArt 24 Datamatics Global Services Limited 25 Dextrys 26 eClerx Services Ltd. 27 Endava UK Limited 28 EPAM Systems Inc. 29 Exigen Services 30 EXL Service Holding Inc. 31 Expert Global Solutions 32 First Line Software 33 Firstsource Solutions Ltd 34 FPT Software Co. Ltd. 35 Freeborders, Inc. 36 Genpact Limited 37 GlobalLogic 38 Globant 39 Harbinger Systems Private Limited 40 HCL Technologies Ltd. 41 Hexaware Technologies Limited 42 Hildebrando 43 Hinduja Global Solutions Limited 44 IBA Group 45 iGATE Corporation 46 Indecomm Global Services (I) Pvt Ltd 47 Infosys Ltd. 48 Infotech Enterprises GlobalServices September 2012  |  15
2012 GS100 List Sl. No. Company Name 49 Innominds Software Pvt. Ltd. 50 Insigma Technology Co., LTD 51 InterGlobe Technologies 52 Intetics Co. 53 iSoftStone Information Technology (Group) Co., Ltd 54 ITC Infotech 55 Itransition Software Development Company 56 KPIT Cummins Infosystems Ltd. 57 Lionbridge 58 Lohika Systems, Inc 59 Luxoft 60 MAVERIC SYSTEMS LIMITED 61 MERA 62 Microland 63 Mindteck (India) Ltd. 64 MindTree Limited 65 Mistral Solutions Pvt. Ltd. 66 Nagarro, Inc. 67 Neilsoft Limited 68 Neoris 69 Neusoft Corporation 70 NIIT Technologies 71 NorthgateArinso 72 Omnitech InfoSolutions Ltd. 73 Persistent Systems Limited 74 ProKarma, Inc 16  |  September 2012 GlobalServices
2012 GS100 List Sl. No. Company Name 75 Quatrro Global Services Pvt. Ltd. 76 RCG Global Services 77 Reksoft 78 SaM Solutions 79 Scicom (MSC) Berhad 80 Serco Global Services 81 Sitel Operating Corporation 82 SoftServe, Inc. 83 Sonata Software Limited 84 SPi Global 85 Stream Global Services 86 Sutherland Global Services, Inc. 87 Symphony BPO Solutions Sdn Bhd 88 Symphony Teleca Corp 89 Synapsis SpA 90 Syntel Inc. 91 Talentica Software (India) Pvt Ltd 92 Unisys Corporation 93 VADS Business Process Sdn Bhd 94 ValueLabs 95 VanceInfo Technologies 96 Virtusa Corporation 97 WNS Global Services PVT. Ltd 98 Xceed 99 Xchanging Plc 100 Zensar 18  |  September 2012 GlobalServices
2012 GS100 category Lists 2012 GLOBAL SERVICES 100 CATEGORY LISTs Top Global ITO Leaders EPAM Systems Inc. Capgemini Genpact Limited CompuCom Systems Inc. Infotech Enterprises CSC ITC Infotech HCL Technologies Ltd. MindTree Limited Infosys Ltd. Neoris Unisys Neusoft Top Global ADM Leaders VanceInfo Technologies Capgemini Zensar CSC Emerging Mid-Tier Global ADM Leaders HCL Technologies Ltd. iGATE Corporation BLEUM INC. Infosys Ltd. CiT Insigma Technology Co., LTD FPT Software Co. Ltd. Syntel Inc. IBA Group Top Mid-tier ADM Companies InterGlobe Technologies Chinasoft International Ltd. KPIT Cummins Infosystems Ltd. Collabera Inc MERA GlobalServices September 2012  |  19
2012 GS100 category Lists NIIT Technologies Leading Mid-tier Infrastructure Management Vendors ProKarma, Inc Aegis Limited SoftServe, Inc. Chinasoft International Ltd. Sonata Software Limited Collabera Inc Specialty ADM Vendors Genpact Limited Achievo Corporation Insigma Technology Co., LTD Cybage Software Private Limited MindTree Limited DataArt NIIT Technologies Endava UK Limited Sonata Software Limited Exigen Services Leading Global OPD Vendors Freeborders, Inc. EPAM Systems Inc. Nagarro, Inc. GlobalLogic Persistent Systems Limited HCL Technologies Reksoft Infosys ValueLabs Infotech Enterprises Top Global Infrastructure Management Vendors Lionbridge Capgemini Persistent Systems Limited CompuCom Systems Inc. Symphony Teleca Corp CSC VanceInfo Technologies HCL Technologies Ltd. Leading Mid-tier OPD Vendors Infosys Ltd. Beyondsoft Corporation Microland Limited Cybage Software Private Limited 20  |  September 2012 GlobalServices
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2012 GS100 category Lists Globant Leading Engineering Services Vendors Hildebrando Collabera Inc iGATE Corporation HCL Technologies Ltd. Luxoft Infosys Ltd. MindTree Limited Infotech Enterprises Leaders- Global Enterprise Insigma Technology Co., LTD Applications Deployment iSoftStone Information Technology (Group) Capgemini Co., Ltd CSC KPIT Cummins Infosystems Ltd. HCL Technologies Ltd. Neilsoft Limited Infosys Ltd. Global Leaders- Testing Services KPIT Cummins Infosystems Ltd. Capgemini Leaders- Mid-market Enterprise CSC Applications Deployment iGATE Corporation EPAM Systems Inc. Infosys Ltd. Genpact Limited Mid-Tier Leaders- Testing Services Hexaware Technologies Limited Beyondsoft Corporation iGATE Corporation Collabera Inc Insigma Technology Co., LTD EPAM Systems Inc. iSoftStone Information Technology (Group) Co., Ltd Hexaware Technologies Limited Neoris Hildebrando S.A Sonata Software Limited Luxoft VanceInfo Technologies MindTree Limited 22  |  September 2012 GlobalServices
2012 GS100 category Lists Neoris InterGlobe Technologies Top Global BPO Leaders Scicom (MSC) Berhad Aegis Limited Symphony BPO Solutions Sdn Bhd Convergys Corporation Xceed Expert Global Solutions Zensar Technologies Genpact Limited Leading Mid-tier BPO Providers Sitel Operating Corporation Altisource Portfolio Solutions S.A Stream Global Services eClerx Services Ltd. Xchanging Plc EXL Service Holding Inc. Global BPO Challengers HCL Technologies Ltd. Aditya Birla Minacs Worldwide Limited Hinduja Global Solutions Limited Firstsource Solutions Ltd Quatrro Global Services Pvt. Ltd. Infosys Ltd. Serco Global Services NorthgateArinso SPi Global Sutherland Global Services, Inc. Syntel Inc. VADS Business Process Sdn Bhd Global Customer Management WNS Global Services PVT. Ltd Leaders Global BPO Niche Leaders Aditya Birla Minacs Worldwide Limited Corbus, LLC Aegis Limited Datamatics Global Services Limited Capgemini Hexaware Technologies Limited Convergys Corporation Indecomm Global Services (I) Pvt Ltd GlobalServices September 2012  |  23
2012 GS100 category Lists Expert Global Solutions Leading Mid-tier FAO Vendors Firstsource Solutions Ltd Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. Hinduja Global Solutions Limited Insigma Technology Co., LTD Sitel Operating Corporation Quatrro Global Services Pvt. Ltd. VADS Business Process Sdn Bhd Sutherland Global Services, Inc. Mid-tier Customer Management Global Leaders- Industry-specific BPO Vendors Altisource Portfolio Solutions S.A Altisource Portfolio Solutions S.A Genpact Limited CompuCom Systems Inc. Infosys Ltd. HCL Technologies Ltd. Stream Global Services Infosys Ltd. Sutherland Global Services, Inc. Scicom (MSC) Berhad Unisys SPi Global Sutherland Global Services, Inc. Industry-specific BPO Niche Leaders Xceed Aditya Birla Minacs Worldwide Limited Global FAO Vendors Aegis Limited Capgemini Ajuba International EXL Service Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. Infosys Ltd. Hexaware Technologies Limited WNS Global Services Hinduja Global Solutions Limited Xchanging Indecomm Global Services (I) Pvt Ltd 24  |  September 2012 GlobalServices
2012 GS100 category Lists InterGlobe Technologies Capgemini Mindteck (India) Ltd. eClerx Services Ltd. Neusoft Corporation Genpact Limited Quatrro Global Services Pvt. Ltd. SPi Global SPi Global Syntel Inc. Global Procurement Management Leaders- Specialty KPO Leaders Aegis Limited Capgemini Affinity Express Corbus, LLC Chinasoft International Ltd. Genpact Limited CompuCom Systems Inc. HCL Technologies Ltd. Corbus, LLC Infosys Ltd. Datamatics Global Services Limited WNS Global Services HCL Technologies Ltd. Xchanging Infosys Ltd. Global HRO Vendors Insigma Technology Co., LTD Capgemini InterGlobe Technologies NorthgateArinso Quatrro Global Services Pvt. Ltd. Global Knowledge Process Leaders Sutherland Global Services, Inc. Aditya Birla Minacs Worldwide Limited VanceInfo Technologies GlobalServices September 2012  |  25
SpecialReport Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis   |  August 2012 GlobalServices
Segment Analysis ADM Application Development Software development Maintenance : activities in the Application On the Road Development Maintenance (ADM) To Recovery Outsourcing space may get postponed in the current By Sourabh Chandra Pushp downturn, but it will return with a throttle effect when the economy recovers GlobalServices September 2012  |  27
Segment Analysis ADM S oftware development activities in IT market is going the Application Development through a period Maintenance(ADM) Outsourcing space may of massive change. get postponed in the current downturn, As enterprise but it will return with a throttle effect when the software enters a economy recovers. great renaissance IT environment is facing extreme cost pressures period driven with increased expectations and IT executives ex- by mobility, pect more from their ongoing IT applications. ADM cloud computing outsourcing offers the full scope of services that and Software accelerates IT spend return— development, imple- as a Service mentation and management. It drives measurable (SaaS), software improvements in product quality, reducing defect manufacturers density and increasing development productivity. and developers Outsourced ADM contracts are said to improve are increasingly productivity by up to 45 percent while it reduces turning to experts IT-costs by as much as 50 percent. in product ADM outsourcing is a proven means by which development to companies can significantly reduce their costs, help them deliver continuously improve the performance, stability innovation and to and availability of their applications and free up market faster. their existing IT-staff to focus on their strategic Keith Higgins initiatives. It allows customers to reduce the cost chief marketing officer, and maintenance risk of all ongoing applications, Symphony Services while still retaining much needed control of their IT OPEX and core business focus. based offshore vendors like TCS, Infosys, Wipro and The ADM Market HCL, ADM activity still constitutes a large chunk of The ADM market is expected to grow from $51 B in the overall IT outsourcing. Recent years have seen 2010 to approx $63 B by 2014 at a rate of 5.7 percent. the entry of other mid-tier vendors like Neoris, By 2015, Forrester expects the market for devel- Auriga and Softtek who have broken ground with opment services to approach $69B USD. non-India offshore delivery. However, India contin- The key ADM themes that dominated the ues to be the leading offshore location. market in 2011 were Cloud, Agile, Security, Analyt- The in-house delivery of IT application, main- ics. These themes have held sway as providers and tenance and processes are still dominant in 2012- buyers both look at taking advantage of the trans- 2013. Research carried by Horses for Sources forming AMD landscape. The explosion of technol- predicts 95% of ADM buyers reporting positive ogy and digital content, more pervasive network outcomes. ADM outsourcing saw near around 35 connectivity and the continued proliferation of percent inshore activity together with more than smart hand-held devices has completely reshaped 30 percent outsourced activity as sourcing model the ADM market and will continue to dominate. for managing the IT business. Companies have a The ADM segment is still the mainstay of the IT renewed focus on maintenance operations and outsourcing market. Led by US-based majors such servicing existing applications is now of a greater as IBM, Accenture, HP and Cognizant and India- importance to them. 28  |  September 2012 GlobalServices
Segment Analysis ADM The worldwide source ADM market gets in the play easier than ever. Open source and collaboration tools from spending on Dropbox to Linux-Ubuntu and to Cloud platforms the enterprise such as AWS Elastic Beanstalk, application develop- application ers across the globe are expecting this to follow for coming years which clearly means new market software is expected implementations ADM outsourcing. to cross $120.4B ADM Buyers across geographies continued expanding their operations. While ADM market in 2012, with a 4.5 saw larger number of less-value deals, well-known percent increase names in the ADM space signed greater number from 2011 spending of contract renewals. North America continued to hold ace spot with the largest number of ADM of $115.2B deals, next to Europe, on a year-to-year basis. Cloud computing continued to be increasingly adopted in newer ADM deals. ADM Buyers are expecting nothing less than great quality, superior customer service and most Changing Landscape: Enterprise important of all, top-notch solutions. In the coming Applications Software time, more contracts are expected to pass on to “The global marketplace is still experiencing a se- emerging ADM destinations, like Brazil, Russia and ries of conflicting and contrasting economic news Eastern Europe. reports, and the full impact of the economic uncer- The ADM industry is going through a signifi- tainty on the enterprise software markets may not cant transformation in their licensing, delivery and be readily assessable until the end of the first half support models. Despite a trend towards increased of 2012,” asserts Tom Eid, research vice president ADM outsourcing to lower-wage economies, the at Gartner in the official press statement. Spending cost of developing and maintaining applications in 2012 is anticipated to focus on industry-specific can still consume more than half of the total IT applications; upgrades to established, mission-criti- budget. cal software; integrating and securing established The most notable theme that changed almost systems and infrastructure; and software as a serv- all ongoing trends for ADM market is the Cloud. ice (SaaS) deployments representing extensions to, With its on-demand, utility-pay for what you use or replacement of, existing applications and new and resource-sharing model, Cloud has galva- solutions. nized businesses and vendors across the industry According to Gartner, the worldwide spending and ADM market landscape. All the leading ADM on the enterprise application software is expected players have in 2011-12 enabled sections of their to cross $120.4B in 2012, with a 4.5 percent in- portfolio as cloud ADM service offerings with plans crease from 2011 spending of $115.2B. in the pipeline to widen their capability for Cloud With increasing number of organizations ADM market. Other prominent ADM market trends demanding application’s functionality as a cloud- are- Enterprise App Stores and Desktop Services. based services rather than on-premises infrastruc- The Mobile and Cloud application develop- ture, ADM vendors are offering more technology ment is the hottest place to be in the IT industry in as subscription-based solutions and “pay as you the coming year. With the rise of productivity and go” ADM offerings. This is expected to be a much collaboration tools becoming more refined, open needed step by ADM providers positioning them as 30  |  September 2012 GlobalServices
Segment Analysis Cloud When everyone is speaking computing about reducing conversations costs especially are slowly overhead in particular, morphing the application’s ADM market in quality cannot be compromised, and terms of cloud this realization computing has led to a lot of focus application on application platforms maintenance as a discipline over the last few years. more cost-effective and as a way to counter the ef- Ashok Saxena fects of economic recession. SaaS and cloud-based Head, India Engineering services are helping established ADM vendors to Centre, Kronos expand their overall revenue growth. On the account of enhanced SaaS and cloud ap- plication use, enterprise ADM market continues to market is experiencing an ongoing boom in soft- evolve. As tighter capital budgets demand accurate ware development for cloud computing that takes leaner alternatives the ADM growth graph varies advantage of benefits but also issues that will open within geographies. up opportunity for new software development ver- ticals. Industry experts believe, the impact of cloud Cloud and Android Based service on the ADM market will change the selling Application Development and licensing of IT-applications, the way applica- Cloud computing conversations are slowly mor- tion data are handled will undergo a major shift phing the ADM market in terms of cloud comput- which will induce the data driven applications into ing application platforms. Much of its expectation, the mainstream market. cloud-based ADM are becoming an IT norm and However, for software development the un- less of an exception. In the cloud world, software derlying challenges of Cloud will come into sharp development has become more complex in terms focus as Cloud’s increasing benefits and risks will of security, reliability, usability and performance prompt the ADM providers to come to grips with and will keep the software development industry it. busy. Besides, Cloud Android is also accelerating the Ashok Saxena, Head, India Engineering Cen- ADM landscape. The unprecedented growth of An- tre, Kronos opines how the whole ADM space has droid devices and the demand for suitable Android changed to serve the market forces and meeting applications are fueling a huge demand for ADM. end user expectations. Ashok says, “Most of the Ron DuPlain, Freelance Lead Android Mobile cloud migrations we see today are applications Web Engineer, says, “Today when everything is for physical infrastructure and are now taking full centered around mobility, application develop- advantage of the cloud possibilities. The ADM ment has taken vital transformation, both in terms 32  |  September 2012 GlobalServices
ADM of development and strategy. Application develop- estimated at a five-year compound annual growth ment companies are focused to help subscribers rate (CAGR) of 15.4% through 2015. While the U.S. realize the potential of rapidly evolving mobile has led other regions in adoption of maintenance technologies.” services, in terms of both traditional and newer cloud-based maintenance services, there is an Application Maintenance and increase in regional interest and adoption of these Testing services in Canada, Latin America, Western Europe, All application products need sufficient mainte- and parts of Asia-Pacific. nance and both–investors and developers tend to Independent maintenance and testing for appli- heavily focus on it. cations is growing at 40 to 50 percent globally and There has been a lot of innovation in ADM with expected growth of about 35 to 40 percent space and several maintenance tools and processes in offshore locations. While various industry report have evolved which enhanced the maintenance forecast various geographies to evolve as major phase which in turn translates the overall quality ADM locations. India has grown to become the larg- of the application. est destination for outsourcing of software mainte- The market for discrete application mainte- nance and testing services, accounting for 32 per- nance worldwide is expected to experience solid cent of the total global ADM outsourcing share. The growth as cloud and mobility drive next phase of application maintenance industry for India is grow- evolution, according to a latest report from IDC ing, export revenues and the number of employees research. IDC estimates that global maintenance have doubled over the last four years in domestic and testing services spending reached $9.4 B in space which is projected to cross $1.5B by 2020. It’s 2010, with projections for worldwide growth quite interesting to note that, US alone spends a GlobalServices September 2012  |  33
Segment Analysis ADM total of $59B on software maintenance. Of this total There has been spend, $13 B is outsourced as a service to the Asian a drastic shift countries, India in particular. The ADM market has in the amount demonstrated a CAGR of 19-23 percent year-on-year of development growth, in comparison to 47 percent by the inde- being done in the pendent maintenance and testing services. integration and Kalyana Rao Konda, Vice President, AppLabs, testing stages says-”The consumer demands are leading to in the lifecycle technology advancements and fierce competition of an IT project, between providers. The survival of providers has compared to what become subjective to the quality of the product was happening with superior service. Software maintenance and ten years back. testing plays a vital role in providing reliability This has resulted and quality to consumers to ensure that they don’t in an increased have a bad experience on using or buying the demand for product they like.” services on Data The current competitive environment and management/ consumer demand for sophisticated applications is BI/Analytics, putting increased pressure on businesses to deliver Integration and quality apps at reduced costs and within shorter Testing sides of time period. This ‘no scope for error’ environment the business, has increased the need for effective software test- which will ing. Today, it has become one of the fastest grow- continue to be ing areas of the corporate IT expenditure. On the key opportunity other hand, meeting customer expectations has areas for all now become a challenge for enterprises across all organizations. the industries due to the faster delivery cycles and Krishnamurthy R, increasingly competitive landscape. Senior Vice President Enterprises operating across various industries Head-Global Delivery, and geographies have now realized the need to Collabera deliver quality products/applications and services to meet customer expectations. of some of these massive movements. There are a Conclusion bewildering range of technologies on the market With the economy of developed countries stagnat- today. The good news is that the service industry is ing and the threat of recession retuning to major becoming more and more specialized. Companies global players, companies will continue to rely on that want to take advantage of the hottest initia- software development outsourcing and offshoring tives today – be they Saas, cloud or enterprise mobil- for cost control, lean operations and scalability in ity – can get all the assistance they need. The right 2012. software development service providers will have As cloud, SaaS, mobility and other trends fun- in-depth knowledge of all these platforms and the damentally re-shape software development, there competency to deploy them quickly and at a com- is a large, growing market for specialized product petitive price. They will also offer outcome-based development specialists. 2012 is just the beginning engagement models that fit each client’s needs. 34  |  September 2012 GlobalServices
ADM Application Development Maintenance Top Global ADM Leaders Capgemini Infosys Ltd. HCL Technologies Ltd. Syntel Inc. Insigma Technology Co., Ltd iGATE Corporation CSC Top Mid-tier ADM Companies Chinasoft International Ltd. EPAM Systems Inc. Infotech Enterprises MindTree Limited Neoris Neusoft ITC Infotech VanceInfo Technologies Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Zensar Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Collabera Inc Genpact Limited Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance GlobalServices Application Development Maintenance September 2012  |  35
Advertorial Stretching Value. Scientifically. T o be able to ‘differentiate’ innovatively and The second variable is the fact-file of the prospec- effectively holds a key to attaining global tive vendor. The overlap between these two vari- leadership in the business world. The natu- ables determines whether the vendor qualifies for ral reflex of a brick mortar company is to the next step in evaluation. The third variable is the adopt a customer-centric ‘differentiator’. IT Service cost—the ratio of the fact-file vs. cost—which deter- companies behave a little different. The fiercely mines the probability of deal closure. contested battle for talent forces them to oscillate Unfortunately, there is one more key variable that between customer centric and employee-centric dif- is often overlooked. This variable resides between ferentiators. ”Pick any one of the two sides, and then the second and third variable; it represents the effi- inherit the one from ciency of the vendor to the other,” goes the leverage the fact-file hypothesis! into relevant deliveries. This differentiat- The customer’s loy- ing tactic certifies alties are not with the the vendor’s dual vendor’s fact-file but robustness. The seeds tied to satisfactory of Cybage thought project deliveries at a leadership are sown reasonable cost. In the in the innovativeness IT business world, this of our ‘differentia- delivery excellence tor’. We believe that is broadly measured the organization’s under the following differentiator should attribute equation: not be inherited from the visible Quality, Speed, Consistency, Respon- aesthetics but from the grass root siveness, Attrition Risk, Scalability, implementation of productivities. and Value-add—dividends captured The customer-centric and employee-centric dif- with ‘Cost’ in the denominator. ferentiators are like leaves and flowers with great Cybage thought leadership is rooted in the visual appeal but all the flourish and greenery is innovation applied to stretch ‘productivity’ of all at the mercy of the root’s productivity to absorb the above mentioned attributes that together lead nourishment. to customer’s delight and employee’s rewards. To appreciate this pivotal role of productivity, The above attribute equation is comprehensively one needs to dig a little deeper where business optimized, implemented, and internalized organi- partnerships are fortified. Generally, there are three zation-wide at Cybage through this sophisticated variables that a customer juggles with to close on business management software system called the a vendor. The first variable is the overall IT needs. ExcelShore® Model of Operational Excellence.
Segment Analysis OPD Market is Expected to Reach $19B By 2015, technology analyst Forrester expects the market for product By Smriti Sharma development services to approach $19B T he business of devel- and market influence oping new and solu- while staying away from tion-customized software marketing and development is the nucleus of thriving risk, it imperative to engineer the technology industry. Product develop- right product, manage it across the ment plays a significant role in getting various phases of its lifecycle, manage economic returns as well as establishing market the copious risks, deliver the product faster to the influence. However, whilst introducing a new prod- market and retaining the capacity to innovate the uct in the market a company is also putting itself at product. The right product strategy is the only way marketing and development risk. to success in the business of software products. To ensure a company wins economic returns Product mangers have repeatedly taken their 38  |  September 2012 GlobalServices
OPD companies through the journey of transition from There are a traditional product development to value develop- bewildering range ment. This process calls for a lot more innovation of technologies and this occurs during the stage of engineering. on the market Still the question remains why outsource? It today. The good is outsourced, much like other services, for the news is that the reasons of getting intellectual property in the service industry form of principles of excellence, best practices, is becoming methodologies, process templates, engineering more and more roadmaps, monitoring tools, quality assurance specialized. procedures- carefully applied across various Companies that stages of product development, further resulting want to take in innovation. advantage of the Large Independent Software Vendors (ISVs) hottest initiatives are creating innovation across various domains today can get all such as Cloud enablement, SaaS, Product Lifestyle the assistance they Management, etc. need. This year the product development space is Keith Higgins expected to become increasingly fragmented chief marketing officer, and specialized. Mobility, cloud computing and Symphony Services Software as a Service (SaaS) continue to be the drivers of this industry. Software manufacturers are seeking advice from experts to assist them in also offer outcome-based engagement models driving innovation to market faster and at a lower that fit each client’s needs.” cost. Experts are roped in for specific initiatives revolving around technology, for example, mobil- Market Scenario ity, cloud and SaaS, their industry, business and During pre-crisis times, IT outsourcing was the most vertical segments. frequently adopted strategy by large companies. As software development is re-shaped by Today, ITO practice has found more support amongst cloud, SaaS, mobility, the demand for specialized the mid-market. As for this segment, cost as well as product development is increasing. Keith Higgins, access to skills and services is extremely essential. chief marketing officer, Symphony Services, stated This market segment is also home to some of the in another interview, “2012 is just the begin- most exciting and current technology developments. ning of some of these massive movements. There Taking advantage of this opportunity some of the are a bewildering range of technologies on the independent software vendors are expanding their market today. The good news is that the service footprints in this space. Software companies who industry is becoming more and more specialized. have moved to cloud computing and SaaS have wit- Companies that want to take advantage of the nessed significantly larger opportunities. hottest initiatives today – be they Saas, cloud The pricing models offered by vendors are or enterprise mobility – can get all the assist- outcome based pricing, revenue share pricing ance they need. The right software development and risk reward pricing. These pricing models service providers will have in-depth knowledge of add to the attractiveness of partnerships. In- all these platforms and the competency to deploy creasingly, buyers are employing risk-reward them quickly and at a competitive price. They will partnership model, where the vendors are GlobalServices September 2012  |  39
Segment Analysis OPD willing to absorb a certain amount of busi- of software development and IT resources, avail- ness model risk, across the lifecycle of products. ability of IT talent pool, positive references from OPDs are expanding in Asia and Europe. The the fellow companies/local business community, challenges that companies who have not made to geographical and cultural proximity, strong re- the outsourcing map of product development face search and development (RD) legacy, political and are poor client-vendor communication, delayed economic stability, Intellectual Property (IP) secu- project delivery, cultural differences etc. rity, proficient English language skills etc. In order to tackle these issues, face-to-face Gartner’s study Predicts 2010: Agile and Cloud communication with their vendor’s project man- Impact Application Development Directions, high- agement and project teams should be increased, lighted, “By 2012 ‘agile development methods will employing additional valuable resources, switching be utilized in 80% of all software development to alternative software development methodol- projects’. Although Scrum will continue gaining in ogy, bringing in assistance (advisories) to enhance popularity over the coming years, organizations vendor relationships, encouraging partnering with will not be successful in their transition unless they different vendors to offer more cost-effective en- move toward a team-focused culture. Very few gagement, etc. organizations use a pure-Scrum approach and most Buyers while zeroing upon a geography should rely on a hybrid approach (waterfall and Agile). keep in mind the following pointers: low costs Organizations struggle to implement true collabo- 40  |  September 2012 GlobalServices
Segment Analysis OPD ration in the context of globally distributed teams. to call on the best talent available. Incumbency is A situation that has amplified in recent years with no longer the advantage it once was.” outsourcing and offshoring of software develop- 3. According to a recent Gartner survey, 30 per- ment projects. On the other hand, teams who cent of large organizations cited enterprise have successfully moved to Agile see productivity mobility as their top business priority for 2012. improvements especially in ‘the flexibility of the Higgins explains, in the past, the enterprise development team to respond to shifting require- tended to be a closed and homogenous place. ments’. This is especially true for web-based ap- Employees would typically use one type of plication developments where rapid responses to a device – like a Blackberry – to communicate changing environment are critical.” amongst themselves. Enterprises now have to Organizations need to make use of key agile grapple with a dizzying array of business and practices and invest in training and supportive connected mobile devices, all of which need tools’ infrastructure. Those who do not will end in to communicate seamlessly and securely with long-term declines in quality and productivity. one another. By outsourcing their enterprise software mobility department, organizations Top Trends are trying to address this challenge. This year, a 1. Cloud, SaaS and mobility has resulted in a lot large number of companies are buying enter- of investments and companies have started prise mobility as a managed service. generating new tools and technology. Many 4. Gartner predicts that 75 percent of all comput- organizations want to use these tools; however, ing will be in public clouds by the year 2020. they do not have domain knowledge or financ- Cloud computing has revolutionized the man- es to integrate the best ones. Thus, companies ner in which companies operate. The manner are moving to outsourcing partners to get the in which companies employ cloud technology specialist assistance they require. Over the next is changing too. A mixture of cloud applica- 12 months, it is expected that companies will tions, platforms and infrastructure is sourced concentrate on building best-in-class technolo- by organizations. As cloud-based companies gies for their clients. They will then use these are becoming more specialized, they are innovative technologies to create products for encapsulating cloud-based tools in their of- their customers as trusted partners. ferings. There are approximately two million 2. According to the global consultancy Zinnov, 70 users of Salesforce.com around the world and percent of ISVs look at industry benchmarks every 25 million users of Google Apps. Company’s year to re-negotiate contracts with their services products assist software developers to build partner. Increasingly in 2012 ISVs will be looking private development clouds. Software devel- to add rigorous Service Level Agreements (SLAs) oper and other outcome-based conditions to the com- 5. The high adopted rate of personal health man- mercial engagement model with their services agement systems has laid eggs for an increased partners. demand of new applications. Higgins predicted, Higgins opined, “We predict this will create a sig- “By 2015, as many as 500 million smartphones nificant opportunity for specialist service provid- will have a health-related application on them. ers, as more ISVs will move to a multi-source mod- The Veterans Administration in the US is plan- el involving a spectrum of trusted partners. ISVs ning to rollout 100,000 iPAD tablets across 152 will actively seek out specialist help to address hospitals. Next year, we expect to see a host of specific pain points in their businesses, speed in- new vendors enter the market with innovative novation and reduce costs. They will not hesitate connected healthcare solutions.”. 42  |  September 2012 GlobalServices
OPD Outsourced Product Development Leading Global OPD Vendors Leading Mid-tier OPD Vendors EPAM Systems Inc. Beyondsoft Corporation GlobalLogic Cybage Software Private Limited HCL Technologies Globant Infosys Hildebrando Infotech Enterprises iGATE Corporation Lionbridge Luxoft Persistent Systems Limited MindTree Limited Symphony Teleca Corp VanceInfo Technologies GlobalServices September 2012  |  43
A City of Financial Delivery Center Hangzhou, China H angzhou is located at southern wing of the Yangtze Delta region, which is the most prosperous area in Eastern China; and also the hub of transportation for airport, rail, road and inner-river in southeast China. As the provincial capital city of Zhejiang, Hangzhou is a city with unique charm and extraordinary potential, enjoyed a long history and culture, unique geographical advantage, healthy natural environment, abundant science and education resources, and solid economic foundation. It ranked No.1 in “China mainland Best commercial City Ranking” by Forbes magazine, reelected “China’s Happiest Cities” for eight consecutive years, China’s top ten Creative City, China’s top ten Dynamic City and top ten low carbon Cities, the highest honor of the model city of Chinese people’s livelihood and achievements. The city will take scientific development as the main theme and focus on adjusting the economic structures. Efforts will be put in to enrich people and increase the city’s competitiveness and social harmony. The urban-rural integration and internationalization strategy being the major means, the city will prioritize the well-being of citizens, emphasize the environmental protection, strengthen its innovative power, support its real economies, boost its cultural industries and uphold its open-up policy. The urban-rural integration and internationalization mark high-level of urbanization, which also sets path for and facilitates the sustainable development. The two tasks must be embodied in every respect of the city’s social and economic development to subsequently optimize the allocation of production factors, invigorate the economic development, expand the development space and upgrade the development level, as a result of which the city’s people will share the modern civilization and happy lives. To prioritize the well-being of citizens, the city will be dedicated to solving problems and addressing difficulties in the aim of enriching and benefiting people. To protect the environment, the city will aim to create the first-class ecological, living, legal, administrative and business environment in order to improve its advantage in this aspect. International Financial Outsourcing Center
To strengthen the innovative power, the city will promote the innovation in idea, technology, system, culture and service so as to improve its creativity and development power. To support its real economies, the city will view real economies as the cornerstone, and continuously improve the core competitiveness through industrial structure upgrading. To boost the cultural industries, the city will continue to explore its cultures and traditions in order to carry along and broaden. In addition, the city will seek to realize the cultural prosperity and development in a major degree for the improvement of soft power. To uphold the open-up, the city will widen and broaden the degree of opening up, and view open-up as the power of reform, development and innovation. In recent years, Hangzhou has issued a series of policies to focus on the implementation of the innovation-driven strategy, accelerate the development of innovative economy, and speed the development of Hangzhou ten major industries —— cultural and creative, tourism and leisure, financial services, e-commerce, information software, advanced equipment manufacturing industry, the Internet of Tings, biomedicine, energy saving, new energy; especially, vigorously promoted the priority development of service industry, optimizing the development, and the main engine role of the services sector in the Hangzhou Economic Development was more prominent. By the end of 2011, there are 22 Hangzhou enterprises among the top 500 Chinese enterprises, 30 companies among the top 500 Chinese manufacturing enterprises, 37 enterprises among the top 500 Chinese service enterprises, 56 private enterprises among the top 500 private enterprises in China; more than 20 national services industry high-tech service industry base, the National Electronic Information Industry Base, and the Hangzhou national software industry base, etc. Demonstration City of Chinasourcing Hangzhou
segment analysis INFRASTRUCTURE MANAGEMENT OUTSOURCING: CLOUD COMES WITH A PROMISE By Sourabh Chandra Pushp High volatile economic downturn coupled with the ease of cloud delivery is resulting in a surge of demand for IM outsourcing 46  |  September 2012 GlobalServices
IMS Two prominent Most of services offered by trends that will software vendors shape the IM today will soon landscape are “As- be offered as ‘as- a-Service’ because a-Service” Offerings it gives cost and Enterprise efficiency which is acceptable Services to most of the customers. As such, enterprises A lthough, the global macroeconomic will eventually uncertainty will result in sluggish IM be forced to outsourcing activity, the current infra- standardize their structure market is evolving rapidly. infrastructure Combined with advances in standards-based infra- management structure, data center transformation, and utility- processes. based cloud computing, the outlook for IM market Brian J Manning continues to be dynamic and exciting. President Managing The Global IM market is expected to touch $180 Director, CSC India B by 2013 and to $355 B by 2016 from $269 B in 2011. Worldwide Remote Infrastructure Manage- ment (RIM) Market size is also expected to be in ture in particular will witness a significant growth. the mark of $95 -$108 B. This is accompanied by This is supported by the fact- a significant number worldwide IT spending forecast to total $3.7 tril- of IT contracts is coming to end. Analysts estimate, lion in 2012, a 2.5 percent increase from 2011. the TCV for the deals that would come to an end in Emerging markets will generate $1.22 trillion next 18 months is around US$85 B. “Infrastructure in IT spending in 2012, representing more than outsourcing, data center and network tower deals 31 percent of the worldwide total. The emerging make up a significant portion of the ITO contracts regions of Asia/Pacific, Latin America, the Middle expiring in the near term,” says Ross Tisnovsky, East and Central and Eastern Europe, continue to senior vice president, Everest Group. “Disruptive show positive IM outsourcing momentum. And, next generation technologies, such as cloud com- this will see half of emerging market IT spending puting, will introduce new benefits and challenges activity representing nearly $658 B for the year that the market didn’t see five years ago. As buy- 2012. This reasons why the market remain far from ers are looking for more than just cost savings.” saturated. Infrastructure outsourcing constitutes some of the largest ITO contracts coming to term in both North Deals and Contracts America and Western Europe. Cloud computing will Most of the IM deals over the last few months have clear visible impact on IM market as Remote saw a renewal in 2011-12. Large deals continue to infrastructure management outsourcing (RIMO) skew the average deal size. North America saw the as a model is maturing quickly and entering into a maximum activity for deals and contracts followed phase of sustained growth. by UK and Rest of Europe. The IT market, Infrastruc- The buyers’ ITO spending shift will be towards GlobalServices September 2012  |  47
segment analysis IMS the smaller deals which will challenge the margin coming with multiple infrastructure services models pressures for service providers. It’s very obvious and competing with traditional IT infrastructure that the IM deals will increasingly be driven by outsourcing firms. This trend will become stronger cloud and RIMO. In the past, technical and percep- in 2012. tion issues caused cloud-infrastructure adoption Two prominent trends that will shape the IM challenges. But, things have changed now and landscape are “As-a-Service” Offerings and Enter- investments in new innovative solutions with hard prise Services. Both trends are increasingly becom- focus to boost the IM market. ing the norm for Infrastructure services and have Infrastructure spending will be driven by larger gained a considerable adoption momentum. Cloud buyers and will focus on outsourcing economics infrastructure trend has have been shaping up and service provider consolidation. The BFSI quite aggressively and service providers have vertical in particular, will con- already embraced while clients are tinue to be the dominant adopting it. infrastructure segment; Infrastructure outsourc- other verticals such as ing segment has consist- healthcare and hos- ently been the fastest pitality will also growing segment witness strong in- within IT services- frastructure ac- share in the over- tivity. Speaking all IT services of geogra- segment has phies, North increased from America, will about 15 per continue to cent in FY2008 dominate to about 17 per whereas Asia cent in FY2012. Pacific is ex- pected to grow Cloud much faster. Computing Comes with a Trends That will Promise Reshape the IM Cloud scripts the story of Landscape Infrastructure Management IT infrastructure outsourcing (IM) and there is a reason has been one of the mainstays for that. Cloud comput- of IT outsourcing industry. ing is fast emerging on the Over the years, its composition IT infrastructure scenario and is has changed significantly and likely to play a disruptive role, with traditional infrastructure model maximum impact visible initially in data has undergone a massive change. center and applications projects. With advanced technologies remote As cloud emerges as a new stor- server management has become the age market, competition is increas- de facto standard for infrastructure ing with leading infrastructure landscape. This has led to new names vendors. Although the external 48  |  September 2012 GlobalServices
segment analysis private cloud infrastructure market is still in it’s Cloud approach nascent stage, both small and large enterprises are to infrastructure utilizing it heavily and are the primary consumers will change of Cloud infrastructure. the traditional By 2016, at least 50 percent of enterprise us- landscape as ers will rely primarily on enterprise-mobile client they offer a instead of a desktop client which means a clear much cheaper shift in the traditional IT infrastructure. It’s well alternative supported by the fact that more than one third to traditional of the digital data would be stored on the cloud infrastructure– infrastructure by 2016. In 2011 just 7 percent of some businesses consumer’s digital data was stored in the Cloud can cut their which will grow phenomenally to whooping 36 operational costs percent in 2016. by as much as 85 Recent IDC cloud research shows that world- percent if they wide revenue from public IT cloud services ex- opt for cloud ceeded $21.5 B in 2010 and will reach $72.9 B in infrastructure. 2015, representing a compound annual growth Sharmila Sahani rate (CAGR) of 27.6percent. This rapid growth rate Mulligan, is over four times the projected growth for the Founder CEO, worldwide IT market as a whole (6.7percent). By ClearStory Data 2015, one of every seven dollars spent on pack- aged software, server, and storage offerings will be through the public cloud model. The cloud move- Brian J Manning, President and Managing ment is about much more than the cloud. Analysts Director, CSC India, says “While no one can pre- predict an aggregation of Cloud offerings located dict exactly how the IT services marketplace will in the same data center to provide appropriate change, we’re confident that client demand will levels of performance, security, manageability and grow very rapidly for cloud computing. In 2012, availability. the global market for cloud services is predicted The cloud is no longer a competitive advantage, to surge to US$148.8 B in 2014. This shows that but has become an operational necessity. Results there will be a huge transformation in the business from a recent KPMG survey show that 81percent model of any organization.” of businesses are either planning their initial cloud In the year 2012, the impact of the shift to computing forays, are in early or advanced stages cloud computing will become apparent. One of of experimentation or have full implementations. the first obvious effects will be the cloud-driven But before moving to the cloud, businesses first transformation of whole industries. Cloud applica- need to examine their current IT infrastructure, us- tion platform/PaaS wars will intensify. Phil Fersht, age and needs. founder of outsourcing consultancy Horses for Worldwide software-as-a-service (SaaS) revenue Sources, calls cloud services the foundation for is forecast to reach $14.5 B in 2012, a 17.9 percent next-generation enterprise sourcing solutions. He increase from 2011 revenue of $12.3 B, according believes cloud services will make traditional deliv- to Gartner, Inc. SaaS-based delivery will experience ery of IT services more efficient and cost-effective. healthy growth through 2015, when worldwide He adds, “This new class of outsourcing has the po- revenue is projected to reach $22.1 B. tential to unlock tremendous value for customers.” 50  |  September 2012 GlobalServices
IMS The global cal. Also, it provides massive compute power that previously would have only been affordable for infrastructure select companies.” market will grow Large Internet companies were the first to 4.4 percent and leverage the power of the cloud infrastructure. By virtue of their business, they had the easiest reach £463B by 2015 time understanding the pros and cons of the cloud and will hit a 4.5 infrastructure, and they already had the talent in- house to take advantage of it. per cent growth rate by 2013 Cloud Predictions The ability to integrate business applications on smartphone, tablets and other wireless devices is predicted to accelerate SaaS adoption in the The growth of platform as a service (PaaS) and corporate business environment. Forrester forecasts cloud computing are driving infrastructure market that the global market for cloud computing will forward. Organizations have now passed the first grow from $40.7 B in 2011 to more than $241 B in stages and are implementing cloud architectures 2020. The total size of the public cloud market will for their enterprise and as a result, the traditional grow from $25.5 B in 2011 to $159.3 B in 2020. IDC role of the IT infrastructure is changing. predicts that 14.4percent of applications spending On the question of changing role of infrastruc- will be SaaS-based in the same time period and the ture services, Raman Sapra, Executive Director- cloud computing marketplace will reach $16.7B in Strategy and MA, Applications BPO, Dell Serv- revenue by 2013, a compound annual growth rate ices asserts how cloud will play a game changer (CAGR) of 24 percent. role together with enterprise mobility and analyt- ics. “With the rise of cloud, infrastructure manage- SMB and Cloud ment services portfolio is bound to get a complete Gone are the days of large enterprises holding the makeover. Emphasis will lie more onto using cloud keys to enterprise-class IT and services. The cloud infrastructure to overhaul the scope and economics levels the playing field for SMBs. Today’s SMBs of traditional infrastructure services,” says Raman. believes in the cloudy abilities. In an independ- The way in which companies utilise cloud infra- ent survey by Microsoft, 76 Percent of SMBs agree structure is changing too. Organisations are now that they are the backbone of the economy and sourcing complete business solutions through the almost half of them (53 Percent) expect sales figure combination of cloud applications, platforms and to grow within next 12-18 months. But, the most infrastructure. Cloud approach to infrastructure important finding remains the awareness of the will change the traditional landscape as they offer Cloud Computing. Majority of them are increasingly a much cheaper alternative to traditional infra- moving to the cloud. structure– some businesses can cut their opera- USA-SMB cloud services market grew 25 percent tional costs by as much as 85 percent if they opt for in 2011 and is asserted to reach $15.1B. Globally, cloud infrastructure. that figure is set to hit $68B by 2014, represent- Sharmila Sahani Mulligan, founder and ing a CAGR of 26 percent. SMB Cloud Market in CEO,ClearStory Data, asserts, “The cloud makes it Asia-Pacific is expected to reach US$16.5B in 2012. possible to store and access data from anywhere, The market for cloud solutions will grow at more so it can really benefit almost anyone or any verti- than twice the rate of traditional ICT technologies GlobalServices September 2012  |  51
segment analysis IMS in 2011 in these markets. In addition, this region As the firms is expected to lead worldwide expansion of cloud across the globe computing markets. scours the Cloud computing is a method to deliver the landscape for crucial IT needs for any small and midsize busi- ways to focus nesses, for say-cheaper operational infrastructure on their core and opex agility. The most commonly used cloud competencies services are email, instant messaging, voice com- and maintain munications, and backup. their competitive The number of very small companies (2-10 edge, the most employees) using paid cloud services will triple in significant the next three years. Almost half of them agree value drivers in that cloud computing is going to become more IT outsourcing important for businesses such as theirs. Speaking of is remote the worldwide public cloud services market, SMBs infrastructure will drive the market over the next five years. Total management cloud market both private and public is expected to (RIM) - the off- reach $85B by 2015. In this time frame, the growth premise, often will be driven by SMB consumption of cloud. off-continent, The biggest motivators for migration to the management of cloud among SMBs are to save money, followed IT infrastructure. by increases in productivity. Cloud allows SMBs to Ben Trowbridge gain access to infrastructure and other IT technolo- CEO-Alsbridge gies that were only leveled for big IT enterprises. By utilizing cloud services, SMBs can stop worrying about the details of installation and operations for growth. External realities such as the advent of the sophisticated infrastructure and services. SMBs can big data era and greatly enhanced role of mobility gain access to the high end IT services that requires in enterprises will shape solutions that providers negligible amount of IT infrastructure. propose on renewed contracts. Recent deal sign- Gartner predicts Small Medium Business ings are indicative of new trends, such as increas- (SMB) in the insurance industry will have a higher ing popularity of multi-sourcing, decline of “lift rate of cloud adoption compared to their enter- shift” models, reinvigorated attention to pricing prise counterparts. models, and increased importance accorded to analytics. State of the RIM Market Offshoring of infrastructure management In the recent years, a major development has been labor typically realizes a savings of 5 to 20 percent the convergence of the Remote Infrastructure compared with U.S. labor rates. But do not assume Management Outsourcing (RIMO) and traditional these savings are instantaneous. RIM services, as Infrastructure Outsourcing (IO) models. According with outsourcing in general, typically provide a to Everest study on Infrastructure Management, the gradual saving curve as delivery maturity is at- RIMO model is gaining wider acceptance across the tained, usually within the first two years of the buyers, which in turn is witnessed by an increased engagement. number of IM deals. RIMO, as a model is matur- The banking, financial services, and insurance ing quickly and entering into a phase of sustained industries are leading RIM offshoring growth. 52  |  September 2012 GlobalServices
segment analysis IMS hibit their adoption of global RIM. The healthcare industry has concerns with the data security and integrity being provided in foreign, nondomestic locations. Healthcare also has much more compli- cated revenue and cost recovery business models, which has some influence on the adoption of global RIM. Even before the arrival of the glo- bal economic downturn, senior business leaders were being challenged to increase prof- itability and efficiency and to drive operational costs down. The allure of outsourcing has always included the prospect of cost reduction through efficiencies and labor arbitrage. Not surprisingly, the increasing interest in RIM services is essential- ly due to the prospect of reducing operational costs and increasing productivity in one IT function. Future An open technology and business envi- ronment, enabled by cloud computing and new outsourcing models, is creating a radically new These industries often referred to as the “financial approach to the present infrastructure market. services industry,” have been early. RIM service Most of the global infrastructure services outsourc- providers have recognized the opportunity to offer ing providers have a strong vision and strategy for follow-the-sun delivery models, highly distributed cloud-based services for future offerings. and flexible monitoring and support models, and According to the latest report by technology in those cases where automation has not replaced analyst firm Ovum, the global infrastructure mar- labor arbitrage, labor cost savings. ket will grow 4.4 per cent by 2015. Ovum’s Infra- The industries that are slow to move toward structure market trends research suggests that it global RIM are those that have the lowest transac- will reach £463 B by 2015 and will hit a 4.5 per cent tion volumes, such as media and entertainment growth rate by 2013. and professional services. Other industries, such as Although 2011 growth is still not back to pre-re- aerospace and defense and the public sectors, face cessionary levels, the market will return to healthy various degrees of government regulations that in- growth of over 4.5 per cent in 2013. 54  |  September 2012 GlobalServices
IMS INFRASTRUCTURE MANAGEMENT OUTSOURCING Top Global Infrastructure Leading Mid-tier Infrastructure Management Vendors Management Vendors HCL Technologies Ltd. Insigma Technology Co., LTD CompuCom Systems Inc. Sonata Software Limited Infosys Ltd. NIIT Technologies Microland Limited Collabera Inc CSC Aegis Limited Capgemini MindTree Limited Genpact Limited Chinasoft International Ltd. Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance GlobalServices Application Development Maintenance September 2012  |  55
Segment Analysis IT Outsourcing Status Quo Won’t Sustain By Sourabh Chandra Pushp Get ready for a post recession era where IT outsourcing will be adopted by organizations to help them work through financial challenges. Market will not only adopt itself to the new delivery models for user focused value of outsourcing services, the longer known status quo of IT Outsourcing market won’t sustain anymore 56  |  September 2012 GlobalServices
IT Outsourcing W hile an economic slowdown places In 2012, outsourcing a greater need on organizations will continue for process excellence and reduced to see growth process costs, and organizations driven by cost typically recognize this, it also enhances all the pressure, increasing main inhibitors to IT outsourcing. complexity to In the mature economies, the IT outsourcing deliver the latest market focus is returning even more strongly to technologies and cost reduction while minimizing client investment the need to align and this market shift leads to massive end-to-end scalability to process service delivery transformations. market demand. Andrew Kokes, vice president, global product Andrew Kokes management, Sitel articulated, “In 2012, outsourc- vice president, global product ing will continue to see growth driven by cost management, Sitel pressure, increasing complexity to deliver the latest technologies and the need to align scalability to market demand.” Significant increase in IT spends in US and Europe economic growth could suppress in outsourcing are likely to come from emerging IT spends whereas, the emerging economies such companies and economies. These companies and as India will account for $1.013T. economies have matured to a level where they Chirajeet Sengupta, research director, Everest can significantly upgrade their IT infrastructure or Group voiced, “Instead of having a multitude of want to get there soon enough by leveraging best contracts spread all over, buyers are increasingly in class IT. In addition, enterprise mobility, cloud trying to consolidate their portfolio and implement computing, managed services, machine-to-machine global contracts with uniform standard SLA lead- communications, product engineering service are ing to a fair amount of centralization of spends some of the areas that will witness growth. and consequently cost savings for the client.” Sengupta believes Infrastructure Outsourcing IT Outsourcing Market Deals is one of the areas where we can expect to see a Worldwide IT outsourcing revenue totaled $246.6B change, as there is a steady increase in offshoring. in 2011, a 7.8 percent increase from 2010 revenue Traditional onshore infrastructure support services of $228.7B, according to Gartner, Inc. However, the are going to go down. This entire wave of consoli- market for IT Outsourcing will go through major dation will evolve a fair degree of system integra- transitions in 2012-13. A spending slowdown post tion, process improvement and process optimiza- recession bounce-back of 2010-11 accompanied by tion. These three are some of the areas that are debt-related macroeconomic conditions of Europe expected to go up. and potentially the US will accelerate the business The outlook for 2013 is slightly brighter with in- shift from older technologies and providers to new dependent research forecasting that software will names. Independent research shows, worldwide IT lead the tech market with 5.5 percent growth, fol- spending is on pace to reach $3.6T in 2012, a 3 per- lowed by IT outsourcing with 3.4 percent growth. cent increase from 2011 spending of $3.5 trillion. According to a new forecast from Forrester, Europe Global tech purchases will be $2,122B in 2012, will see 1.2 percent growth in IT purchases in 2012. which is up by Just 5 percent when compared to In terms of US dollars, the European market will previous year. US, Japan and China are said to be shrink by almost 6 percent, while the US and Asia on the top for IT purchases in 2012. The slowdown Pacific will both grow by more than 6 percent. The GlobalServices September 2012  |  57
Segment Analysis IT Outsourcing activity in mega-deals (TCV of $1B or contracts with The five factors that affect the ACV of $100M or more). “The outsourcing market showed improvement IT Outsourcing deals Dave Brown, KPMG during the second quarter on both a year-over- year and sequential basis,” John Keppel, Partner  Partnership and innovation: Look for your President, Research and Managed Services, ISG. service provider to step up as a true partner on He further added, however, the quarter’s growth innovation. That could mean making investments was not enough to prevent a first-half decline to solve problems or providing industry insights to help you excel against the competition. in both value and activity from last year’s record  Cloud computing: Cloud solutions are not one- performance. By function area, IT outsourcing size-fits-all, so make sure your contract has the contracts accounted for $13.1B in second-quar- right solution for your company’s needs. ter-2012 TCV, a rise of 6 percent year-over-year  Flexibility: As your business continually adapts but a decline of 5 percent sequentially. By region to the marketplace, your ITO agreements and geographic distributions, Asia Pacific turned should be adaptable as well – in terms of the commercial offering, contract terms, staffing and out to be the fastest growth location during the delivery location. second quarter of 2012, driven by activity the  Price: It will always be important, but keep in Telecom Media and Banking, Financial Services mind that next-generation contracts usually Insurance (BFSI) verticals and Greater China don’t offer as much opportunity for price and Australia New Zealand sub-regions. Speak- reductions as the first time around. Remember that a myopic focus on price can threaten the ing of other regions, America’s TCV of $8.3B rose quality of operations. 6 percent over the same quarter a year ago but  Cross-functional service delivery: Consider dropped 6 percent from the first quarter. Europe how IT services can drive new value by improving and Middle East Africa (EMEA) registered $8.4B back-office functions throughout the enterprise. in TCV, a drop of 21 percent year-over-year and 11 Source: blog.equaterra.com percent sequentially. ISG-TPI anticipates a soft third quarter for IT outsourcing business whereas analysts believe study suggests the sluggish 1.2 percent growth in the coming fourth quarter will likely pick up the the European ICT market will be reflected in all the IT outsourcing activity on the account of larger tech categories except IT outsourcing and hard- deals waiting in the queue. In an another research ware maintenance and IT consulting and integra- conducted by Everest Research, The IT outsourcing tion services, which will grow by 3.3 percent and markets will witness a significant number of con- 2.8 percent, respectively. tracts coming to end of term, totaling more than Recent data from TPI Index shows outsourc- US$85B TCV during the next 18 months. ing market improved in second quarter-2012 with The study reasons, because buyers signed Total Contract Value (TCV) up by 7 percent year- progressively larger deals until the economic over-year data. Despite decline in major outsourc- slowdown struck, more than $US55B of contracts ing/IT spending activity, one can exhibit a marginal will expire in the next 12 months, and this declines growth in outsourcing especially for Asia Pacific actually shows a dip in size compared to preceding region where the market if largely driven by mega- year. “Infrastructure outsourcing, data center and deals. The study reveals, 173 contract awards dur- network tower deals make up a significant portion ing the second quarter represented a drop of 22 of the ITO contracts expiring in the near term,” percent year-over-year and 14 percent sequentially. quoted Ross Tisnovsky, senior vice president, Ever- However, the outsourcing market saw renewed est Group. 58  |  September 2012 GlobalServices
Segment Analysis IT Outsourcing As outsourcing market is just looking for more Instead of having than just cost savings, service providers will likely a multitude of find themselves in an ordeal for contract renewals contracts spread if they don’t adapt to the emerging preferences of all over, buyers are the market. increasingly trying Alok Sinha, ITO President at Xchanging to consolidate believes the Service providers too have been busy their portfolio and bidding for new contracts. Many of these are truly implement global not new-contracts but existing contracts which contracts with have been brought back on the table due to the uniform standard contractual terms signed earlier. The newer con- SLA leading to tracts now have smaller parcels and in many cases a fair amount of contracted across multiple providers. The renego- centralization tiated contracts also saw a variety of innovative of spends and engagement models, investment lead and skin- consequently cost in-the-game models, outcomes based than pure savings for the vanilla variants, etc., being adopted by the players. client. However, on the other side of the spectrum there Chirajeet Sengupta were many too who were consolidating from mul- research director, Everest tiple suppliers into one or two. Group Vendor Landscape John Cotterell, Chief Executive at Endava as- zone, proximity, cultural empathy and qual- serts, the economic climate is forcing ity of work - and growing rapidly as organizations to re-evaluate a result. The expectation is that their overseas IT outsourcing this trend will continue to options. Offshore regions, accelerate. such as India, are prov- For example, Romania ing not suitable for is increasingly valuable everything organiza- to organizations requir- tions want to out- ing highly-transaction- source. There is now al, complex ‘agile’ IT an increasing trend projects, with evolving of organizations business requirements looking to balance and new technologies. their location risk by This enables them to moving some IT spends match their IT require- away from offshore, and ments with cost-effective, utilizing alternative, near- swift and successful project shore talent pools in Eastern delivery. Europe. As per Gartner research, IBM These nearshore locations maintained the No. 1 position, as are becoming more attractive its revenue grew 7.8 percent, and for IT projects, due to time its revenue accounted for 10.9 60  |  September 2012 GlobalServices
Segment Analysis The Service percent of ITO revenue. IBM was the No. 1 ranked providers too provider in all regions. HP grew below the market have been busy growth rate, but retained the No. 2 worldwide bidding for new market share position with 6.1 percent market contracts. Many of share. Fujitsu, helped by currency gains, overtook these are truly not CSC for the No. 3 worldwide market share position new-contracts but in 2011. Bryan Britz, research director at Gartner existing contracts asserted in the press statement, the strategies will which have been vary as clients are likely to pursue hybrid cloud brought back on strategies requiring providers to deliver some as- the table due to the set-light and some asset-heavy offerings — which contractual terms will result in varying growth trajectories among signed earlier. competitors over the next several years. In a media interview, Arjun Sethi, vice president Alok Sinha ITO president, Xchanging and partner in charge of A.T. Kearney’s strategic IT practice, asserts about how the emergence of new vendors are challenging traditional outsourcers with solutions that deliver capabilities at a lower price point and thus the need to manage IT opera- tions seamlessly across a multi-vendor environment has increased. He opines how independent cloud- based IT service management tools could enable CIOs to wrestle back control of IT once and for all. Cloud-based service management has many benefits to offer weary CIOs. Its proactive tools enable them to gain control over vendor rela- tionships, experience a far greater ability to understand and serve the needs of business users, and unleash a powerful new source of information for contributing to the achieve- ment of strategic goals. Buyers will be lured by cost structures and cloud portfolio from various pro- viders trying to build a strong market share. Bill Thomas, Partner, KPMG-UK reports in the blog post about how the shared services and outsourcing markets are in a state of flux. He asserts, “In the US, the economy does seem to be about a year or two ahead of Europe at the moment. While in Latin America, Africa, Asia and Rus- sia, there are extraordinary growth stories.” Speaking of the negative 62  |  September 2012 GlobalServices
IT Outsourcing global economic conditions and it’s impact on out- The economic sourcing and IT services, weak consumer demand climate is forcing will continue to challenge organizations in 2012. organizations The most optimism on improving economic condi- to re-evaluate tions is in the Americas, and the least is in Europe. their overseas The continuing emphasis on cost reduction from IT outsourcing key markets such as the U.S. combined with wage options. Offshore inflation and staff attrition in India and China will regions, such as lead vendors to enter new lower cost locations India, are proving moving to parts of India for example which have not suitable yet to experience BPO and may deliver both lower for everything cost and greater employee loyalty. organizations want to outsource. Cloud Computing and IT There is now an Outsourcing increasing trend The emerging of cloud computing has a great of organizations impact on outsourcing. Gartner’s forecast states looking to balance that by 2015 the low-cost cloud service will erode their location risk 15 percent income the outsourcing service provid- by moving some ers. Cloud will change the general picture of the IT spends away pricing and economics of outsourcing. from offshore, and Fifty percent of new outsourcing deals will be utilizing alternative, significantly Cloud enabled by 2015, according to a nearshore talent newly released report from Saugatuck Technology pools in Eastern Inc., titled “The Cloud and Business Services: Key Europe. Trends and Directions Through 2015.” Saugatuck John Cotterell Technology notes that the IT and BPO services chief executive officer, Endava market is undergoing a period of deep structural change and this is bringing change in the market positions and business models of traditional serv- sulting companies will continue to enjoy superior ices providers. Findings from the report show that market growth. As Cloud business solution providers Indian providers will be some of the most aggres- offer integration APIs, Cloud consultants/integrators sive innovators in PaaS through 2013. By leveraging will produce a wide range of adapters, services and Cloud delivery models and client trust these provid- toolkits to provide added value for clients. By 2013, ers will attempt to break their linear headcount-to- “non-traditional” service providers with specific revenue business models. The study also indicate vertical and business IP will aggressively enter the that through 2013, pure-play Cloud consulting Cloud Business Services market. Saugatuck’s posi- companies will continue to enjoy superior market tion is that “non-traditional” services providers may growth. Through 2013, Indian providers will be be the logical front-runners in the race for extend- some of the most aggressive innovators in PaaS. ing niche vertical services from the Cloud to clients. The Indian services providers will take advantage of The ongoing transition to cloud computing will Cloud delivery models and client trust to break their have a measurable impact on IT outsourcing as it linear headcount-to-revenue business models. The would alter the old age IT spending methodolo- study reveals through 2013, pure-play Cloud con- gies and it would also revitalize the traditional IT GlobalServices September 2012  |  63
Segment Analysis IT Outsourcing What John Willmott, CEO Nelson Hall expects to see in outsourcing in 2012:  Single digit growth in the mature economies with an emphasis on quick sub-process wins rather than major transformation, with double-digit growth in the emerging and growth economies.  Increased acceleration to new lower-cost delivery locations both onshore, to meet branding and political pressures, and offshore to re-establish high levels of labor arbitrage.  Increased adoption of BPaaS, both embedded within existing end-to-end services and also increasingly in standalone form, and SaaS in ITO.  Continuing emphasis on certainty of outcome in short timescales within the mature economies with process benchmarking and roadmaps key factors in establishing certainty of outcome. delivery to cloud-based offerings. Not only this, into mainstream corporate networks, driving more this shift to cloud is altering market behaviors and corporate spend in this area. is posing fresh challenges for traditional sourcing Smaller deals will be the talk of the town, in providers. The cloud will bring integration to out- 2012, macroeconomic factors could force reduced IT sourcing industry in terms of innovation. spend, with buyers doing smaller number of deals New research from the London School of with simpler pricing models, amid strategic conver- Economics and Accenture finds that the cloud will gence between offshore, MNC service providers. have a strong near-term impact on the majority of Global sourcing stakeholders will continue to pursue organizations. Cloud will escalate the importance new locations due to talent, cost arbitrage and risk of delivering effective service—the quality of the diversification-related considerations. customer experience—as a differentiator of suppli- Companies will continue adoption of hybrid ers in the IT industry. That, in turn, will change the captive/third-party sourcing models in 2012, and character of the IT Outsourcing industry. efforts will be made to improve captive value by focusing on high-value processes. Captive invest- Conclusion- Cloud, Smaller Deals ments will continue with the majority of setups and Third Party Sourcing Models and expansions occurring in the Asia Pacific and Other factors that would have high impact on IT CEE geographies in the year to come. Outsourcing are cloud adoption, smaller deals “The IT outsourcing market has matured and and captive sourcing models. In the past, technical price is no longer the foremost driver. Instead, and perception issues have caused cloud adoption next-generation outsourcing deals are about challenges. But continued capital investments will improving service delivery, managing risk, staying result in new and sophisticated solutions that will current with the IT market, and positioning your lead to new hybrid models and new integration business for an uncertain future.”- Dave Brown, approaches, making cloud adoption more main- Principal, KPMG. stream. The rapidly accelerating use of enterprise Get ready for a post recession era where out- mobility, social networking and cloud services in sourcing will be adopted by organizations to help workplaces will increasingly require integration them work through financial challenges. 64  |  September 2012 GlobalServices
IT Outsourcing Top Global ITO Leaders CSC Infosys Ltd. HCL Technologies Ltd. CompuCom Systems Inc. Capgemini Unisys
SEGMENT ANALYSIS Contact Center Outsourcing: Growth Momentum Continues Amidst Turbulence By Smita Vasudevan From a post recession to a transformational phase- the global contact center industry marches ahead in tough times as enterprises gear up to increase their customer focus 66  |  September 2012 GlobalServices
Contact Centre OUTSOURCING T he last two years saw the contact center Demand for industry moving through a tough yet services provided interesting phase. With 2010 being the from offshore year of gradual recovery post recession (non-U.S.) and 2011 being the year that sparked some new geographies transformations. This year is probably going to be remains strong. all the more interesting as we see the impact of all Convergys these combined forces coming to fore – technology continues to see advancements, integration of multiple communica- demand for the tion channels, the power of analytics and the social Philippines, Latin media puzzle. America and India. The good news is that amidst a sluggish global Mike Cholak economy, the contact center industry hasn’t lost its vice president, Convergys growth momentum. In fact, if industry experts are Analytics to be believed, recessionary fears might pave the way for outsourcing growth, as enterprises look at optimizing the cost of servicing customers and at the same time increase their focus on improved cus- tomer experience. “Despite the difficulties in 2010 Market Scan and 2011, market participants have expressed high Cost efficiency and language skills continue to be expectations for multi-year engagements with new the drivers. Asia Pacific, North America, Latin Amer- and existing clients into 2012 going forward,” says ica and Europe continue to be the most prominent Michael DeSalles,Principal Analyst, Frost Sullivan. destinations for contact centers. The APAC region A notable change over last year is the way in exhibits huge potential for growth and is estimated which contact centers are transforming themselves to be the fastest growing market for contact centers to become a more strategic part of an organization in the coming years. India, China and Philippines rather than just being a seen as a ‘call center’. The will be the key locations. According to Frost and idea is to attract and retain customers by offering Sullivan, the APAC market showed 8% growth in them the right type of experience, irrespective of 2011 and is expected to grow at around 10% CAGR what communication channel is being used. This through 2017, while the North American contact might call for some investments in the short run center industry is expected to grow by 3.5% from but can also go a long way in building customer 2010 to 2017. Latin America remains a prominent loyalty and brand image. location for contact centers, attracting both near- Krishna Baidya, industry manager for ICT, Frost shore and onshore demand and is expected to grow Sullivan APAC, reveals, ”End customers still value at 10.8 percent through 2017. speed, accuracy and ease of use, but they added a What is expected is a combination of offshore few elements: the convenience of performing ever- and onshore. High-value complex interactions are more-complex transactions on the go, personal- expected to remain onshore or nearshore, while ized service at every instance, and seamless move- high volume work is more likely to be sent offshore ment among various channels with a consistent to reduce costs. experience at each.” The emergence of non-voice Across verticals, Telecommunication has the channels and automated technologies have taken largest demand for third party contact center customer care interactions to another level and the services. Healthcare and financial sector are other expectations have never been this high. major contributors to growth in demand. GlobalServices September 2012  |  67
SEGMENT ANALYSIS We see no major It is going to be threat from a combination Philippines. of several India’s contact parameters-speed center industry is of conducting going to be more analytics and quick multidimensional recommendations, while Philippines’ real-time customer industrial growth is feedback, premium starting to taper off. support, and technological Vijay Narsapur strategic business practice advances for head, CS, Infosys BPO, increasing sales or reducing costs Rammohan Natarajan SVP, business transformation, Firstsource Solutions workforce, with few emerging competitors. But its Some Important Contact Center   only now that the threat has become so visible in Deals in 2012 the form of Philippines. According to Steve Barker, Deals Contract Value general manager, Sitel, “More recently, the Philip- Universal American C3 $10 million pines overtook India in business process outsourc- UK Government Xerox $20 million ing (BPO). The Contact Center Association reported Airtel Africa Avaya Not available that the Philippines voice revenue doubled over recent years and now exceeds India by more than CCO Expanding Into Emerging $200 million.” The reason can be a very high affinity Economies between Philippines and the United States. Com- Enterprises operating in the EMEA are likely to panies that are operating in Philippines are now face increased complexities as each region exhibits trying to replicate the tactics that proved successful a different level of maturity. For emerging mar- in India. Indian service providers are of the view that kets like Eastern Europe, there needs to be a good the contact center industry in India is much more understanding of rules of the land. This will drive matured and Philippines, though currently growing outsourcing to third party service providers. at a higher rate, lacks technical capabilities. Some emerging locations for contact centers are:  APAC - The Philippines, Malaysia Key Drivers for CCO  Europe - Serbia, Poland, Bulgaria , Romania The major drivers for contact center outsourcing in  America (near shore) – Central America and 2012 will be: Caribbean  Optimizing the cost of servicing customers.  Concentrate on core business areas, while rely- Philippines Vs India ing on experts for non core areas like customer There is a lot of hype surrounding the Philippines’ service contact center industry. For years, India was the  Access to better technologies and cloud based location of choice for its high-skilled, low cost services 68  |  September 2012 GlobalServices
Contact Centre OUTSOURCING Key focus is likely With easy access to be in stitching to real-time different forms of information, a analytics across new generation the organization of ‘always-on’ to leverage new consumers is more found actionable empowered and insights, possibly in demanding than real-time, to make ever. This trend is smarter decisions on the rise as social throughout media proliferates, organization and both online and enhance customer on mobile, across experience. all age groups and demographics. Krishna Baidya industry manager, ICT, Frost Andrew Kokes Sullivan APAC, global product management, Sitel Search For Improved Customer channels. This information is helping enterprises Experience Drives Investments decode complex customer behavior and forms the The ultimate aim for enterprises today is to create basis for framing future customer service strategies. a great customer experience and how well they Predictive analytic tools allow call center agents are able to do this will decide their ability to retain to identify customer concerns even before he says and attract customers in the long run. Cost is a big hello. Convergys believes that harnessing the power concern but there is also a growing realization that of “Big Data” will be a key trend in 2012. offering the right customer experience can do a lot in improving margins. Numerous surveys support The Transition from Voice to Non the fact that customers are ready to pay a little Voice extra for being served well. Interactions in contact centers are no longer With the explosion of new communication restricted to the four walls of a contact center. channels, a big challenge for enterprises and serv- Voice, the most favored medium of interaction, is ice providers would be to offer an optimal custom- increasingly being replaced by a plethora of op- er experience on all these channels. Cholak says, tions like web chats, voice mail, online self service “The experience needs to be consistently applied tools, social media and so on. The whole idea is across every touchpoint—customers need “any- to make customer interactions simpler and faster. time, anywhere” care. Investments in this area will But is voice going to be lost in this quest for better be a major trend to watch out for in 2012. There customer experience? Cholak, reveals, “While 2011 can be no single way to great customer experience. Convergys Customer Scorecard Research found that consumers clearly still prefer to talk to agents The Power of “Big Data” when dealing with a company, their interest in Analytics is playing a major role in filtering out other channels is strong.” useful information from the large pool of unstruc- Not only is an increased preference for non tured data coming out of multiple communication voice channels but increased efforts are also being GlobalServices September 2012  |  69
SEGMENT ANALYSIS Contact Centre OUTSOURCING allow customers to look Contact Center Technologies Helping Enterprises for solutions and resolve queries on their own and Convergys shares some real world examples of how technology has helped cut down the dependence improve client key performance indicators: on agents.  A large North American telecommunications company saw a 27% acceptance rate for highly targeted IPTV and DSL cross-sells in their retail But where to draw the stores after implementing a Convergys Cross-sell/Upsell Solution line? Subramanya. C, Chief  A top 10 North American retail bank implemented the Convergys Intelligent Technology Officer, Hinduja Self-Service Solution and increased IVR containment from 89% to 93%, Global Solutions, says, “All resulting in a substantial annual savings a customer wants from us  One of the largest PC manufacturer in the world experienced a 32% increase is to ‘know her’, ‘help her’ in the average number of posts worked per agent per week using the Convergys Social Interactions Solution and ‘remember her’. The knowing and remembering parts can always be auto- made by enterprises to cut down call volumes in mated. However, helping always involves human order to reduce costs. Although non-voice interac- touch.” So striking the right balance between tions are going up at an alarming rate, it is not automation and live support is going to be the likely to takeover voice anytime soon. Experts key. Sitel shares a similar opinion that the idea will say that if the percentage ratio is around 80-20 be to cut down costs through technology without right now, this is expected to shift to 60-40 by sacrificing the human touch. 2015. Narsapur adds, “Non voice communication is expanding at an alarming rate. So the situa- The Need For “Super Agents” tion is not inconceivable where the two will be Nothing is going to eliminate the need for agents very close in volumes.” But one thing is clear now. in a contact center. In fact the agent’s role has only Voice is no longer going to dominate customer become more complex now with the emergence interactions, its only going to be the part of a big- of multiple channels. Cholak, says,“The use of ger service offering. alternate channels for customer care will undoubt- edly continue to grow, but the agent will remain New Ways to Interact a critical focal point in a diverse range of chan- While 2011 Convergys Customer Scorecard Re- nels.” Agents have to be trained not for one but search found that consumers clearly still prefer every type of interaction possible. Whatever be to talk to agents when dealing with a company, the medium that a customer opts for, the agent their interest in other channels is strong, with 13% has to be prepared to listen and deliver the right saying they’ve used mobile applications or text kind of response. What these changes mean for messaging for customer care, 11% saying they’ve service providers is that they need to train contact used social media for customer care, and 7% saying center agents for each and every channel of interac- they’ve used webcam or video support with an tion. Cholak adds that the need today is for ‘super agent for customer care. agents’ that are adept at all interaction methods, especially in handling interactions with the ultimate Humanization of Technology multitasking communicators, the Millennials. “These Enterprises are using technology to interact and agents could be moved around a call center to ac- engage with their customers in innovative ways, so count for channel volume changes in a given client’s that cost is optimized and the effort is much lesser. program, driven by new product launches and other Artificial intelligence tools and Self service options high traffic, multichannel events” he says. 70  |  September 2012 GlobalServices
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SEGMENT ANALYSIS Contact Centre OUTSOURCING Cost reduction is the prime driver, followed by scalability and easier call center management. Gartner research predicts that by 2013 at least 75% of customer-focused call centers will use a form of the cloud in their call centers. Baidya says, “More solution vendors will offer applications in the cloud and offer customers with choices suiting their business needs and scale at that time. Global service providers and large sys- tem integrators are likely to proactively promote such solutions to customers.” The Outlook The year is definitely not going to be a dormant one with lots of transitions happening. A lot of effort will be on establishing a multiple channel strat- egy that gives a unified view of all the different interaction channels being used by a cus- Social Media Puzzle tomer. Automation will con- Social media means big business today. Lots of tinue both in voice and non interactions happen every moment and you never voice areas, though the scope will be more in non know how and what is going to have an impact on voice. There are no signs of non voice channels the image of your enterprise. A very high percent- completely taking over voice in the near future, age of customers are turning to social media sites but its expected to take a more dominant shape. and forums to solve problems, search for informa- Social media still needs to evolve completely as a tion and voice complaints. And this is acting as a customer interaction channel yet will be attract- wake up call for enterprises to build up their pres- ing significant investments. ence and create a social media strategy. And this presents the big challenge - How to Top CCO Trends in 2012 make sense of all the data. What if a social media  Enterprises will invest for better customer expe- strategy backfires? These are questions to be an- rience swered before enterprises decide to take the leap.  A higher proportion of interactions moving to non voice channels Contact Centers Migrate to the ‘cloud’  Demand for offshore locations remain strong, The combination of BPO and platform based nearshore scores on multiple language skills services, BPaaS, is gaining traction more than ever.  Increased efforts will be put in to harness the There is increased pressure from every corner to power of Big Data look for newer cost saving options and this has to  Possibility of clients going for consolidation of be done without compromising on service qual- vendors for better manageability ity. As cloud offerings mature and its benefits get  Combined use of agent, analytics and tech- acknowledged, contact center operations too are nology will likely be the strategy for service gradually being migrated to the cloud. providers. 72  |  September 2012 GlobalServices
Contact Center Outsourcing Global Customer Management Leaders Aditya Birla Minacs Worldwide Limited Aegis Limited Capgemini Convergys Corporation Expert Global Solutions Firstsource Solutions Ltd Genpact Limited Hinduja Global Solutions Limited Sitel Operating Corporation VADS Business Proces Sdn Bhd Mid-tier Customer Management Vendors Altisource Portfolio Solutions S.A CompuCom Systems Inc. HCL Technologies Ltd. Infosys Ltd. Scicom (MSC) Berhad SPi Global Sutherland Global Services, Inc. Xceed Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance GlobalServices Application Development Maintenance September 2012  |  73
Segment Analysis FAO: All Signs Suggest Maturity By Smriti Sharma In 2011, ACV grew 11 percent punctuated by an all-time high in contract extensions and expansions 74  |  September 2012 GlobalServices
FA Outsourcing T he global Finance and Accounting Out- Key reasons sourcing (FAO) market echoed success behind the in 2010 with 18 percent growth (ACV). ‘denominator However, in 2011 this growth diminished effect’ are when the market grew by mere 11 percent (ACV). reduction in new The year 2012 is expected to bring along a positive contract signings, wave of prosperity as the FAO space is projected to reduction in rebound by 10-15 percent (ACV). average size of According to a new analysis titled Finance new multi-process Accounting Outsourcing Annual Report 2012 FAO contracts, and by Everest Group, “The multi-process FAO mar- risk-averse phased ket is projected to rebound by 10-15 percent and approach to FAO. top $4 to $4.5B in annual contract value (ACV) in Abhishek Menon 2012. 2011 saw the market reach an all-time high research director, Everest in contract extensions that along with contract Group expansions, represented 70 percent of ACV growth in 2011.” Explaining this further, R U Srinivas,chief executive The FAO market reached $3.8B in ACV in 2011, officer executive director, Caliber Point, Hexa- representing about $32B in total FAO spending. Last ware BPO, articulated. “More single process (e.g. year also witnessed a drop in total contract values Accounts Payable) contracts are evaluated sepa- (TCV) of new engagements in comparison to 2010. rately; Full-scale FAO deals have become fewer. Abhishek Menon, research director, Everest The market is gradually evolving, with a number Group explained the slow growth rate of 2011 of service providers augmenting capabilities to is not a sign of worry but a sign of movement provide technology enabled solutions and con- towards maturity. He highlighted, “Key reasons be- sulting, apart from usual business processes. This hind the ‘denominator effect’ are reduction in new is also supplemented by the fact that there is now contract signings, reduction in average size of new abundant availability of talent at offshore with multi-process FAO contracts, and risk-averse phased significant domain knowledge. So providers have approach to FAO.” a scope to play in a larger field and higher up in In 2011, 72 new contracts were signed and the value chain. Moreover, a number of providers there were 126 extensions/renewals. The study are building their expertise in FAO within specific predicts organic growth to continue as contracts industries, and even positioning themselves as valued $7.3B or more are up for extension within niche offerings.” the next three years. Saurabh Gupta, vice president, Everest Group, The Service Providers’ Territory articulated, “Although the market witnessed Last year 60 percent of fresh FAO contracts were slower than expected growth levels last year, we signed by companies in the revenue bracket of less nevertheless saw strong growth with nearly 200 than $5B. contracts for new, extended and renewed con- Accenture, IBM and Genpact continue to have tracts. Along with fewer new contracts signed and the strongest foothold in this space. However, as some terminations, we also saw a drop in size of per the same report, in the last five years, the mar- multi-process contracts largely due to cautious buy- ket share of the top three providers has reduced ers opting for risk-averse phased approaches.” from 65 percent to 50 percent. 2011’s highest new In current scenario, the deals are fragmented. contracts had Accenture, Capgemini and Infosys GlobalServices September 2012  |  75
Segment Analysis Many of these vendors whose performance significantly enhanced providers have on the FAO PEAK MATRIX are EXL Service, HCL, evolved because Infosys, and WNS. of initial IT David Borowski, senior associate, Pace Harmon, capabilities that speaking about service providers said, “Multi-tow- have expanded, er outsourcing providers, e.g., IBM, Accenture, pro- either organically or vide IT and business process outsourcing, as well through acquisition, as a variety of other types of services and products into competitive (e.g., technology, consulting). These providers BPO expertise. often offer comprehensive global delivery services, significant brand recognition, and an opportunity David Borowski senior associate, Pace Harmon to leverage varied capabilities. India-based general outsourcing providers, e.g., Wipro, Infosys, TCS, offer a broad array of BPO and ITO capabilities, as BPO’s name as service providers. Accenture, TCS, well as other professional services.” and IBM accounted for about 50 percent of total He added, “Many of these providers have contract value signed in 2011, including new con- evolved because of initial IT capabilities that have tracts, renewals and extensions. expanded, either organically or through acquisi- Market leader Accenture claims its scale, tion, into competitive BPO expertise. Outsourcing integration and specialization continues to dif- providers with a more direct focus on BPO, e.g., ferentiate it in the market. Talking about their WNS, Genpact, were often captive shared services success cards, Tony Chambliss, global offering functions that spun off from parent companies lead for FA BPO, Accenture, pointed, “We have to provide back office services as a commercial extensive global delivery capabilities, provid- offering. FAO specialists, who focus on a particu- ing a full suite of FA BPO capabilities across all lar FA service tower, often stem from a compel- industries from transaction processing through to ling technology-based differentiator. Examples high value finance and analytics. In addition, we include API for procure-to-pay expertise and VWA bring our clients an integrated solution including for order-to-cash expertise (prior to the Capgemi- consulting and BPO that generates business out- ni acquisition).” comes and end-to-end transformation that results Hexaware BPO’s strategy for 2012 vs 2011 has in true value, improving the performance of the changed with increased focus on FAO; they are client’s business.” strongly undertaking an Account Based Mining He added, “Accenture’s technology delivery approach to cross-sell/ up-sell Finance Account- experts have skills and tools to implement enabling ing services within our existing customer base. technology. Accenture also has extended expertise Also, Hexaware is deploying an Offshore-onshore in complementary areas to ensure successful solu- delivery model, supported by our strong network tion delivery,such as change management and of partners. Our Go-to-Market is based on transfor- workforce training. These capabilities, along with mation/ consulting oriented pitch, showcasing our the Accenture Global Delivery Network, combine to expertise in creating value apart from cost savings. deliver efficient and effective FA BPO operations.” The difference between the market leaders and Based on the YoY movement of different serv- major contenders is diminishing. ice providers on the PEAK Matrix, Everest Group Gartner, Inc.’s 2012 reported titled, ‘Magic identified ‘2012 FAO Market Star Performers’ as Ac- Quadrant for Finance and Accounting BPO,’ centure, Capgemini, Genpact, IBM and TCS. Other stamped the following organizations as leaders: 76  |  September 2012 GlobalServices
FA Outsourcing Accenture, ACS, A Xerox Company, IBM, Genpact, Menon speaking about the service provider Capgemini, Infosys Ltd., WNS and Wipro. Niche landscape added, “While the market continues to players identified: HP, Steria, OPI, Cognizant, HCL be led by three service providers (Accenture, Gen- Technologies and Intelenet. pact, and IBM), other service providers are aggres- Gartner research highlighted, “Leaders are per- sively expanding their market share. As a result, forming well today, both with a clear vision of mar- in the last few years, the market share of the top ket direction and by actively building competencies three service providers declined from 64 percent in to sustain their leaders position in the market. The 2005 to 50 percent in 2011.” comprehensive FA BPO players in this quadrant Service provider’s in order to differentiate generally share superior market understanding, themselves are creating innovation across three have a global client base, an extensive network dimensions. These dimensions, as per Everest, are of well-distributed and highly populated global non-linear growth, differentiated offering, and delivery centers catering for multiple languages, a new buyer segments. good balance of transactional and high-end FA delivery, and innovative well-communicated and The SMB Space marketed sales offerings.” SMB segments adoption rate of FAO doubled over Previous year eyed some strategic MA activity, the previous year. One of the prominent service for example: Capgemini-VWA, EXL-OPI, Serco-In- providers in this space is Quatrro. Speaking about telenet, and iGate-Patni. Quatrro’s approach to the mid-market, Monica GlobalServices September 2012  |  77
Segment Analysis Kashyap, senior vice president, new product de- Further voiced, Neeraj Sahgal, general manag- velopment and operations, Quatrro said, “Study- er-technologies, Quatrro, “Most of the large play- ing the mid-market space, we realized that one ers in this market are targeting the Fortune 500 key issue this segment faced was the lack of right or top thousand clients. These clients do have the technology. One reason they had not outsourced ability to go buy one of finest accounting pack- FA, while they had outsourced payrolls, is that age or an ERP deployed across all organizations. they do not have the technology that can allow We approach the mid-market segment saying finance outsourcing, they may not have the right we know you do not have the strength to buy a financial strength, to have the right technology, SAP or oracle finance but we do. This way we can to be able to outsource it, to leverage it etc. To work thousand such clients and give them the do FAO, it was important for us to arm ourselves capability. Then, they can use some of the best with the right processes systems and technology, practices that SAP or any other Tier 1 platform so, that we could approach the mid-market with has to offer. We help them in doing end-to-end this offer.” financial transaction; we process their financials 78  |  September 2012 GlobalServices
FA Outsourcing end-to-end, save tax processes and filling of Everest report coined Wipro, Capgemini, and TCS returns etc. We take care of all those particular as the leaders in innovation with the use of new statutory requirements.” tools and technologies. Chambliss talking about different models of Industries implementing FAO Accenture has employed ar- Last year’s leading verticals were manufactur- ticulated, “Accenture is helping clients consolidate ing, hi-tech telecom, professional services, and more back office processes, leveraging the shared financial services. These verticals accounted for 60 percent of the market. Professional services is a relatively a new industry that is gaining traction. Clients are Accenture embraces experience in more than increasingly forty industries covering communications, media taking an end-to- technology, financial services, health and public end process view service, consumer goods, retail, utilities, chemi- of their finance cals and energy. In recent times, Accenture noted operations and particular interest in FA BPO from the high-tech, therefore we’re telcom, manufacturing and retail sectors. providing an Genpact provides FA expertise across many expanded scope verticals such as manufacturing, pharmaceutical, of processes—as consumer product goods (CPG), retail, insurance well as bundling and financial service. of services such Quatrro caters to retail, manufacturing, profes- as FA and sional services, hotel, auto, educational institu- procurement—to tions, not for profit organizations, grocery etc. achieve greater Some of Steria’s big clients come from health- savings. care, telco and media, banking and retail. Tony Chambliss For HGS, FAO’s end-to-end accounting the area global offering lead for FA is equity/fund advisory companies and minor subsi- BPO, Accenture dies of MNCs. In the case of volume transaction it is the BFSI sector. services model, hybrid BPO/shared services model, and bundling BPO and IT outsourcing. Clients are The Models increasingly taking an end-to-end process view As the FAO space matures, the value proposition of their finance operations and therefore we’re moves away from cost and thus solutions providing an expanded scope of processes—as well transform too. as bundling of services such as FA and procure- Everest report stated that, beyond transaction- ment—to achieve greater savings. Another exam- intensive processes (AP, AR and GL), judgment- ple is moving toward business outcome based solu- intenstive processes such as FPA were increasing tions, enabling the FA areas to become strategic included in FAO contracts. The trend towards to the value they can generate for the business.” end-to-end solutions (P2P, O2C, R2R) continued HGS FAO Solutions have employed two types of to gain momentum as opposed to a traditional FAO. Sridhar Krishnamurthy, executive vice presi- piecemeal solution. dent, strategic initiatives, HGS shared, “One is the Service providers are now employing process- end-to-end accounting model where we act as the agnostic solutions across different process areas. CFO role including accounting advisory on statuto- GlobalServices September 2012  |  79
Segment Analysis India continues approach’ to interface with a variety of ERP solutions. Their toolsets give flexibility to interact to be the most seamlessly with client’s existing ERPs and has flex- prominent ibility to perform analytics within the toolsets not being limited by clients ERPs. destination on the Quatrro has created a platform. Sahgal ex- FA map. of the plained, “This is a platform which sits in front of FAO FTEs, 65% are the SAP. It controls the entire operational process, so there are two set of player. One is the client located in India who can access this portal, he has access to all his Across North financial reports, he can transit with us as well as transit all the systems using this portal. He need America and not understand the nuisances of what SAP does, Europe. or any other tier 1 platform would offer, he has a simple interface- he knows the five things that are critical to him and he simply goes ahead and does ry compliances and fund management. The second it. Also, he has access to all the reports at any given type of practice is volume transactions where we point of time.” take up the AP processes like Vendor Payments He added, “The other piece is Quatrro people. Employee Reimbursements.” That is where they access the services component of this portal. We define our own set of workflows: Technology Matters who is going to process it, how it is going be done, Technologies play in this domain has advanced somebody is going to do a review make sure all the from the basic ‘tie-and-run’ model to an ‘augmen- numbers match. Portal itself has a whole set of log- tation’ model. Menon pointed, “In 2011, technol- ics that are build in to make sure the transactions ogy augmentation had become the new “nor- mal”. Nearly 45 percent of the contracts in 2011 leveraged add-on tools such as workflow engines, The Leader’s interfaces, document digitization, business intel- ligence tools, user portals/dashboards, and project- domain management tools.” Accenture He added, “While most FAO buyers prefer a For more than 20 years, Accenture has been providing technology augmentation approach, there exist FA BPO. It has an established portfolio of more than situations where buyers are amenable to plat- 80 finance outsourcing contracts for approximately 70 clients in 39 different languages across 150 countries. form-based FAO. Year 2011 witnessed a signifi- These clients are served by more than 10,000 skilled cant increase in adoption of platform-based FAO professionals. solutions, primarily driven by increased adoption Mike Salvino, group chief executive of BPO, Accenture in the mid-market and SMB segment (revenue less said, “Accenture’s positioning in the FA BPO than US$5B)” Leaders quadrant by Gartner underscores our ability to bring industry expertise, analytics and innovation Many organizations’ technology landscape is a to our clients, leading to better business insights and cocktail of their developed tools and best-of-breed, outcomes, which we call fourth generation BPO. We third-party applications. For example Accenture is feel it also highlights our ability to leverage the cloud, flexible with the software they use. Their technol- social media, mobility and analytics to drive value for our clients, which we call fifth generation BPO.” ogy architecture is designed with a ‘wrap-around 80  |  September 2012 GlobalServices
FA Outsourcing Infosys Genpact In 2004, Infosys BPO’s FA unit was established. It has Since 1997, Genpact has been selling FA services. It 11 centers in more than 7 countries such as India, China, delivers these services from 25 centers in 10 countries. the Philippines, the Czech Republic, Poland, Mexico and In the past 18 months, it has signed many new deals Brazil. The company employs approximately 7,000 FTEs in and accomplished 100 percent contract renewals or FA BPO. extensions. Gautam Thakkar, vice president and head, enterprise Tiger Tyagarajan, president and CEO, Genpact, services, Infosys BPO asserted, “We consider this articulated, “Combined with our widespread global recognition as a validation of the strategic investments that delivery capabilities and deep domain expertise in many we have made in the FA practice across industry verticals. vertical industries, Genpact’s Smart Enterprise Processes Our focus on developing and deploying cutting-edge tools (SEPSM) framework drives additional excellence in FA have helped enhance the effectiveness and efficiency processes and helps our clients achieve bottom-line of our processes, while minimizing the risk of running impact.” accounting operations through a global delivery model.” Xerox WNS Xerox Services houses 24,000 professionals. They In 1996, WNS began providing FA BPO services and in operate out of over 90 global service centers, in multiple a short period of time (fiscal 2012) FA accounted for 19 languages in North America, Central America, South percent of WNS’s total revenue (net of repair payments). America, Europe, and Asia Pacific. It embraces 7,000 employees delivering from simple Kent Schnacker, executive vice president, ACS financial transactions to complex analytical processes, including services group said, “In a communications era where industry-specific processes to more than 70 global clients. consumers expect all bills, invoices and documents to be Keshav R. Murugesh, group CEO, WNS stated, “We delivered exactly when and how they prefer, our finance believe that our capability and position as a leader in and accounting services help organizations deliver quality the FAO space is a result of our differentiated market service on a consistent basis. Our clients count on us to approach coupled with investments designed to provide help keep their customers satisfied.” our clients with the right blend of expertise, talent and technology to outperform their competition,” Capgemini Talking about what is helping WNS, Tasneem Lakdawalla, Christopher Stancombe, global head, FAO, Capgemini, executive vice president, Finance and Accounting, WNS said: “We deliver valuable business outcomes to the articulated, “Our vertically-led strategy is helping us benefit of our clients efficiently and effectively within a deliver FA offerings supported by industry-specific strongly controlled environment.” domain expertise, and enabling WNS to better service our Capgemini’s BPO has over 13,000 BPO professionals clients. We will continue to invest in tools, technology, providing services to customers worldwide. These services resources and strategic partnerships which will help drive are provided in 36 languages and are delivered from platform-based solutions, increased business process centers located in Australia, Brazil, Canada, Chile, China, efficiencies and differentiated service offerings for FA,” Guatemala, India, Poland, Sweden and the United States. TCS Wipro TCS’ BPO revenue is over $1.1B and it houses 40,000+ Wipro BPO operates from 30 centers in 11 countries, employees. It has presence across 11 countries from including Poland, Romania, China, Japan, Philippines, where it delivers services to more than 200+ customers. Australia, U.S, Canada, Brazil, Mexico and India Abid Ali Neemuchwala, global head, TCS BPO business (Bangalore, Delhi, Chennai, Pune, Hyderabad, Kolkata opined, “TCS’s investments in building industry vertical and Mumbai). expertise in FA, Manoj Punja, svp and global head, Wipro BPO echoed, our proven transformation methodology - FORE™ “Our ability to leverage our extensive technology delivering best in class processes, our business model capabilities and shaping the vision for the next generation innovation of FA Platform solution delivering Business of FA outsourcing is a clear differentiator. We feel this Process as a service (BPaaS), and unrelenting focus on recognition confirms our strategy and the significant analytics, risk and controllership are all geared to meet investments that we have made in our FA practice to the customer’s needs for an effective and efficient Finance improve our offering and add measurable business value function.” to our clients.” GlobalServices September 2012  |  81
Segment Analysis Industry Trends Predict Many businesses are refocusing attention on global outsourcing not only to reduce costs but to capitalize on globalizing operations and transformation processes. While cost arbitrage continues to be a key driver, client expectation from FA BPO is now to transform processes to align to client’s business outcomes and it is becoming increasingly standard to bundle transformation elements into contracts as a standard offering. Clients are also increasingly taking an end-to-end view of their finance operations with outsourcing bundling contracts growing. We expect the role of technology to expand, resulting in a stronger push to software- as-a-service and mobility catalyzing further evolution of BPO. Technology enablement of FA BPO is now becoming pivotal to development of services and there is an increase in the number contracts where service providers will provide application wrappers to enhance process standardization for buyers. As buyers become more experienced managing FA BPO processes they will increase their contract scope to include more customized and complex processes including management reporting processes, analytics and other specialized services. Accenture —Tony Chambliss FA BPO is seeing an increased demand for analytics information derived from the global offering lead for financial processes we manage to enhance client decisions and support functions—the FA BPO, Accenture ability to turn data into new streams of value. For example, we have built and piloted the Accenture BPO Navigator—a central portal that provides real time visibility into a client’s business performance, including operational and contractual metrics and analytics that is delivered in our private Cloud. This tool provides clients with both a snapshot and detailed view of their business performance and the dashboard shows metric thresholds, trends and compares data across business unit or country. Through analytics, we can analyze this data to provide insights to aid key business decisions. For FA BPO clients we can process their invoices, collate the spend, map that back to their strategic sourcing agreements and identify rogue spend outside that agreement to drive savings Increased penetration: FA Outsourcing has not reached all industries and there are a lot of avenues where it can still prove to be useful. Untapped fields like SMEs have yet to be included in the targeted market segments of outsourcing providers. Offshore acceleration: With over 60% of global players outsourcing to India. It is safe to assume that in today’s business environment, it is the norm to outsource finance and accounting functions. SAAS - Software-as-a-Service and cloud-based solutions: They are gaining influence in the industry. Software programs for finance and accounting used to be unaffected by technological advancement Buyer-side sophistication: Buyers are becoming more sophisticated and demanding in terms of service. A more informed market in a very competitive landscape increases the bargaining power of consumers, further resulting to lowering prices. Maybe more FA captive sales: More and more companies choose to establish an entire FA team offshore. Divestments such as Citi Group, Lehman, AIG, however, are becoming more common as companies take advantage of the exibility offered by —Sachdev Ramakrishna outsourcing. director, marketing, Steria India 82  |  September 2012 GlobalServices
FA Outsourcing ed by the Industry The trend is major We are witnessing outsourcing opportunities frequent inclusion of are in the AP processes. ‘onsite component’ in Organizations have had recent deals. In other these internally for years words, the hybrid and are planning to move model (combination of it outside to an offsite onshore/offshore; shared locations to seek more services/outsourcing) is streamlined operations having a good traction. (arising out of best As highlighted, the practices implemented by comprehensive ‘full- FAO Agencies) and to seek scale’ deals have a better cost advantage. become fewer – buyer are evaluating single —Sridhar processes (Accounts —R U Srinivas Krishnamurthy Payable, Record-to- chief executive officer executive vice president, Report, etc.) as opposed executive director, Caliber strategic initiatives, HGS to multiple processes at Point, Hexaware BPO one go. Another trend is interest towards transformational sourcing, to improve/re-structure the business processes, with help of technology enablement and domain knowledge. Financial Planning Analysis (FPA) represents an emerging area in FAO. FAO has moved beyond just AP, AR and GL to realize more benefits. An end-to-end process-driven approach to FAO is also emerging as opposed to a traditional functional and piecemeal approach. Nearly 50 percent of the new contracts in 2011 had end-to-end elements (Procure-to-Pay, Order-to-Cash, Record- to-Report) Industry-specific FA solutions: There is an increasing trend of “verticalization” in FAO, moving away from the traditional assumption that FAO is a horizontal function. Buyers now consider FA process as unique to their industry. Thus, domain expertise is emerging as an important source of value from service providers. As a result, many service providers are coming up with industry-specific FAO solutions (e.g., focused offering in travel, telecom, utility etc.). Service providers are also aligning their sales and delivery team along key verticals to make a targeted market approach. The adoption of transaction-based and performance-based pricing has increased. The changing FA solution elements are driving buyers to reassess pricing structure and —Abhishek Menon, introduce pricing that provides flexibility and/or business-oriented performance. research director, Everest Group GlobalServices September 2012  |  83
Segment Analysis FA Outsourcing As per the Everest High-end processes such as FPA are increas- ingly getting included, primarily during extensions. report, buyers continue Adopting more end-to-end approach as op- to focus on an end- posed to siloed and piecemeal approach in or- der to increase visibility, streamline, and to have to-end process- stronger link to overall business performance. driven approach to He further added, “Buyers are cautious and FAO, as opposed to a they prefer phased approach as opposed to big- bang approach. This is also reflected in new con- traditional functional tract signings and contract extensions/renewals: and piecemeal approach We saw increase in the number of single process con- tracts signed in 2010-2011 compared to previous years. Also, the size of contracts extended/renewed was larger than the size of original contracts because of that are going in the system are all authentic are scope and scale expansion during renewals.” all absolutely fine. This is the entire mechanism, India continues to be the most prominent des- by virtue of this, what we are able to do is we are tination on the FA map. 65 percent of the FAO able to streamline our process; it has also increased FTEs are located in India. Southeast Asia witnessed the efficiency tremendously. Our total time to the a significant increase in the number of delivery manual activities that were earlier involved has all centers. Across North America and Europe, there is gone out of the window.” a ramp-up in onshore delivery capabilities. Steria has presence across three leading de- Clients and Delivery Locations livery locations in India namely Noida, Chennai The largest client-base of this sector continues to and Pune. Sachdev Ramakrishna, director, mar- be based in US, followed by Western Europe. There keting, Steria India talking about India being the is also an increased trend from buyers in Asia-Pa- preferred location said, “India is the preferred cific region and in Latin America. location for outsourcing FA services in terms of In the previous year, approximately 50 percent of financial attractiveness, people skills availability the fresh contacts had elements of end-to-end scope: as well as the business environment. Hence more Procure-to-Pay, Order-to-Cash, Record-to-Report. and more delivery centers are being setup here. There was a noticeable shift from an offshore-centric Moreover, due to rapid growth in credit card, to a balanced onshore-nearshore-offshore model. telecom infrastructure and retail banking penetra- As per the Everest report, buyers continue to tion in India, there is a phenomenal increase in focus on an end-to-end process-driven approach transaction processing of payments and collections to FAO, as opposed to a traditional functional and in India domestic market as well.” piecemeal approach. Also, while nearly 90 percent HGS is planning to extend its geographical pres- of the FAO FTE mix continues to be offshore-/near- ence and also the delivery locations. Their two year shore-centric, 2011 witnessed a significant increase plan is to look for clients from other countries and in onshore delivery center. the same time to zero on cities that can give the Recent times have also noted a significant required number of knowledgeable resources change in buyer expectation. A major transforma- skill sets for these types of transaction. They are re- tion is that cost saving is no more the only need ferring to the volume transactions here. The end to or driver. This in turn has resulted in the change in end accounting model will have to be in the same FA solution elements too. Menon stated: location where the client office is situated. 84  |  September 2012 GlobalServices
FA Outsourcing Global FAO Vendors Capgemini EXL Service Genpact Limited Infosys Ltd. WNS Global Services Xchanging Leading Mid-tier FAO Vendors Datamatics Global Services Ltd. HCL Technologies Ltd. Insigma Technology Co., LTD Quatrro Global Services Pvt. Ltd. Sutherland Global Services, Inc.
Segment Analysis Industry- Specific BPO: Being Explored Aggressively The ever increasing By Smriti Sharma, Smita Vasudevan, Sourabh C. Pushpa pressure to curtail costs and the expectation to drive better business outcomes is acting as a big push for the global industry- specific BPO 86  |  September 2012 GlobalServices
industry specific BPO E nterprises in almost all verticals are Cost arbitrage, currently going through a tough phase, maturity in service plagued by mounting cost pressures provider offerings and customer expectations. What they and rising buyer need is a unique solution tailor made to their expectations to problems - a generalized BPO offering from get more out their service providers is not going to work of outsourcing anymore. As the situation prevails, an increasing deals are acting number of enterprises are exploring industry- as major drivers specific BPO opportunities to drive better busi- for the growth of ness outcomes. According to Horses for Sources industry-specific research, there are strong signs of increased BPO adoption of industry-specific BPO solutions, most Ramesh Gopalan notably in Financial Services and Life Sciences, executive vice president, and many other emerging verticals. international operations, Hinduja Global Solutions What is Driving Demand for Industry-specific BPO? cially in the Healthcare and Life Sciences space. The Almost all industries are undergoing radical market is also witnessing the trend towards com- changes and there is increasing competition bining technology and BPO into a single service within each industry. This makes it imperative offering. Bundling together BPO processes along for enterprises to look for newer avenues of with IT offerings is giving service providers the op- increasing efficiency and cutting down costs. portunity to expand their footprints. This is a major reason why domain specific of- Although enterprises seem to be a lot more ferings are being aggressively pursued. Enter- industry focused now, the trend towards industry- prises understand that acquiring domain specific specific BPO is not new. Its been there for very long, knowledge can help them add value and be a especially in the areas like mortgage processing differentiating factor for their business. and healthcare. According to Gopalan, “Healthcare Financial services, Healthcare, Life Sciences, has always been a very industry-focused vertical. It Media, Entertainment and Retail are some of started primarily with transcription processing and the verticals expected to contribute largely to evolved into customer service and collections.” the growth of industry-specific offerings in the And especially after the US healthcare reforms, near future. the industry is undergoing lots of transformations As the outsourcing industry matures, enter- and the need for industry-specific skills is ever prises are looking beyond traditional service increasing. Most of the players catering to health- offerings. They are now looking for services that care clients are doing it through industry-specific cater to the unique needs of the industry that processes. “In the healthcare space, industry-spe- they operate in. Service providers are making cific processes account for more than 80 percent of significant investments in acquiring domain spe- the market share, while horizontal services are only cific capabilities. Interestingly, industry-specific less than 20 percent” adds Gopalan. BPO is the segment where lots of new providers are entering through niche offerings. Even the Market Estimates Geographies established IT vendors have been developing Over the next 5 years, vertical specific BPO is ex- BPO niches in this space. This is evident espe- pected to offer a larger opportunity as compared GlobalServices September 2012  |  87
Segment Analysis to horizontal BPO. According to the Nasscom-Ever- European est India BPO Study- Roadmap 2012, the segment companies have presents an opportunity of US$ 145 – 175 B, which explored locations is around 60 percent of the entire market. like Ireland, Across geographies, India and Philippines are Scotland and the only two prominent offshore destinations. Im- Spain - for specific portant nearshore destinations include South and savings in costs Central America and South Africa. and geographic proximity and Some Prominent Industry-specific South Africa is Processes emerging as a close Healthcare outsourcing: According to a report favorite for the UK published by US based marketresearch.com, the glo- companies due to bal healthcare BPO market is growing at a healthy the cultural affinity CAGR of 21.4 percent. Healthcare payer outsourcing and good quality of market will also grow at about 30 percent in the the services forecast period. Healthcare provider outsourcing Sanjay Venkataraman has the highest growth rate of 31.9 percent from president, Asia customer 2011 to 2016 due to conversion from ICD-9 coding management, Firstsource system to ICD-10 and ICD-10 coding system to be implemented by October 2013 in the US. Talking about what has worked for this indus- are going to need professional vendors who will be try, Tony Mira, Group CEO and founder of Ajuba able to handle this work effectively.” Solutions, said, “The regulatory changes in the US Overall, the healthcare BPO market is crumbled have been a driver for the healthcare outsourcing and small players are trying to make their presence industry. There are two main reasons – one is ICD- felt, especially in India and China. 10, this has created a lot of confusion and concern Accenture (Ireland), Medusind (U.S.), GeBBS with the healthcare community in US because the Healthcare (U.S.), Omega Healthcare (India), and level of education, Inventive (U.S.). sophistication, and The pharmaceutical training is much Overall, the healthcare outsourcing market higher than the ICD- BPO market is crumbled and is captured by play- 9. The people who ers such as Quintiles are ICD-9 trained small players are trying (U.S.), Covance (U.S.), are having difficulty to make their presence felt, PPD (U.S.), Parexel in passing for the (U.S.), Charles Rivers ICD-10 level. They especially in India   Laboratories (U.S.) are facing difficulty and China and ICON (Ireland) in with the exist- the CRO space... are ing coding in US. This is creating opportunity for some of the major players of this space. offshore company. Second, with the new offshore Publishing outsourcing: The e-book market was reform the level of patients is expected to increase one of the few markets that grew during recession. by almost 30B. This is going to create an increase Since then, this segment has been witnessing a of work for people in healthcare industry and they positive growth and publishers have been looking 88  |  September 2012 GlobalServices
industry specific BPO at it as a strong revenue spot. Apart from tackling Key Trends In industry-specific cost pressure, the key drivers for publishing out- sourcing are handling challenges of adapting to Specific BPO  Increased adoption in verticals like Healthcare and life new technology, lack of in-house capability and sciences that are undergoing profound changes addressing new geographies.  Significant investments by service providers US is the most popular publishing outsourcing in enhancing and acquiring industry-specific destination. India is the most preferred offshore capabilities. Industry-specific analytics and customer destination followed by Philippines. Indian players intelligence services are evolving continue to focus more on lucrative segments such  Combining BPO with technology as a single offering is a growing trend that we see in the industry-specific as educational, magazines, corporate, B2B, trade BPO space and e-books. Over the next three years, all these  BPO service providers are joining hands with clients segments are expected to remain attractive. for end-to-end service delivery and also, they are Mortgage Process Outsourcing: This model scaling up their business competency levels in has evolved the manner in which companies are handling high value business projects running their mortgage processing requests. The conventional manner is costly and burdensome and thus they do not operate successfully any longer. Checks, Underwriting Disbursement and Servicing BPO’s mortgage service offerings are crafted Collections Maintenance. to be in sync with the needs of mortgage banking The integration of services (For example, loan institutions. Some of the challenges mortgage bank- origination, vendor management, post-closing ing institutions face are rising interest rates, increas- processing services, third party services until under- ing instances of borrower default, competitive writing, modification services, technology services pressures etc. Mortgage BPOs spread their services etc.) is a challenge that vendors face while offering across various levels of the mort- mortgage services. gage value chain. Life sciences outsourcing: Research The functions of mortgage and development was the core of a BPO can be categorized under life science company and thus four divisions: distinct was perceived too valuable to headers;New Business pass on to others. However, Acquisition, Ap- today under the growing praisal Title pressure to cut costs and speed development, life science companies and large pharma- ceutical firms have started outsourcing clinical development programs to outside clini- cal research organizations (CROs). Companies depend on CROs to lower costs, access new patients, and comply with complex regula- tory requirements. In return, CROs should aim at becoming long-term strategic partners offering GlobalServices September 2012  |  89
Segment Analysis value-added services. States and western Europe to China and India. Clinical development outsourcing is expected The study titled Outsourcing in Life Sciences A to increase and establish its footprints in different Survey of BayBio Members highlighted, “The key parts of the globe. Presently, a large percentage of findings of our survey of BayBio life science compa- outsourcing comes from United States and western nies suggest continued growth in clinical develop- Europe. In future, China and India are expected ment outsourcing, with a significant amount of to make their presence felt on the life sciences growth occurring overseas. The need for external outsourcing map. RD outsourcing is expected to capacity and capabilities is a key driver of outsourcing grow and also shift geographically from the United today, with a significant focus on reliable, on-time 90  |  September 2012 GlobalServices
industry specific BPO service. Current CRO relationships appear to leave an agency’s proprietary or third-party analytics tool significant room for improvement. Patient recruit- that may have tons of fancy graphs, lots of numbers, ment, customer-centricity, regulatory compliance, and export complicated spreadsheets -- but it really and flexibility of service plans were mentioned as doesn’t tell you how to do anything actionable to particular areas in which CROs could do a better job. improve your social media marketing with that data. Overall, as companies look to CROs as the answer So if you’re considering using a third party for social for internal constraints, they would also like to shift media analytics, make sure that their tool not only emphasis from today’s transactional relationships to offers closed-loop reporting, but that the person long-term strategic development partnerships.” analyzing the data can also tell you how to use that Media outsourcing: Media outsourcing is often information to improve your marketing strategy.” looked at as the new wave of outsourcing. This is Other emerging verticals include travel, tele- courtesy an increase in the outsourcing of media com, insurance, supply chain management, tech- work such as online reputation management, data nology, transportation etc. mining, influencer identification and crisis manage- ment etc. Opportunities and Risks On the internet customers talk in real time and Despite its numerous advantages, there are some companies have comprehended the fact that mere potential risks and opportunities suppliers need to online monitoring tools are not sufficient. Soft- identify, and in turn adopt mitigation strategies ware’s can search conversations but they are not for these risks. industry-specific BPO providers are intelligent enough to understand sarcasm. Thus, stressing hard to move up the BPO value chain. BPO human beings are required. companies are joining hands with their clients for Also, all companies are well versed with the fact end-to-end service delivery and also, they are scal- that it is imperative to maintain a good profile on ing up their business competency levels in handling the internet. Hence, they look out for third party high value business projects. vendors who are armed with online business mar- Everest study states that primarily one demand- ket skills and also cost ing factor that pushes effective. Media outsourcing is often suppliers to opt for Social Media Exam- industry-specific BPO is iner’s Michael Stelzner looked at as the new wave cost. While traditional report titled 2012 of outsourcing, This is BPO focuses heavily on State of the Social reducing operational Media Marketing courtesy an increase in costs, industry-specific Industry stated, “In the outsourcing of media BPO offerings promise 2010, only 14 percent to create business im- of marketers out- work such as online pact. Industry reports sourced social media reputation management, predict that industry- marketing. Last year, data mining etc centric BPO capabilities that number doubled will emerge as an op- to 28 percent. And portunity for suppliers this year, the percentage rose yet again, with 32 to create top-line impact for their clients and attain percent of marketers outsourcing social media.” distinctive positioning in an increasingly competitive The report also highlighted,“Since marketers market in the aftermath of economic downturn. are so confused about how to measure social me- While the overall traditional BPO market is high- dia’s ROI, it’s certainly easy to be duped into using ly competitive, the industry-specific market is highly GlobalServices September 2012  |  91
Segment Analysis industry specific BPO Everest predicts that industry-specific BPO will emerge as an opportunity for suppliers to create top-line impact for their clients and attain distinctive positioning in an increasingly competitive market. The financial pressures on vendors to maintain their profit margins may override development of this segment. Industry reports assert that scarce capital, major cutbacks in corporate spending, pressure on prices and margins together with drastic change in the competitive landscape are major threats to industry-specific BPO. While these risks poses threat they also create opportunities for strong players to achieve high performance. While some vendors are clearly content with a thin veneer of vertical capability, others are picking verticals where they feel they can gain an edge over the competition. But it’s a gradual develop- ment, and experts say that it will take patience and attitude on the vendors’ side to invest in the depth of talent they need, and be less concerned about short-term profits and demands. The real challenge lies for the BPO companies in the years to come, as they must-have to create domain expertise to furnish the market require- ments. industry-specific BPO providers will have to showcase their expertise across the various verticals and also align their business model. Financial, manufacturing and business services sectors are expected to be the fastest growing markets. In the IDC report, titled- “Worldwide concentrated as the industry relevance approach is BPO Services Market Forecaster: Vertical Markets,” now a key ingredient in BPO offerings. For industry- Juan Sacchi, senior research analyst, IDC European specific BPO services, Analytics and Cloud are play- Services, said “Industry-specific BPO demand is ex- ing game changing roles. But talent and skill issues pected to be relatively slow in 2012 compared with are are gripping the industry. Service providers are 2011. But looking forward, we expect to see indus- spending huge amounts on training and develop- try-specific BPO demand recovering and growing ment. Industry experts believe that skill shortages faster than demand for traditional key horizontal are going to be a problem going ahead. BPO services. Despite the fact that cost cutting The prime concerns related to industry-specific and cost control continue to be top priority for processes are- reducing operational errors, analyz- BPO investment decisions, more and more we will ing real time business performance to standardize see demand in the market for domain or industry business process operations on global-scale and to expertise and services that are able to drive busi- gain more control over the business operations via ness results alongside the traditional cost-cutting third party. approach.” 92  |  September 2012 GlobalServices
industry specific BPO Industry- Specific BPO Global Leaders- Industry- specific BPO Altisource Portfolio Solutions S.A Genpact Limited Infosys Ltd. Stream Global Services Sutherland Global Services, Inc. Unisys Industry-specific BPO Niche Leaders Aditya Birla Minacs Worldwide Limited Aegis Limited Ajuba International Datamatics Global Services Limited HCL Technologies Ltd. Hexaware Technologies Ltd. Hinduja Global Solutions Ltd. Indecomm Global Services (I) Pvt Ltd InterGlobe Technologies Mindteck (India) Ltd. Neusoft Corporation Quatrro Global Services Pvt. Ltd. SPi Global GlobalServices September 2012  |  93
segment analysis The Expanding Scope of PO Contracts By Smita Vasudevan Despite a sluggish macr- oeconomic outlook, the global PO market has retained its momentum. Fresh deals, renewals, new technologies and emerg- ing players - there is lot for procurement outsourcing buyers to look forward to this year P ost the 2008 global recession the demand for PO (Pro- curement Outsourcing) has been on the rise. In the post recession phase companies have been facing increasing pressures to cut down procurement costs and deal with concerns relating to volatility in commodity markets. This has been a big driver for the global PO market. Procurement is one of the 94  |  September 2012 GlobalServices
procurement outsourcing most important of all the business functions as it It is no longer is directly linked to revenues and has a significant just a bottom line bottom line impact. This is the reason why even savings target for when recessionary fears are once again looming procurement; you large, PO hasn’t lost its charm. The inherent pres- have to provide sure to attain cost savings is more evident now, savings, but in and outsourcing is coming out to be the most the most efficient desired medium. model that also is helping to further Global Market Scenario secure the supply The sluggish global economy is having a knockdown chain and protect impact on almost all areas of business. Procurement the end customers outsourcing too is under the wrath to some extent. in terms of products UK and US are two very prominent markets for PO, to be sold. and whatever happens in these markets is going to Jason Evans have a very likely impact on the segment. Despite Vice President, Corbus that, growth in 2011 was pretty decent with a 14 percent growth in annual contract value, which crossed $ 1.6 B. According to Everest Group’s Pro-  Geographic adoption will also continue to curement Outsourcing Annual Report 2012, 60 new expand in terms of global contracts as well as multi-process PO contracts and 53 renewals/exten- adoption by source geographies such as Asia- sions were signed in 2011, which is the highest ever Pacific and South America till now. Everest predicts that the global PO market will reach an ACV of $1.8B in 2012, representing Changing Face of Procurement managed spends of US$250B. Outsourcing Like most other outsourced services, procurement PO Market in 2011 too is undergoing lots of transformations in this tough phase that demands enterprises to look for  60 new multi-process PO contracts signed in 2011 newer ways of doing things. Buyers are looking at  ACV grew 14 percent to reach US$1.6 billion PO not just as a cost saving initiative but the way  Service providers managing more than US $190B of procurement spend on behalf of their clients to desired business outcomes and this has added to Source: Everest Report titled “Procurement Outsourcing Annual its strategic significance. The role of procurement Report 2012” officer is expanding and there is greater coordi- nation between the procurement officer and the 2012 Market Projections CFO. There is also a visible trend towards PO deals End-of-term activity will be significant as 57 per- bundling up with FAO. cent of PO contracts, valued at nearly US$6 billion, Reliance on procurement outsourcing is going are up for renewal within the next four years up as enterprises look for the expert knowledge  Adoption will be led by companies with rev- of service providers, who usually charge a fixed enues over US$1 billion while adoption by price for a certain amount of cost savings. Trans- small/medium-sized businesses (SMB) segment actional procurement, strategic sourcing, compli- will remain sporadic ance management, category management, tactical  Adoption in the public sector is expected to procurement and reporting are the common types grow of services being offered today. GlobalServices September 2012  |  95
segment analysis An interesting trend is the growing prefer- to choose from. ence for procurement outsourcing among mid For long, PO contracts were focused on indirect market companies. Emerging technologies, espe- spends. This seems to be changing now as direct cially, cloud-based offerings have made PO serv- spending is also getting added more and more. ices affordable for the mid market. The increas- Rajesh Ranjan, Vice President, Everest, says, “The ing demand in this space is also encouraging market is shifting from classifying spend as direct small service providers with niche expertize to versus indirect to core versus non-core. While a enter the market. At the same time, large service majority of contract continues to include indirect providers are bringing out more services spend, inclusion of direct spend is increas- in their PO offerings, especially through ing.” Enterprises are focusing on core direct cloud-based offerings. The tough spending, preferring to keep it in house, competition in the service while outsourcing non-core direct provider landscape between spend categories, such as main- the large and small players tenance, repair and overhaul. will keep the momentum These changes are in a way going. And this will be a resulting in expanding the good opportunity for buyers scope of PO contracts. Ranjan to capitalize on, as they have confirms, “The functional scope numerous options of PO contracts is expanding into available adjacent supply chain processes.” Another change that the market is witnessing is changing buyer expecta- tions. Today enterprises want their PO service providers to come up with end- to-end solutions in source-to-procure and procure- to-pay contracts. The spate of MA and consolida- tion activities that is happening in the PO market is an indicator of the pressure that service providers face to expand their service capabilities and come out with complete solutions. Prominent Geographies Verticals North America will be the most dominant market followed by Europe and Asia Pacific. Emerging geographies will be attracting a lot of buyer atten- tion in the PO space, just like most other segments. Low cost and high skilled, talented workforce are primary factors driving demand in these regions. As wage inflation and rising costs have lessened the attractiveness of offshore locations like India and China to some extent, the unexplored loca- tions in Eastern Europe, Middle East and Latin America are gaining popularity. Also since unem- ployment levels in the US and UK are pretty high, 96  |  September 2012 GlobalServices
procurement outsourcing Merger Acquisition Deals in 2011 Deal Objective To establish presence in the Australian market with more offerings in Infosys BPO Acquires Portland Group the value-added segment IBM Completes Acquisition of Emptoris To expand Smarter Commerce initiative The market is of value creation varies with process focus, eg; shifting from higher transactional nature of processes in the case classifying spend of P2P-focused buyers present more opportunities as direct versus to create value through process optimization. On indirect to core the other hand, spend reduction is typically a fea- versus non-core. ture of sourcing-related processes, therefore, a key While a majority of value creation lever for sourcing-focused buyers.” contract continues to include indirect The service Provider Landscape spend, inclusion It is definitely a tough phase for service providers of direct spend is with expectations soaring high and uncertainties increasing. prevailing in the global environment. And with Ranjan Rajesh many new entrants coming up its not the same Vice President, Everest playing field anymore. Most service providers are focusing their strategies around three things - peo- ple, process and technology. The focus has been on buyers will be forced to turn to nearshoring rather hiring and retaining talented people with knowl- than offshoring. edge and experience in niche areas like negotia- Across verticals, demand coming from manufac- tions, spend analytics etc. As clients are becoming turing, retail, BFSI, telecom and energy sectors has more and more demanding, providers are under helped in maintaining the momentum in the PO pressure to offer access to cutting edge technolo- market. Public sector is also likely to come out as a gies. Investing in technology is going to be another huge driver as governments are also under tremen- big trend among service providers and emerging dous pressure to cut down costs and are ready to technologies like social media, mobility and cloud look for alternative avenues. computing will have a lot of influence on the type of offerings that providers come up with. Major Drivers Process optimization and compliance are the PO Service Providers’ Landscape primary factors that are contributing to growth in  IBM, Accenture and Procurian together account demand for PO globally. The cost base for procure- for 70 percent of the PO market in terms of ACV ment outsourcing is much larger than other BPO  In 2011, IBM, Accenture, and GEP signed nearly segments and thus the opportunity is much more. 45 percent of new multi-process PO contracts. PO also has a very high impact on the bottom line  IBM, Accenture, and Xchanging accounted for which makes the value proposition quite attractive. about 60 percent of total contract value signed But at the same time realizing full value out of it in 2012, including new contracts, renewals and can also be a challenge. Ranjan says, “The extent extensions. GlobalServices September 2012  |  97
segment analysis procurement outsourcing A lot will also ing includes the full range of Ariba’s collaborative commerce solutions with Genpact’s procurement depend on how services led by our SEP framework for making production facilities business processes much more effective,” said operate worldwide. Shantanu Ghosh, senior vice president, Practices, Solutions and Transitions, Genpact, in a company Against this press release.“ backdrop, supply The Way Ahead shortages are Its a transformational phase for the PO market. expected to remain The industry has definitely come of age with some in the first half and significant changes happening. The value proposi- tion for procurement outsourcing is quite high but recover gradually the challenge is in attaining its full value. by the second half of There are expectations of adoption rates pick- ing up across all verticals and the market is enter- the yeaR ing a new phase of accelerated growth. As the PO market evolves, service providers are coming out with innovative ways to serve their clients and Consolidation attract untapped segments. Like in all areas, here The service provider landscape is a mixed lot with also ‘more for less’ remains the mantra for buyers. different types of players competing together. This Jason Evans, Vice President, Corbus, says, “It is no includes source-to-contract and procure-to-pay longer just a bottom line savings target for pro- service providers, FAO service providers, advisory curement; you have to provide savings, but in the firms, supply chain management firms and so on. most efficient model that also is helping to further With niche offerings coming up, specialty players secure the supply chain and protect the end cus- are also expected to enter the scene. The trend to- tomers in terms of products to be sold.” wards consolidation that started a few years back A lot will also depend on how production facili- is very likely to continue strongly, and large players ties operate worldwide. The floods in Thailand and will try and acquire small and niche players to the earthquakes in Japan has had a serious impact come up with more expanded service offerings and on the manufacturing facilities in these countries. enhance their service capabilities. Swaminathan D, Though production has resumed, it might take a CEO and MD, Infosys BPO, which acquired Portland while to come to normalcy. Against this backdrop, BPO in 2011, stated in a company press release, supply shortages are expected to remain in the first “This acquisition would significantly deepen our half and recover gradually by the second half of capabilities and domain expertise in our sourcing the year. and procurement practice. It will also enhance the Global economies are still struggling to find competitiveness, spread of offerings and global their way out of the economic crisis. This will be a reach for our clients.” concern for service providers, but they also have Collaboration partnerships between large and the opportunity to attract buyers by helping them small service providers will also be a trend to watch streamline procurement costs. Evidences of how out for. For instance, Genpact has expanded their enterprises have attained cost savings through PO alliance with Ariba to include Ariba’s cloud based will be a key driver for other enterprises that have solutions into its offerings. “The combined offer- stayed away so far. 98  |  September 2012 GlobalServices
procurement outsourcing Global Procurement Management Leaders Capgemini Corbus, LLC Genpact Limited HCL Technologies Ltd. Infosys Ltd. WNS Global Services Xchanging GlobalServices September 2012  |  99
Segment analysis From Cost Savings to Strategic Advantages: Global HRO Human resources outsourcing Evolves industry retains its cautious optimism as increasing complexities in HR processes By Smita Vasudevan and growing uncertainties in the macroeconomic environment creates new reasons for enterprises to outsource their HR transactions. 100  |  September 2012 GlobalServices
HRO O ver the years the Human Resources The need to Outsourcing (HRO) industry has evolve HR gradually matured and the whole practices in HR BPO space has transformed order to cater from a mere cost saving initiative to a driving to a younger force for adding business value. The traditional workforce will be belief that HRO is simply a measure to reduce felt more. the burden on HR is changing and the strategic Rajiv Raghunandan significance of HRO is being acknowledged more strategic business practice and more. head, HRO and SF, So how has the year 2012 been for HRO? Infosys BPO The global HRO market retains its optimism, very much the way it did last year. But things are definitely not going to be the same, as single process HRO space and is the fastest growing the market continues to evolve under the segment right now. influence of some significant changes-chang- ing employee demographics being one of the Market Estimates most significant. According to Everest Research, the MPHRO market Of all the forces acting together, two primary remains a consolidated space with few leading forces are driving global HRO ahead in these players dominating the scene. Top players like Aon tough times - HRO becoming a more strategic Hewitt, IBM, Accenture, NGA, ADP etc account for initiative for enterprises and HR service providers around 80% of the market share. Similar is the case coming out with new technology innovations. with Benefits Administration where top 3 players, Targeted for multinational companies for a long including Aon Hewitt, Fidelity and Xerox account time, HRO is now attracting interest from mid for 70% of the market share. Single process func- market enterprises as well and this is going a be tions like RPO and Learning are relatively frag- a strong catalyst for growth in the coming years. mented markets with numerous service providers Also the concept of employee engagement is playing together. going to hold a lot of significance. The market is still in a phase of cautious opti- According to GIA’s, Human Resource mism and growth in 2012 is expected to be very Outsourcing(HRO): A Global Strategic Business much in line with what we saw last year. The MPH- Report, the global market for HRO is esti- RO space has grown around 2% over the last year mated to reach US$199.6B by the year 2017, and stands at around $ 3.1 B. The RPO segment has driven by the increasing need for alignment grown over 27% over the same time and currently between business operations and HR, cost re- stands at around $1.4B. Benefits, the most matured duction, compliance management, understand market in the HRO space, remains the largest in changing policy framework and access to key terms of value, currently around $5B. technologies. Globalization Growth Of Emerging Markets The global HRO market is clearly divided into Multi country capabilities are high on enterpris- two parts - MPHRO and Single process HRO. es agenda as they explore new, emerging markets Although some growth has been evident in all and attempt to break geographical boundaries. forms of HR outsourcing contracts, its the single Enterprises that venture into new areas should be process HRO space that is demonstrating an aware of the rules of the land. Local knowledge aggressive pace of growth. RPO dominates the and experience is very crucial and if they can’t get GlobalServices September 2012  |  101
Segment analysis this on their own, they will need to partner with In 2012 we expect a service provider that has global competencies. organizations all Multi country HRO offerings is thus a big trend in over the world to the current scenario. have a renewed The ability to scale up is highly essential in these focus on employee markets and this is acting as a driver for global HRO. engagement as a way to generate RPO a Big Driver better outcomes For emerging geographies, RPO seems to be the for employees and most highly demanded HR function. The five year lower costs for global RPO deal between pharmaceutical major Eli employers. Lily and HRO service provider Kenexa is a good ex- Rohail Khan ample of the growing significance of RPO. The deal group president, HR includes recruiting in Asia Pacific, Europe and the outsourcing and solutions, ACS Americas and according to Nelson Hall’s estimates, the deal is worth more than $50 million, one of the largest RPO contracts till now. Khan says, “Re- the mid market space as well. Saas offerings have cruiting is now one of the three fastest growing made HR technology affordable and reachable for primary services bigger businesses are expecting mid market enterprises. outside firms to handle. Benefits administration He believes that BPaas will make traditional HR and payroll are the biggest two, but contracting BPO more flexible and easier to consume, with out- out recruiting assistance is a growing trend.” come-based contracts, and flexible ways of engag- ing with specialist providers. Bpaas Opens Up New HRO As a trend, HR service providers will be tying up Opportunities with SaaS providers to offer platform based HRO of- Saas-Based HR services have been around for a ferings. Joining hands with a service provider. One while but its only now with the greater breadth of example is Workday partnering with Accenture and cloud offerings in HR ERP, that its penetrating into Wipro to offer integrated saas Bpo services. Mobility and Self Service High on Demand As a trend, HR Mobile HR applications are high on enterprises’ service providers demand list and service providers will face in- will be tying up creased pressures to offer mobile functionality. Quite related to the emergence of mobility and IT with SaaS providers consumerization is the growth of self service as a to offer platform preferred way of handling HR transactions. Custers says, “Following the rapid adoption of self service based HRO offerings transactions in personal banking, utilities billing, One example is and social media, employees and managers will expect to be able to handle both simple personal Workday partnering data changes, as well as more complex, multi-step with Accenture HR transactions via self service scenarios.” This will have dual benefits - employees will have more con- 102  |  September 2012 GlobalServices
HRO Across different A striking difference over last verticals, the demand year is the growth from financial in preference for services, telecom emerging markets. Enterprises are and manufacturing moving beyond will be a big driver. developed markets and emerging The retail and locations in APAC, government sectors, Europe and Latin America are gaining though does not lot of attention. look too bright right Rajesh Ranjan now, shows great Vice President, Everest Research potential for future growth Growth Across Segments and Geographies trol over their data and organizations will be able The GIA report states that the United States and to reduce administrative overheads. Europe account for a major chunk of global HRO services. India still holds a significant position but How Innovative HR Technologies Are the emergence of alternate centers across geog- Helping Enterprises? raphies like Latin America, Eastern Europe and Rajiv Raghunandan, Infosys, points out three ways South East Asia is a key indicator of the expansion in which HR technologies are helping organiza- of HRO across geographies. Raghunandan says, tions: “Today Europe is where US was 4-5 years ago. The  Ensuring greater compliance proportion is now 40-40. Rest 20 percent is very  Better end user experience by making transac- important. These areas could become innovation tions simpler hotbeds. Lot of what is learned there are replicable  Making HR policies flexible enough to accom- in developed markets.” modate a global and mobile workforce Across different verticals, the demand from financial services, telecom and manufacturing will be a big driver. The retail and government sectors, Key Highlights of 2011 though does not look too bright right now, shows  While the overall HRO market grew at a healthy great potential for future growth. rate, the MPHRO grew by a modest 2% to reach an annualized spend of US$3.12B in 2011 Technology Driven Consolidations  Transaction intensive processes are core but The trend towards consolidation in the service talent management components are increasingly considered provider landscape is expected to go on strongly,  The appeal of multi-tenant BpaaS will increase as players look to acquire better technologies and  The MA and partnership environment continues to global capabilities. Big players often bring in the play out in the marketplace scalability while smaller players bring in niche GlobalServices September 2012  |  103
Segment analysis HRO Deal tenures and sizes BPaaS will help overcome some of are likely to remain the shortcomings short and small as of both BPO and enterprises prefer to SaaS. It will add an additional tread cautiously. The layer of subject- size of MPHRO deals matter expertise to organizations is also becoming who have moved smaller as the number into SaaS and who find it hard to be of processes bundled entirely self reliant together in MPHRO is from a process coming down level. Michael Custers vice president, global alliances technology capabilities, creating a an attractive strategic marketing, NGA mix. The acquisition of Taleo, an on-demand tal- ent management software company by Oracle is a good example of this. Hot HRO Deals in 2011  MPHRO deal between BAE Systems and Logica Demand for Short Term Deals  Benefits Administration contract between State of Continue California and Aon Hewitt Deal tenures and sizes are likely to remain short  5 yr HR and Payroll Contract between Northgate and small as enterprises prefer to tread cautiously. Arinso and Family Mosaic The size of MPHRO deals is also becoming smaller  RPO contract between Eli Lily and Kenexa as the number of processes bundled together in MPHRO is coming down. Raghunandan says, providers are bringing out customized outsourcing “There was a one time change that happened. The models for mid market enterprises. interest of clients to lock themselves into 10 year While cost savings and compliance with complex deals has gone away a few years back. In the last HR transactions will work as short term drivers, 3-4 years there has not been much change in the business transformations and technology innova- duration of deals.” tions will play a big role in the long term. As the HR demographics change and a new Facebook genera- What Lies Ahead? tion gets geared up to work, organizations will have Currently many forces are acting together to re- a tough task in front of them in reorganizing their shape the global HRO landscape. Even against the work environment. Enterprises that start now will backdrop of a dull and gloomy economic scenario, definitely have an edge when this happens a few optimism remains as enterprises aim to reap strate- years down the line. Raghunandan sums up “ We gic advantages out of HR outsourcing deals. There have to evolve our workforce and we have started are huge opportunities that are yet to be fully ex- doing that today so that we are better prepared plored, especially in the form of a huge untapped for it.” The message holds a lot for service providers mid market segment. Foreseeing this, service and buyers in the global HRO space. 104  |  September 2012 GlobalServices
HRO human resource outsourcing Global HRO Vendors Capgemini NorthgateArinso GlobalServices September 2012  |  105
Segment Analysis Analytics Outsourcing: Inside the World of Numbers By Smriti Sharma Advanced analytics will increasingly become a necessity for competitive differentiation 106  |  September 2012 GlobalServices
Analytics Outsourcing T oday, all organizations operate in a glo- With greater bal environment that is set against the usage of analytics backdrop of cut-throat competition and and increasing regulatory pressure. Business decisions, complexity, there predictions, introduction of new products… all is a tendency to these decisions should be drawn after analyzing break analytics accurate data. Business analytics arm an organiza- projects into tion with quick and insightful decisions that assist distinctly an organization in managing its performance and executable parts creating value. and outsource Data is not new to industries. For many years to different they have possessed all kinds of data. However, specialized teams. absence of requisite skills and tools made it difficult Reetika Joshi for them to utilize this data. As companies continue senior research analyst, to lack appropriate analytics expertise, they are rely- ValueNotes Sourcing Practice ing on the value of outsourcing in this domain. Cost has never been the driver of the wheels of Reetika Joshi, senior research analyst, Valu- analytics outsourcing. Rather, its clutch has been eNotes Sourcing Practice and co-author of the HFS pressed by highly skilled statisticians with domain analytics report titled ‘Where offshore analytics is knowledge who have the capabilities of develop- heading in 2011’ in another interview spoke about ing insights using data. When these capabilities are what covers in offshore analytics area said, with married to specialized tools and technologies, the greater usage of analytics and increasing complex- provider can create impactful knowledge. ity, there is a tendency to break analytics projects Sundar Varadarajan, senior vice president, BIBA into distinctly executable parts and outsource to COE PRESALES said, “Business Analytics is one of different specialized teams. the terms that are very broadly used. While tradi- Accordingly, there are four levels in the analyt- tional Business Intelligence (interactive reporting, ics services mix, in ascending order of complexity: slicing and dicing of data) is referred to as analytics 1. Data entry/de-duplication: This includes by many; some may refer to analytics specifically in everything from cleaning to maintenance and the context of advanced decision support/predic- actual. It is a low-end service and offers low tive analytics. With volume and variety of data ever revenues to service providers. A large chunk of increasing, and with constant evolution of plat- KPO-centric analytics work (almost half) is dedi- forms for computation (for advanced analytics on cated to data preparation. an mpp architecture, in-memory computing, etc.) 2. Intuitive analytics: This entails running the are becoming more viable, this has also enabled models and generating new insights on a advanced/predictive analytics on petabyte-scale.” continuous basis. The outputs for these services While traditional BI will continue to flourish, may be in the form of dashboards, reports (of advanced analytics will increasingly become a ne- different frequencies), alerts, etc. cessity for competitive differentiation, for strategic 3. Model building: This is an advanced level of analysis, and for better forecasting, and perform- analytics, where models are designed to predict ance management etc. various business outcomes. Statisticians and Growing competition and globalization has econometricians build models focusing on busi- made analytics critical for all businesses to support ness problems/opportunities at hand. In terms strategic decision making. of offshoring, modeling is done by captives as GlobalServices September 2012  |  107
Segment Analysis Buyers need to plan A large percentage of Genpact’s revenue comes for innovation in from America. It also has presence in Europe, terms of budgeting China, India and Australia. exercise. They may Fortune 500 companies are the big-league not know what that clients for this knowledge service. Carnation Auto innovation is going and GE Money are some of its clients. to be but at least Some of Accenture’s clients are BP and Verizon. they have a budget Connectiva serves service providers in telecom, and that helps media and entertainment. Their customers in- them achieve the clude some of the world’s largest providers with innovation. When I 200+M subscribers as well as greenfield operators say budget, I mean and mid-sized companies. Their customers include there are certain Bharti, T-Mobile, Telefonica, Alcatel Lucent, YTL, things the service IDEA amongst others. Capgemini’s clients include providers are going Mazda and Baycorp. to do, buyers have Fortune 500 companies are the big-league cli- got to support ents for this knowledge services. them. Innovation is what most of the buyers are asking for. Rajesh Ranjan, vice president, Everest Rajesh Ranjan vice president, Everest Group Group explained, “Innovation is something which helps you really leap from one level to another. Buyers really want things to improve, and thus well as third-party vendors depending on the they want service providers, who are operating the maturity of the clients’ in-house teams. business process function on their behalf to put 4. Solutions: Solutions generally entail “bun- in practice some of the best things that they have dled” analytics components, delivered to clients gulfed out from their experience of working with to address their needs. Providers take a con- some of the other organizations. Also, the services sultative approach and leverage technology to BPO providers provide are their core competency. deliver value. The aim is to render the client Within their core business again, they expect the self-sustaining and create a unified analytics de- provider to be able to bring those best practices livery mechanism. This may be done by deploy- and bring those things they are doing internally to ing an analytics platform or other tools. optimize and provide that benefit.” Apart from the above mentioned IT/BPO provide He adds, “However, I also feel that buyers also plenty of value-enhancing analytics components, need to plan and budget for that. In general, in- such as analytics to improve the efficiency of process- novation costs some money, innovation does not es, identify problem areas or sub-processes with cost- come free. Buyers need to plan for that in terms saving potential, and provide reporting and MIS for of budgeting exercise, they may not know what existing processes. Often these services are delivered that innovation is going to be but at least they to the client as value-adds minus additional cost. have a budget and that helps them achieve the innovation. When I say budget, I mean there are What do the Buyers Want? certain things the service providers are going to US and UK continue to be the major markets served do, you have got to support for that, and if these by analytics service providers. America and Japan things bring the right results, you should be able to has also won the focus of some vendors. reward the service provider. All these things need 108  |  September 2012 GlobalServices
Analytics Outsourcing to happen in conjunction to be able to bring in the outsource in the next 12 – 18 months preferred right value for the buyers side.” output based or transaction based pricing models, Extracts from TCS report titled, Future Proof- with about 9% even willing to opt for an outcome ing the Organization through Analytics, based pricing model. A significant 40% of the buyers felt the func- tional expertise in the domain was the key factor Service Providers Landscape in choosing a service provider and an additional The players in this market space can be categorized 35% sought experience in the same industry in three divisions. One is the global outsourcing ma- It is also not surprising that influencers continue jor: IBM, Accenture, Capgemini, TCS, Infosys, Wipro to consider presence of a technology platform a etc., the second segment is pure play BPO provider, critical aspect to outsourcing. The buyers tend to though they are not many of them left now,: see this as a relatively low importance factor in WNS,EXL, and the third one is business specialist, decision making since the business and technology these are very few. In the last category, the ques- decisions are made separately. tion is to what extend will they continue to operate Interestingly, among the buyers, more than on their own vs. on getting acquired. 50% of those who are currently outsourcing Analytics outsourcing started as financial and sought functional expertise in the partner or- marketing function. Shipping and logistics, manu- ganization, while over 60% of those planning to facturing, supply chain etc. were initially not very outsource in the near future said they would look active in this space. However, now they offer good for similar experience in the industry. opportunities. Web and web related services, pack- A buyer experienced in outsourcing is perhaps age solutions that mix combine consulting services looking at the nuances that the partner can bring, with delivery are very much in demand. particularly in case of analytics services. Hence, a Chirajeet Sengupta, research director, Everest partner with enough experience in the domain Group articulated, “Increasingly, there has been a is desirable. For a buyer that has not outsourced shift or blurring of lines between different kind of before, similar industry experience is a confidence market players and their competent quotient. Es- building factor. sentially, this field is open to everyone.” Close to 50% of the buyers in our survey said He explains why some of the large scale IT that technology and infrastructure were key ele- providers are able to act well in this space. The ments where they looked at their partners for help. reason being they have expertise in handling Also, many buyers are looking to migrate to things like business intelligence and data ware- newer technologies, particularly from the cost and houses. They have experience in handling those time to market perspective. Here the support and huge amounts of transactional data Secondly, necessary skills of a technology competent partner they have the scale, they have the deep pockets for the buyer is extremely critical. to invest in a particular upcoming space and their Buyers are also looking at process standardization ability to invest is larger than a start-up analytics from their partners, with 28% of the buyers in our house. The third factor is they are able to offer survey saying that this was critical for them. People certain efficiencies in terms of automation. They consolidation and automation are important in as are able to hire a whole bunch of statisticians much as they help in cutting the costs to the buyers. and put them behind stats terminals to churn out Buyers who were currently outsourcing analytics insights or you can automate 70 percent of that. processes preferred the more traditional FTE based That in itself is a huge advantage. or fixed price model. However, it is interesting to The last thing is that some of the account level note that close to 40% of the buyers planning to relationships these organizations have built over GlobalServices September 2012  |  109
Segment Analysis Analytics Outsourcing time have helped them mine into what seems as The ability to a natural expansion of scope. For example, if you undertake analytics are implementing business intelligence systems for on transactions, retail company and you have a healthy relationship understand the with that retail company for the last five years; it’s insights and almost a natural extension to talk about how you then identify are going to help them mind those insights out of opportunities to that system. improve and add The IDC MarketScape report evaluated the value to the client’s offerings and capabilities of 10 business analytics business is what BPO vendors namely: Accenture, Capgemini, Cogni- our clients expect zant, EXL Services, Genpact, HP, IBM, Infosys, TATA from BPO. Consultancy Services (TCS), and WNS. Accenture, Anoop Sagoo Capgemini, Cognizant, EXL Services, Genpact, HP, BPO cross operating group IBM, Infosys, TATA Consultancy Services (TCS), and lead, Accenture WNS. Service providers were evaluated based on potential key strategy measures for success in two as a service on the cloud, Social intelligence and primary categories: current capabilities and future mining, Advanced (predictive) analytics such as: strategy. Accenture, Capgemini, Genpact and TCS Fraud Analytics in the Financial Services, Insurance were positioned as as ‘Market Leaders.’ Industry, Higher Education analytics – e.g., predict Mukesh Dialani, research manager, Worldwide student dropout patterns, analyze and predict per- BPO Services, was quoted, “BPO vendors find formances, etc. and Smart Metering related analyt- themselves in a favorable position to assist their ics in the energy/utilities and other industries. clients’ transformation efforts as enterprises face Varadarajan also highlighted the following new sources of competition in this global environ- upcoming trends: ment and try to stay competitive by keeping a In addition to the typical analytical solutions on close check on various business performance met- well-structured corporate or customer data, etc., we rics. BPO providers that build competency around are increasing seeing that organizations are having industry-specific BPO and analytics outsourcing as to deal with more external data (on social networks, well as exhibit the capability to assist clients with internet, emails, text documents, etc.), a lot of business consulting services will gain a bigger por- which is unstructured, and needs to be analyzed in tion of this business.” conjunction with the structured data; also, the data Anoop Sagoo, BPO cross operating group lead, volume is increasingly huge – we see that effectively Accenture, expressed, “BPO today is about min- dealing with this “big data” analytics is becoming ing the huge volume of transactional data that key and will be a mainstream part of analytics out- is being processed – and using industry expertise, sourcing in the coming years. analytics and innovation to help a client operate Also, with the adoption of platforms and appli- its business better and drive business outcomes. cations on the cloud, analytics-as-a-service, or data- The ability to undertake analytics on transactions, integration-as-a-service are also increasingly being understand the insights and then identify oppor- adopted – e.g., we have seen with a few customers tunities to improve and add value to the client’s and prospects that as a natural extension to ERP business is what our clients expect from BPO.” in a cloud model, analytical services on top of ERPs Varadarajan pointed the following as new (eg., HR analytics as a service) are also becoming opportunities for analytics outsourcing: Analytics more prevalent. 110  |  September 2012 GlobalServices
Analytics Outsourcing Leaders- Specialty KPO Global Knowledge Process Aegis Limited Leaders Affinity Express Aditya Birla Minacs Worldwide Chinasoft International Ltd. Limited CompuCom Systems Inc. Capgemini Corbus, LLC eClerx Services Ltd. Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. SPi Global Infosys Ltd. Syntel Inc. Insigma Technology Co., LTD InterGlobe Technologies Quatrro Global Services Pvt. Ltd. Sutherland Global Services, Inc. VanceInfo Technologies Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics GlobalServices Outsourcing Analytics Outsourcing September 2012  |  111
2012 Global Services Compendium - GS100

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2012 Global Services Compendium - GS100

  • 1.
    www.globalservicesmedia.com Annual Issue 2012 Annual Global Outsourcing Industry Analysis 2012 Global Services Compendium GS100 Survey þ GS100 List þ GS100 Categories þ ITO Segments þ BPO Segmentsþ
  • 2.
    editor’s note Facing the New Realities The impact of the turbulent global economy on the growth of the services industry continues to be a widely discussed topic. The other such topic is the possible impact of the political backlash against outsourcing. While the latter can be dismissed as political rhetoric in an election year, the former requires some re-strategizing and deftness on the part of service providers. Growth rates are in single digits in the mature economies and the emphasis is on shorter term, single- function deals. Labor arbitrage is still important and service providers continue to seek low-cost locations. Our conversations with many companies during the GS100 survey re- vealed that while companies are seeking acceleration in revenue growth, profits, and other performance parameters; they are more engaged in acquiring the new capabilities required to address technological and social shifts influencing their customer’s business. n Enterprise software enters a phase of renewal driven by mobility, cloud computing and Software as a Service (SaaS), software manufacturers, and developers are turning Ed Nair, Editor to experts in product development. [email protected] n Contact center outsourcing is seeing renewed growth with customer interactions moving over to non-voice channels and social media. n The HR space is being redefined with greater breadth of cloud-based offerings rang- ing from recruitment to talent management. The impact of social media in managing workforce also requires major reorientation in terms of policies and practices. n The real hotspot is analytics outsourcing. Developments on the technology side in the form of cloud, big data, and business intelligence tools have simplified the area but there is still the need for data scientists to perform analytics. This makes the case eminent for outsourcing analytics. n With increasing number of organizations demanding application’s functionality as a cloud-based services rather than on-premises infrastructure, ADM vendors are of- fering more technology as subscription-based solutions and “pay as you go” ADM offerings. These shifts require major investments for both organic and inorganic scale up. Mostly, global service providers are rich with good financial reserves. Therefore, there would be a slew of M&A deals when services companies would acquire technology companies to own pieces of technol- ogy that would help them offer differentiated services. The current model of GS100 is based on market performance and leadership, breadth of services, spread of global delivery capabilities, and customer leadership. Next year, we would extend the model to measure how service providers move towards leveraging platforms and solutions to deliver the next wave of business value. Congratulations to all the GS100 companies!
  • 4.
    Contents 46 27 Segment Analysis n Application Development & Maintenance: On The Road To Recovery/ 27 n OPD: Market is Expected to Reach $19B/ 38 38 n Infrastructure Management Services: Cloud Comes With a Promise/ 46 n ITO: Status Quo Sustained/ 56 66 n Contact Centers: Growth Momentum Continues Amidst Turbulence/ 66 n FAO: All Signs Suggest Maturity/ 75 75 n ISBPO: Being Explored 56 Aggressively/ 86 n PO: The Expanding Scope of PO 94 Contracts/ 94 n HRO: From Cost Savings to Strategic 86 Advantages/ 100 106 n Analytics Outsourcing: Inside The World of Numbers/ 106 100   |  September 2012 GlobalServices
  • 5.
    6 Survey Analysis The 2012 Global Services 100: Defining Leadership in Global IT and Business Advertisers Lists Ø Hildebrando 3 Ø Quatrro 7 GS100 Lists Ø Endava 13 Ø The GS100 List/ 13 Ø Belatrix 17 Ø The GS100 Category Lists/ 19 Ø Hexaware 21 Editorial Team Gulnar Oberoi Ed Nair [email protected] Ø IBA 29 Editor, [email protected] Smriti Sharma Design Team Ø Prokarma 31 [email protected] Bhagbat Pattnayak Smita Vasudevan Harnek Singh Ø Cybage 36 [email protected] Pramod S Rawat Sourabh Chandra Pushp Ø Harbinger 41 [email protected] Cover: Pramod S Rawat Ø Great Idea 44 Pradeep Gupta Sales Marketing Ø Mexico IT 49 Chairman MD Satish Gupta Hoshie Ghaswalla AVP, satishg@cybermedia. Ø EPAM 53 CEO, Media Business co.in Ibrahim Ahmad Gary Bindra Group Editor Ø Luxoft 59 [email protected] GlobalServices September 2012  | 
  • 6.
    SpecialReport Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis   |  August 2012 GlobalServices
  • 7.
    Advertorial Quatrro Global Services– SpearheadingBPO Industry to “Beyond the Existing” Quatrro has realized the benefits of first mover by offering state-of-the-art platform based solu- tions to its clients. It’s businesses are remarkably different compared to most of the other players in the industry whose focus continues to be on headcount, utilizing client owned technology for process delivery and cost reduction while Quatrro’s value proposition is primarily centered on utilizing Quatrro owned / customized technology, platform based services and revenue enhancement. Quatrro leads its peers by at least 3-5 years in servicing the mid market through right shore delivery. Stressing that SMB needs are remarkably dif- ferent from large enterprises, Raman says, “Mid market clients are value conscious and actively seek a lower total cost of ownership. Focusing on cost and transformation led value proposition alone will not help the service providers fulfill the mid market needs. The focus needs to be on enhancing the business value for SMB clients”. Q Illustrated below are various drivers that em- uatrro is recognized as one of the power Quatrro deliver significant value to its mid leading Business Process Outsourc- market clients: ing companies, focused on offering Commenting on Quatrro’s current success, Raman platform based services to Small and adds,” The adoption of our services by over 11,000 Medium Businesses (SMBs) globally. The company SMB / SOHOs and leading multi- national companies which is spearheaded by the Guru of Indian BPO for their franchise operations is a colossal endorse- industry, Raman Roy, has taken rapid strides over ment of our business strategy. This has been further the years and has lent true meaning to its tagline endorsed through the alliances that we forged with “Beyond the Existing”. It currently has over 130 various technology players in taking their services to enterprise clients, 11000+ SMB SOHO custom- the mid-market, otherwise found unviable by them.” ers and 500,000+ individual customers in multiple Summing up, Raman says that Quatrro has geographies with diverse services covering Risk architected the birth of yet another industry in Management, Financial Processing, Technical Solu- the services space – the industry of platform based tions, Mortgage Processing, Interactive Entertain- business services that have no geographic barriers ment and Knowledge Services. or limitations.
  • 8.
    cover story The 2012GS100: Defining Leadership This is neither in Global IT a study of 100 companies nor a survey aimed and Business at choosing hundred best companies Process based on financial performance. Hundred best Outsourcing companies they are; chosen through a rigorous methodology...   |  September 2012 GlobalServices
  • 9.
    survey analysis T his is neither a study of 100 companies nor IT Outsourcing Segments a survey aimed at choosing hundred best Total- $21.2B companies based on financial perform- SO Others 4% 5% ance. Hundred best companies they are; Testing 5% chosen through a rigorous methodology that eval- OPD 7% uates each company across multiple dimensions, ADM 38% measured both quantitatively and qualitatively. ES The study presents a complete view of the dynam- 8% ics of the most significant segments that make up the IT and business process outsourcing industry. IMS This is not a list of the 100 largest outsourcing 14% vendors. This list reflects the diversity and overall EA 19% landscape of the service provider community in terms of company sizes, countries of origin and BPO Segments countries of delivery. Total- $11B FAO The GS100 Methodology 8% HRO I/S Companies who opted to participate in the sur- 20% 5% vey were asked to share exhaustive information through an online survey done during 05/12 and KPO 06/12. The top 100 list and the names in the catego- 9% CC ries are derived using a scientific research method- 53% PO ology based on several qualitative parameters. 4% CONTRACT SIZES Customer Base- ITO BPO IT Outsourcing (# Customers, 130 Cos.) Upto $5M 15444 2586 $5M to $19M 357 165 New Customers-2011 Existing Active Customers $20M to $34M 177 54 $35M to $50M 55 28 Others 987 342 IT Strategy $51 M to $99 M 23 27 and 809 420 Consulting Total IT O/S $100M to $299 M 14 3 1775 583 IM $300M to $499 M 4 3 2876 285 OPD $500M to $749 M 4 7 1586 697 ES $750M to $ 1B 3 8 885 551 EA $ 1 B to $ 2 B 1 2 4021 967 ADM 1474 More than $ 2 B 0 5977 0 1000 2000 3000 4000 5000 6000 7000 8000 (# of contracts, 130 companies) GlobalServices September 2012  | 
  • 10.
    cover story survey analysis Revenue by Geographies Customer Base- BPO ($65B, 130 cos.) (# Customers, 130 Cos.) North America New Customers-2011 South America Existing Active Customers Europe Africa ME Asia Japan Industry-specific 960 328 Australia Australia Japan KPO 3809 780 5% 2% Asia 14% Procurement 222 60 Africa North ME CC 3145 610 America 3% 47% HRO 396 34 Europe 733 96 FAO 24% South 0 1000 2000 3000 4000 5000 America 6% Verticals Row 4 Telecom 11.11 Retail Consumer Products 12.93 Media Information Services 8.40 Manufacturing 10.45 % Rev. 2011 Life Sciences 9.11 Insurance 7.24 High Tech 11.26 Healthcare 8.27 Government 5.86 Energy, Resources Utilities 6.48 Banking Financial Services 15.84 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00 10  |  September 2012 GlobalServices
  • 11.
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    GS100 GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list
  • 13.
    Quality. Productivity. innovation. Endava PErhaPs it’s timE to think again about whErE you outsourcE Endava is a leading IT services organisation, with offices in London, New York, and Glasgow, and delivery centres in Romania and Moldova. Utilising our distributed agile delivery model we are able to deliver significant improvements to quality and productivity enabling our clients to deliver better results from their budgets — ApplicAtion Development — testing — ApplicAtion mAnAgement — DigitAl meDiA — infrAstructure Hosting AnD support london nEw york glasgow romania moldova endava.com 2012 Finalist
  • 14.
    2012 GS100 List 2012GLOBAL SERVICES 100 COMPANIES Sl. No. Company Name 1 Achievo Corporation 2 Aditya Birla Minacs Worldwide Limited 3 Aegis Limited 4 Affinity Express 5 AJUBA iNTERNATIONAL LLC 6 Altisource Portfolio Solutions S.A 7 Aspire Systems (India) Pvt. Ltd. 8 Auriga Inc. 9 Beyondsoft Corporation 10 BLEUM INC. 11 Blue Star Infotech Limited 12 Capgemini 13 Chinasoft International Ltd. 14 CiT 15 Ciklum 16 City Park Technologies 17 Collabera Inc 18 CompuCom Systems Inc. 19 Convergys Corporation 20 Corbus, LLC 21 CSC 22 Cybage Software Private Limited 14  |  September 2012 GlobalServices
  • 15.
    2012 GS100 List Sl. No. Company Name 23 DataArt 24 Datamatics Global Services Limited 25 Dextrys 26 eClerx Services Ltd. 27 Endava UK Limited 28 EPAM Systems Inc. 29 Exigen Services 30 EXL Service Holding Inc. 31 Expert Global Solutions 32 First Line Software 33 Firstsource Solutions Ltd 34 FPT Software Co. Ltd. 35 Freeborders, Inc. 36 Genpact Limited 37 GlobalLogic 38 Globant 39 Harbinger Systems Private Limited 40 HCL Technologies Ltd. 41 Hexaware Technologies Limited 42 Hildebrando 43 Hinduja Global Solutions Limited 44 IBA Group 45 iGATE Corporation 46 Indecomm Global Services (I) Pvt Ltd 47 Infosys Ltd. 48 Infotech Enterprises GlobalServices September 2012  |  15
  • 16.
    2012 GS100 List Sl.No. Company Name 49 Innominds Software Pvt. Ltd. 50 Insigma Technology Co., LTD 51 InterGlobe Technologies 52 Intetics Co. 53 iSoftStone Information Technology (Group) Co., Ltd 54 ITC Infotech 55 Itransition Software Development Company 56 KPIT Cummins Infosystems Ltd. 57 Lionbridge 58 Lohika Systems, Inc 59 Luxoft 60 MAVERIC SYSTEMS LIMITED 61 MERA 62 Microland 63 Mindteck (India) Ltd. 64 MindTree Limited 65 Mistral Solutions Pvt. Ltd. 66 Nagarro, Inc. 67 Neilsoft Limited 68 Neoris 69 Neusoft Corporation 70 NIIT Technologies 71 NorthgateArinso 72 Omnitech InfoSolutions Ltd. 73 Persistent Systems Limited 74 ProKarma, Inc 16  |  September 2012 GlobalServices
  • 18.
    2012 GS100 List Sl.No. Company Name 75 Quatrro Global Services Pvt. Ltd. 76 RCG Global Services 77 Reksoft 78 SaM Solutions 79 Scicom (MSC) Berhad 80 Serco Global Services 81 Sitel Operating Corporation 82 SoftServe, Inc. 83 Sonata Software Limited 84 SPi Global 85 Stream Global Services 86 Sutherland Global Services, Inc. 87 Symphony BPO Solutions Sdn Bhd 88 Symphony Teleca Corp 89 Synapsis SpA 90 Syntel Inc. 91 Talentica Software (India) Pvt Ltd 92 Unisys Corporation 93 VADS Business Process Sdn Bhd 94 ValueLabs 95 VanceInfo Technologies 96 Virtusa Corporation 97 WNS Global Services PVT. Ltd 98 Xceed 99 Xchanging Plc 100 Zensar 18  |  September 2012 GlobalServices
  • 19.
    2012 GS100 categoryLists 2012 GLOBAL SERVICES 100 CATEGORY LISTs Top Global ITO Leaders EPAM Systems Inc. Capgemini Genpact Limited CompuCom Systems Inc. Infotech Enterprises CSC ITC Infotech HCL Technologies Ltd. MindTree Limited Infosys Ltd. Neoris Unisys Neusoft Top Global ADM Leaders VanceInfo Technologies Capgemini Zensar CSC Emerging Mid-Tier Global ADM Leaders HCL Technologies Ltd. iGATE Corporation BLEUM INC. Infosys Ltd. CiT Insigma Technology Co., LTD FPT Software Co. Ltd. Syntel Inc. IBA Group Top Mid-tier ADM Companies InterGlobe Technologies Chinasoft International Ltd. KPIT Cummins Infosystems Ltd. Collabera Inc MERA GlobalServices September 2012  |  19
  • 20.
    2012 GS100 categoryLists NIIT Technologies Leading Mid-tier Infrastructure Management Vendors ProKarma, Inc Aegis Limited SoftServe, Inc. Chinasoft International Ltd. Sonata Software Limited Collabera Inc Specialty ADM Vendors Genpact Limited Achievo Corporation Insigma Technology Co., LTD Cybage Software Private Limited MindTree Limited DataArt NIIT Technologies Endava UK Limited Sonata Software Limited Exigen Services Leading Global OPD Vendors Freeborders, Inc. EPAM Systems Inc. Nagarro, Inc. GlobalLogic Persistent Systems Limited HCL Technologies Reksoft Infosys ValueLabs Infotech Enterprises Top Global Infrastructure Management Vendors Lionbridge Capgemini Persistent Systems Limited CompuCom Systems Inc. Symphony Teleca Corp CSC VanceInfo Technologies HCL Technologies Ltd. Leading Mid-tier OPD Vendors Infosys Ltd. Beyondsoft Corporation Microland Limited Cybage Software Private Limited 20  |  September 2012 GlobalServices
  • 21.
    PARTNER WITH ATEAM OF EXPERTS Global IT Services and Consultancy Provider with the expertise and resources to meet and exceed your expectations every time Verticals Horizontals Certifications Banking, Financial Services Enterprise Services (SAP, PeopleSoft, Oracle, Microsoft) CMMI Level 5 Travel and Transportation Quality Assurance and Testing Services (QATS) ISO 9001 Insurance and Healthcare Infrastructure Management Service (IMS) ISO 27001 Manufacturing Business Intelligence Analytics SAS 70 Type II Energy and Utilities Business Process Outsourcing PCI DSS Human Resource Information Technology / HR Outsourcing Enterprise Risk Management www.hexaware.com
  • 22.
    2012 GS100 categoryLists Globant Leading Engineering Services Vendors Hildebrando Collabera Inc iGATE Corporation HCL Technologies Ltd. Luxoft Infosys Ltd. MindTree Limited Infotech Enterprises Leaders- Global Enterprise Insigma Technology Co., LTD Applications Deployment iSoftStone Information Technology (Group) Capgemini Co., Ltd CSC KPIT Cummins Infosystems Ltd. HCL Technologies Ltd. Neilsoft Limited Infosys Ltd. Global Leaders- Testing Services KPIT Cummins Infosystems Ltd. Capgemini Leaders- Mid-market Enterprise CSC Applications Deployment iGATE Corporation EPAM Systems Inc. Infosys Ltd. Genpact Limited Mid-Tier Leaders- Testing Services Hexaware Technologies Limited Beyondsoft Corporation iGATE Corporation Collabera Inc Insigma Technology Co., LTD EPAM Systems Inc. iSoftStone Information Technology (Group) Co., Ltd Hexaware Technologies Limited Neoris Hildebrando S.A Sonata Software Limited Luxoft VanceInfo Technologies MindTree Limited 22  |  September 2012 GlobalServices
  • 23.
    2012 GS100 categoryLists Neoris InterGlobe Technologies Top Global BPO Leaders Scicom (MSC) Berhad Aegis Limited Symphony BPO Solutions Sdn Bhd Convergys Corporation Xceed Expert Global Solutions Zensar Technologies Genpact Limited Leading Mid-tier BPO Providers Sitel Operating Corporation Altisource Portfolio Solutions S.A Stream Global Services eClerx Services Ltd. Xchanging Plc EXL Service Holding Inc. Global BPO Challengers HCL Technologies Ltd. Aditya Birla Minacs Worldwide Limited Hinduja Global Solutions Limited Firstsource Solutions Ltd Quatrro Global Services Pvt. Ltd. Infosys Ltd. Serco Global Services NorthgateArinso SPi Global Sutherland Global Services, Inc. Syntel Inc. VADS Business Process Sdn Bhd Global Customer Management WNS Global Services PVT. Ltd Leaders Global BPO Niche Leaders Aditya Birla Minacs Worldwide Limited Corbus, LLC Aegis Limited Datamatics Global Services Limited Capgemini Hexaware Technologies Limited Convergys Corporation Indecomm Global Services (I) Pvt Ltd GlobalServices September 2012  |  23
  • 24.
    2012 GS100 categoryLists Expert Global Solutions Leading Mid-tier FAO Vendors Firstsource Solutions Ltd Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. Hinduja Global Solutions Limited Insigma Technology Co., LTD Sitel Operating Corporation Quatrro Global Services Pvt. Ltd. VADS Business Process Sdn Bhd Sutherland Global Services, Inc. Mid-tier Customer Management Global Leaders- Industry-specific BPO Vendors Altisource Portfolio Solutions S.A Altisource Portfolio Solutions S.A Genpact Limited CompuCom Systems Inc. Infosys Ltd. HCL Technologies Ltd. Stream Global Services Infosys Ltd. Sutherland Global Services, Inc. Scicom (MSC) Berhad Unisys SPi Global Sutherland Global Services, Inc. Industry-specific BPO Niche Leaders Xceed Aditya Birla Minacs Worldwide Limited Global FAO Vendors Aegis Limited Capgemini Ajuba International EXL Service Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. Infosys Ltd. Hexaware Technologies Limited WNS Global Services Hinduja Global Solutions Limited Xchanging Indecomm Global Services (I) Pvt Ltd 24  |  September 2012 GlobalServices
  • 25.
    2012 GS100 categoryLists InterGlobe Technologies Capgemini Mindteck (India) Ltd. eClerx Services Ltd. Neusoft Corporation Genpact Limited Quatrro Global Services Pvt. Ltd. SPi Global SPi Global Syntel Inc. Global Procurement Management Leaders- Specialty KPO Leaders Aegis Limited Capgemini Affinity Express Corbus, LLC Chinasoft International Ltd. Genpact Limited CompuCom Systems Inc. HCL Technologies Ltd. Corbus, LLC Infosys Ltd. Datamatics Global Services Limited WNS Global Services HCL Technologies Ltd. Xchanging Infosys Ltd. Global HRO Vendors Insigma Technology Co., LTD Capgemini InterGlobe Technologies NorthgateArinso Quatrro Global Services Pvt. Ltd. Global Knowledge Process Leaders Sutherland Global Services, Inc. Aditya Birla Minacs Worldwide Limited VanceInfo Technologies GlobalServices September 2012  |  25
  • 26.
    SpecialReport Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis   |  August 2012 GlobalServices
  • 27.
    Segment Analysis ADM Application Development Software development Maintenance : activities in the Application On the Road Development Maintenance (ADM) To Recovery Outsourcing space may get postponed in the current By Sourabh Chandra Pushp downturn, but it will return with a throttle effect when the economy recovers GlobalServices September 2012  |  27
  • 28.
    Segment Analysis ADM S oftware development activities in IT market is going the Application Development through a period Maintenance(ADM) Outsourcing space may of massive change. get postponed in the current downturn, As enterprise but it will return with a throttle effect when the software enters a economy recovers. great renaissance IT environment is facing extreme cost pressures period driven with increased expectations and IT executives ex- by mobility, pect more from their ongoing IT applications. ADM cloud computing outsourcing offers the full scope of services that and Software accelerates IT spend return— development, imple- as a Service mentation and management. It drives measurable (SaaS), software improvements in product quality, reducing defect manufacturers density and increasing development productivity. and developers Outsourced ADM contracts are said to improve are increasingly productivity by up to 45 percent while it reduces turning to experts IT-costs by as much as 50 percent. in product ADM outsourcing is a proven means by which development to companies can significantly reduce their costs, help them deliver continuously improve the performance, stability innovation and to and availability of their applications and free up market faster. their existing IT-staff to focus on their strategic Keith Higgins initiatives. It allows customers to reduce the cost chief marketing officer, and maintenance risk of all ongoing applications, Symphony Services while still retaining much needed control of their IT OPEX and core business focus. based offshore vendors like TCS, Infosys, Wipro and The ADM Market HCL, ADM activity still constitutes a large chunk of The ADM market is expected to grow from $51 B in the overall IT outsourcing. Recent years have seen 2010 to approx $63 B by 2014 at a rate of 5.7 percent. the entry of other mid-tier vendors like Neoris, By 2015, Forrester expects the market for devel- Auriga and Softtek who have broken ground with opment services to approach $69B USD. non-India offshore delivery. However, India contin- The key ADM themes that dominated the ues to be the leading offshore location. market in 2011 were Cloud, Agile, Security, Analyt- The in-house delivery of IT application, main- ics. These themes have held sway as providers and tenance and processes are still dominant in 2012- buyers both look at taking advantage of the trans- 2013. Research carried by Horses for Sources forming AMD landscape. The explosion of technol- predicts 95% of ADM buyers reporting positive ogy and digital content, more pervasive network outcomes. ADM outsourcing saw near around 35 connectivity and the continued proliferation of percent inshore activity together with more than smart hand-held devices has completely reshaped 30 percent outsourced activity as sourcing model the ADM market and will continue to dominate. for managing the IT business. Companies have a The ADM segment is still the mainstay of the IT renewed focus on maintenance operations and outsourcing market. Led by US-based majors such servicing existing applications is now of a greater as IBM, Accenture, HP and Cognizant and India- importance to them. 28  |  September 2012 GlobalServices
  • 30.
    Segment Analysis ADM The worldwide source ADM market gets in the play easier than ever. Open source and collaboration tools from spending on Dropbox to Linux-Ubuntu and to Cloud platforms the enterprise such as AWS Elastic Beanstalk, application develop- application ers across the globe are expecting this to follow for coming years which clearly means new market software is expected implementations ADM outsourcing. to cross $120.4B ADM Buyers across geographies continued expanding their operations. While ADM market in 2012, with a 4.5 saw larger number of less-value deals, well-known percent increase names in the ADM space signed greater number from 2011 spending of contract renewals. North America continued to hold ace spot with the largest number of ADM of $115.2B deals, next to Europe, on a year-to-year basis. Cloud computing continued to be increasingly adopted in newer ADM deals. ADM Buyers are expecting nothing less than great quality, superior customer service and most Changing Landscape: Enterprise important of all, top-notch solutions. In the coming Applications Software time, more contracts are expected to pass on to “The global marketplace is still experiencing a se- emerging ADM destinations, like Brazil, Russia and ries of conflicting and contrasting economic news Eastern Europe. reports, and the full impact of the economic uncer- The ADM industry is going through a signifi- tainty on the enterprise software markets may not cant transformation in their licensing, delivery and be readily assessable until the end of the first half support models. Despite a trend towards increased of 2012,” asserts Tom Eid, research vice president ADM outsourcing to lower-wage economies, the at Gartner in the official press statement. Spending cost of developing and maintaining applications in 2012 is anticipated to focus on industry-specific can still consume more than half of the total IT applications; upgrades to established, mission-criti- budget. cal software; integrating and securing established The most notable theme that changed almost systems and infrastructure; and software as a serv- all ongoing trends for ADM market is the Cloud. ice (SaaS) deployments representing extensions to, With its on-demand, utility-pay for what you use or replacement of, existing applications and new and resource-sharing model, Cloud has galva- solutions. nized businesses and vendors across the industry According to Gartner, the worldwide spending and ADM market landscape. All the leading ADM on the enterprise application software is expected players have in 2011-12 enabled sections of their to cross $120.4B in 2012, with a 4.5 percent in- portfolio as cloud ADM service offerings with plans crease from 2011 spending of $115.2B. in the pipeline to widen their capability for Cloud With increasing number of organizations ADM market. Other prominent ADM market trends demanding application’s functionality as a cloud- are- Enterprise App Stores and Desktop Services. based services rather than on-premises infrastruc- The Mobile and Cloud application develop- ture, ADM vendors are offering more technology ment is the hottest place to be in the IT industry in as subscription-based solutions and “pay as you the coming year. With the rise of productivity and go” ADM offerings. This is expected to be a much collaboration tools becoming more refined, open needed step by ADM providers positioning them as 30  |  September 2012 GlobalServices
  • 32.
    Segment Analysis Cloud When everyone is speaking computing about reducing conversations costs especially are slowly overhead in particular, morphing the application’s ADM market in quality cannot be compromised, and terms of cloud this realization computing has led to a lot of focus application on application platforms maintenance as a discipline over the last few years. more cost-effective and as a way to counter the ef- Ashok Saxena fects of economic recession. SaaS and cloud-based Head, India Engineering services are helping established ADM vendors to Centre, Kronos expand their overall revenue growth. On the account of enhanced SaaS and cloud ap- plication use, enterprise ADM market continues to market is experiencing an ongoing boom in soft- evolve. As tighter capital budgets demand accurate ware development for cloud computing that takes leaner alternatives the ADM growth graph varies advantage of benefits but also issues that will open within geographies. up opportunity for new software development ver- ticals. Industry experts believe, the impact of cloud Cloud and Android Based service on the ADM market will change the selling Application Development and licensing of IT-applications, the way applica- Cloud computing conversations are slowly mor- tion data are handled will undergo a major shift phing the ADM market in terms of cloud comput- which will induce the data driven applications into ing application platforms. Much of its expectation, the mainstream market. cloud-based ADM are becoming an IT norm and However, for software development the un- less of an exception. In the cloud world, software derlying challenges of Cloud will come into sharp development has become more complex in terms focus as Cloud’s increasing benefits and risks will of security, reliability, usability and performance prompt the ADM providers to come to grips with and will keep the software development industry it. busy. Besides, Cloud Android is also accelerating the Ashok Saxena, Head, India Engineering Cen- ADM landscape. The unprecedented growth of An- tre, Kronos opines how the whole ADM space has droid devices and the demand for suitable Android changed to serve the market forces and meeting applications are fueling a huge demand for ADM. end user expectations. Ashok says, “Most of the Ron DuPlain, Freelance Lead Android Mobile cloud migrations we see today are applications Web Engineer, says, “Today when everything is for physical infrastructure and are now taking full centered around mobility, application develop- advantage of the cloud possibilities. The ADM ment has taken vital transformation, both in terms 32  |  September 2012 GlobalServices
  • 33.
    ADM of development andstrategy. Application develop- estimated at a five-year compound annual growth ment companies are focused to help subscribers rate (CAGR) of 15.4% through 2015. While the U.S. realize the potential of rapidly evolving mobile has led other regions in adoption of maintenance technologies.” services, in terms of both traditional and newer cloud-based maintenance services, there is an Application Maintenance and increase in regional interest and adoption of these Testing services in Canada, Latin America, Western Europe, All application products need sufficient mainte- and parts of Asia-Pacific. nance and both–investors and developers tend to Independent maintenance and testing for appli- heavily focus on it. cations is growing at 40 to 50 percent globally and There has been a lot of innovation in ADM with expected growth of about 35 to 40 percent space and several maintenance tools and processes in offshore locations. While various industry report have evolved which enhanced the maintenance forecast various geographies to evolve as major phase which in turn translates the overall quality ADM locations. India has grown to become the larg- of the application. est destination for outsourcing of software mainte- The market for discrete application mainte- nance and testing services, accounting for 32 per- nance worldwide is expected to experience solid cent of the total global ADM outsourcing share. The growth as cloud and mobility drive next phase of application maintenance industry for India is grow- evolution, according to a latest report from IDC ing, export revenues and the number of employees research. IDC estimates that global maintenance have doubled over the last four years in domestic and testing services spending reached $9.4 B in space which is projected to cross $1.5B by 2020. It’s 2010, with projections for worldwide growth quite interesting to note that, US alone spends a GlobalServices September 2012  |  33
  • 34.
    Segment Analysis ADM total of $59B on software maintenance. Of this total There has been spend, $13 B is outsourced as a service to the Asian a drastic shift countries, India in particular. The ADM market has in the amount demonstrated a CAGR of 19-23 percent year-on-year of development growth, in comparison to 47 percent by the inde- being done in the pendent maintenance and testing services. integration and Kalyana Rao Konda, Vice President, AppLabs, testing stages says-”The consumer demands are leading to in the lifecycle technology advancements and fierce competition of an IT project, between providers. The survival of providers has compared to what become subjective to the quality of the product was happening with superior service. Software maintenance and ten years back. testing plays a vital role in providing reliability This has resulted and quality to consumers to ensure that they don’t in an increased have a bad experience on using or buying the demand for product they like.” services on Data The current competitive environment and management/ consumer demand for sophisticated applications is BI/Analytics, putting increased pressure on businesses to deliver Integration and quality apps at reduced costs and within shorter Testing sides of time period. This ‘no scope for error’ environment the business, has increased the need for effective software test- which will ing. Today, it has become one of the fastest grow- continue to be ing areas of the corporate IT expenditure. On the key opportunity other hand, meeting customer expectations has areas for all now become a challenge for enterprises across all organizations. the industries due to the faster delivery cycles and Krishnamurthy R, increasingly competitive landscape. Senior Vice President Enterprises operating across various industries Head-Global Delivery, and geographies have now realized the need to Collabera deliver quality products/applications and services to meet customer expectations. of some of these massive movements. There are a Conclusion bewildering range of technologies on the market With the economy of developed countries stagnat- today. The good news is that the service industry is ing and the threat of recession retuning to major becoming more and more specialized. Companies global players, companies will continue to rely on that want to take advantage of the hottest initia- software development outsourcing and offshoring tives today – be they Saas, cloud or enterprise mobil- for cost control, lean operations and scalability in ity – can get all the assistance they need. The right 2012. software development service providers will have As cloud, SaaS, mobility and other trends fun- in-depth knowledge of all these platforms and the damentally re-shape software development, there competency to deploy them quickly and at a com- is a large, growing market for specialized product petitive price. They will also offer outcome-based development specialists. 2012 is just the beginning engagement models that fit each client’s needs. 34  |  September 2012 GlobalServices
  • 35.
    ADM Application Development Maintenance Top Global ADM Leaders Capgemini Infosys Ltd. HCL Technologies Ltd. Syntel Inc. Insigma Technology Co., Ltd iGATE Corporation CSC Top Mid-tier ADM Companies Chinasoft International Ltd. EPAM Systems Inc. Infotech Enterprises MindTree Limited Neoris Neusoft ITC Infotech VanceInfo Technologies Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Zensar Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Collabera Inc Genpact Limited Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance GlobalServices Application Development Maintenance September 2012  |  35
  • 36.
    Advertorial Stretching Value. Scientifically. T o be able to ‘differentiate’ innovatively and The second variable is the fact-file of the prospec- effectively holds a key to attaining global tive vendor. The overlap between these two vari- leadership in the business world. The natu- ables determines whether the vendor qualifies for ral reflex of a brick mortar company is to the next step in evaluation. The third variable is the adopt a customer-centric ‘differentiator’. IT Service cost—the ratio of the fact-file vs. cost—which deter- companies behave a little different. The fiercely mines the probability of deal closure. contested battle for talent forces them to oscillate Unfortunately, there is one more key variable that between customer centric and employee-centric dif- is often overlooked. This variable resides between ferentiators. ”Pick any one of the two sides, and then the second and third variable; it represents the effi- inherit the one from ciency of the vendor to the other,” goes the leverage the fact-file hypothesis! into relevant deliveries. This differentiat- The customer’s loy- ing tactic certifies alties are not with the the vendor’s dual vendor’s fact-file but robustness. The seeds tied to satisfactory of Cybage thought project deliveries at a leadership are sown reasonable cost. In the in the innovativeness IT business world, this of our ‘differentia- delivery excellence tor’. We believe that is broadly measured the organization’s under the following differentiator should attribute equation: not be inherited from the visible Quality, Speed, Consistency, Respon- aesthetics but from the grass root siveness, Attrition Risk, Scalability, implementation of productivities. and Value-add—dividends captured The customer-centric and employee-centric dif- with ‘Cost’ in the denominator. ferentiators are like leaves and flowers with great Cybage thought leadership is rooted in the visual appeal but all the flourish and greenery is innovation applied to stretch ‘productivity’ of all at the mercy of the root’s productivity to absorb the above mentioned attributes that together lead nourishment. to customer’s delight and employee’s rewards. To appreciate this pivotal role of productivity, The above attribute equation is comprehensively one needs to dig a little deeper where business optimized, implemented, and internalized organi- partnerships are fortified. Generally, there are three zation-wide at Cybage through this sophisticated variables that a customer juggles with to close on business management software system called the a vendor. The first variable is the overall IT needs. ExcelShore® Model of Operational Excellence.
  • 38.
    Segment Analysis OPD Marketis Expected to Reach $19B By 2015, technology analyst Forrester expects the market for product By Smriti Sharma development services to approach $19B T he business of devel- and market influence oping new and solu- while staying away from tion-customized software marketing and development is the nucleus of thriving risk, it imperative to engineer the technology industry. Product develop- right product, manage it across the ment plays a significant role in getting various phases of its lifecycle, manage economic returns as well as establishing market the copious risks, deliver the product faster to the influence. However, whilst introducing a new prod- market and retaining the capacity to innovate the uct in the market a company is also putting itself at product. The right product strategy is the only way marketing and development risk. to success in the business of software products. To ensure a company wins economic returns Product mangers have repeatedly taken their 38  |  September 2012 GlobalServices
  • 39.
    OPD companies through thejourney of transition from There are a traditional product development to value develop- bewildering range ment. This process calls for a lot more innovation of technologies and this occurs during the stage of engineering. on the market Still the question remains why outsource? It today. The good is outsourced, much like other services, for the news is that the reasons of getting intellectual property in the service industry form of principles of excellence, best practices, is becoming methodologies, process templates, engineering more and more roadmaps, monitoring tools, quality assurance specialized. procedures- carefully applied across various Companies that stages of product development, further resulting want to take in innovation. advantage of the Large Independent Software Vendors (ISVs) hottest initiatives are creating innovation across various domains today can get all such as Cloud enablement, SaaS, Product Lifestyle the assistance they Management, etc. need. This year the product development space is Keith Higgins expected to become increasingly fragmented chief marketing officer, and specialized. Mobility, cloud computing and Symphony Services Software as a Service (SaaS) continue to be the drivers of this industry. Software manufacturers are seeking advice from experts to assist them in also offer outcome-based engagement models driving innovation to market faster and at a lower that fit each client’s needs.” cost. Experts are roped in for specific initiatives revolving around technology, for example, mobil- Market Scenario ity, cloud and SaaS, their industry, business and During pre-crisis times, IT outsourcing was the most vertical segments. frequently adopted strategy by large companies. As software development is re-shaped by Today, ITO practice has found more support amongst cloud, SaaS, mobility, the demand for specialized the mid-market. As for this segment, cost as well as product development is increasing. Keith Higgins, access to skills and services is extremely essential. chief marketing officer, Symphony Services, stated This market segment is also home to some of the in another interview, “2012 is just the begin- most exciting and current technology developments. ning of some of these massive movements. There Taking advantage of this opportunity some of the are a bewildering range of technologies on the independent software vendors are expanding their market today. The good news is that the service footprints in this space. Software companies who industry is becoming more and more specialized. have moved to cloud computing and SaaS have wit- Companies that want to take advantage of the nessed significantly larger opportunities. hottest initiatives today – be they Saas, cloud The pricing models offered by vendors are or enterprise mobility – can get all the assist- outcome based pricing, revenue share pricing ance they need. The right software development and risk reward pricing. These pricing models service providers will have in-depth knowledge of add to the attractiveness of partnerships. In- all these platforms and the competency to deploy creasingly, buyers are employing risk-reward them quickly and at a competitive price. They will partnership model, where the vendors are GlobalServices September 2012  |  39
  • 40.
    Segment Analysis OPD willing to absorb a certain amount of busi- of software development and IT resources, avail- ness model risk, across the lifecycle of products. ability of IT talent pool, positive references from OPDs are expanding in Asia and Europe. The the fellow companies/local business community, challenges that companies who have not made to geographical and cultural proximity, strong re- the outsourcing map of product development face search and development (RD) legacy, political and are poor client-vendor communication, delayed economic stability, Intellectual Property (IP) secu- project delivery, cultural differences etc. rity, proficient English language skills etc. In order to tackle these issues, face-to-face Gartner’s study Predicts 2010: Agile and Cloud communication with their vendor’s project man- Impact Application Development Directions, high- agement and project teams should be increased, lighted, “By 2012 ‘agile development methods will employing additional valuable resources, switching be utilized in 80% of all software development to alternative software development methodol- projects’. Although Scrum will continue gaining in ogy, bringing in assistance (advisories) to enhance popularity over the coming years, organizations vendor relationships, encouraging partnering with will not be successful in their transition unless they different vendors to offer more cost-effective en- move toward a team-focused culture. Very few gagement, etc. organizations use a pure-Scrum approach and most Buyers while zeroing upon a geography should rely on a hybrid approach (waterfall and Agile). keep in mind the following pointers: low costs Organizations struggle to implement true collabo- 40  |  September 2012 GlobalServices
  • 42.
    Segment Analysis OPD ration in the context of globally distributed teams. to call on the best talent available. Incumbency is A situation that has amplified in recent years with no longer the advantage it once was.” outsourcing and offshoring of software develop- 3. According to a recent Gartner survey, 30 per- ment projects. On the other hand, teams who cent of large organizations cited enterprise have successfully moved to Agile see productivity mobility as their top business priority for 2012. improvements especially in ‘the flexibility of the Higgins explains, in the past, the enterprise development team to respond to shifting require- tended to be a closed and homogenous place. ments’. This is especially true for web-based ap- Employees would typically use one type of plication developments where rapid responses to a device – like a Blackberry – to communicate changing environment are critical.” amongst themselves. Enterprises now have to Organizations need to make use of key agile grapple with a dizzying array of business and practices and invest in training and supportive connected mobile devices, all of which need tools’ infrastructure. Those who do not will end in to communicate seamlessly and securely with long-term declines in quality and productivity. one another. By outsourcing their enterprise software mobility department, organizations Top Trends are trying to address this challenge. This year, a 1. Cloud, SaaS and mobility has resulted in a lot large number of companies are buying enter- of investments and companies have started prise mobility as a managed service. generating new tools and technology. Many 4. Gartner predicts that 75 percent of all comput- organizations want to use these tools; however, ing will be in public clouds by the year 2020. they do not have domain knowledge or financ- Cloud computing has revolutionized the man- es to integrate the best ones. Thus, companies ner in which companies operate. The manner are moving to outsourcing partners to get the in which companies employ cloud technology specialist assistance they require. Over the next is changing too. A mixture of cloud applica- 12 months, it is expected that companies will tions, platforms and infrastructure is sourced concentrate on building best-in-class technolo- by organizations. As cloud-based companies gies for their clients. They will then use these are becoming more specialized, they are innovative technologies to create products for encapsulating cloud-based tools in their of- their customers as trusted partners. ferings. There are approximately two million 2. According to the global consultancy Zinnov, 70 users of Salesforce.com around the world and percent of ISVs look at industry benchmarks every 25 million users of Google Apps. Company’s year to re-negotiate contracts with their services products assist software developers to build partner. Increasingly in 2012 ISVs will be looking private development clouds. Software devel- to add rigorous Service Level Agreements (SLAs) oper and other outcome-based conditions to the com- 5. The high adopted rate of personal health man- mercial engagement model with their services agement systems has laid eggs for an increased partners. demand of new applications. Higgins predicted, Higgins opined, “We predict this will create a sig- “By 2015, as many as 500 million smartphones nificant opportunity for specialist service provid- will have a health-related application on them. ers, as more ISVs will move to a multi-source mod- The Veterans Administration in the US is plan- el involving a spectrum of trusted partners. ISVs ning to rollout 100,000 iPAD tablets across 152 will actively seek out specialist help to address hospitals. Next year, we expect to see a host of specific pain points in their businesses, speed in- new vendors enter the market with innovative novation and reduce costs. They will not hesitate connected healthcare solutions.”. 42  |  September 2012 GlobalServices
  • 43.
    OPD Outsourced Product Development Leading Global OPD Vendors Leading Mid-tier OPD Vendors EPAM Systems Inc. Beyondsoft Corporation GlobalLogic Cybage Software Private Limited HCL Technologies Globant Infosys Hildebrando Infotech Enterprises iGATE Corporation Lionbridge Luxoft Persistent Systems Limited MindTree Limited Symphony Teleca Corp VanceInfo Technologies GlobalServices September 2012  |  43
  • 44.
    A City of Financial Delivery Center Hangzhou, China H angzhou is located at southern wing of the Yangtze Delta region, which is the most prosperous area in Eastern China; and also the hub of transportation for airport, rail, road and inner-river in southeast China. As the provincial capital city of Zhejiang, Hangzhou is a city with unique charm and extraordinary potential, enjoyed a long history and culture, unique geographical advantage, healthy natural environment, abundant science and education resources, and solid economic foundation. It ranked No.1 in “China mainland Best commercial City Ranking” by Forbes magazine, reelected “China’s Happiest Cities” for eight consecutive years, China’s top ten Creative City, China’s top ten Dynamic City and top ten low carbon Cities, the highest honor of the model city of Chinese people’s livelihood and achievements. The city will take scientific development as the main theme and focus on adjusting the economic structures. Efforts will be put in to enrich people and increase the city’s competitiveness and social harmony. The urban-rural integration and internationalization strategy being the major means, the city will prioritize the well-being of citizens, emphasize the environmental protection, strengthen its innovative power, support its real economies, boost its cultural industries and uphold its open-up policy. The urban-rural integration and internationalization mark high-level of urbanization, which also sets path for and facilitates the sustainable development. The two tasks must be embodied in every respect of the city’s social and economic development to subsequently optimize the allocation of production factors, invigorate the economic development, expand the development space and upgrade the development level, as a result of which the city’s people will share the modern civilization and happy lives. To prioritize the well-being of citizens, the city will be dedicated to solving problems and addressing difficulties in the aim of enriching and benefiting people. To protect the environment, the city will aim to create the first-class ecological, living, legal, administrative and business environment in order to improve its advantage in this aspect. International Financial Outsourcing Center
  • 45.
    To strengthen theinnovative power, the city will promote the innovation in idea, technology, system, culture and service so as to improve its creativity and development power. To support its real economies, the city will view real economies as the cornerstone, and continuously improve the core competitiveness through industrial structure upgrading. To boost the cultural industries, the city will continue to explore its cultures and traditions in order to carry along and broaden. In addition, the city will seek to realize the cultural prosperity and development in a major degree for the improvement of soft power. To uphold the open-up, the city will widen and broaden the degree of opening up, and view open-up as the power of reform, development and innovation. In recent years, Hangzhou has issued a series of policies to focus on the implementation of the innovation-driven strategy, accelerate the development of innovative economy, and speed the development of Hangzhou ten major industries —— cultural and creative, tourism and leisure, financial services, e-commerce, information software, advanced equipment manufacturing industry, the Internet of Tings, biomedicine, energy saving, new energy; especially, vigorously promoted the priority development of service industry, optimizing the development, and the main engine role of the services sector in the Hangzhou Economic Development was more prominent. By the end of 2011, there are 22 Hangzhou enterprises among the top 500 Chinese enterprises, 30 companies among the top 500 Chinese manufacturing enterprises, 37 enterprises among the top 500 Chinese service enterprises, 56 private enterprises among the top 500 private enterprises in China; more than 20 national services industry high-tech service industry base, the National Electronic Information Industry Base, and the Hangzhou national software industry base, etc. Demonstration City of Chinasourcing Hangzhou
  • 46.
    segment analysis INFRASTRUCTURE MANAGEMENT OUTSOURCING: CLOUD COMES WITHA PROMISE By Sourabh Chandra Pushp High volatile economic downturn coupled with the ease of cloud delivery is resulting in a surge of demand for IM outsourcing 46  |  September 2012 GlobalServices
  • 47.
    IMS Two prominent Most of services offered by trends that will software vendors shape the IM today will soon landscape are “As- be offered as ‘as- a-Service’ because a-Service” Offerings it gives cost and Enterprise efficiency which is acceptable Services to most of the customers. As such, enterprises A lthough, the global macroeconomic will eventually uncertainty will result in sluggish IM be forced to outsourcing activity, the current infra- standardize their structure market is evolving rapidly. infrastructure Combined with advances in standards-based infra- management structure, data center transformation, and utility- processes. based cloud computing, the outlook for IM market Brian J Manning continues to be dynamic and exciting. President Managing The Global IM market is expected to touch $180 Director, CSC India B by 2013 and to $355 B by 2016 from $269 B in 2011. Worldwide Remote Infrastructure Manage- ment (RIM) Market size is also expected to be in ture in particular will witness a significant growth. the mark of $95 -$108 B. This is accompanied by This is supported by the fact- a significant number worldwide IT spending forecast to total $3.7 tril- of IT contracts is coming to end. Analysts estimate, lion in 2012, a 2.5 percent increase from 2011. the TCV for the deals that would come to an end in Emerging markets will generate $1.22 trillion next 18 months is around US$85 B. “Infrastructure in IT spending in 2012, representing more than outsourcing, data center and network tower deals 31 percent of the worldwide total. The emerging make up a significant portion of the ITO contracts regions of Asia/Pacific, Latin America, the Middle expiring in the near term,” says Ross Tisnovsky, East and Central and Eastern Europe, continue to senior vice president, Everest Group. “Disruptive show positive IM outsourcing momentum. And, next generation technologies, such as cloud com- this will see half of emerging market IT spending puting, will introduce new benefits and challenges activity representing nearly $658 B for the year that the market didn’t see five years ago. As buy- 2012. This reasons why the market remain far from ers are looking for more than just cost savings.” saturated. Infrastructure outsourcing constitutes some of the largest ITO contracts coming to term in both North Deals and Contracts America and Western Europe. Cloud computing will Most of the IM deals over the last few months have clear visible impact on IM market as Remote saw a renewal in 2011-12. Large deals continue to infrastructure management outsourcing (RIMO) skew the average deal size. North America saw the as a model is maturing quickly and entering into a maximum activity for deals and contracts followed phase of sustained growth. by UK and Rest of Europe. The IT market, Infrastruc- The buyers’ ITO spending shift will be towards GlobalServices September 2012  |  47
  • 48.
    segment analysis IMS the smaller deals which will challenge the margin coming with multiple infrastructure services models pressures for service providers. It’s very obvious and competing with traditional IT infrastructure that the IM deals will increasingly be driven by outsourcing firms. This trend will become stronger cloud and RIMO. In the past, technical and percep- in 2012. tion issues caused cloud-infrastructure adoption Two prominent trends that will shape the IM challenges. But, things have changed now and landscape are “As-a-Service” Offerings and Enter- investments in new innovative solutions with hard prise Services. Both trends are increasingly becom- focus to boost the IM market. ing the norm for Infrastructure services and have Infrastructure spending will be driven by larger gained a considerable adoption momentum. Cloud buyers and will focus on outsourcing economics infrastructure trend has have been shaping up and service provider consolidation. The BFSI quite aggressively and service providers have vertical in particular, will con- already embraced while clients are tinue to be the dominant adopting it. infrastructure segment; Infrastructure outsourc- other verticals such as ing segment has consist- healthcare and hos- ently been the fastest pitality will also growing segment witness strong in- within IT services- frastructure ac- share in the over- tivity. Speaking all IT services of geogra- segment has phies, North increased from America, will about 15 per continue to cent in FY2008 dominate to about 17 per whereas Asia cent in FY2012. Pacific is ex- pected to grow Cloud much faster. Computing Comes with a Trends That will Promise Reshape the IM Cloud scripts the story of Landscape Infrastructure Management IT infrastructure outsourcing (IM) and there is a reason has been one of the mainstays for that. Cloud comput- of IT outsourcing industry. ing is fast emerging on the Over the years, its composition IT infrastructure scenario and is has changed significantly and likely to play a disruptive role, with traditional infrastructure model maximum impact visible initially in data has undergone a massive change. center and applications projects. With advanced technologies remote As cloud emerges as a new stor- server management has become the age market, competition is increas- de facto standard for infrastructure ing with leading infrastructure landscape. This has led to new names vendors. Although the external 48  |  September 2012 GlobalServices
  • 50.
    segment analysis private cloudinfrastructure market is still in it’s Cloud approach nascent stage, both small and large enterprises are to infrastructure utilizing it heavily and are the primary consumers will change of Cloud infrastructure. the traditional By 2016, at least 50 percent of enterprise us- landscape as ers will rely primarily on enterprise-mobile client they offer a instead of a desktop client which means a clear much cheaper shift in the traditional IT infrastructure. It’s well alternative supported by the fact that more than one third to traditional of the digital data would be stored on the cloud infrastructure– infrastructure by 2016. In 2011 just 7 percent of some businesses consumer’s digital data was stored in the Cloud can cut their which will grow phenomenally to whooping 36 operational costs percent in 2016. by as much as 85 Recent IDC cloud research shows that world- percent if they wide revenue from public IT cloud services ex- opt for cloud ceeded $21.5 B in 2010 and will reach $72.9 B in infrastructure. 2015, representing a compound annual growth Sharmila Sahani rate (CAGR) of 27.6percent. This rapid growth rate Mulligan, is over four times the projected growth for the Founder CEO, worldwide IT market as a whole (6.7percent). By ClearStory Data 2015, one of every seven dollars spent on pack- aged software, server, and storage offerings will be through the public cloud model. The cloud move- Brian J Manning, President and Managing ment is about much more than the cloud. Analysts Director, CSC India, says “While no one can pre- predict an aggregation of Cloud offerings located dict exactly how the IT services marketplace will in the same data center to provide appropriate change, we’re confident that client demand will levels of performance, security, manageability and grow very rapidly for cloud computing. In 2012, availability. the global market for cloud services is predicted The cloud is no longer a competitive advantage, to surge to US$148.8 B in 2014. This shows that but has become an operational necessity. Results there will be a huge transformation in the business from a recent KPMG survey show that 81percent model of any organization.” of businesses are either planning their initial cloud In the year 2012, the impact of the shift to computing forays, are in early or advanced stages cloud computing will become apparent. One of of experimentation or have full implementations. the first obvious effects will be the cloud-driven But before moving to the cloud, businesses first transformation of whole industries. Cloud applica- need to examine their current IT infrastructure, us- tion platform/PaaS wars will intensify. Phil Fersht, age and needs. founder of outsourcing consultancy Horses for Worldwide software-as-a-service (SaaS) revenue Sources, calls cloud services the foundation for is forecast to reach $14.5 B in 2012, a 17.9 percent next-generation enterprise sourcing solutions. He increase from 2011 revenue of $12.3 B, according believes cloud services will make traditional deliv- to Gartner, Inc. SaaS-based delivery will experience ery of IT services more efficient and cost-effective. healthy growth through 2015, when worldwide He adds, “This new class of outsourcing has the po- revenue is projected to reach $22.1 B. tential to unlock tremendous value for customers.” 50  |  September 2012 GlobalServices
  • 51.
    IMS The global cal. Also, it provides massive compute power that previously would have only been affordable for infrastructure select companies.” market will grow Large Internet companies were the first to 4.4 percent and leverage the power of the cloud infrastructure. By virtue of their business, they had the easiest reach £463B by 2015 time understanding the pros and cons of the cloud and will hit a 4.5 infrastructure, and they already had the talent in- house to take advantage of it. per cent growth rate by 2013 Cloud Predictions The ability to integrate business applications on smartphone, tablets and other wireless devices is predicted to accelerate SaaS adoption in the The growth of platform as a service (PaaS) and corporate business environment. Forrester forecasts cloud computing are driving infrastructure market that the global market for cloud computing will forward. Organizations have now passed the first grow from $40.7 B in 2011 to more than $241 B in stages and are implementing cloud architectures 2020. The total size of the public cloud market will for their enterprise and as a result, the traditional grow from $25.5 B in 2011 to $159.3 B in 2020. IDC role of the IT infrastructure is changing. predicts that 14.4percent of applications spending On the question of changing role of infrastruc- will be SaaS-based in the same time period and the ture services, Raman Sapra, Executive Director- cloud computing marketplace will reach $16.7B in Strategy and MA, Applications BPO, Dell Serv- revenue by 2013, a compound annual growth rate ices asserts how cloud will play a game changer (CAGR) of 24 percent. role together with enterprise mobility and analyt- ics. “With the rise of cloud, infrastructure manage- SMB and Cloud ment services portfolio is bound to get a complete Gone are the days of large enterprises holding the makeover. Emphasis will lie more onto using cloud keys to enterprise-class IT and services. The cloud infrastructure to overhaul the scope and economics levels the playing field for SMBs. Today’s SMBs of traditional infrastructure services,” says Raman. believes in the cloudy abilities. In an independ- The way in which companies utilise cloud infra- ent survey by Microsoft, 76 Percent of SMBs agree structure is changing too. Organisations are now that they are the backbone of the economy and sourcing complete business solutions through the almost half of them (53 Percent) expect sales figure combination of cloud applications, platforms and to grow within next 12-18 months. But, the most infrastructure. Cloud approach to infrastructure important finding remains the awareness of the will change the traditional landscape as they offer Cloud Computing. Majority of them are increasingly a much cheaper alternative to traditional infra- moving to the cloud. structure– some businesses can cut their opera- USA-SMB cloud services market grew 25 percent tional costs by as much as 85 percent if they opt for in 2011 and is asserted to reach $15.1B. Globally, cloud infrastructure. that figure is set to hit $68B by 2014, represent- Sharmila Sahani Mulligan, founder and ing a CAGR of 26 percent. SMB Cloud Market in CEO,ClearStory Data, asserts, “The cloud makes it Asia-Pacific is expected to reach US$16.5B in 2012. possible to store and access data from anywhere, The market for cloud solutions will grow at more so it can really benefit almost anyone or any verti- than twice the rate of traditional ICT technologies GlobalServices September 2012  |  51
  • 52.
    segment analysis IMS in 2011 in these markets. In addition, this region As the firms is expected to lead worldwide expansion of cloud across the globe computing markets. scours the Cloud computing is a method to deliver the landscape for crucial IT needs for any small and midsize busi- ways to focus nesses, for say-cheaper operational infrastructure on their core and opex agility. The most commonly used cloud competencies services are email, instant messaging, voice com- and maintain munications, and backup. their competitive The number of very small companies (2-10 edge, the most employees) using paid cloud services will triple in significant the next three years. Almost half of them agree value drivers in that cloud computing is going to become more IT outsourcing important for businesses such as theirs. Speaking of is remote the worldwide public cloud services market, SMBs infrastructure will drive the market over the next five years. Total management cloud market both private and public is expected to (RIM) - the off- reach $85B by 2015. In this time frame, the growth premise, often will be driven by SMB consumption of cloud. off-continent, The biggest motivators for migration to the management of cloud among SMBs are to save money, followed IT infrastructure. by increases in productivity. Cloud allows SMBs to Ben Trowbridge gain access to infrastructure and other IT technolo- CEO-Alsbridge gies that were only leveled for big IT enterprises. By utilizing cloud services, SMBs can stop worrying about the details of installation and operations for growth. External realities such as the advent of the sophisticated infrastructure and services. SMBs can big data era and greatly enhanced role of mobility gain access to the high end IT services that requires in enterprises will shape solutions that providers negligible amount of IT infrastructure. propose on renewed contracts. Recent deal sign- Gartner predicts Small Medium Business ings are indicative of new trends, such as increas- (SMB) in the insurance industry will have a higher ing popularity of multi-sourcing, decline of “lift rate of cloud adoption compared to their enter- shift” models, reinvigorated attention to pricing prise counterparts. models, and increased importance accorded to analytics. State of the RIM Market Offshoring of infrastructure management In the recent years, a major development has been labor typically realizes a savings of 5 to 20 percent the convergence of the Remote Infrastructure compared with U.S. labor rates. But do not assume Management Outsourcing (RIMO) and traditional these savings are instantaneous. RIM services, as Infrastructure Outsourcing (IO) models. According with outsourcing in general, typically provide a to Everest study on Infrastructure Management, the gradual saving curve as delivery maturity is at- RIMO model is gaining wider acceptance across the tained, usually within the first two years of the buyers, which in turn is witnessed by an increased engagement. number of IM deals. RIMO, as a model is matur- The banking, financial services, and insurance ing quickly and entering into a phase of sustained industries are leading RIM offshoring growth. 52  |  September 2012 GlobalServices
  • 54.
    segment analysis IMS hibit their adoption of global RIM. The healthcare industry has concerns with the data security and integrity being provided in foreign, nondomestic locations. Healthcare also has much more compli- cated revenue and cost recovery business models, which has some influence on the adoption of global RIM. Even before the arrival of the glo- bal economic downturn, senior business leaders were being challenged to increase prof- itability and efficiency and to drive operational costs down. The allure of outsourcing has always included the prospect of cost reduction through efficiencies and labor arbitrage. Not surprisingly, the increasing interest in RIM services is essential- ly due to the prospect of reducing operational costs and increasing productivity in one IT function. Future An open technology and business envi- ronment, enabled by cloud computing and new outsourcing models, is creating a radically new These industries often referred to as the “financial approach to the present infrastructure market. services industry,” have been early. RIM service Most of the global infrastructure services outsourc- providers have recognized the opportunity to offer ing providers have a strong vision and strategy for follow-the-sun delivery models, highly distributed cloud-based services for future offerings. and flexible monitoring and support models, and According to the latest report by technology in those cases where automation has not replaced analyst firm Ovum, the global infrastructure mar- labor arbitrage, labor cost savings. ket will grow 4.4 per cent by 2015. Ovum’s Infra- The industries that are slow to move toward structure market trends research suggests that it global RIM are those that have the lowest transac- will reach £463 B by 2015 and will hit a 4.5 per cent tion volumes, such as media and entertainment growth rate by 2013. and professional services. Other industries, such as Although 2011 growth is still not back to pre-re- aerospace and defense and the public sectors, face cessionary levels, the market will return to healthy various degrees of government regulations that in- growth of over 4.5 per cent in 2013. 54  |  September 2012 GlobalServices
  • 55.
    IMS INFRASTRUCTURE MANAGEMENT OUTSOURCING Top Global Infrastructure Leading Mid-tier Infrastructure Management Vendors Management Vendors HCL Technologies Ltd. Insigma Technology Co., LTD CompuCom Systems Inc. Sonata Software Limited Infosys Ltd. NIIT Technologies Microland Limited Collabera Inc CSC Aegis Limited Capgemini MindTree Limited Genpact Limited Chinasoft International Ltd. Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance GlobalServices Application Development Maintenance September 2012  |  55
  • 56.
    Segment Analysis IT Outsourcing StatusQuo Won’t Sustain By Sourabh Chandra Pushp Get ready for a post recession era where IT outsourcing will be adopted by organizations to help them work through financial challenges. Market will not only adopt itself to the new delivery models for user focused value of outsourcing services, the longer known status quo of IT Outsourcing market won’t sustain anymore 56  |  September 2012 GlobalServices
  • 57.
    IT Outsourcing W hile an economic slowdown places In 2012, outsourcing a greater need on organizations will continue for process excellence and reduced to see growth process costs, and organizations driven by cost typically recognize this, it also enhances all the pressure, increasing main inhibitors to IT outsourcing. complexity to In the mature economies, the IT outsourcing deliver the latest market focus is returning even more strongly to technologies and cost reduction while minimizing client investment the need to align and this market shift leads to massive end-to-end scalability to process service delivery transformations. market demand. Andrew Kokes, vice president, global product Andrew Kokes management, Sitel articulated, “In 2012, outsourc- vice president, global product ing will continue to see growth driven by cost management, Sitel pressure, increasing complexity to deliver the latest technologies and the need to align scalability to market demand.” Significant increase in IT spends in US and Europe economic growth could suppress in outsourcing are likely to come from emerging IT spends whereas, the emerging economies such companies and economies. These companies and as India will account for $1.013T. economies have matured to a level where they Chirajeet Sengupta, research director, Everest can significantly upgrade their IT infrastructure or Group voiced, “Instead of having a multitude of want to get there soon enough by leveraging best contracts spread all over, buyers are increasingly in class IT. In addition, enterprise mobility, cloud trying to consolidate their portfolio and implement computing, managed services, machine-to-machine global contracts with uniform standard SLA lead- communications, product engineering service are ing to a fair amount of centralization of spends some of the areas that will witness growth. and consequently cost savings for the client.” Sengupta believes Infrastructure Outsourcing IT Outsourcing Market Deals is one of the areas where we can expect to see a Worldwide IT outsourcing revenue totaled $246.6B change, as there is a steady increase in offshoring. in 2011, a 7.8 percent increase from 2010 revenue Traditional onshore infrastructure support services of $228.7B, according to Gartner, Inc. However, the are going to go down. This entire wave of consoli- market for IT Outsourcing will go through major dation will evolve a fair degree of system integra- transitions in 2012-13. A spending slowdown post tion, process improvement and process optimiza- recession bounce-back of 2010-11 accompanied by tion. These three are some of the areas that are debt-related macroeconomic conditions of Europe expected to go up. and potentially the US will accelerate the business The outlook for 2013 is slightly brighter with in- shift from older technologies and providers to new dependent research forecasting that software will names. Independent research shows, worldwide IT lead the tech market with 5.5 percent growth, fol- spending is on pace to reach $3.6T in 2012, a 3 per- lowed by IT outsourcing with 3.4 percent growth. cent increase from 2011 spending of $3.5 trillion. According to a new forecast from Forrester, Europe Global tech purchases will be $2,122B in 2012, will see 1.2 percent growth in IT purchases in 2012. which is up by Just 5 percent when compared to In terms of US dollars, the European market will previous year. US, Japan and China are said to be shrink by almost 6 percent, while the US and Asia on the top for IT purchases in 2012. The slowdown Pacific will both grow by more than 6 percent. The GlobalServices September 2012  |  57
  • 58.
    Segment Analysis IT Outsourcing activity in mega-deals (TCV of $1B or contracts with The five factors that affect the ACV of $100M or more). “The outsourcing market showed improvement IT Outsourcing deals Dave Brown, KPMG during the second quarter on both a year-over- year and sequential basis,” John Keppel, Partner  Partnership and innovation: Look for your President, Research and Managed Services, ISG. service provider to step up as a true partner on He further added, however, the quarter’s growth innovation. That could mean making investments was not enough to prevent a first-half decline to solve problems or providing industry insights to help you excel against the competition. in both value and activity from last year’s record  Cloud computing: Cloud solutions are not one- performance. By function area, IT outsourcing size-fits-all, so make sure your contract has the contracts accounted for $13.1B in second-quar- right solution for your company’s needs. ter-2012 TCV, a rise of 6 percent year-over-year  Flexibility: As your business continually adapts but a decline of 5 percent sequentially. By region to the marketplace, your ITO agreements and geographic distributions, Asia Pacific turned should be adaptable as well – in terms of the commercial offering, contract terms, staffing and out to be the fastest growth location during the delivery location. second quarter of 2012, driven by activity the  Price: It will always be important, but keep in Telecom Media and Banking, Financial Services mind that next-generation contracts usually Insurance (BFSI) verticals and Greater China don’t offer as much opportunity for price and Australia New Zealand sub-regions. Speak- reductions as the first time around. Remember that a myopic focus on price can threaten the ing of other regions, America’s TCV of $8.3B rose quality of operations. 6 percent over the same quarter a year ago but  Cross-functional service delivery: Consider dropped 6 percent from the first quarter. Europe how IT services can drive new value by improving and Middle East Africa (EMEA) registered $8.4B back-office functions throughout the enterprise. in TCV, a drop of 21 percent year-over-year and 11 Source: blog.equaterra.com percent sequentially. ISG-TPI anticipates a soft third quarter for IT outsourcing business whereas analysts believe study suggests the sluggish 1.2 percent growth in the coming fourth quarter will likely pick up the the European ICT market will be reflected in all the IT outsourcing activity on the account of larger tech categories except IT outsourcing and hard- deals waiting in the queue. In an another research ware maintenance and IT consulting and integra- conducted by Everest Research, The IT outsourcing tion services, which will grow by 3.3 percent and markets will witness a significant number of con- 2.8 percent, respectively. tracts coming to end of term, totaling more than Recent data from TPI Index shows outsourc- US$85B TCV during the next 18 months. ing market improved in second quarter-2012 with The study reasons, because buyers signed Total Contract Value (TCV) up by 7 percent year- progressively larger deals until the economic over-year data. Despite decline in major outsourc- slowdown struck, more than $US55B of contracts ing/IT spending activity, one can exhibit a marginal will expire in the next 12 months, and this declines growth in outsourcing especially for Asia Pacific actually shows a dip in size compared to preceding region where the market if largely driven by mega- year. “Infrastructure outsourcing, data center and deals. The study reveals, 173 contract awards dur- network tower deals make up a significant portion ing the second quarter represented a drop of 22 of the ITO contracts expiring in the near term,” percent year-over-year and 14 percent sequentially. quoted Ross Tisnovsky, senior vice president, Ever- However, the outsourcing market saw renewed est Group. 58  |  September 2012 GlobalServices
  • 60.
    Segment Analysis IT Outsourcing As outsourcing market is just looking for more Instead of having than just cost savings, service providers will likely a multitude of find themselves in an ordeal for contract renewals contracts spread if they don’t adapt to the emerging preferences of all over, buyers are the market. increasingly trying Alok Sinha, ITO President at Xchanging to consolidate believes the Service providers too have been busy their portfolio and bidding for new contracts. Many of these are truly implement global not new-contracts but existing contracts which contracts with have been brought back on the table due to the uniform standard contractual terms signed earlier. The newer con- SLA leading to tracts now have smaller parcels and in many cases a fair amount of contracted across multiple providers. The renego- centralization tiated contracts also saw a variety of innovative of spends and engagement models, investment lead and skin- consequently cost in-the-game models, outcomes based than pure savings for the vanilla variants, etc., being adopted by the players. client. However, on the other side of the spectrum there Chirajeet Sengupta were many too who were consolidating from mul- research director, Everest tiple suppliers into one or two. Group Vendor Landscape John Cotterell, Chief Executive at Endava as- zone, proximity, cultural empathy and qual- serts, the economic climate is forcing ity of work - and growing rapidly as organizations to re-evaluate a result. The expectation is that their overseas IT outsourcing this trend will continue to options. Offshore regions, accelerate. such as India, are prov- For example, Romania ing not suitable for is increasingly valuable everything organiza- to organizations requir- tions want to out- ing highly-transaction- source. There is now al, complex ‘agile’ IT an increasing trend projects, with evolving of organizations business requirements looking to balance and new technologies. their location risk by This enables them to moving some IT spends match their IT require- away from offshore, and ments with cost-effective, utilizing alternative, near- swift and successful project shore talent pools in Eastern delivery. Europe. As per Gartner research, IBM These nearshore locations maintained the No. 1 position, as are becoming more attractive its revenue grew 7.8 percent, and for IT projects, due to time its revenue accounted for 10.9 60  |  September 2012 GlobalServices
  • 62.
    Segment Analysis The Service percent of ITO revenue. IBM was the No. 1 ranked providers too provider in all regions. HP grew below the market have been busy growth rate, but retained the No. 2 worldwide bidding for new market share position with 6.1 percent market contracts. Many of share. Fujitsu, helped by currency gains, overtook these are truly not CSC for the No. 3 worldwide market share position new-contracts but in 2011. Bryan Britz, research director at Gartner existing contracts asserted in the press statement, the strategies will which have been vary as clients are likely to pursue hybrid cloud brought back on strategies requiring providers to deliver some as- the table due to the set-light and some asset-heavy offerings — which contractual terms will result in varying growth trajectories among signed earlier. competitors over the next several years. In a media interview, Arjun Sethi, vice president Alok Sinha ITO president, Xchanging and partner in charge of A.T. Kearney’s strategic IT practice, asserts about how the emergence of new vendors are challenging traditional outsourcers with solutions that deliver capabilities at a lower price point and thus the need to manage IT opera- tions seamlessly across a multi-vendor environment has increased. He opines how independent cloud- based IT service management tools could enable CIOs to wrestle back control of IT once and for all. Cloud-based service management has many benefits to offer weary CIOs. Its proactive tools enable them to gain control over vendor rela- tionships, experience a far greater ability to understand and serve the needs of business users, and unleash a powerful new source of information for contributing to the achieve- ment of strategic goals. Buyers will be lured by cost structures and cloud portfolio from various pro- viders trying to build a strong market share. Bill Thomas, Partner, KPMG-UK reports in the blog post about how the shared services and outsourcing markets are in a state of flux. He asserts, “In the US, the economy does seem to be about a year or two ahead of Europe at the moment. While in Latin America, Africa, Asia and Rus- sia, there are extraordinary growth stories.” Speaking of the negative 62  |  September 2012 GlobalServices
  • 63.
    IT Outsourcing global economicconditions and it’s impact on out- The economic sourcing and IT services, weak consumer demand climate is forcing will continue to challenge organizations in 2012. organizations The most optimism on improving economic condi- to re-evaluate tions is in the Americas, and the least is in Europe. their overseas The continuing emphasis on cost reduction from IT outsourcing key markets such as the U.S. combined with wage options. Offshore inflation and staff attrition in India and China will regions, such as lead vendors to enter new lower cost locations India, are proving moving to parts of India for example which have not suitable yet to experience BPO and may deliver both lower for everything cost and greater employee loyalty. organizations want to outsource. Cloud Computing and IT There is now an Outsourcing increasing trend The emerging of cloud computing has a great of organizations impact on outsourcing. Gartner’s forecast states looking to balance that by 2015 the low-cost cloud service will erode their location risk 15 percent income the outsourcing service provid- by moving some ers. Cloud will change the general picture of the IT spends away pricing and economics of outsourcing. from offshore, and Fifty percent of new outsourcing deals will be utilizing alternative, significantly Cloud enabled by 2015, according to a nearshore talent newly released report from Saugatuck Technology pools in Eastern Inc., titled “The Cloud and Business Services: Key Europe. Trends and Directions Through 2015.” Saugatuck John Cotterell Technology notes that the IT and BPO services chief executive officer, Endava market is undergoing a period of deep structural change and this is bringing change in the market positions and business models of traditional serv- sulting companies will continue to enjoy superior ices providers. Findings from the report show that market growth. As Cloud business solution providers Indian providers will be some of the most aggres- offer integration APIs, Cloud consultants/integrators sive innovators in PaaS through 2013. By leveraging will produce a wide range of adapters, services and Cloud delivery models and client trust these provid- toolkits to provide added value for clients. By 2013, ers will attempt to break their linear headcount-to- “non-traditional” service providers with specific revenue business models. The study also indicate vertical and business IP will aggressively enter the that through 2013, pure-play Cloud consulting Cloud Business Services market. Saugatuck’s posi- companies will continue to enjoy superior market tion is that “non-traditional” services providers may growth. Through 2013, Indian providers will be be the logical front-runners in the race for extend- some of the most aggressive innovators in PaaS. ing niche vertical services from the Cloud to clients. The Indian services providers will take advantage of The ongoing transition to cloud computing will Cloud delivery models and client trust to break their have a measurable impact on IT outsourcing as it linear headcount-to-revenue business models. The would alter the old age IT spending methodolo- study reveals through 2013, pure-play Cloud con- gies and it would also revitalize the traditional IT GlobalServices September 2012  |  63
  • 64.
    Segment Analysis IT Outsourcing What John Willmott, CEO Nelson Hall expects to see in outsourcing in 2012:  Single digit growth in the mature economies with an emphasis on quick sub-process wins rather than major transformation, with double-digit growth in the emerging and growth economies.  Increased acceleration to new lower-cost delivery locations both onshore, to meet branding and political pressures, and offshore to re-establish high levels of labor arbitrage.  Increased adoption of BPaaS, both embedded within existing end-to-end services and also increasingly in standalone form, and SaaS in ITO.  Continuing emphasis on certainty of outcome in short timescales within the mature economies with process benchmarking and roadmaps key factors in establishing certainty of outcome. delivery to cloud-based offerings. Not only this, into mainstream corporate networks, driving more this shift to cloud is altering market behaviors and corporate spend in this area. is posing fresh challenges for traditional sourcing Smaller deals will be the talk of the town, in providers. The cloud will bring integration to out- 2012, macroeconomic factors could force reduced IT sourcing industry in terms of innovation. spend, with buyers doing smaller number of deals New research from the London School of with simpler pricing models, amid strategic conver- Economics and Accenture finds that the cloud will gence between offshore, MNC service providers. have a strong near-term impact on the majority of Global sourcing stakeholders will continue to pursue organizations. Cloud will escalate the importance new locations due to talent, cost arbitrage and risk of delivering effective service—the quality of the diversification-related considerations. customer experience—as a differentiator of suppli- Companies will continue adoption of hybrid ers in the IT industry. That, in turn, will change the captive/third-party sourcing models in 2012, and character of the IT Outsourcing industry. efforts will be made to improve captive value by focusing on high-value processes. Captive invest- Conclusion- Cloud, Smaller Deals ments will continue with the majority of setups and Third Party Sourcing Models and expansions occurring in the Asia Pacific and Other factors that would have high impact on IT CEE geographies in the year to come. Outsourcing are cloud adoption, smaller deals “The IT outsourcing market has matured and and captive sourcing models. In the past, technical price is no longer the foremost driver. Instead, and perception issues have caused cloud adoption next-generation outsourcing deals are about challenges. But continued capital investments will improving service delivery, managing risk, staying result in new and sophisticated solutions that will current with the IT market, and positioning your lead to new hybrid models and new integration business for an uncertain future.”- Dave Brown, approaches, making cloud adoption more main- Principal, KPMG. stream. The rapidly accelerating use of enterprise Get ready for a post recession era where out- mobility, social networking and cloud services in sourcing will be adopted by organizations to help workplaces will increasingly require integration them work through financial challenges. 64  |  September 2012 GlobalServices
  • 65.
    IT Outsourcing Top Global ITOLeaders CSC Infosys Ltd. HCL Technologies Ltd. CompuCom Systems Inc. Capgemini Unisys
  • 66.
    SEGMENT ANALYSIS Contact Center Outsourcing: Growth Momentum ContinuesAmidst Turbulence By Smita Vasudevan From a post recession to a transformational phase- the global contact center industry marches ahead in tough times as enterprises gear up to increase their customer focus 66  |  September 2012 GlobalServices
  • 67.
    Contact Centre OUTSOURCING T he last two years saw the contact center Demand for industry moving through a tough yet services provided interesting phase. With 2010 being the from offshore year of gradual recovery post recession (non-U.S.) and 2011 being the year that sparked some new geographies transformations. This year is probably going to be remains strong. all the more interesting as we see the impact of all Convergys these combined forces coming to fore – technology continues to see advancements, integration of multiple communica- demand for the tion channels, the power of analytics and the social Philippines, Latin media puzzle. America and India. The good news is that amidst a sluggish global Mike Cholak economy, the contact center industry hasn’t lost its vice president, Convergys growth momentum. In fact, if industry experts are Analytics to be believed, recessionary fears might pave the way for outsourcing growth, as enterprises look at optimizing the cost of servicing customers and at the same time increase their focus on improved cus- tomer experience. “Despite the difficulties in 2010 Market Scan and 2011, market participants have expressed high Cost efficiency and language skills continue to be expectations for multi-year engagements with new the drivers. Asia Pacific, North America, Latin Amer- and existing clients into 2012 going forward,” says ica and Europe continue to be the most prominent Michael DeSalles,Principal Analyst, Frost Sullivan. destinations for contact centers. The APAC region A notable change over last year is the way in exhibits huge potential for growth and is estimated which contact centers are transforming themselves to be the fastest growing market for contact centers to become a more strategic part of an organization in the coming years. India, China and Philippines rather than just being a seen as a ‘call center’. The will be the key locations. According to Frost and idea is to attract and retain customers by offering Sullivan, the APAC market showed 8% growth in them the right type of experience, irrespective of 2011 and is expected to grow at around 10% CAGR what communication channel is being used. This through 2017, while the North American contact might call for some investments in the short run center industry is expected to grow by 3.5% from but can also go a long way in building customer 2010 to 2017. Latin America remains a prominent loyalty and brand image. location for contact centers, attracting both near- Krishna Baidya, industry manager for ICT, Frost shore and onshore demand and is expected to grow Sullivan APAC, reveals, ”End customers still value at 10.8 percent through 2017. speed, accuracy and ease of use, but they added a What is expected is a combination of offshore few elements: the convenience of performing ever- and onshore. High-value complex interactions are more-complex transactions on the go, personal- expected to remain onshore or nearshore, while ized service at every instance, and seamless move- high volume work is more likely to be sent offshore ment among various channels with a consistent to reduce costs. experience at each.” The emergence of non-voice Across verticals, Telecommunication has the channels and automated technologies have taken largest demand for third party contact center customer care interactions to another level and the services. Healthcare and financial sector are other expectations have never been this high. major contributors to growth in demand. GlobalServices September 2012  |  67
  • 68.
    SEGMENT ANALYSIS We see no major It is going to be threat from a combination Philippines. of several India’s contact parameters-speed center industry is of conducting going to be more analytics and quick multidimensional recommendations, while Philippines’ real-time customer industrial growth is feedback, premium starting to taper off. support, and technological Vijay Narsapur strategic business practice advances for head, CS, Infosys BPO, increasing sales or reducing costs Rammohan Natarajan SVP, business transformation, Firstsource Solutions workforce, with few emerging competitors. But its Some Important Contact Center   only now that the threat has become so visible in Deals in 2012 the form of Philippines. According to Steve Barker, Deals Contract Value general manager, Sitel, “More recently, the Philip- Universal American C3 $10 million pines overtook India in business process outsourc- UK Government Xerox $20 million ing (BPO). The Contact Center Association reported Airtel Africa Avaya Not available that the Philippines voice revenue doubled over recent years and now exceeds India by more than CCO Expanding Into Emerging $200 million.” The reason can be a very high affinity Economies between Philippines and the United States. Com- Enterprises operating in the EMEA are likely to panies that are operating in Philippines are now face increased complexities as each region exhibits trying to replicate the tactics that proved successful a different level of maturity. For emerging mar- in India. Indian service providers are of the view that kets like Eastern Europe, there needs to be a good the contact center industry in India is much more understanding of rules of the land. This will drive matured and Philippines, though currently growing outsourcing to third party service providers. at a higher rate, lacks technical capabilities. Some emerging locations for contact centers are:  APAC - The Philippines, Malaysia Key Drivers for CCO  Europe - Serbia, Poland, Bulgaria , Romania The major drivers for contact center outsourcing in  America (near shore) – Central America and 2012 will be: Caribbean  Optimizing the cost of servicing customers.  Concentrate on core business areas, while rely- Philippines Vs India ing on experts for non core areas like customer There is a lot of hype surrounding the Philippines’ service contact center industry. For years, India was the  Access to better technologies and cloud based location of choice for its high-skilled, low cost services 68  |  September 2012 GlobalServices
  • 69.
    Contact Centre OUTSOURCING Key focus is likely With easy access to be in stitching to real-time different forms of information, a analytics across new generation the organization of ‘always-on’ to leverage new consumers is more found actionable empowered and insights, possibly in demanding than real-time, to make ever. This trend is smarter decisions on the rise as social throughout media proliferates, organization and both online and enhance customer on mobile, across experience. all age groups and demographics. Krishna Baidya industry manager, ICT, Frost Andrew Kokes Sullivan APAC, global product management, Sitel Search For Improved Customer channels. This information is helping enterprises Experience Drives Investments decode complex customer behavior and forms the The ultimate aim for enterprises today is to create basis for framing future customer service strategies. a great customer experience and how well they Predictive analytic tools allow call center agents are able to do this will decide their ability to retain to identify customer concerns even before he says and attract customers in the long run. Cost is a big hello. Convergys believes that harnessing the power concern but there is also a growing realization that of “Big Data” will be a key trend in 2012. offering the right customer experience can do a lot in improving margins. Numerous surveys support The Transition from Voice to Non the fact that customers are ready to pay a little Voice extra for being served well. Interactions in contact centers are no longer With the explosion of new communication restricted to the four walls of a contact center. channels, a big challenge for enterprises and serv- Voice, the most favored medium of interaction, is ice providers would be to offer an optimal custom- increasingly being replaced by a plethora of op- er experience on all these channels. Cholak says, tions like web chats, voice mail, online self service “The experience needs to be consistently applied tools, social media and so on. The whole idea is across every touchpoint—customers need “any- to make customer interactions simpler and faster. time, anywhere” care. Investments in this area will But is voice going to be lost in this quest for better be a major trend to watch out for in 2012. There customer experience? Cholak, reveals, “While 2011 can be no single way to great customer experience. Convergys Customer Scorecard Research found that consumers clearly still prefer to talk to agents The Power of “Big Data” when dealing with a company, their interest in Analytics is playing a major role in filtering out other channels is strong.” useful information from the large pool of unstruc- Not only is an increased preference for non tured data coming out of multiple communication voice channels but increased efforts are also being GlobalServices September 2012  |  69
  • 70.
    SEGMENT ANALYSIS Contact Centre OUTSOURCING allow customers to look Contact Center Technologies Helping Enterprises for solutions and resolve queries on their own and Convergys shares some real world examples of how technology has helped cut down the dependence improve client key performance indicators: on agents.  A large North American telecommunications company saw a 27% acceptance rate for highly targeted IPTV and DSL cross-sells in their retail But where to draw the stores after implementing a Convergys Cross-sell/Upsell Solution line? Subramanya. C, Chief  A top 10 North American retail bank implemented the Convergys Intelligent Technology Officer, Hinduja Self-Service Solution and increased IVR containment from 89% to 93%, Global Solutions, says, “All resulting in a substantial annual savings a customer wants from us  One of the largest PC manufacturer in the world experienced a 32% increase is to ‘know her’, ‘help her’ in the average number of posts worked per agent per week using the Convergys Social Interactions Solution and ‘remember her’. The knowing and remembering parts can always be auto- made by enterprises to cut down call volumes in mated. However, helping always involves human order to reduce costs. Although non-voice interac- touch.” So striking the right balance between tions are going up at an alarming rate, it is not automation and live support is going to be the likely to takeover voice anytime soon. Experts key. Sitel shares a similar opinion that the idea will say that if the percentage ratio is around 80-20 be to cut down costs through technology without right now, this is expected to shift to 60-40 by sacrificing the human touch. 2015. Narsapur adds, “Non voice communication is expanding at an alarming rate. So the situa- The Need For “Super Agents” tion is not inconceivable where the two will be Nothing is going to eliminate the need for agents very close in volumes.” But one thing is clear now. in a contact center. In fact the agent’s role has only Voice is no longer going to dominate customer become more complex now with the emergence interactions, its only going to be the part of a big- of multiple channels. Cholak, says,“The use of ger service offering. alternate channels for customer care will undoubt- edly continue to grow, but the agent will remain New Ways to Interact a critical focal point in a diverse range of chan- While 2011 Convergys Customer Scorecard Re- nels.” Agents have to be trained not for one but search found that consumers clearly still prefer every type of interaction possible. Whatever be to talk to agents when dealing with a company, the medium that a customer opts for, the agent their interest in other channels is strong, with 13% has to be prepared to listen and deliver the right saying they’ve used mobile applications or text kind of response. What these changes mean for messaging for customer care, 11% saying they’ve service providers is that they need to train contact used social media for customer care, and 7% saying center agents for each and every channel of interac- they’ve used webcam or video support with an tion. Cholak adds that the need today is for ‘super agent for customer care. agents’ that are adept at all interaction methods, especially in handling interactions with the ultimate Humanization of Technology multitasking communicators, the Millennials. “These Enterprises are using technology to interact and agents could be moved around a call center to ac- engage with their customers in innovative ways, so count for channel volume changes in a given client’s that cost is optimized and the effort is much lesser. program, driven by new product launches and other Artificial intelligence tools and Self service options high traffic, multichannel events” he says. 70  |  September 2012 GlobalServices
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    CyberMedia Announces itsnew Platform to Subscribe Magazines on iPad, Android PC http://digisub.ciol.com DATAQUEST PCQUEST VOICEDATA BIOSPECTRUM For collaboration opportunities please get in touch with Manish Verma [email protected]
  • 72.
    SEGMENT ANALYSIS Contact Centre OUTSOURCING Cost reduction is the prime driver, followed by scalability and easier call center management. Gartner research predicts that by 2013 at least 75% of customer-focused call centers will use a form of the cloud in their call centers. Baidya says, “More solution vendors will offer applications in the cloud and offer customers with choices suiting their business needs and scale at that time. Global service providers and large sys- tem integrators are likely to proactively promote such solutions to customers.” The Outlook The year is definitely not going to be a dormant one with lots of transitions happening. A lot of effort will be on establishing a multiple channel strat- egy that gives a unified view of all the different interaction channels being used by a cus- Social Media Puzzle tomer. Automation will con- Social media means big business today. Lots of tinue both in voice and non interactions happen every moment and you never voice areas, though the scope will be more in non know how and what is going to have an impact on voice. There are no signs of non voice channels the image of your enterprise. A very high percent- completely taking over voice in the near future, age of customers are turning to social media sites but its expected to take a more dominant shape. and forums to solve problems, search for informa- Social media still needs to evolve completely as a tion and voice complaints. And this is acting as a customer interaction channel yet will be attract- wake up call for enterprises to build up their pres- ing significant investments. ence and create a social media strategy. And this presents the big challenge - How to Top CCO Trends in 2012 make sense of all the data. What if a social media  Enterprises will invest for better customer expe- strategy backfires? These are questions to be an- rience swered before enterprises decide to take the leap.  A higher proportion of interactions moving to non voice channels Contact Centers Migrate to the ‘cloud’  Demand for offshore locations remain strong, The combination of BPO and platform based nearshore scores on multiple language skills services, BPaaS, is gaining traction more than ever.  Increased efforts will be put in to harness the There is increased pressure from every corner to power of Big Data look for newer cost saving options and this has to  Possibility of clients going for consolidation of be done without compromising on service qual- vendors for better manageability ity. As cloud offerings mature and its benefits get  Combined use of agent, analytics and tech- acknowledged, contact center operations too are nology will likely be the strategy for service gradually being migrated to the cloud. providers. 72  |  September 2012 GlobalServices
  • 73.
    Contact Center Outsourcing Global Customer Management Leaders Aditya Birla Minacs Worldwide Limited Aegis Limited Capgemini Convergys Corporation Expert Global Solutions Firstsource Solutions Ltd Genpact Limited Hinduja Global Solutions Limited Sitel Operating Corporation VADS Business Proces Sdn Bhd Mid-tier Customer Management Vendors Altisource Portfolio Solutions S.A CompuCom Systems Inc. HCL Technologies Ltd. Infosys Ltd. Scicom (MSC) Berhad SPi Global Sutherland Global Services, Inc. Xceed Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance Application Development Maintenance GlobalServices Application Development Maintenance September 2012  |  73
  • 74.
    Segment Analysis FAO: All SignsSuggest Maturity By Smriti Sharma In 2011, ACV grew 11 percent punctuated by an all-time high in contract extensions and expansions 74  |  September 2012 GlobalServices
  • 75.
    FA Outsourcing T he global Finance and Accounting Out- Key reasons sourcing (FAO) market echoed success behind the in 2010 with 18 percent growth (ACV). ‘denominator However, in 2011 this growth diminished effect’ are when the market grew by mere 11 percent (ACV). reduction in new The year 2012 is expected to bring along a positive contract signings, wave of prosperity as the FAO space is projected to reduction in rebound by 10-15 percent (ACV). average size of According to a new analysis titled Finance new multi-process Accounting Outsourcing Annual Report 2012 FAO contracts, and by Everest Group, “The multi-process FAO mar- risk-averse phased ket is projected to rebound by 10-15 percent and approach to FAO. top $4 to $4.5B in annual contract value (ACV) in Abhishek Menon 2012. 2011 saw the market reach an all-time high research director, Everest in contract extensions that along with contract Group expansions, represented 70 percent of ACV growth in 2011.” Explaining this further, R U Srinivas,chief executive The FAO market reached $3.8B in ACV in 2011, officer executive director, Caliber Point, Hexa- representing about $32B in total FAO spending. Last ware BPO, articulated. “More single process (e.g. year also witnessed a drop in total contract values Accounts Payable) contracts are evaluated sepa- (TCV) of new engagements in comparison to 2010. rately; Full-scale FAO deals have become fewer. Abhishek Menon, research director, Everest The market is gradually evolving, with a number Group explained the slow growth rate of 2011 of service providers augmenting capabilities to is not a sign of worry but a sign of movement provide technology enabled solutions and con- towards maturity. He highlighted, “Key reasons be- sulting, apart from usual business processes. This hind the ‘denominator effect’ are reduction in new is also supplemented by the fact that there is now contract signings, reduction in average size of new abundant availability of talent at offshore with multi-process FAO contracts, and risk-averse phased significant domain knowledge. So providers have approach to FAO.” a scope to play in a larger field and higher up in In 2011, 72 new contracts were signed and the value chain. Moreover, a number of providers there were 126 extensions/renewals. The study are building their expertise in FAO within specific predicts organic growth to continue as contracts industries, and even positioning themselves as valued $7.3B or more are up for extension within niche offerings.” the next three years. Saurabh Gupta, vice president, Everest Group, The Service Providers’ Territory articulated, “Although the market witnessed Last year 60 percent of fresh FAO contracts were slower than expected growth levels last year, we signed by companies in the revenue bracket of less nevertheless saw strong growth with nearly 200 than $5B. contracts for new, extended and renewed con- Accenture, IBM and Genpact continue to have tracts. Along with fewer new contracts signed and the strongest foothold in this space. However, as some terminations, we also saw a drop in size of per the same report, in the last five years, the mar- multi-process contracts largely due to cautious buy- ket share of the top three providers has reduced ers opting for risk-averse phased approaches.” from 65 percent to 50 percent. 2011’s highest new In current scenario, the deals are fragmented. contracts had Accenture, Capgemini and Infosys GlobalServices September 2012  |  75
  • 76.
    Segment Analysis Many of these vendors whose performance significantly enhanced providers have on the FAO PEAK MATRIX are EXL Service, HCL, evolved because Infosys, and WNS. of initial IT David Borowski, senior associate, Pace Harmon, capabilities that speaking about service providers said, “Multi-tow- have expanded, er outsourcing providers, e.g., IBM, Accenture, pro- either organically or vide IT and business process outsourcing, as well through acquisition, as a variety of other types of services and products into competitive (e.g., technology, consulting). These providers BPO expertise. often offer comprehensive global delivery services, significant brand recognition, and an opportunity David Borowski senior associate, Pace Harmon to leverage varied capabilities. India-based general outsourcing providers, e.g., Wipro, Infosys, TCS, offer a broad array of BPO and ITO capabilities, as BPO’s name as service providers. Accenture, TCS, well as other professional services.” and IBM accounted for about 50 percent of total He added, “Many of these providers have contract value signed in 2011, including new con- evolved because of initial IT capabilities that have tracts, renewals and extensions. expanded, either organically or through acquisi- Market leader Accenture claims its scale, tion, into competitive BPO expertise. Outsourcing integration and specialization continues to dif- providers with a more direct focus on BPO, e.g., ferentiate it in the market. Talking about their WNS, Genpact, were often captive shared services success cards, Tony Chambliss, global offering functions that spun off from parent companies lead for FA BPO, Accenture, pointed, “We have to provide back office services as a commercial extensive global delivery capabilities, provid- offering. FAO specialists, who focus on a particu- ing a full suite of FA BPO capabilities across all lar FA service tower, often stem from a compel- industries from transaction processing through to ling technology-based differentiator. Examples high value finance and analytics. In addition, we include API for procure-to-pay expertise and VWA bring our clients an integrated solution including for order-to-cash expertise (prior to the Capgemi- consulting and BPO that generates business out- ni acquisition).” comes and end-to-end transformation that results Hexaware BPO’s strategy for 2012 vs 2011 has in true value, improving the performance of the changed with increased focus on FAO; they are client’s business.” strongly undertaking an Account Based Mining He added, “Accenture’s technology delivery approach to cross-sell/ up-sell Finance Account- experts have skills and tools to implement enabling ing services within our existing customer base. technology. Accenture also has extended expertise Also, Hexaware is deploying an Offshore-onshore in complementary areas to ensure successful solu- delivery model, supported by our strong network tion delivery,such as change management and of partners. Our Go-to-Market is based on transfor- workforce training. These capabilities, along with mation/ consulting oriented pitch, showcasing our the Accenture Global Delivery Network, combine to expertise in creating value apart from cost savings. deliver efficient and effective FA BPO operations.” The difference between the market leaders and Based on the YoY movement of different serv- major contenders is diminishing. ice providers on the PEAK Matrix, Everest Group Gartner, Inc.’s 2012 reported titled, ‘Magic identified ‘2012 FAO Market Star Performers’ as Ac- Quadrant for Finance and Accounting BPO,’ centure, Capgemini, Genpact, IBM and TCS. Other stamped the following organizations as leaders: 76  |  September 2012 GlobalServices
  • 77.
    FA Outsourcing Accenture, ACS,A Xerox Company, IBM, Genpact, Menon speaking about the service provider Capgemini, Infosys Ltd., WNS and Wipro. Niche landscape added, “While the market continues to players identified: HP, Steria, OPI, Cognizant, HCL be led by three service providers (Accenture, Gen- Technologies and Intelenet. pact, and IBM), other service providers are aggres- Gartner research highlighted, “Leaders are per- sively expanding their market share. As a result, forming well today, both with a clear vision of mar- in the last few years, the market share of the top ket direction and by actively building competencies three service providers declined from 64 percent in to sustain their leaders position in the market. The 2005 to 50 percent in 2011.” comprehensive FA BPO players in this quadrant Service provider’s in order to differentiate generally share superior market understanding, themselves are creating innovation across three have a global client base, an extensive network dimensions. These dimensions, as per Everest, are of well-distributed and highly populated global non-linear growth, differentiated offering, and delivery centers catering for multiple languages, a new buyer segments. good balance of transactional and high-end FA delivery, and innovative well-communicated and The SMB Space marketed sales offerings.” SMB segments adoption rate of FAO doubled over Previous year eyed some strategic MA activity, the previous year. One of the prominent service for example: Capgemini-VWA, EXL-OPI, Serco-In- providers in this space is Quatrro. Speaking about telenet, and iGate-Patni. Quatrro’s approach to the mid-market, Monica GlobalServices September 2012  |  77
  • 78.
    Segment Analysis Kashyap, seniorvice president, new product de- Further voiced, Neeraj Sahgal, general manag- velopment and operations, Quatrro said, “Study- er-technologies, Quatrro, “Most of the large play- ing the mid-market space, we realized that one ers in this market are targeting the Fortune 500 key issue this segment faced was the lack of right or top thousand clients. These clients do have the technology. One reason they had not outsourced ability to go buy one of finest accounting pack- FA, while they had outsourced payrolls, is that age or an ERP deployed across all organizations. they do not have the technology that can allow We approach the mid-market segment saying finance outsourcing, they may not have the right we know you do not have the strength to buy a financial strength, to have the right technology, SAP or oracle finance but we do. This way we can to be able to outsource it, to leverage it etc. To work thousand such clients and give them the do FAO, it was important for us to arm ourselves capability. Then, they can use some of the best with the right processes systems and technology, practices that SAP or any other Tier 1 platform so, that we could approach the mid-market with has to offer. We help them in doing end-to-end this offer.” financial transaction; we process their financials 78  |  September 2012 GlobalServices
  • 79.
    FA Outsourcing end-to-end, savetax processes and filling of Everest report coined Wipro, Capgemini, and TCS returns etc. We take care of all those particular as the leaders in innovation with the use of new statutory requirements.” tools and technologies. Chambliss talking about different models of Industries implementing FAO Accenture has employed ar- Last year’s leading verticals were manufactur- ticulated, “Accenture is helping clients consolidate ing, hi-tech telecom, professional services, and more back office processes, leveraging the shared financial services. These verticals accounted for 60 percent of the market. Professional services is a relatively a new industry that is gaining traction. Clients are Accenture embraces experience in more than increasingly forty industries covering communications, media taking an end-to- technology, financial services, health and public end process view service, consumer goods, retail, utilities, chemi- of their finance cals and energy. In recent times, Accenture noted operations and particular interest in FA BPO from the high-tech, therefore we’re telcom, manufacturing and retail sectors. providing an Genpact provides FA expertise across many expanded scope verticals such as manufacturing, pharmaceutical, of processes—as consumer product goods (CPG), retail, insurance well as bundling and financial service. of services such Quatrro caters to retail, manufacturing, profes- as FA and sional services, hotel, auto, educational institu- procurement—to tions, not for profit organizations, grocery etc. achieve greater Some of Steria’s big clients come from health- savings. care, telco and media, banking and retail. Tony Chambliss For HGS, FAO’s end-to-end accounting the area global offering lead for FA is equity/fund advisory companies and minor subsi- BPO, Accenture dies of MNCs. In the case of volume transaction it is the BFSI sector. services model, hybrid BPO/shared services model, and bundling BPO and IT outsourcing. Clients are The Models increasingly taking an end-to-end process view As the FAO space matures, the value proposition of their finance operations and therefore we’re moves away from cost and thus solutions providing an expanded scope of processes—as well transform too. as bundling of services such as FA and procure- Everest report stated that, beyond transaction- ment—to achieve greater savings. Another exam- intensive processes (AP, AR and GL), judgment- ple is moving toward business outcome based solu- intenstive processes such as FPA were increasing tions, enabling the FA areas to become strategic included in FAO contracts. The trend towards to the value they can generate for the business.” end-to-end solutions (P2P, O2C, R2R) continued HGS FAO Solutions have employed two types of to gain momentum as opposed to a traditional FAO. Sridhar Krishnamurthy, executive vice presi- piecemeal solution. dent, strategic initiatives, HGS shared, “One is the Service providers are now employing process- end-to-end accounting model where we act as the agnostic solutions across different process areas. CFO role including accounting advisory on statuto- GlobalServices September 2012  |  79
  • 80.
    Segment Analysis India continues approach’ to interface with a variety of ERP solutions. Their toolsets give flexibility to interact to be the most seamlessly with client’s existing ERPs and has flex- prominent ibility to perform analytics within the toolsets not being limited by clients ERPs. destination on the Quatrro has created a platform. Sahgal ex- FA map. of the plained, “This is a platform which sits in front of FAO FTEs, 65% are the SAP. It controls the entire operational process, so there are two set of player. One is the client located in India who can access this portal, he has access to all his Across North financial reports, he can transit with us as well as transit all the systems using this portal. He need America and not understand the nuisances of what SAP does, Europe. or any other tier 1 platform would offer, he has a simple interface- he knows the five things that are critical to him and he simply goes ahead and does ry compliances and fund management. The second it. Also, he has access to all the reports at any given type of practice is volume transactions where we point of time.” take up the AP processes like Vendor Payments He added, “The other piece is Quatrro people. Employee Reimbursements.” That is where they access the services component of this portal. We define our own set of workflows: Technology Matters who is going to process it, how it is going be done, Technologies play in this domain has advanced somebody is going to do a review make sure all the from the basic ‘tie-and-run’ model to an ‘augmen- numbers match. Portal itself has a whole set of log- tation’ model. Menon pointed, “In 2011, technol- ics that are build in to make sure the transactions ogy augmentation had become the new “nor- mal”. Nearly 45 percent of the contracts in 2011 leveraged add-on tools such as workflow engines, The Leader’s interfaces, document digitization, business intel- ligence tools, user portals/dashboards, and project- domain management tools.” Accenture He added, “While most FAO buyers prefer a For more than 20 years, Accenture has been providing technology augmentation approach, there exist FA BPO. It has an established portfolio of more than situations where buyers are amenable to plat- 80 finance outsourcing contracts for approximately 70 clients in 39 different languages across 150 countries. form-based FAO. Year 2011 witnessed a signifi- These clients are served by more than 10,000 skilled cant increase in adoption of platform-based FAO professionals. solutions, primarily driven by increased adoption Mike Salvino, group chief executive of BPO, Accenture in the mid-market and SMB segment (revenue less said, “Accenture’s positioning in the FA BPO than US$5B)” Leaders quadrant by Gartner underscores our ability to bring industry expertise, analytics and innovation Many organizations’ technology landscape is a to our clients, leading to better business insights and cocktail of their developed tools and best-of-breed, outcomes, which we call fourth generation BPO. We third-party applications. For example Accenture is feel it also highlights our ability to leverage the cloud, flexible with the software they use. Their technol- social media, mobility and analytics to drive value for our clients, which we call fifth generation BPO.” ogy architecture is designed with a ‘wrap-around 80  |  September 2012 GlobalServices
  • 81.
    FA Outsourcing Infosys Genpact In 2004, Infosys BPO’s FA unit was established. It has Since 1997, Genpact has been selling FA services. It 11 centers in more than 7 countries such as India, China, delivers these services from 25 centers in 10 countries. the Philippines, the Czech Republic, Poland, Mexico and In the past 18 months, it has signed many new deals Brazil. The company employs approximately 7,000 FTEs in and accomplished 100 percent contract renewals or FA BPO. extensions. Gautam Thakkar, vice president and head, enterprise Tiger Tyagarajan, president and CEO, Genpact, services, Infosys BPO asserted, “We consider this articulated, “Combined with our widespread global recognition as a validation of the strategic investments that delivery capabilities and deep domain expertise in many we have made in the FA practice across industry verticals. vertical industries, Genpact’s Smart Enterprise Processes Our focus on developing and deploying cutting-edge tools (SEPSM) framework drives additional excellence in FA have helped enhance the effectiveness and efficiency processes and helps our clients achieve bottom-line of our processes, while minimizing the risk of running impact.” accounting operations through a global delivery model.” Xerox WNS Xerox Services houses 24,000 professionals. They In 1996, WNS began providing FA BPO services and in operate out of over 90 global service centers, in multiple a short period of time (fiscal 2012) FA accounted for 19 languages in North America, Central America, South percent of WNS’s total revenue (net of repair payments). America, Europe, and Asia Pacific. It embraces 7,000 employees delivering from simple Kent Schnacker, executive vice president, ACS financial transactions to complex analytical processes, including services group said, “In a communications era where industry-specific processes to more than 70 global clients. consumers expect all bills, invoices and documents to be Keshav R. Murugesh, group CEO, WNS stated, “We delivered exactly when and how they prefer, our finance believe that our capability and position as a leader in and accounting services help organizations deliver quality the FAO space is a result of our differentiated market service on a consistent basis. Our clients count on us to approach coupled with investments designed to provide help keep their customers satisfied.” our clients with the right blend of expertise, talent and technology to outperform their competition,” Capgemini Talking about what is helping WNS, Tasneem Lakdawalla, Christopher Stancombe, global head, FAO, Capgemini, executive vice president, Finance and Accounting, WNS said: “We deliver valuable business outcomes to the articulated, “Our vertically-led strategy is helping us benefit of our clients efficiently and effectively within a deliver FA offerings supported by industry-specific strongly controlled environment.” domain expertise, and enabling WNS to better service our Capgemini’s BPO has over 13,000 BPO professionals clients. We will continue to invest in tools, technology, providing services to customers worldwide. These services resources and strategic partnerships which will help drive are provided in 36 languages and are delivered from platform-based solutions, increased business process centers located in Australia, Brazil, Canada, Chile, China, efficiencies and differentiated service offerings for FA,” Guatemala, India, Poland, Sweden and the United States. TCS Wipro TCS’ BPO revenue is over $1.1B and it houses 40,000+ Wipro BPO operates from 30 centers in 11 countries, employees. It has presence across 11 countries from including Poland, Romania, China, Japan, Philippines, where it delivers services to more than 200+ customers. Australia, U.S, Canada, Brazil, Mexico and India Abid Ali Neemuchwala, global head, TCS BPO business (Bangalore, Delhi, Chennai, Pune, Hyderabad, Kolkata opined, “TCS’s investments in building industry vertical and Mumbai). expertise in FA, Manoj Punja, svp and global head, Wipro BPO echoed, our proven transformation methodology - FORE™ “Our ability to leverage our extensive technology delivering best in class processes, our business model capabilities and shaping the vision for the next generation innovation of FA Platform solution delivering Business of FA outsourcing is a clear differentiator. We feel this Process as a service (BPaaS), and unrelenting focus on recognition confirms our strategy and the significant analytics, risk and controllership are all geared to meet investments that we have made in our FA practice to the customer’s needs for an effective and efficient Finance improve our offering and add measurable business value function.” to our clients.” GlobalServices September 2012  |  81
  • 82.
    Segment Analysis Industry TrendsPredict Many businesses are refocusing attention on global outsourcing not only to reduce costs but to capitalize on globalizing operations and transformation processes. While cost arbitrage continues to be a key driver, client expectation from FA BPO is now to transform processes to align to client’s business outcomes and it is becoming increasingly standard to bundle transformation elements into contracts as a standard offering. Clients are also increasingly taking an end-to-end view of their finance operations with outsourcing bundling contracts growing. We expect the role of technology to expand, resulting in a stronger push to software- as-a-service and mobility catalyzing further evolution of BPO. Technology enablement of FA BPO is now becoming pivotal to development of services and there is an increase in the number contracts where service providers will provide application wrappers to enhance process standardization for buyers. As buyers become more experienced managing FA BPO processes they will increase their contract scope to include more customized and complex processes including management reporting processes, analytics and other specialized services. Accenture —Tony Chambliss FA BPO is seeing an increased demand for analytics information derived from the global offering lead for financial processes we manage to enhance client decisions and support functions—the FA BPO, Accenture ability to turn data into new streams of value. For example, we have built and piloted the Accenture BPO Navigator—a central portal that provides real time visibility into a client’s business performance, including operational and contractual metrics and analytics that is delivered in our private Cloud. This tool provides clients with both a snapshot and detailed view of their business performance and the dashboard shows metric thresholds, trends and compares data across business unit or country. Through analytics, we can analyze this data to provide insights to aid key business decisions. For FA BPO clients we can process their invoices, collate the spend, map that back to their strategic sourcing agreements and identify rogue spend outside that agreement to drive savings Increased penetration: FA Outsourcing has not reached all industries and there are a lot of avenues where it can still prove to be useful. Untapped fields like SMEs have yet to be included in the targeted market segments of outsourcing providers. Offshore acceleration: With over 60% of global players outsourcing to India. It is safe to assume that in today’s business environment, it is the norm to outsource finance and accounting functions. SAAS - Software-as-a-Service and cloud-based solutions: They are gaining influence in the industry. Software programs for finance and accounting used to be unaffected by technological advancement Buyer-side sophistication: Buyers are becoming more sophisticated and demanding in terms of service. A more informed market in a very competitive landscape increases the bargaining power of consumers, further resulting to lowering prices. Maybe more FA captive sales: More and more companies choose to establish an entire FA team offshore. Divestments such as Citi Group, Lehman, AIG, however, are becoming more common as companies take advantage of the exibility offered by —Sachdev Ramakrishna outsourcing. director, marketing, Steria India 82  |  September 2012 GlobalServices
  • 83.
    FA Outsourcing ed bythe Industry The trend is major We are witnessing outsourcing opportunities frequent inclusion of are in the AP processes. ‘onsite component’ in Organizations have had recent deals. In other these internally for years words, the hybrid and are planning to move model (combination of it outside to an offsite onshore/offshore; shared locations to seek more services/outsourcing) is streamlined operations having a good traction. (arising out of best As highlighted, the practices implemented by comprehensive ‘full- FAO Agencies) and to seek scale’ deals have a better cost advantage. become fewer – buyer are evaluating single —Sridhar processes (Accounts —R U Srinivas Krishnamurthy Payable, Record-to- chief executive officer executive vice president, Report, etc.) as opposed executive director, Caliber strategic initiatives, HGS to multiple processes at Point, Hexaware BPO one go. Another trend is interest towards transformational sourcing, to improve/re-structure the business processes, with help of technology enablement and domain knowledge. Financial Planning Analysis (FPA) represents an emerging area in FAO. FAO has moved beyond just AP, AR and GL to realize more benefits. An end-to-end process-driven approach to FAO is also emerging as opposed to a traditional functional and piecemeal approach. Nearly 50 percent of the new contracts in 2011 had end-to-end elements (Procure-to-Pay, Order-to-Cash, Record- to-Report) Industry-specific FA solutions: There is an increasing trend of “verticalization” in FAO, moving away from the traditional assumption that FAO is a horizontal function. Buyers now consider FA process as unique to their industry. Thus, domain expertise is emerging as an important source of value from service providers. As a result, many service providers are coming up with industry-specific FAO solutions (e.g., focused offering in travel, telecom, utility etc.). Service providers are also aligning their sales and delivery team along key verticals to make a targeted market approach. The adoption of transaction-based and performance-based pricing has increased. The changing FA solution elements are driving buyers to reassess pricing structure and —Abhishek Menon, introduce pricing that provides flexibility and/or business-oriented performance. research director, Everest Group GlobalServices September 2012  |  83
  • 84.
    Segment Analysis FA Outsourcing As per the Everest High-end processes such as FPA are increas- ingly getting included, primarily during extensions. report, buyers continue Adopting more end-to-end approach as op- to focus on an end- posed to siloed and piecemeal approach in or- der to increase visibility, streamline, and to have to-end process- stronger link to overall business performance. driven approach to He further added, “Buyers are cautious and FAO, as opposed to a they prefer phased approach as opposed to big- bang approach. This is also reflected in new con- traditional functional tract signings and contract extensions/renewals: and piecemeal approach We saw increase in the number of single process con- tracts signed in 2010-2011 compared to previous years. Also, the size of contracts extended/renewed was larger than the size of original contracts because of that are going in the system are all authentic are scope and scale expansion during renewals.” all absolutely fine. This is the entire mechanism, India continues to be the most prominent des- by virtue of this, what we are able to do is we are tination on the FA map. 65 percent of the FAO able to streamline our process; it has also increased FTEs are located in India. Southeast Asia witnessed the efficiency tremendously. Our total time to the a significant increase in the number of delivery manual activities that were earlier involved has all centers. Across North America and Europe, there is gone out of the window.” a ramp-up in onshore delivery capabilities. Steria has presence across three leading de- Clients and Delivery Locations livery locations in India namely Noida, Chennai The largest client-base of this sector continues to and Pune. Sachdev Ramakrishna, director, mar- be based in US, followed by Western Europe. There keting, Steria India talking about India being the is also an increased trend from buyers in Asia-Pa- preferred location said, “India is the preferred cific region and in Latin America. location for outsourcing FA services in terms of In the previous year, approximately 50 percent of financial attractiveness, people skills availability the fresh contacts had elements of end-to-end scope: as well as the business environment. Hence more Procure-to-Pay, Order-to-Cash, Record-to-Report. and more delivery centers are being setup here. There was a noticeable shift from an offshore-centric Moreover, due to rapid growth in credit card, to a balanced onshore-nearshore-offshore model. telecom infrastructure and retail banking penetra- As per the Everest report, buyers continue to tion in India, there is a phenomenal increase in focus on an end-to-end process-driven approach transaction processing of payments and collections to FAO, as opposed to a traditional functional and in India domestic market as well.” piecemeal approach. Also, while nearly 90 percent HGS is planning to extend its geographical pres- of the FAO FTE mix continues to be offshore-/near- ence and also the delivery locations. Their two year shore-centric, 2011 witnessed a significant increase plan is to look for clients from other countries and in onshore delivery center. the same time to zero on cities that can give the Recent times have also noted a significant required number of knowledgeable resources change in buyer expectation. A major transforma- skill sets for these types of transaction. They are re- tion is that cost saving is no more the only need ferring to the volume transactions here. The end to or driver. This in turn has resulted in the change in end accounting model will have to be in the same FA solution elements too. Menon stated: location where the client office is situated. 84  |  September 2012 GlobalServices
  • 85.
    FA Outsourcing Global FAO Vendors Capgemini EXL Service Genpact Limited Infosys Ltd. WNS Global Services Xchanging Leading Mid-tier FAO Vendors Datamatics Global Services Ltd. HCL Technologies Ltd. Insigma Technology Co., LTD Quatrro Global Services Pvt. Ltd. Sutherland Global Services, Inc.
  • 86.
    Segment Analysis Industry- Specific BPO: Being Explored Aggressively The ever increasing By Smriti Sharma, Smita Vasudevan, Sourabh C. Pushpa pressure to curtail costs and the expectation to drive better business outcomes is acting as a big push for the global industry- specific BPO 86  |  September 2012 GlobalServices
  • 87.
    industry specific BPO E nterprises in almost all verticals are Cost arbitrage, currently going through a tough phase, maturity in service plagued by mounting cost pressures provider offerings and customer expectations. What they and rising buyer need is a unique solution tailor made to their expectations to problems - a generalized BPO offering from get more out their service providers is not going to work of outsourcing anymore. As the situation prevails, an increasing deals are acting number of enterprises are exploring industry- as major drivers specific BPO opportunities to drive better busi- for the growth of ness outcomes. According to Horses for Sources industry-specific research, there are strong signs of increased BPO adoption of industry-specific BPO solutions, most Ramesh Gopalan notably in Financial Services and Life Sciences, executive vice president, and many other emerging verticals. international operations, Hinduja Global Solutions What is Driving Demand for Industry-specific BPO? cially in the Healthcare and Life Sciences space. The Almost all industries are undergoing radical market is also witnessing the trend towards com- changes and there is increasing competition bining technology and BPO into a single service within each industry. This makes it imperative offering. Bundling together BPO processes along for enterprises to look for newer avenues of with IT offerings is giving service providers the op- increasing efficiency and cutting down costs. portunity to expand their footprints. This is a major reason why domain specific of- Although enterprises seem to be a lot more ferings are being aggressively pursued. Enter- industry focused now, the trend towards industry- prises understand that acquiring domain specific specific BPO is not new. Its been there for very long, knowledge can help them add value and be a especially in the areas like mortgage processing differentiating factor for their business. and healthcare. According to Gopalan, “Healthcare Financial services, Healthcare, Life Sciences, has always been a very industry-focused vertical. It Media, Entertainment and Retail are some of started primarily with transcription processing and the verticals expected to contribute largely to evolved into customer service and collections.” the growth of industry-specific offerings in the And especially after the US healthcare reforms, near future. the industry is undergoing lots of transformations As the outsourcing industry matures, enter- and the need for industry-specific skills is ever prises are looking beyond traditional service increasing. Most of the players catering to health- offerings. They are now looking for services that care clients are doing it through industry-specific cater to the unique needs of the industry that processes. “In the healthcare space, industry-spe- they operate in. Service providers are making cific processes account for more than 80 percent of significant investments in acquiring domain spe- the market share, while horizontal services are only cific capabilities. Interestingly, industry-specific less than 20 percent” adds Gopalan. BPO is the segment where lots of new providers are entering through niche offerings. Even the Market Estimates Geographies established IT vendors have been developing Over the next 5 years, vertical specific BPO is ex- BPO niches in this space. This is evident espe- pected to offer a larger opportunity as compared GlobalServices September 2012  |  87
  • 88.
    Segment Analysis to horizontalBPO. According to the Nasscom-Ever- European est India BPO Study- Roadmap 2012, the segment companies have presents an opportunity of US$ 145 – 175 B, which explored locations is around 60 percent of the entire market. like Ireland, Across geographies, India and Philippines are Scotland and the only two prominent offshore destinations. Im- Spain - for specific portant nearshore destinations include South and savings in costs Central America and South Africa. and geographic proximity and Some Prominent Industry-specific South Africa is Processes emerging as a close Healthcare outsourcing: According to a report favorite for the UK published by US based marketresearch.com, the glo- companies due to bal healthcare BPO market is growing at a healthy the cultural affinity CAGR of 21.4 percent. Healthcare payer outsourcing and good quality of market will also grow at about 30 percent in the the services forecast period. Healthcare provider outsourcing Sanjay Venkataraman has the highest growth rate of 31.9 percent from president, Asia customer 2011 to 2016 due to conversion from ICD-9 coding management, Firstsource system to ICD-10 and ICD-10 coding system to be implemented by October 2013 in the US. Talking about what has worked for this indus- are going to need professional vendors who will be try, Tony Mira, Group CEO and founder of Ajuba able to handle this work effectively.” Solutions, said, “The regulatory changes in the US Overall, the healthcare BPO market is crumbled have been a driver for the healthcare outsourcing and small players are trying to make their presence industry. There are two main reasons – one is ICD- felt, especially in India and China. 10, this has created a lot of confusion and concern Accenture (Ireland), Medusind (U.S.), GeBBS with the healthcare community in US because the Healthcare (U.S.), Omega Healthcare (India), and level of education, Inventive (U.S.). sophistication, and The pharmaceutical training is much Overall, the healthcare outsourcing market higher than the ICD- BPO market is crumbled and is captured by play- 9. The people who ers such as Quintiles are ICD-9 trained small players are trying (U.S.), Covance (U.S.), are having difficulty to make their presence felt, PPD (U.S.), Parexel in passing for the (U.S.), Charles Rivers ICD-10 level. They especially in India   Laboratories (U.S.) are facing difficulty and China and ICON (Ireland) in with the exist- the CRO space... are ing coding in US. This is creating opportunity for some of the major players of this space. offshore company. Second, with the new offshore Publishing outsourcing: The e-book market was reform the level of patients is expected to increase one of the few markets that grew during recession. by almost 30B. This is going to create an increase Since then, this segment has been witnessing a of work for people in healthcare industry and they positive growth and publishers have been looking 88  |  September 2012 GlobalServices
  • 89.
    industry specific BPO atit as a strong revenue spot. Apart from tackling Key Trends In industry-specific cost pressure, the key drivers for publishing out- sourcing are handling challenges of adapting to Specific BPO  Increased adoption in verticals like Healthcare and life new technology, lack of in-house capability and sciences that are undergoing profound changes addressing new geographies.  Significant investments by service providers US is the most popular publishing outsourcing in enhancing and acquiring industry-specific destination. India is the most preferred offshore capabilities. Industry-specific analytics and customer destination followed by Philippines. Indian players intelligence services are evolving continue to focus more on lucrative segments such  Combining BPO with technology as a single offering is a growing trend that we see in the industry-specific as educational, magazines, corporate, B2B, trade BPO space and e-books. Over the next three years, all these  BPO service providers are joining hands with clients segments are expected to remain attractive. for end-to-end service delivery and also, they are Mortgage Process Outsourcing: This model scaling up their business competency levels in has evolved the manner in which companies are handling high value business projects running their mortgage processing requests. The conventional manner is costly and burdensome and thus they do not operate successfully any longer. Checks, Underwriting Disbursement and Servicing BPO’s mortgage service offerings are crafted Collections Maintenance. to be in sync with the needs of mortgage banking The integration of services (For example, loan institutions. Some of the challenges mortgage bank- origination, vendor management, post-closing ing institutions face are rising interest rates, increas- processing services, third party services until under- ing instances of borrower default, competitive writing, modification services, technology services pressures etc. Mortgage BPOs spread their services etc.) is a challenge that vendors face while offering across various levels of the mort- mortgage services. gage value chain. Life sciences outsourcing: Research The functions of mortgage and development was the core of a BPO can be categorized under life science company and thus four divisions: distinct was perceived too valuable to headers;New Business pass on to others. However, Acquisition, Ap- today under the growing praisal Title pressure to cut costs and speed development, life science companies and large pharma- ceutical firms have started outsourcing clinical development programs to outside clini- cal research organizations (CROs). Companies depend on CROs to lower costs, access new patients, and comply with complex regula- tory requirements. In return, CROs should aim at becoming long-term strategic partners offering GlobalServices September 2012  |  89
  • 90.
    Segment Analysis value-added services. States and western Europe to China and India. Clinical development outsourcing is expected The study titled Outsourcing in Life Sciences A to increase and establish its footprints in different Survey of BayBio Members highlighted, “The key parts of the globe. Presently, a large percentage of findings of our survey of BayBio life science compa- outsourcing comes from United States and western nies suggest continued growth in clinical develop- Europe. In future, China and India are expected ment outsourcing, with a significant amount of to make their presence felt on the life sciences growth occurring overseas. The need for external outsourcing map. RD outsourcing is expected to capacity and capabilities is a key driver of outsourcing grow and also shift geographically from the United today, with a significant focus on reliable, on-time 90  |  September 2012 GlobalServices
  • 91.
    industry specific BPO service.Current CRO relationships appear to leave an agency’s proprietary or third-party analytics tool significant room for improvement. Patient recruit- that may have tons of fancy graphs, lots of numbers, ment, customer-centricity, regulatory compliance, and export complicated spreadsheets -- but it really and flexibility of service plans were mentioned as doesn’t tell you how to do anything actionable to particular areas in which CROs could do a better job. improve your social media marketing with that data. Overall, as companies look to CROs as the answer So if you’re considering using a third party for social for internal constraints, they would also like to shift media analytics, make sure that their tool not only emphasis from today’s transactional relationships to offers closed-loop reporting, but that the person long-term strategic development partnerships.” analyzing the data can also tell you how to use that Media outsourcing: Media outsourcing is often information to improve your marketing strategy.” looked at as the new wave of outsourcing. This is Other emerging verticals include travel, tele- courtesy an increase in the outsourcing of media com, insurance, supply chain management, tech- work such as online reputation management, data nology, transportation etc. mining, influencer identification and crisis manage- ment etc. Opportunities and Risks On the internet customers talk in real time and Despite its numerous advantages, there are some companies have comprehended the fact that mere potential risks and opportunities suppliers need to online monitoring tools are not sufficient. Soft- identify, and in turn adopt mitigation strategies ware’s can search conversations but they are not for these risks. industry-specific BPO providers are intelligent enough to understand sarcasm. Thus, stressing hard to move up the BPO value chain. BPO human beings are required. companies are joining hands with their clients for Also, all companies are well versed with the fact end-to-end service delivery and also, they are scal- that it is imperative to maintain a good profile on ing up their business competency levels in handling the internet. Hence, they look out for third party high value business projects. vendors who are armed with online business mar- Everest study states that primarily one demand- ket skills and also cost ing factor that pushes effective. Media outsourcing is often suppliers to opt for Social Media Exam- industry-specific BPO is iner’s Michael Stelzner looked at as the new wave cost. While traditional report titled 2012 of outsourcing, This is BPO focuses heavily on State of the Social reducing operational Media Marketing courtesy an increase in costs, industry-specific Industry stated, “In the outsourcing of media BPO offerings promise 2010, only 14 percent to create business im- of marketers out- work such as online pact. Industry reports sourced social media reputation management, predict that industry- marketing. Last year, data mining etc centric BPO capabilities that number doubled will emerge as an op- to 28 percent. And portunity for suppliers this year, the percentage rose yet again, with 32 to create top-line impact for their clients and attain percent of marketers outsourcing social media.” distinctive positioning in an increasingly competitive The report also highlighted,“Since marketers market in the aftermath of economic downturn. are so confused about how to measure social me- While the overall traditional BPO market is high- dia’s ROI, it’s certainly easy to be duped into using ly competitive, the industry-specific market is highly GlobalServices September 2012  |  91
  • 92.
    Segment Analysis industry specific BPO Everest predicts that industry-specific BPO will emerge as an opportunity for suppliers to create top-line impact for their clients and attain distinctive positioning in an increasingly competitive market. The financial pressures on vendors to maintain their profit margins may override development of this segment. Industry reports assert that scarce capital, major cutbacks in corporate spending, pressure on prices and margins together with drastic change in the competitive landscape are major threats to industry-specific BPO. While these risks poses threat they also create opportunities for strong players to achieve high performance. While some vendors are clearly content with a thin veneer of vertical capability, others are picking verticals where they feel they can gain an edge over the competition. But it’s a gradual develop- ment, and experts say that it will take patience and attitude on the vendors’ side to invest in the depth of talent they need, and be less concerned about short-term profits and demands. The real challenge lies for the BPO companies in the years to come, as they must-have to create domain expertise to furnish the market require- ments. industry-specific BPO providers will have to showcase their expertise across the various verticals and also align their business model. Financial, manufacturing and business services sectors are expected to be the fastest growing markets. In the IDC report, titled- “Worldwide concentrated as the industry relevance approach is BPO Services Market Forecaster: Vertical Markets,” now a key ingredient in BPO offerings. For industry- Juan Sacchi, senior research analyst, IDC European specific BPO services, Analytics and Cloud are play- Services, said “Industry-specific BPO demand is ex- ing game changing roles. But talent and skill issues pected to be relatively slow in 2012 compared with are are gripping the industry. Service providers are 2011. But looking forward, we expect to see indus- spending huge amounts on training and develop- try-specific BPO demand recovering and growing ment. Industry experts believe that skill shortages faster than demand for traditional key horizontal are going to be a problem going ahead. BPO services. Despite the fact that cost cutting The prime concerns related to industry-specific and cost control continue to be top priority for processes are- reducing operational errors, analyz- BPO investment decisions, more and more we will ing real time business performance to standardize see demand in the market for domain or industry business process operations on global-scale and to expertise and services that are able to drive busi- gain more control over the business operations via ness results alongside the traditional cost-cutting third party. approach.” 92  |  September 2012 GlobalServices
  • 93.
    industry specific BPO Industry- Specific BPO Global Leaders- Industry- specific BPO Altisource Portfolio Solutions S.A Genpact Limited Infosys Ltd. Stream Global Services Sutherland Global Services, Inc. Unisys Industry-specific BPO Niche Leaders Aditya Birla Minacs Worldwide Limited Aegis Limited Ajuba International Datamatics Global Services Limited HCL Technologies Ltd. Hexaware Technologies Ltd. Hinduja Global Solutions Ltd. Indecomm Global Services (I) Pvt Ltd InterGlobe Technologies Mindteck (India) Ltd. Neusoft Corporation Quatrro Global Services Pvt. Ltd. SPi Global GlobalServices September 2012  |  93
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    segment analysis The Expanding Scopeof PO Contracts By Smita Vasudevan Despite a sluggish macr- oeconomic outlook, the global PO market has retained its momentum. Fresh deals, renewals, new technologies and emerg- ing players - there is lot for procurement outsourcing buyers to look forward to this year P ost the 2008 global recession the demand for PO (Pro- curement Outsourcing) has been on the rise. In the post recession phase companies have been facing increasing pressures to cut down procurement costs and deal with concerns relating to volatility in commodity markets. This has been a big driver for the global PO market. Procurement is one of the 94  |  September 2012 GlobalServices
  • 95.
    procurement outsourcing most importantof all the business functions as it It is no longer is directly linked to revenues and has a significant just a bottom line bottom line impact. This is the reason why even savings target for when recessionary fears are once again looming procurement; you large, PO hasn’t lost its charm. The inherent pres- have to provide sure to attain cost savings is more evident now, savings, but in and outsourcing is coming out to be the most the most efficient desired medium. model that also is helping to further Global Market Scenario secure the supply The sluggish global economy is having a knockdown chain and protect impact on almost all areas of business. Procurement the end customers outsourcing too is under the wrath to some extent. in terms of products UK and US are two very prominent markets for PO, to be sold. and whatever happens in these markets is going to Jason Evans have a very likely impact on the segment. Despite Vice President, Corbus that, growth in 2011 was pretty decent with a 14 percent growth in annual contract value, which crossed $ 1.6 B. According to Everest Group’s Pro-  Geographic adoption will also continue to curement Outsourcing Annual Report 2012, 60 new expand in terms of global contracts as well as multi-process PO contracts and 53 renewals/exten- adoption by source geographies such as Asia- sions were signed in 2011, which is the highest ever Pacific and South America till now. Everest predicts that the global PO market will reach an ACV of $1.8B in 2012, representing Changing Face of Procurement managed spends of US$250B. Outsourcing Like most other outsourced services, procurement PO Market in 2011 too is undergoing lots of transformations in this tough phase that demands enterprises to look for  60 new multi-process PO contracts signed in 2011 newer ways of doing things. Buyers are looking at  ACV grew 14 percent to reach US$1.6 billion PO not just as a cost saving initiative but the way  Service providers managing more than US $190B of procurement spend on behalf of their clients to desired business outcomes and this has added to Source: Everest Report titled “Procurement Outsourcing Annual its strategic significance. The role of procurement Report 2012” officer is expanding and there is greater coordi- nation between the procurement officer and the 2012 Market Projections CFO. There is also a visible trend towards PO deals End-of-term activity will be significant as 57 per- bundling up with FAO. cent of PO contracts, valued at nearly US$6 billion, Reliance on procurement outsourcing is going are up for renewal within the next four years up as enterprises look for the expert knowledge  Adoption will be led by companies with rev- of service providers, who usually charge a fixed enues over US$1 billion while adoption by price for a certain amount of cost savings. Trans- small/medium-sized businesses (SMB) segment actional procurement, strategic sourcing, compli- will remain sporadic ance management, category management, tactical  Adoption in the public sector is expected to procurement and reporting are the common types grow of services being offered today. GlobalServices September 2012  |  95
  • 96.
    segment analysis An interesting trend is the growing prefer- to choose from. ence for procurement outsourcing among mid For long, PO contracts were focused on indirect market companies. Emerging technologies, espe- spends. This seems to be changing now as direct cially, cloud-based offerings have made PO serv- spending is also getting added more and more. ices affordable for the mid market. The increas- Rajesh Ranjan, Vice President, Everest, says, “The ing demand in this space is also encouraging market is shifting from classifying spend as direct small service providers with niche expertize to versus indirect to core versus non-core. While a enter the market. At the same time, large service majority of contract continues to include indirect providers are bringing out more services spend, inclusion of direct spend is increas- in their PO offerings, especially through ing.” Enterprises are focusing on core direct cloud-based offerings. The tough spending, preferring to keep it in house, competition in the service while outsourcing non-core direct provider landscape between spend categories, such as main- the large and small players tenance, repair and overhaul. will keep the momentum These changes are in a way going. And this will be a resulting in expanding the good opportunity for buyers scope of PO contracts. Ranjan to capitalize on, as they have confirms, “The functional scope numerous options of PO contracts is expanding into available adjacent supply chain processes.” Another change that the market is witnessing is changing buyer expecta- tions. Today enterprises want their PO service providers to come up with end- to-end solutions in source-to-procure and procure- to-pay contracts. The spate of MA and consolida- tion activities that is happening in the PO market is an indicator of the pressure that service providers face to expand their service capabilities and come out with complete solutions. Prominent Geographies Verticals North America will be the most dominant market followed by Europe and Asia Pacific. Emerging geographies will be attracting a lot of buyer atten- tion in the PO space, just like most other segments. Low cost and high skilled, talented workforce are primary factors driving demand in these regions. As wage inflation and rising costs have lessened the attractiveness of offshore locations like India and China to some extent, the unexplored loca- tions in Eastern Europe, Middle East and Latin America are gaining popularity. Also since unem- ployment levels in the US and UK are pretty high, 96  |  September 2012 GlobalServices
  • 97.
    procurement outsourcing Merger Acquisition Deals in 2011 Deal Objective To establish presence in the Australian market with more offerings in Infosys BPO Acquires Portland Group the value-added segment IBM Completes Acquisition of Emptoris To expand Smarter Commerce initiative The market is of value creation varies with process focus, eg; shifting from higher transactional nature of processes in the case classifying spend of P2P-focused buyers present more opportunities as direct versus to create value through process optimization. On indirect to core the other hand, spend reduction is typically a fea- versus non-core. ture of sourcing-related processes, therefore, a key While a majority of value creation lever for sourcing-focused buyers.” contract continues to include indirect The service Provider Landscape spend, inclusion It is definitely a tough phase for service providers of direct spend is with expectations soaring high and uncertainties increasing. prevailing in the global environment. And with Ranjan Rajesh many new entrants coming up its not the same Vice President, Everest playing field anymore. Most service providers are focusing their strategies around three things - peo- ple, process and technology. The focus has been on buyers will be forced to turn to nearshoring rather hiring and retaining talented people with knowl- than offshoring. edge and experience in niche areas like negotia- Across verticals, demand coming from manufac- tions, spend analytics etc. As clients are becoming turing, retail, BFSI, telecom and energy sectors has more and more demanding, providers are under helped in maintaining the momentum in the PO pressure to offer access to cutting edge technolo- market. Public sector is also likely to come out as a gies. Investing in technology is going to be another huge driver as governments are also under tremen- big trend among service providers and emerging dous pressure to cut down costs and are ready to technologies like social media, mobility and cloud look for alternative avenues. computing will have a lot of influence on the type of offerings that providers come up with. Major Drivers Process optimization and compliance are the PO Service Providers’ Landscape primary factors that are contributing to growth in  IBM, Accenture and Procurian together account demand for PO globally. The cost base for procure- for 70 percent of the PO market in terms of ACV ment outsourcing is much larger than other BPO  In 2011, IBM, Accenture, and GEP signed nearly segments and thus the opportunity is much more. 45 percent of new multi-process PO contracts. PO also has a very high impact on the bottom line  IBM, Accenture, and Xchanging accounted for which makes the value proposition quite attractive. about 60 percent of total contract value signed But at the same time realizing full value out of it in 2012, including new contracts, renewals and can also be a challenge. Ranjan says, “The extent extensions. GlobalServices September 2012  |  97
  • 98.
    segment analysis procurement outsourcing A lot will also ing includes the full range of Ariba’s collaborative commerce solutions with Genpact’s procurement depend on how services led by our SEP framework for making production facilities business processes much more effective,” said operate worldwide. Shantanu Ghosh, senior vice president, Practices, Solutions and Transitions, Genpact, in a company Against this press release.“ backdrop, supply The Way Ahead shortages are Its a transformational phase for the PO market. expected to remain The industry has definitely come of age with some in the first half and significant changes happening. The value proposi- tion for procurement outsourcing is quite high but recover gradually the challenge is in attaining its full value. by the second half of There are expectations of adoption rates pick- ing up across all verticals and the market is enter- the yeaR ing a new phase of accelerated growth. As the PO market evolves, service providers are coming out with innovative ways to serve their clients and Consolidation attract untapped segments. Like in all areas, here The service provider landscape is a mixed lot with also ‘more for less’ remains the mantra for buyers. different types of players competing together. This Jason Evans, Vice President, Corbus, says, “It is no includes source-to-contract and procure-to-pay longer just a bottom line savings target for pro- service providers, FAO service providers, advisory curement; you have to provide savings, but in the firms, supply chain management firms and so on. most efficient model that also is helping to further With niche offerings coming up, specialty players secure the supply chain and protect the end cus- are also expected to enter the scene. The trend to- tomers in terms of products to be sold.” wards consolidation that started a few years back A lot will also depend on how production facili- is very likely to continue strongly, and large players ties operate worldwide. The floods in Thailand and will try and acquire small and niche players to the earthquakes in Japan has had a serious impact come up with more expanded service offerings and on the manufacturing facilities in these countries. enhance their service capabilities. Swaminathan D, Though production has resumed, it might take a CEO and MD, Infosys BPO, which acquired Portland while to come to normalcy. Against this backdrop, BPO in 2011, stated in a company press release, supply shortages are expected to remain in the first “This acquisition would significantly deepen our half and recover gradually by the second half of capabilities and domain expertise in our sourcing the year. and procurement practice. It will also enhance the Global economies are still struggling to find competitiveness, spread of offerings and global their way out of the economic crisis. This will be a reach for our clients.” concern for service providers, but they also have Collaboration partnerships between large and the opportunity to attract buyers by helping them small service providers will also be a trend to watch streamline procurement costs. Evidences of how out for. For instance, Genpact has expanded their enterprises have attained cost savings through PO alliance with Ariba to include Ariba’s cloud based will be a key driver for other enterprises that have solutions into its offerings. “The combined offer- stayed away so far. 98  |  September 2012 GlobalServices
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    procurement outsourcing Global Procurement Management Leaders Capgemini Corbus, LLC GenpactLimited HCL Technologies Ltd. Infosys Ltd. WNS Global Services Xchanging GlobalServices September 2012  |  99
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    Segment analysis From Cost Savingsto Strategic Advantages: Global HRO Human resources outsourcing Evolves industry retains its cautious optimism as increasing complexities in HR processes By Smita Vasudevan and growing uncertainties in the macroeconomic environment creates new reasons for enterprises to outsource their HR transactions. 100  |  September 2012 GlobalServices
  • 101.
    HRO O ver the years the Human Resources The need to Outsourcing (HRO) industry has evolve HR gradually matured and the whole practices in HR BPO space has transformed order to cater from a mere cost saving initiative to a driving to a younger force for adding business value. The traditional workforce will be belief that HRO is simply a measure to reduce felt more. the burden on HR is changing and the strategic Rajiv Raghunandan significance of HRO is being acknowledged more strategic business practice and more. head, HRO and SF, So how has the year 2012 been for HRO? Infosys BPO The global HRO market retains its optimism, very much the way it did last year. But things are definitely not going to be the same, as single process HRO space and is the fastest growing the market continues to evolve under the segment right now. influence of some significant changes-chang- ing employee demographics being one of the Market Estimates most significant. According to Everest Research, the MPHRO market Of all the forces acting together, two primary remains a consolidated space with few leading forces are driving global HRO ahead in these players dominating the scene. Top players like Aon tough times - HRO becoming a more strategic Hewitt, IBM, Accenture, NGA, ADP etc account for initiative for enterprises and HR service providers around 80% of the market share. Similar is the case coming out with new technology innovations. with Benefits Administration where top 3 players, Targeted for multinational companies for a long including Aon Hewitt, Fidelity and Xerox account time, HRO is now attracting interest from mid for 70% of the market share. Single process func- market enterprises as well and this is going a be tions like RPO and Learning are relatively frag- a strong catalyst for growth in the coming years. mented markets with numerous service providers Also the concept of employee engagement is playing together. going to hold a lot of significance. The market is still in a phase of cautious opti- According to GIA’s, Human Resource mism and growth in 2012 is expected to be very Outsourcing(HRO): A Global Strategic Business much in line with what we saw last year. The MPH- Report, the global market for HRO is esti- RO space has grown around 2% over the last year mated to reach US$199.6B by the year 2017, and stands at around $ 3.1 B. The RPO segment has driven by the increasing need for alignment grown over 27% over the same time and currently between business operations and HR, cost re- stands at around $1.4B. Benefits, the most matured duction, compliance management, understand market in the HRO space, remains the largest in changing policy framework and access to key terms of value, currently around $5B. technologies. Globalization Growth Of Emerging Markets The global HRO market is clearly divided into Multi country capabilities are high on enterpris- two parts - MPHRO and Single process HRO. es agenda as they explore new, emerging markets Although some growth has been evident in all and attempt to break geographical boundaries. forms of HR outsourcing contracts, its the single Enterprises that venture into new areas should be process HRO space that is demonstrating an aware of the rules of the land. Local knowledge aggressive pace of growth. RPO dominates the and experience is very crucial and if they can’t get GlobalServices September 2012  |  101
  • 102.
    Segment analysis this ontheir own, they will need to partner with In 2012 we expect a service provider that has global competencies. organizations all Multi country HRO offerings is thus a big trend in over the world to the current scenario. have a renewed The ability to scale up is highly essential in these focus on employee markets and this is acting as a driver for global HRO. engagement as a way to generate RPO a Big Driver better outcomes For emerging geographies, RPO seems to be the for employees and most highly demanded HR function. The five year lower costs for global RPO deal between pharmaceutical major Eli employers. Lily and HRO service provider Kenexa is a good ex- Rohail Khan ample of the growing significance of RPO. The deal group president, HR includes recruiting in Asia Pacific, Europe and the outsourcing and solutions, ACS Americas and according to Nelson Hall’s estimates, the deal is worth more than $50 million, one of the largest RPO contracts till now. Khan says, “Re- the mid market space as well. Saas offerings have cruiting is now one of the three fastest growing made HR technology affordable and reachable for primary services bigger businesses are expecting mid market enterprises. outside firms to handle. Benefits administration He believes that BPaas will make traditional HR and payroll are the biggest two, but contracting BPO more flexible and easier to consume, with out- out recruiting assistance is a growing trend.” come-based contracts, and flexible ways of engag- ing with specialist providers. Bpaas Opens Up New HRO As a trend, HR service providers will be tying up Opportunities with SaaS providers to offer platform based HRO of- Saas-Based HR services have been around for a ferings. Joining hands with a service provider. One while but its only now with the greater breadth of example is Workday partnering with Accenture and cloud offerings in HR ERP, that its penetrating into Wipro to offer integrated saas Bpo services. Mobility and Self Service High on Demand As a trend, HR Mobile HR applications are high on enterprises’ service providers demand list and service providers will face in- will be tying up creased pressures to offer mobile functionality. Quite related to the emergence of mobility and IT with SaaS providers consumerization is the growth of self service as a to offer platform preferred way of handling HR transactions. Custers says, “Following the rapid adoption of self service based HRO offerings transactions in personal banking, utilities billing, One example is and social media, employees and managers will expect to be able to handle both simple personal Workday partnering data changes, as well as more complex, multi-step with Accenture HR transactions via self service scenarios.” This will have dual benefits - employees will have more con- 102  |  September 2012 GlobalServices
  • 103.
    HRO Across different A striking difference over last verticals, the demand year is the growth from financial in preference for services, telecom emerging markets. Enterprises are and manufacturing moving beyond will be a big driver. developed markets and emerging The retail and locations in APAC, government sectors, Europe and Latin America are gaining though does not lot of attention. look too bright right Rajesh Ranjan now, shows great Vice President, Everest Research potential for future growth Growth Across Segments and Geographies trol over their data and organizations will be able The GIA report states that the United States and to reduce administrative overheads. Europe account for a major chunk of global HRO services. India still holds a significant position but How Innovative HR Technologies Are the emergence of alternate centers across geog- Helping Enterprises? raphies like Latin America, Eastern Europe and Rajiv Raghunandan, Infosys, points out three ways South East Asia is a key indicator of the expansion in which HR technologies are helping organiza- of HRO across geographies. Raghunandan says, tions: “Today Europe is where US was 4-5 years ago. The  Ensuring greater compliance proportion is now 40-40. Rest 20 percent is very  Better end user experience by making transac- important. These areas could become innovation tions simpler hotbeds. Lot of what is learned there are replicable  Making HR policies flexible enough to accom- in developed markets.” modate a global and mobile workforce Across different verticals, the demand from financial services, telecom and manufacturing will be a big driver. The retail and government sectors, Key Highlights of 2011 though does not look too bright right now, shows  While the overall HRO market grew at a healthy great potential for future growth. rate, the MPHRO grew by a modest 2% to reach an annualized spend of US$3.12B in 2011 Technology Driven Consolidations  Transaction intensive processes are core but The trend towards consolidation in the service talent management components are increasingly considered provider landscape is expected to go on strongly,  The appeal of multi-tenant BpaaS will increase as players look to acquire better technologies and  The MA and partnership environment continues to global capabilities. Big players often bring in the play out in the marketplace scalability while smaller players bring in niche GlobalServices September 2012  |  103
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    Segment analysis HRO Deal tenures and sizes BPaaS will help overcome some of are likely to remain the shortcomings short and small as of both BPO and enterprises prefer to SaaS. It will add an additional tread cautiously. The layer of subject- size of MPHRO deals matter expertise to organizations is also becoming who have moved smaller as the number into SaaS and who find it hard to be of processes bundled entirely self reliant together in MPHRO is from a process coming down level. Michael Custers vice president, global alliances technology capabilities, creating a an attractive strategic marketing, NGA mix. The acquisition of Taleo, an on-demand tal- ent management software company by Oracle is a good example of this. Hot HRO Deals in 2011  MPHRO deal between BAE Systems and Logica Demand for Short Term Deals  Benefits Administration contract between State of Continue California and Aon Hewitt Deal tenures and sizes are likely to remain short  5 yr HR and Payroll Contract between Northgate and small as enterprises prefer to tread cautiously. Arinso and Family Mosaic The size of MPHRO deals is also becoming smaller  RPO contract between Eli Lily and Kenexa as the number of processes bundled together in MPHRO is coming down. Raghunandan says, providers are bringing out customized outsourcing “There was a one time change that happened. The models for mid market enterprises. interest of clients to lock themselves into 10 year While cost savings and compliance with complex deals has gone away a few years back. In the last HR transactions will work as short term drivers, 3-4 years there has not been much change in the business transformations and technology innova- duration of deals.” tions will play a big role in the long term. As the HR demographics change and a new Facebook genera- What Lies Ahead? tion gets geared up to work, organizations will have Currently many forces are acting together to re- a tough task in front of them in reorganizing their shape the global HRO landscape. Even against the work environment. Enterprises that start now will backdrop of a dull and gloomy economic scenario, definitely have an edge when this happens a few optimism remains as enterprises aim to reap strate- years down the line. Raghunandan sums up “ We gic advantages out of HR outsourcing deals. There have to evolve our workforce and we have started are huge opportunities that are yet to be fully ex- doing that today so that we are better prepared plored, especially in the form of a huge untapped for it.” The message holds a lot for service providers mid market segment. Foreseeing this, service and buyers in the global HRO space. 104  |  September 2012 GlobalServices
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    HRO human resource outsourcing Global HRO Vendors Capgemini NorthgateArinso GlobalServices September 2012  |  105
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    Segment Analysis Analytics Outsourcing: Inside theWorld of Numbers By Smriti Sharma Advanced analytics will increasingly become a necessity for competitive differentiation 106  |  September 2012 GlobalServices
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    Analytics Outsourcing T oday, all organizations operate in a glo- With greater bal environment that is set against the usage of analytics backdrop of cut-throat competition and and increasing regulatory pressure. Business decisions, complexity, there predictions, introduction of new products… all is a tendency to these decisions should be drawn after analyzing break analytics accurate data. Business analytics arm an organiza- projects into tion with quick and insightful decisions that assist distinctly an organization in managing its performance and executable parts creating value. and outsource Data is not new to industries. For many years to different they have possessed all kinds of data. However, specialized teams. absence of requisite skills and tools made it difficult Reetika Joshi for them to utilize this data. As companies continue senior research analyst, to lack appropriate analytics expertise, they are rely- ValueNotes Sourcing Practice ing on the value of outsourcing in this domain. Cost has never been the driver of the wheels of Reetika Joshi, senior research analyst, Valu- analytics outsourcing. Rather, its clutch has been eNotes Sourcing Practice and co-author of the HFS pressed by highly skilled statisticians with domain analytics report titled ‘Where offshore analytics is knowledge who have the capabilities of develop- heading in 2011’ in another interview spoke about ing insights using data. When these capabilities are what covers in offshore analytics area said, with married to specialized tools and technologies, the greater usage of analytics and increasing complex- provider can create impactful knowledge. ity, there is a tendency to break analytics projects Sundar Varadarajan, senior vice president, BIBA into distinctly executable parts and outsource to COE PRESALES said, “Business Analytics is one of different specialized teams. the terms that are very broadly used. While tradi- Accordingly, there are four levels in the analyt- tional Business Intelligence (interactive reporting, ics services mix, in ascending order of complexity: slicing and dicing of data) is referred to as analytics 1. Data entry/de-duplication: This includes by many; some may refer to analytics specifically in everything from cleaning to maintenance and the context of advanced decision support/predic- actual. It is a low-end service and offers low tive analytics. With volume and variety of data ever revenues to service providers. A large chunk of increasing, and with constant evolution of plat- KPO-centric analytics work (almost half) is dedi- forms for computation (for advanced analytics on cated to data preparation. an mpp architecture, in-memory computing, etc.) 2. Intuitive analytics: This entails running the are becoming more viable, this has also enabled models and generating new insights on a advanced/predictive analytics on petabyte-scale.” continuous basis. The outputs for these services While traditional BI will continue to flourish, may be in the form of dashboards, reports (of advanced analytics will increasingly become a ne- different frequencies), alerts, etc. cessity for competitive differentiation, for strategic 3. Model building: This is an advanced level of analysis, and for better forecasting, and perform- analytics, where models are designed to predict ance management etc. various business outcomes. Statisticians and Growing competition and globalization has econometricians build models focusing on busi- made analytics critical for all businesses to support ness problems/opportunities at hand. In terms strategic decision making. of offshoring, modeling is done by captives as GlobalServices September 2012  |  107
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    Segment Analysis Buyers needto plan A large percentage of Genpact’s revenue comes for innovation in from America. It also has presence in Europe, terms of budgeting China, India and Australia. exercise. They may Fortune 500 companies are the big-league not know what that clients for this knowledge service. Carnation Auto innovation is going and GE Money are some of its clients. to be but at least Some of Accenture’s clients are BP and Verizon. they have a budget Connectiva serves service providers in telecom, and that helps media and entertainment. Their customers in- them achieve the clude some of the world’s largest providers with innovation. When I 200+M subscribers as well as greenfield operators say budget, I mean and mid-sized companies. Their customers include there are certain Bharti, T-Mobile, Telefonica, Alcatel Lucent, YTL, things the service IDEA amongst others. Capgemini’s clients include providers are going Mazda and Baycorp. to do, buyers have Fortune 500 companies are the big-league cli- got to support ents for this knowledge services. them. Innovation is what most of the buyers are asking for. Rajesh Ranjan, vice president, Everest Rajesh Ranjan vice president, Everest Group Group explained, “Innovation is something which helps you really leap from one level to another. Buyers really want things to improve, and thus well as third-party vendors depending on the they want service providers, who are operating the maturity of the clients’ in-house teams. business process function on their behalf to put 4. Solutions: Solutions generally entail “bun- in practice some of the best things that they have dled” analytics components, delivered to clients gulfed out from their experience of working with to address their needs. Providers take a con- some of the other organizations. Also, the services sultative approach and leverage technology to BPO providers provide are their core competency. deliver value. The aim is to render the client Within their core business again, they expect the self-sustaining and create a unified analytics de- provider to be able to bring those best practices livery mechanism. This may be done by deploy- and bring those things they are doing internally to ing an analytics platform or other tools. optimize and provide that benefit.” Apart from the above mentioned IT/BPO provide He adds, “However, I also feel that buyers also plenty of value-enhancing analytics components, need to plan and budget for that. In general, in- such as analytics to improve the efficiency of process- novation costs some money, innovation does not es, identify problem areas or sub-processes with cost- come free. Buyers need to plan for that in terms saving potential, and provide reporting and MIS for of budgeting exercise, they may not know what existing processes. Often these services are delivered that innovation is going to be but at least they to the client as value-adds minus additional cost. have a budget and that helps them achieve the innovation. When I say budget, I mean there are What do the Buyers Want? certain things the service providers are going to US and UK continue to be the major markets served do, you have got to support for that, and if these by analytics service providers. America and Japan things bring the right results, you should be able to has also won the focus of some vendors. reward the service provider. All these things need 108  |  September 2012 GlobalServices
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    Analytics Outsourcing to happenin conjunction to be able to bring in the outsource in the next 12 – 18 months preferred right value for the buyers side.” output based or transaction based pricing models, Extracts from TCS report titled, Future Proof- with about 9% even willing to opt for an outcome ing the Organization through Analytics, based pricing model. A significant 40% of the buyers felt the func- tional expertise in the domain was the key factor Service Providers Landscape in choosing a service provider and an additional The players in this market space can be categorized 35% sought experience in the same industry in three divisions. One is the global outsourcing ma- It is also not surprising that influencers continue jor: IBM, Accenture, Capgemini, TCS, Infosys, Wipro to consider presence of a technology platform a etc., the second segment is pure play BPO provider, critical aspect to outsourcing. The buyers tend to though they are not many of them left now,: see this as a relatively low importance factor in WNS,EXL, and the third one is business specialist, decision making since the business and technology these are very few. In the last category, the ques- decisions are made separately. tion is to what extend will they continue to operate Interestingly, among the buyers, more than on their own vs. on getting acquired. 50% of those who are currently outsourcing Analytics outsourcing started as financial and sought functional expertise in the partner or- marketing function. Shipping and logistics, manu- ganization, while over 60% of those planning to facturing, supply chain etc. were initially not very outsource in the near future said they would look active in this space. However, now they offer good for similar experience in the industry. opportunities. Web and web related services, pack- A buyer experienced in outsourcing is perhaps age solutions that mix combine consulting services looking at the nuances that the partner can bring, with delivery are very much in demand. particularly in case of analytics services. Hence, a Chirajeet Sengupta, research director, Everest partner with enough experience in the domain Group articulated, “Increasingly, there has been a is desirable. For a buyer that has not outsourced shift or blurring of lines between different kind of before, similar industry experience is a confidence market players and their competent quotient. Es- building factor. sentially, this field is open to everyone.” Close to 50% of the buyers in our survey said He explains why some of the large scale IT that technology and infrastructure were key ele- providers are able to act well in this space. The ments where they looked at their partners for help. reason being they have expertise in handling Also, many buyers are looking to migrate to things like business intelligence and data ware- newer technologies, particularly from the cost and houses. They have experience in handling those time to market perspective. Here the support and huge amounts of transactional data Secondly, necessary skills of a technology competent partner they have the scale, they have the deep pockets for the buyer is extremely critical. to invest in a particular upcoming space and their Buyers are also looking at process standardization ability to invest is larger than a start-up analytics from their partners, with 28% of the buyers in our house. The third factor is they are able to offer survey saying that this was critical for them. People certain efficiencies in terms of automation. They consolidation and automation are important in as are able to hire a whole bunch of statisticians much as they help in cutting the costs to the buyers. and put them behind stats terminals to churn out Buyers who were currently outsourcing analytics insights or you can automate 70 percent of that. processes preferred the more traditional FTE based That in itself is a huge advantage. or fixed price model. However, it is interesting to The last thing is that some of the account level note that close to 40% of the buyers planning to relationships these organizations have built over GlobalServices September 2012  |  109
  • 110.
    Segment Analysis Analytics Outsourcing time have helped them mine into what seems as The ability to a natural expansion of scope. For example, if you undertake analytics are implementing business intelligence systems for on transactions, retail company and you have a healthy relationship understand the with that retail company for the last five years; it’s insights and almost a natural extension to talk about how you then identify are going to help them mind those insights out of opportunities to that system. improve and add The IDC MarketScape report evaluated the value to the client’s offerings and capabilities of 10 business analytics business is what BPO vendors namely: Accenture, Capgemini, Cogni- our clients expect zant, EXL Services, Genpact, HP, IBM, Infosys, TATA from BPO. Consultancy Services (TCS), and WNS. Accenture, Anoop Sagoo Capgemini, Cognizant, EXL Services, Genpact, HP, BPO cross operating group IBM, Infosys, TATA Consultancy Services (TCS), and lead, Accenture WNS. Service providers were evaluated based on potential key strategy measures for success in two as a service on the cloud, Social intelligence and primary categories: current capabilities and future mining, Advanced (predictive) analytics such as: strategy. Accenture, Capgemini, Genpact and TCS Fraud Analytics in the Financial Services, Insurance were positioned as as ‘Market Leaders.’ Industry, Higher Education analytics – e.g., predict Mukesh Dialani, research manager, Worldwide student dropout patterns, analyze and predict per- BPO Services, was quoted, “BPO vendors find formances, etc. and Smart Metering related analyt- themselves in a favorable position to assist their ics in the energy/utilities and other industries. clients’ transformation efforts as enterprises face Varadarajan also highlighted the following new sources of competition in this global environ- upcoming trends: ment and try to stay competitive by keeping a In addition to the typical analytical solutions on close check on various business performance met- well-structured corporate or customer data, etc., we rics. BPO providers that build competency around are increasing seeing that organizations are having industry-specific BPO and analytics outsourcing as to deal with more external data (on social networks, well as exhibit the capability to assist clients with internet, emails, text documents, etc.), a lot of business consulting services will gain a bigger por- which is unstructured, and needs to be analyzed in tion of this business.” conjunction with the structured data; also, the data Anoop Sagoo, BPO cross operating group lead, volume is increasingly huge – we see that effectively Accenture, expressed, “BPO today is about min- dealing with this “big data” analytics is becoming ing the huge volume of transactional data that key and will be a mainstream part of analytics out- is being processed – and using industry expertise, sourcing in the coming years. analytics and innovation to help a client operate Also, with the adoption of platforms and appli- its business better and drive business outcomes. cations on the cloud, analytics-as-a-service, or data- The ability to undertake analytics on transactions, integration-as-a-service are also increasingly being understand the insights and then identify oppor- adopted – e.g., we have seen with a few customers tunities to improve and add value to the client’s and prospects that as a natural extension to ERP business is what our clients expect from BPO.” in a cloud model, analytical services on top of ERPs Varadarajan pointed the following as new (eg., HR analytics as a service) are also becoming opportunities for analytics outsourcing: Analytics more prevalent. 110  |  September 2012 GlobalServices
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    Analytics Outsourcing Leaders- Specialty KPO Global Knowledge Process Aegis Limited Leaders Affinity Express Aditya Birla Minacs Worldwide Chinasoft International Ltd. Limited CompuCom Systems Inc. Capgemini Corbus, LLC eClerx Services Ltd. Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. SPi Global Infosys Ltd. Syntel Inc. Insigma Technology Co., LTD InterGlobe Technologies Quatrro Global Services Pvt. Ltd. Sutherland Global Services, Inc. VanceInfo Technologies Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics GlobalServices Outsourcing Analytics Outsourcing September 2012  |  111