www.globalservicesmedia.com GS100 Survey þ GS100 List þ GS100 Categories þ ITO Segments þ BPO Segmentsþ Annual Global Outsourcing Industry Analysis 2012 Global Services Compendium 2012 Global Services Compendium ANNUAL ISSUE 2012
May 20, 2015
www.globalservicesmedia.com
GS100 Survey þGS100 List þ
GS100 Categories þITO Segments þBPO Segmentsþ
Annual Global Outsourcing Industry Analysis
2012 Global
Services Compendium
2012 Global
Services Compendium
AnnuAlIssue2012
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
to experts in product development.
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!
Facing the New Realities
editor’s note
Ed Nair, Editor [email protected]
� | September 2012 GlobalServices
Segment Analysis
n Application Development & Maintenance: On The Road To
Recovery/ 27
n OPD: Market is Expected to Reach
$19B/ 38
n Infrastructure Management Services: Cloud Comes With a
Promise/ 46
n ITO: Status Quo Sustained/ 56
n Contact Centers: Growth Momentum
Continues Amidst Turbulence/ 66
n FAO: All Signs Suggest Maturity/ 75
n ISBPO: Being Explored
Aggressively/ 86
n PO: The Expanding Scope of PO
Contracts/ 94
n HRO: From Cost Savings to Strategic
Advantages/ 100
n Analytics Outsourcing: Inside The
World of Numbers/ 106
38
46
86
106
100
66
56
94
75
Contents27
GlobalServices September 2012 | �
GS100 LISTS Ø The GS100 List/ 13Ø The GS100 Category Lists/ 19
ADveRTISeRS LISTS
Ø Hildebrando 3
Ø Quatrro 7
Ø Endava 13
Ø Belatrix 17
Ø Hexaware 21
Ø IBA 29
Ø Prokarma 31
Ø Cybage 36
Ø Harbinger 41
Ø Great Idea 44
Ø Mexico IT 49
Ø EPAM 53
Ø Luxoft 59
SuRveyAnALySIS
The 2012 Global Services 100: Defining Leadership in Global IT and Business
eDITORIAL TeAM ed nairEditor, [email protected] [email protected] [email protected] Chandra [email protected]
SALeS & MARkeTInGSatish GuptaAVP, [email protected] [email protected]
Pradeep GuptaChairman & MDHoshie GhaswallaCEO, Media BusinessIbrahim AhmadGroup Editor
Gulnar [email protected]
DeSIGn TeAMBhagbat PattnayakHarnek SinghPramod S Rawat
COveR: Pramod S Rawat
6
SpecialRepoRt
� | August 2012 GlobalServices
SuRvey
Survey analySiS Survey analySiS Survey analySiS Survey analySiS Survey analySiSSurvey analySiS Survey analySiS Survey analySiS Survey analySiS Survey analySiS
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analysisSurvey analySiS Survey analySiS Survey analySiS Survey analySiS Survey analySiSSurvey analySiS Survey analySiS Survey analySiS Survey analySiS Survey analySiS
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Quatrro is recognized as one of the
leading Business Process Outsourc-
ing companies, focused on offering
platform based services to Small and
Medium Businesses (SMBs) globally. The company
which is spearheaded by the Guru of Indian BPO
industry, Raman Roy, has taken rapid strides over
the years and has lent true meaning to its tagline
“Beyond the Existing”. It currently has over 130
enterprise clients, 11000+ SMB & SOHO custom-
ers and 500,000+ individual customers in multiple
geographies with diverse services covering Risk
Management, Financial Processing, Technical Solu-
tions, Mortgage Processing, Interactive Entertain-
ment and Knowledge Services.
Quatrro Global ServiceS–Spearheading BpO induStry tO
ad
vert
ori
al
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”.
Illustrated below are various drivers that em-
power Quatrro deliver significant value to its mid
market clients:
Commenting on Quatrro’s current success, Raman
adds,” The adoption of our services by over 11,000
SMB / SOHOs and leading multi- national companies
for their franchise operations is a colossal endorse-
ment of our business strategy. This has been further
endorsed through the alliances that we forged with
various technology players in taking their services to
the mid-market, otherwise found unviable by them.”
Summing up, Raman says that Quatrro has
architected the birth of yet another industry in
the services space – the industry of platform based
business services that have no geographic barriers
or limitations.
“BeyOnd the exiSting”
cover story
� | September 2012 GlobalServices
the 2012 Gs100:
This is neither a study of 100 companies nor a survey aimed at choosing hundred best companies based on financial performance. Hundred best companies they are; chosen through a rigorous methodology...
DefininG LeaDership in GLobaL it anD business process outsourcinG
survey anaLysis
GlobalServices September 2012 | �
This is neither a study of 100 companies nor
a survey aimed at choosing hundred best
companies based on financial perform-
ance. Hundred best companies they are;
chosen through a rigorous methodology that eval-
uates each company across multiple dimensions,
measured both quantitatively and qualitatively.
The study presents a complete view of the dynam-
ics of the most significant segments that make up
the IT and business process outsourcing industry.
This is not a list of the 100 largest outsourcing
vendors. This list reflects the diversity and overall
landscape of the service provider community in
terms of company sizes, countries of origin and
countries of delivery.
the Gs100 MethodologyCompanies who opted to participate in the sur-
vey were asked to share exhaustive information
through an online survey done during 05/12 and
06/12. The top 100 list and the names in the catego-
ries are derived using a scientific research method-
ology based on several qualitative parameters.
Customer Base-IT Outsourcing
(# Customers, 130 Cos.)
ADM
EA
ES
OPD
IM
Total IT O/S
IT Strategyand
Consulting
Others
0 1000 2000 3000 4000 5000 6000 7000 8000
5977
4021
885
1586
2876
1775
809
987
1474
967
551
697
285
583
420
342
New Customers-2011Existing Active Customers
CONTRACT SIZES
ITO BPO
Upto $5M 15444 2586
$5M to $19M 357 165
$20M to $34M 177 54
$35M to $50M 55 28
$51 M to $99 M 23 27
$100M to $299 M 14 3
$300M to $499 M 4 3
$500M to $749 M 4 7
$750M to $ 1B 3 8
$ 1 B to $ 2 B 1 2
More than $ 2 B 0
(# of contracts, 130 companies)
ADM38%
EA19%
IMS14%
ES8%
OPD7%
Testing5%
SO4%
Others5%
IT Outsourcing SegmentsTotal- $21.2B
FAO8%
HRO5%
CC53%
PO4%
KPO9%
I/S20%
BPO SegmentsTotal- $11B
cover story
10 | September 2012 GlobalServices
survey anaLysis
NorthAmerica
47%
SouthAmerica6%
Europe24%
Africa& ME3%
Asia14%
Japan2%
Australia5%
Revenue by Geographies($65B, 130 cos.)
North AmericaSouth AmericaEuropeAfrica & MEAsiaJapanAustralia
FAO
HRO
CC
Procurement
KPO
Industry-specific
0 1000 2000 3000 4000 5000
733
396
3145
222
3809
960
96
34
610
60
780
328
Customer Base- BPO(# Customers, 130 Cos.)
New Customers-2011Existing Active Customers
Banking & Financial Services
Energy, Resources & Utilities
Government
Healthcare
High Tech
Insurance
Life Sciences
Manufacturing
Media & Information Services
Retail & Consumer Products
Telecom
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00
15.84
6.48
5.86
8.27
11.26
7.24
9.11
10.45
8.40
12.93
11.11
Verticals
Row 4
%Re
v.20
11
coming soon...
To know more write to [email protected]
GS100
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Quality. Productivity. innovation. EndavaPErhaPs it’s timE to think againabout whErE you outsourcEEndava 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
endava.comlondon nEw york glasgow romania moldova
2012 Finalist
2012 GS100 LiSt
14 | September 2012 GlobalServices
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 Ci&T
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
2012 GLOBAL SERViCES 100 COMPANiES
2012 GS100 LiSt
GlobalServices September 2012 | 15
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
2012 GS100 LiSt
16 | September 2012 GlobalServices
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
2012 GS100 LiSt
18 | September 2012 GlobalServices
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
GlobalServices September 2012 | 19
2012 GS100 cateGory LiStS
2012 GLoBaL SerViceS 100 cateGory LiStS
Top Global ITO Leaders
Capgemini
CompuCom Systems Inc.
CSC
HCL Technologies Ltd.
Infosys Ltd.
Unisys
Top Global ADM Leaders
Capgemini
CSC
HCL Technologies Ltd.
iGATE Corporation
Infosys Ltd.
Insigma Technology Co., LTD
Syntel Inc.
Top Mid-tier ADM Companies
Chinasoft International Ltd.
Collabera Inc
EPAM Systems Inc.
Genpact Limited
Infotech Enterprises
ITC Infotech
MindTree Limited
Neoris
Neusoft
VanceInfo Technologies
Zensar
Emerging Mid-Tier Global ADM Leaders
BLEUM INC.
Ci&T
FPT Software Co. Ltd.
IBA Group
InterGlobe Technologies
KPIT Cummins Infosystems Ltd.
MERA
20 | September 2012 GlobalServices
2012 GS100 cateGory LiStS
NIIT Technologies
ProKarma, Inc
SoftServe, Inc.
Sonata Software Limited
Specialty ADM Vendors
Achievo Corporation
Cybage Software Private Limited
DataArt
Endava UK Limited
Exigen Services
Freeborders, Inc.
Nagarro, Inc.
Persistent Systems Limited
Reksoft
ValueLabs
Top Global Infrastructure Management Vendors
Capgemini
CompuCom Systems Inc.
CSC
HCL Technologies Ltd.
Infosys Ltd.
Microland Limited
Leading Mid-tier Infrastructure Management Vendors
Aegis Limited
Chinasoft International Ltd.
Collabera Inc
Genpact Limited
Insigma Technology Co., LTD
MindTree Limited
NIIT Technologies
Sonata Software Limited
Leading Global OPD Vendors
EPAM Systems Inc.
GlobalLogic
HCL Technologies
Infosys
Infotech Enterprises
Lionbridge
Persistent Systems Limited
Symphony Teleca Corp
VanceInfo Technologies
Leading Mid-tier OPD Vendors
Beyondsoft Corporation
Cybage Software Private Limited
HorizontalsEnterprise Services (SAP, PeopleSoft, Oracle, Microsoft)Quality Assurance and Testing Services (QATS)Infrastructure Management Service (IMS)Business Intelligence & AnalyticsBusiness Process OutsourcingHuman Resource Information Technology / HR OutsourcingEnterprise Risk Management
CertificationsCMMI Level 5ISO 9001 ISO 27001SAS 70 Type IIPCI DSS
VerticalsBanking, Financial Services Travel and TransportationInsurance and HealthcareManufacturingEnergy and Utilities
Global IT Services and Consultancy Provider with the expertise and resources to meet and
exceed your expectations every time
PARTNER WITH A TEAMOF EXPERTS
www.hexaware.com
2012 GS100 cateGory LiStS
22 | September 2012 GlobalServices
Globant
Hildebrando
iGATE Corporation
Luxoft
MindTree Limited
Leaders- Global Enterprise Applications Deployment
Capgemini
CSC
HCL Technologies Ltd.
Infosys Ltd.
KPIT Cummins Infosystems Ltd.
Leaders- Mid-market Enterprise Applications Deployment
EPAM Systems Inc.
Genpact Limited
Hexaware Technologies Limited
iGATE Corporation
Insigma Technology Co., LTD
iSoftStone Information Technology (Group) Co., Ltd
Neoris
Sonata Software Limited
VanceInfo Technologies
Leading Engineering Services Vendors
Collabera Inc
HCL Technologies Ltd.
Infosys Ltd.
Infotech Enterprises
Insigma Technology Co., LTD
iSoftStone Information Technology (Group) Co., Ltd
KPIT Cummins Infosystems Ltd.
Neilsoft Limited
Global Leaders- Testing Services
Capgemini
CSC
iGATE Corporation
Infosys Ltd.
Mid-Tier Leaders- Testing Services
Beyondsoft Corporation
Collabera Inc
EPAM Systems Inc.
Hexaware Technologies Limited
Hildebrando S.A
Luxoft
MindTree Limited
2012 GS100 cateGory LiStS
GlobalServices September 2012 | 23
Neoris
Top Global BPO Leaders
Aegis Limited
Convergys Corporation
Expert Global Solutions
Genpact Limited
Sitel Operating Corporation
Stream Global Services
Xchanging Plc
Global BPO Challengers
Aditya Birla Minacs Worldwide Limited
Firstsource Solutions Ltd
Infosys Ltd.
NorthgateArinso
Sutherland Global Services, Inc.
VADS Business Process Sdn Bhd
WNS Global Services PVT. Ltd
Global BPO Niche Leaders
Corbus, LLC
Datamatics Global Services Limited
Hexaware Technologies Limited
Indecomm Global Services (I) Pvt Ltd
InterGlobe Technologies
Scicom (MSC) Berhad
Symphony BPO Solutions Sdn Bhd
Xceed
Zensar Technologies
Leading Mid-tier BPO Providers
Altisource Portfolio Solutions S.A
eClerx Services Ltd.
EXL Service Holding Inc.
HCL Technologies Ltd.
Hinduja Global Solutions Limited
Quatrro Global Services Pvt. Ltd.
Serco Global Services
SPi Global
Syntel Inc.
Global Customer Management Leaders
Aditya Birla Minacs Worldwide Limited
Aegis Limited
Capgemini
Convergys Corporation
2012 GS100 cateGory LiStS
24 | September 2012 GlobalServices
Expert Global Solutions
Firstsource Solutions Ltd
Genpact Limited
Hinduja Global Solutions Limited
Sitel Operating Corporation
VADS Business Process 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
Global FAO Vendors
Capgemini
EXL Service
Genpact Limited
Infosys Ltd.
WNS Global Services
Xchanging
Leading Mid-tier FAO Vendors
Datamatics Global Services Limited
HCL Technologies Ltd.
Insigma Technology Co., LTD
Quatrro Global Services Pvt. Ltd.
Sutherland Global Services, Inc.
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 Limited
Hinduja Global Solutions Limited
Indecomm Global Services (I) Pvt Ltd
2012 GS100 cateGory LiStS
GlobalServices September 2012 | 25
InterGlobe Technologies
Mindteck (India) Ltd.
Neusoft Corporation
Quatrro Global Services Pvt. Ltd.
SPi Global
Global Procurement Management Leaders
Capgemini
Corbus, LLC
Genpact Limited
HCL Technologies Ltd.
Infosys Ltd.
WNS Global Services
Xchanging
Global HRO Vendors
Capgemini
NorthgateArinso
Global Knowledge Process Leaders
Aditya Birla Minacs Worldwide Limited
Capgemini
eClerx Services Ltd.
Genpact Limited
SPi Global
Syntel Inc.
Leaders- Specialty KPO
Aegis Limited
Affinity Express
Chinasoft International Ltd.
CompuCom Systems Inc.
Corbus, LLC
Datamatics Global Services Limited
HCL Technologies Ltd.
Infosys Ltd.
Insigma Technology Co., LTD
InterGlobe Technologies
Quatrro Global Services Pvt. Ltd.
Sutherland Global Services, Inc.
VanceInfo Technologies
SpecialRepoRt
� | August 2012 GlobalServices
Segment
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ADM
GlobalServices September 2012 | 27
SegMent AnAlySiS
By Sourabh Chandra Pushp
ApplicAtion DevelopMent & MAintenAnce :on the RoAD to RecoveRy
Software development activities in the Application Development & Maintenance (ADM) Outsourcing space may get postponed in the current downturn, but it will return with a throttle effect when the economy recovers
SegMent AnAlySiS
28 | September 2012 GlobalServices
ADM
IT market is going through a period
of massive change. As enterprise
software enters a great renaissance
period driven by mobility,
cloud computing and Software
as a Service (SaaS), software
manufacturers and developers are increasingly
turning to experts in product
development to help them deliver innovation and to
market faster.
Keith higginS chief marketing officer,
Symphony Services
Software development activities in
the Application Development &
Maintenance(ADM) Outsourcing space may
get postponed in the current downturn,
but it will return with a throttle effect when the
economy recovers.
IT environment is facing extreme cost pressures
with increased expectations and IT executives ex-
pect more from their ongoing IT applications. ADM
outsourcing offers the full scope of services that
accelerates IT spend return— development, imple-
mentation and management. It drives measurable
improvements in product quality, reducing defect
density and increasing development productivity.
Outsourced ADM contracts are said to improve
productivity by up to 45 percent while it reduces
IT-costs by as much as 50 percent.
ADM outsourcing is a proven means by which
companies can significantly reduce their costs,
continuously improve the performance, stability
and availability of their applications and free up
their existing IT-staff to focus on their strategic
initiatives. It allows customers to reduce the cost
and maintenance risk of all ongoing applications,
while still retaining much needed control of their
IT OPEX and core business focus.
the ADM MarketThe ADM market is expected to grow from $51 B in
2010 to approx $63 B by 2014 at a rate of 5.7 percent.
By 2015, Forrester expects the market for devel-
opment services to approach $69B USD.
The key ADM themes that dominated the
market in 2011 were Cloud, Agile, Security, Analyt-
ics. These themes have held sway as providers and
buyers both look at taking advantage of the trans-
forming AMD landscape. The explosion of technol-
ogy and digital content, more pervasive network
connectivity and the continued proliferation of
smart hand-held devices has completely reshaped
the ADM market and will continue to dominate.
The ADM segment is still the mainstay of the IT
outsourcing market. Led by US-based majors such
as IBM, Accenture, HP and Cognizant and India-
based offshore vendors like TCS, Infosys, Wipro and
HCL, ADM activity still constitutes a large chunk of
the overall IT outsourcing. Recent years have seen
the entry of other mid-tier vendors like Neoris,
Auriga and Softtek who have broken ground with
non-India offshore delivery. However, India contin-
ues to be the leading offshore location.
The in-house delivery of IT application, main-
tenance and processes are still dominant in 2012-
2013. Research carried by Horses for Sources
predicts 95% of ADM buyers reporting positive
outcomes. ADM outsourcing saw near around 35
percent inshore activity together with more than
30 percent outsourced activity as sourcing model
for managing the IT business. Companies have a
renewed focus on maintenance operations and
servicing existing applications is now of a greater
importance to them.
SegMent AnAlySiS
30 | September 2012 GlobalServices
ADM
ADM Buyers are expecting nothing less than
great quality, superior customer service and most
important of all, top-notch solutions. In the coming
time, more contracts are expected to pass on to
emerging ADM destinations, like Brazil, Russia and
Eastern Europe.
The ADM industry is going through a signifi-
cant transformation in their licensing, delivery and
support models. Despite a trend towards increased
ADM outsourcing to lower-wage economies, the
cost of developing and maintaining applications
can still consume more than half of the total IT
budget.
The most notable theme that changed almost
all ongoing trends for ADM market is the Cloud.
With its on-demand, utility-pay for what you use
and resource-sharing model, Cloud has galva-
nized businesses and vendors across the industry
and ADM market landscape. All the leading ADM
players have in 2011-12 enabled sections of their
portfolio as cloud ADM service offerings with plans
in the pipeline to widen their capability for Cloud
ADM market. Other prominent ADM market trends
are- Enterprise App Stores and Desktop Services.
The Mobile and Cloud application develop-
ment is the hottest place to be in the IT industry in
the coming year. With the rise of productivity and
collaboration tools becoming more refined, open
source ADM market gets in the play easier than
ever. Open source and collaboration tools from
Dropbox to Linux-Ubuntu and to Cloud platforms
such as AWS Elastic Beanstalk, application develop-
ers across the globe are expecting this to follow
for coming years which clearly means new market
implementations ADM outsourcing.
ADM Buyers across geographies continued
expanding their operations. While ADM market
saw larger number of less-value deals, well-known
names in the ADM space signed greater number
of contract renewals. North America continued
to hold ace spot with the largest number of ADM
deals, next to Europe, on a year-to-year basis.
Cloud computing continued to be increasingly
adopted in newer ADM deals.
changing landscape: enterprise Applications Software“The global marketplace is still experiencing a se-
ries of conflicting and contrasting economic news
reports, and the full impact of the economic uncer-
tainty on the enterprise software markets may not
be readily assessable until the end of the first half
of 2012,” asserts Tom Eid, research vice president
at Gartner in the official press statement. Spending
in 2012 is anticipated to focus on industry-specific
applications; upgrades to established, mission-criti-
cal software; integrating and securing established
systems and infrastructure; and software as a serv-
ice (SaaS) deployments representing extensions to,
or replacement of, existing applications and new
solutions.
According to Gartner, the worldwide spending
on the enterprise application software is expected
to cross $120.4B in 2012, with a 4.5 percent in-
crease from 2011 spending of $115.2B.
With increasing number of organizations
demanding application’s functionality as a cloud-
based services rather than on-premises infrastruc-
ture, ADM vendors are offering more technology
as subscription-based solutions and “pay as you
go” ADM offerings. This is expected to be a much
needed step by ADM providers positioning them as
The wOrlDwIDe SPenDInG On The enTerPrISe APPlICATIOn SOfTwAre IS exPeCTeD TO CrOSS $120.4B In 2012, wITh A 4.5 PerCenT InCreASe frOM 2011 SPenDInG Of $115.2B
SegMent AnAlySiS
32 | September 2012 GlobalServices
more cost-effective and as a way to counter the ef-
fects of economic recession. SaaS and cloud-based
services are helping established ADM vendors to
expand their overall revenue growth.
On the account of enhanced SaaS and cloud ap-
plication use, enterprise ADM market continues to
evolve. As tighter capital budgets demand accurate
leaner alternatives the ADM growth graph varies
within geographies.
cloud and Android Based Application DevelopmentCloud computing conversations are slowly mor-
phing the ADM market in terms of cloud comput-
ing application platforms. Much of its expectation,
cloud-based ADM are becoming an IT norm and
less of an exception. In the cloud world, software
development has become more complex in terms
of security, reliability, usability and performance
and will keep the software development industry
busy.
Ashok Saxena, Head, India Engineering Cen-
tre, Kronos opines how the whole ADM space has
changed to serve the market forces and meeting
end user expectations. Ashok says, “Most of the
cloud migrations we see today are applications
for physical infrastructure and are now taking full
advantage of the cloud possibilities. The ADM
market is experiencing an ongoing boom in soft-
ware development for cloud computing that takes
advantage of benefits but also issues that will open
up opportunity for new software development ver-
ticals. Industry experts believe, the impact of cloud
service on the ADM market will change the selling
and licensing of IT-applications, the way applica-
tion data are handled will undergo a major shift
which will induce the data driven applications into
the mainstream market.
However, for software development the un-
derlying challenges of Cloud will come into sharp
focus as Cloud’s increasing benefits and risks will
prompt the ADM providers to come to grips with
it.
Besides, Cloud Android is also accelerating the
ADM landscape. The unprecedented growth of An-
droid devices and the demand for suitable Android
applications are fueling a huge demand for ADM.
Ron DuPlain, Freelance Lead Android & Mobile
Web Engineer, says, “Today when everything is
centered around mobility, application develop-
ment has taken vital transformation, both in terms
when everyone is speaking
about reducing costs especially
overhead in particular,
application’s quality cannot be
compromised, and this realization
has led to a lot of focus
on application maintenance as a
discipline over the last few years.
AShoK SAxenAHead, India Engineering
Centre, Kronos
ClOuD COMPuTInG COnverSATIOnS Are SlOwly MOrPhInG The ADM MArkeT In TerMS Of ClOuD COMPuTInG APPlICATIOn PlATfOrMS
ADM
GlobalServices September 2012 | 33
of development and strategy. Application develop-
ment companies are focused to help subscribers
realize the potential of rapidly evolving mobile
technologies.”
Application Maintenance and testingAll application products need sufficient mainte-
nance and both–investors and developers tend to
heavily focus on it.
There has been a lot of innovation in ADM
space and several maintenance tools and processes
have evolved which enhanced the maintenance
phase which in turn translates the overall quality
of the application.
The market for discrete application mainte-
nance worldwide is expected to experience solid
growth as cloud and mobility drive next phase of
evolution, according to a latest report from IDC
research. IDC estimates that global maintenance
and testing services spending reached $9.4 B in
2010, with projections for worldwide growth
estimated at a five-year compound annual growth
rate (CAGR) of 15.4% through 2015. While the U.S.
has led other regions in adoption of maintenance
services, in terms of both traditional and newer
cloud-based maintenance services, there is an
increase in regional interest and adoption of these
services in Canada, Latin America, Western Europe,
and parts of Asia-Pacific.
Independent maintenance and testing for appli-
cations is growing at 40 to 50 percent globally and
with expected growth of about 35 to 40 percent
in offshore locations. While various industry report
forecast various geographies to evolve as major
ADM locations. India has grown to become the larg-
est destination for outsourcing of software mainte-
nance and testing services, accounting for 32 per-
cent of the total global ADM outsourcing share. The
application maintenance industry for India is grow-
ing, export revenues and the number of employees
have doubled over the last four years in domestic
space which is projected to cross $1.5B by 2020. It’s
quite interesting to note that, US alone spends a
SegMent AnAlySiS
34 | September 2012 GlobalServices
ADM
total of $59B on software maintenance. Of this total
spend, $13 B is outsourced as a service to the Asian
countries, India in particular. The ADM market has
demonstrated a CAGR of 19-23 percent year-on-year
growth, in comparison to 47 percent by the inde-
pendent maintenance and testing services.
Kalyana Rao Konda, Vice President, AppLabs,
says-”The consumer demands are leading to
technology advancements and fierce competition
between providers. The survival of providers has
become subjective to the quality of the product
with superior service. Software maintenance and
testing plays a vital role in providing reliability
and quality to consumers to ensure that they don’t
have a bad experience on using or buying the
product they like.”
The current competitive environment and
consumer demand for sophisticated applications is
putting increased pressure on businesses to deliver
quality apps at reduced costs and within shorter
time period. This ‘no scope for error’ environment
has increased the need for effective software test-
ing. Today, it has become one of the fastest grow-
ing areas of the corporate IT expenditure. On the
other hand, meeting customer expectations has
now become a challenge for enterprises across all
the industries due to the faster delivery cycles and
increasingly competitive landscape.
Enterprises operating across various industries
and geographies have now realized the need to
deliver quality products/applications and services to
meet customer expectations.
conclusionWith the economy of developed countries stagnat-
ing and the threat of recession retuning to major
global players, companies will continue to rely on
software development outsourcing and offshoring
for cost control, lean operations and scalability in
2012.
As cloud, SaaS, mobility and other trends fun-
damentally re-shape software development, there
is a large, growing market for specialized product
development specialists. 2012 is just the beginning
of some of these massive movements. There are a
bewildering range of technologies on the market
today. The good news is that the service industry is
becoming more and more specialized. Companies
that want to take advantage of the hottest initia-
tives today – be they Saas, cloud or enterprise mobil-
ity – can get all the assistance they need. The right
software development service providers will have
in-depth knowledge of all these platforms and the
competency to deploy them quickly and at a com-
petitive price. They will also offer outcome-based
engagement models that fit each client’s needs.
There has been a drastic shift
in the amount of development
being done in the integration and
testing stages in the lifecycle
of an IT project, compared to what
was happening ten years back.
This has resulted in an increased
demand for services on Data
management/BI/Analytics,
Integration and Testing sides of
the business, which will
continue to be key opportunity
areas for all organizations.
KRiShnAMuRthy R, Senior Vice President &
Head-Global Delivery, Collabera
ADM
GlobalServices September 2012 | 35
ApplicAtion DevelopMent & MAintenAnce
ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnceApplicAtion 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 & mAintenAnceApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnceApplicAtion 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
Top Global aDM leaDersCapgeminiInfosys ltd.HCl Technologies ltd.syntel Inc.Insigma Technology Co., ltdiGaTe CorporationCsC
Top MID-TIer aDM CoMpanIesChinasoft International ltd.epaM systems Inc.Infotech enterprisesMindTree limitedneorisneusoftITC InfotechVanceInfo TechnologiesZensarCollabera IncGenpact limited
Stretching Value. Scientifically.
ad
vert
ori
al
To be able to ‘differentiate’ innovatively and
effectively holds a key to attaining global
leadership in the business world. The natu-
ral reflex of a brick & mortar company is to
adopt a customer-centric ‘differentiator’. IT Service
companies behave a little different. The fiercely
contested battle for talent forces them to oscillate
between customer centric and employee-centric dif-
ferentiators. ”Pick any one of the two sides, and then
inherit the one from
the other,” goes the
hypothesis!
This differentiat-
ing tactic certifies
the vendor’s dual
robustness. The seeds
of Cybage thought
leadership are sown
in the innovativeness
of our ‘differentia-
tor’. We believe that
the organization’s
differentiator should
not be inherited from the visible
aesthetics but from the grass root
implementation of productivities.
The customer-centric and employee-centric dif-
ferentiators are like leaves and flowers with great
visual appeal but all the flourish and greenery is
at the mercy of the root’s productivity to absorb
nourishment.
To appreciate this pivotal role of productivity,
one needs to dig a little deeper where business
partnerships are fortified. Generally, there are three
variables that a customer juggles with to close on
a vendor. The first variable is the overall IT needs.
The second variable is the fact-file of the prospec-
tive vendor. The overlap between these two vari-
ables determines whether the vendor qualifies for
the next step in evaluation. The third variable is the
cost—the ratio of the fact-file vs. cost—which deter-
mines the probability of deal closure.
Unfortunately, there is one more key variable that
is often overlooked. This variable resides between
the second and third variable; it represents the effi-
ciency of the vendor to
leverage the fact-file
into relevant deliveries.
The customer’s loy-
alties are not with the
vendor’s fact-file but
tied to satisfactory
project deliveries at a
reasonable cost. In the
IT business world, this
delivery excellence
is broadly measured
under the following
attribute equation:
Quality, Speed, Consistency, Respon-
siveness, Attrition Risk, Scalability,
and Value-add—dividends captured
with ‘Cost’ in the denominator.
Cybage thought leadership is rooted in the
innovation applied to stretch ‘productivity’ of all
the above mentioned attributes that together lead
to customer’s delight and employee’s rewards.
The above attribute equation is comprehensively
optimized, implemented, and internalized organi-
zation-wide at Cybage through this sophisticated
business management software system called the
ExcelShore® Model of Operational Excellence.
38 | September 2012 GlobalServices
Segment AnAlySiS
OPD mArket iS exPecteD tO reAch$19B By 2015, technology
analyst Forrester expects the market for product development services to approach $19B
By Smriti Sharma
The business of devel-
oping new and solu-
tion-customized software
is the nucleus of thriving
technology industry. Product develop-
ment plays a significant role in getting
economic returns as well as establishing market
influence. However, whilst introducing a new prod-
uct in the market a company is also putting itself at
marketing and development risk.
To ensure a company wins economic returns
and market influence
while staying away from
marketing and development
risk, it imperative to engineer the
right product, manage it across the
various phases of its lifecycle, manage
the copious risks, deliver the product faster to the
market and retaining the capacity to innovate the
product. The right product strategy is the only way
to success in the business of software products.
Product mangers have repeatedly taken their
OPD
GlobalServices September 2012 | 39
There are a bewildering range
of technologies on the market
today. The good news is that the service industry
is becoming more and more
specialized. Companies that
want to take advantage of the hottest initiatives today can get all
the assistance they need.
keith higginSchief marketing officer,
Symphony Services
companies through the journey of transition from
traditional product development to value develop-
ment. This process calls for a lot more innovation
and this occurs during the stage of engineering.
Still the question remains why outsource? It
is outsourced, much like other services, for the
reasons of getting intellectual property in the
form of principles of excellence, best practices,
methodologies, process templates, engineering
roadmaps, monitoring tools, quality assurance
procedures- carefully applied across various
stages of product development, further resulting
in innovation.
Large Independent Software Vendors (ISVs)
are creating innovation across various domains
such as Cloud enablement, SaaS, Product Lifestyle
Management, etc.
This year the product development space is
expected to become increasingly fragmented
and specialized. Mobility, cloud computing and
Software as a Service (SaaS) continue to be the
drivers of this industry. Software manufacturers
are seeking advice from experts to assist them in
driving innovation to market faster and at a lower
cost. Experts are roped in for specific initiatives
revolving around technology, for example, mobil-
ity, cloud and SaaS, their industry, business and
vertical segments.
As software development is re-shaped by
cloud, SaaS, mobility, the demand for specialized
product development is increasing. Keith Higgins,
chief marketing officer, Symphony Services, stated
in another interview, “2012 is just the begin-
ning of some of these massive movements. There
are a bewildering range of technologies on the
market today. The good news is that the service
industry is becoming more and more specialized.
Companies that want to take advantage of the
hottest initiatives today – be they Saas, cloud
or enterprise mobility – can get all the assist-
ance they need. The right software development
service providers will have in-depth knowledge of
all these platforms and the competency to deploy
them quickly and at a competitive price. They will
also offer outcome-based engagement models
that fit each client’s needs.”
market Scenario During pre-crisis times, IT outsourcing was the most
frequently adopted strategy by large companies.
Today, ITO practice has found more support amongst
the mid-market. As for this segment, cost as well as
access to skills and services is extremely essential.
This market segment is also home to some of the
most exciting and current technology developments.
Taking advantage of this opportunity some of the
independent software vendors are expanding their
footprints in this space. Software companies who
have moved to cloud computing and SaaS have wit-
nessed significantly larger opportunities.
The pricing models offered by vendors are
outcome based pricing, revenue share pricing
and risk reward pricing. These pricing models
add to the attractiveness of partnerships. In-
creasingly, buyers are employing risk-reward
partnership model, where the vendors are
40 | September 2012 GlobalServices
Segment AnAlySiS OPD
willing to absorb a certain amount of busi-
ness model risk, across the lifecycle of products.
OPDs are expanding in Asia and Europe. The
challenges that companies who have not made to
the outsourcing map of product development face
are poor client-vendor communication, delayed
project delivery, cultural differences etc.
In order to tackle these issues, face-to-face
communication with their vendor’s project man-
agement and project teams should be increased,
employing additional valuable resources, switching
to alternative software development methodol-
ogy, bringing in assistance (advisories) to enhance
vendor relationships, encouraging partnering with
different vendors to offer more cost-effective en-
gagement, etc.
Buyers while zeroing upon a geography should
keep in mind the following pointers: low costs
of software development and IT resources, avail-
ability of IT talent pool, positive references from
the fellow companies/local business community,
geographical and cultural proximity, strong re-
search and development (R&D) legacy, political and
economic stability, Intellectual Property (IP) secu-
rity, proficient English language skills etc.
Gartner’s study Predicts 2010: Agile and Cloud
Impact Application Development Directions, high-
lighted, “By 2012 ‘agile development methods will
be utilized in 80% of all software development
projects’. Although Scrum will continue gaining in
popularity over the coming years, organizations
will not be successful in their transition unless they
move toward a team-focused culture. Very few
organizations use a pure-Scrum approach and most
rely on a hybrid approach (waterfall and Agile).
Organizations struggle to implement true collabo-
42 | September 2012 GlobalServices
Segment AnAlySiS OPD
ration in the context of globally distributed teams.
A situation that has amplified in recent years with
outsourcing and offshoring of software develop-
ment projects. On the other hand, teams who
have successfully moved to Agile see productivity
improvements especially in ‘the flexibility of the
development team to respond to shifting require-
ments’. This is especially true for web-based ap-
plication developments where rapid responses to a
changing environment are critical.”
Organizations need to make use of key agile
practices and invest in training and supportive
tools’ infrastructure. Those who do not will end in
long-term declines in quality and productivity.
top trends Cloud, SaaS and mobility has resulted in a lot
of investments and companies have started
generating new tools and technology. Many
organizations want to use these tools; however,
they do not have domain knowledge or financ-
es to integrate the best ones. Thus, companies
are moving to outsourcing partners to get the
specialist assistance they require. Over the next
12 months, it is expected that companies will
concentrate on building best-in-class technolo-
gies for their clients. They will then use these
innovative technologies to create products for
their customers as trusted partners.
According to the global consultancy Zinnov, 70
percent of ISVs look at industry benchmarks every
year to re-negotiate contracts with their services
partner. Increasingly in 2012 ISVs will be looking
to add rigorous Service Level Agreements (SLAs)
and other outcome-based conditions to the com-
mercial engagement model with their services
partners.
Higgins opined, “We predict this will create a sig-
nificant opportunity for specialist service provid-
ers, as more ISVs will move to a multi-source mod-
el involving a spectrum of trusted partners. ISVs
will actively seek out specialist help to address
specific pain points in their businesses, speed in-
novation and reduce costs. They will not hesitate
1.
2.
to call on the best talent available. Incumbency is
no longer the advantage it once was.”
According to a recent Gartner survey, 30 per-
cent of large organizations cited enterprise
mobility as their top business priority for 2012.
Higgins explains, in the past, the enterprise
tended to be a closed and homogenous place.
Employees would typically use one type of
device – like a Blackberry – to communicate
amongst themselves. Enterprises now have to
grapple with a dizzying array of business and
connected mobile devices, all of which need
to communicate seamlessly and securely with
one another. By outsourcing their enterprise
software mobility department, organizations
are trying to address this challenge. This year, a
large number of companies are buying enter-
prise mobility as a managed service.
Gartner predicts that 75 percent of all comput-
ing will be in public clouds by the year 2020.
Cloud computing has revolutionized the man-
ner in which companies operate. The manner
in which companies employ cloud technology
is changing too. A mixture of cloud applica-
tions, platforms and infrastructure is sourced
by organizations. As cloud-based companies
are becoming more specialized, they are
encapsulating cloud-based tools in their of-
ferings. There are approximately two million
users of Salesforce.com around the world and
25 million users of Google Apps. Company’s
products assist software developers to build
private development clouds. Software devel-
oper
The high adopted rate of personal health man-
agement systems has laid eggs for an increased
demand of new applications. Higgins predicted,
“By 2015, as many as 500 million smartphones
will have a health-related application on them.
The Veterans Administration in the US is plan-
ning to rollout 100,000 iPAD tablets across 152
hospitals. Next year, we expect to see a host of
new vendors enter the market with innovative
connected healthcare solutions.”.
3.
4.
5.
OPD
GlobalServices September 2012 | 43
OutSOurceD PrODuct DevelOPment
Leading gLobaL oPd VendorsePaM systems inc.globalLogicHCL Technologiesinfosysinfotech enterprisesLionbridgePersistent systems Limitedsymphony Teleca CorpVanceinfo Technologies
Leading Mid-Tier oPd Vendorsbeyondsoft CorporationCybage software Private LimitedglobantHildebrandoigaTe CorporationLuxoftMindTree Limited
Hangzhou 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.
Demonstration City of Chinasourcing Hangzhou
Hangzhou, China
A City ofFinancial Delivery
Center
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.
Hangzhou 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.
Demonstration City of Chinasourcing Hangzhou
Hangzhou, China
A City ofFinancial Delivery
Center
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.
segment analysis
46 | September 2012 GlobalServices
By Sourabh Chandra Pushp
inFRastRUCtURe management OUtsOURCing:ClOUD COmes WitH a PROmise
High volatile economic downturn coupled with the ease of cloud delivery is resulting in a surge of demand for IM outsourcing
ims
GlobalServices September 2012 | 47
Most of services offered by
software vendors today will soon
be offered as ‘as-a-Service’ because
it gives cost efficiency which
is acceptable to most of the customers. As
such, enterprises will eventually
be forced to standardize their
infrastructure management
processes.
BRian J manningPresident & Managing
Director, CSC India
Although, the global macroeconomic
uncertainty will result in sluggish IM
outsourcing activity, the current infra-
structure market is evolving rapidly.
Combined with advances in standards-based infra-
structure, data center transformation, and utility-
based cloud computing, the outlook for IM market
continues to be dynamic and exciting.
The Global IM market is expected to touch $180
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
the mark of $95 -$108 B. This is accompanied by
worldwide IT spending forecast to total $3.7 tril-
lion in 2012, a 2.5 percent increase from 2011.
Emerging markets will generate $1.22 trillion
in IT spending in 2012, representing more than
31 percent of the worldwide total. The emerging
regions of Asia/Pacific, Latin America, the Middle
East and Central and Eastern Europe, continue to
show positive IM outsourcing momentum. And,
this will see half of emerging market IT spending
activity representing nearly $658 B for the year
2012. This reasons why the market remain far from
saturated.
Deals and ContractsMost of the IM deals over the last few months
saw a renewal in 2011-12. Large deals continue to
skew the average deal size. North America saw the
maximum activity for deals and contracts followed
by UK and Rest of Europe. The IT market, Infrastruc-
ture in particular will witness a significant growth.
This is supported by the fact- a significant number
of IT contracts is coming to end. Analysts estimate,
the TCV for the deals that would come to an end in
next 18 months is around US$85 B. “Infrastructure
outsourcing, data center and network tower deals
make up a significant portion of the ITO contracts
expiring in the near term,” says Ross Tisnovsky,
senior vice president, Everest Group. “Disruptive
next generation technologies, such as cloud com-
puting, will introduce new benefits and challenges
that the market didn’t see five years ago. As buy-
ers are looking for more than just cost savings.”
Infrastructure outsourcing constitutes some of the
largest ITO contracts coming to term in both North
America and Western Europe. Cloud computing will
have clear visible impact on IM market as Remote
infrastructure management outsourcing (RIMO)
as a model is maturing quickly and entering into a
phase of sustained growth.
The buyers’ ITO spending shift will be towards
Two ProMInenT TrendS THAT wIll SHAPe THe IM lAndSCAPe Are “AS-A-ServICe” offerInGS And enTerPrISe ServICeS
segment analysis
48 | September 2012 GlobalServices
ims
the smaller deals which will challenge the margin
pressures for service providers. It’s very obvious
that the IM deals will increasingly be driven by
cloud and RIMO. In the past, technical and percep-
tion issues caused cloud-infrastructure adoption
challenges. But, things have changed now and
investments in new innovative solutions with hard
focus to boost the IM market.
Infrastructure spending will be driven by larger
buyers and will focus on outsourcing economics
and service provider consolidation. The BFSI
vertical in particular, will con-
tinue to be the dominant
infrastructure segment;
other verticals such as
healthcare and hos-
pitality will also
witness strong in-
frastructure ac-
tivity. Speaking
of geogra-
phies, North
America, will
continue to
dominate
whereas Asia
Pacific is ex-
pected to grow
much faster.
trends that will Reshape the im landscapeIT infrastructure outsourcing
has been one of the mainstays
of IT outsourcing industry.
Over the years, its composition
has changed significantly and
traditional infrastructure model
has undergone a massive change.
With advanced technologies remote
server management has become the
de facto standard for infrastructure
landscape. This has led to new names
coming with multiple infrastructure services models
and competing with traditional IT infrastructure
outsourcing firms. This trend will become stronger
in 2012.
Two prominent trends that will shape the IM
landscape are “As-a-Service” Offerings and Enter-
prise Services. Both trends are increasingly becom-
ing the norm for Infrastructure services and have
gained a considerable adoption momentum. Cloud
infrastructure trend has have been shaping up
quite aggressively and service providers have
already embraced while clients are
adopting it.
Infrastructure outsourc-
ing segment has consist-
ently been the fastest
growing segment
within IT services-
share in the over-
all IT services
segment has
increased from
about 15 per
cent in FY2008
to about 17 per
cent in FY2012.
Cloud Computing
Comes with a Promise
Cloud scripts the story of
Infrastructure Management
(IM) and there is a reason
for that. Cloud comput-
ing is fast emerging on the
IT infrastructure scenario and is
likely to play a disruptive role, with
maximum impact visible initially in data
center and applications projects.
As cloud emerges as a new stor-
age market, competition is increas-
ing with leading infrastructure
vendors. Although the external
segment analysis
50 | September 2012 GlobalServices
private cloud infrastructure market is still in it’s
nascent stage, both small and large enterprises are
utilizing it heavily and are the primary consumers
of Cloud infrastructure.
By 2016, at least 50 percent of enterprise us-
ers will rely primarily on enterprise-mobile client
instead of a desktop client which means a clear
shift in the traditional IT infrastructure. It’s well
supported by the fact that more than one third
of the digital data would be stored on the cloud
infrastructure by 2016. In 2011 just 7 percent of
consumer’s digital data was stored in the Cloud
which will grow phenomenally to whooping 36
percent in 2016.
Recent IDC cloud research shows that world-
wide revenue from public IT cloud services ex-
ceeded $21.5 B in 2010 and will reach $72.9 B in
2015, representing a compound annual growth
rate (CAGR) of 27.6percent. This rapid growth rate
is over four times the projected growth for the
worldwide IT market as a whole (6.7percent). By
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-
ment is about much more than the cloud. Analysts
predict an aggregation of Cloud offerings located
in the same data center to provide appropriate
levels of performance, security, manageability and
availability.
The cloud is no longer a competitive advantage,
but has become an operational necessity. Results
from a recent KPMG survey show that 81percent
of businesses are either planning their initial cloud
computing forays, are in early or advanced stages
of experimentation or have full implementations.
But before moving to the cloud, businesses first
need to examine their current IT infrastructure, us-
age and needs.
Worldwide software-as-a-service (SaaS) revenue
is forecast to reach $14.5 B in 2012, a 17.9 percent
increase from 2011 revenue of $12.3 B, according
to Gartner, Inc. SaaS-based delivery will experience
healthy growth through 2015, when worldwide
revenue is projected to reach $22.1 B.
Brian J Manning, President and Managing
Director, CSC India, says “While no one can pre-
dict exactly how the IT services marketplace will
change, we’re confident that client demand will
grow very rapidly for cloud computing. In 2012,
the global market for cloud services is predicted
to surge to US$148.8 B in 2014. This shows that
there will be a huge transformation in the business
model of any organization.”
In the year 2012, the impact of the shift to
cloud computing will become apparent. One of
the first obvious effects will be the cloud-driven
transformation of whole industries. Cloud applica-
tion platform/PaaS wars will intensify. Phil Fersht,
founder of outsourcing consultancy Horses for
Sources, calls cloud services the foundation for
next-generation enterprise sourcing solutions. He
believes cloud services will make traditional deliv-
ery of IT services more efficient and cost-effective.
He adds, “This new class of outsourcing has the po-
tential to unlock tremendous value for customers.”
Cloud approach to infrastructure
will change the traditional
landscape as they offer a
much cheaper alternative
to traditional infrastructure–
some businesses can cut their
operational costs by as much as 85
percent if they opt for cloud
infrastructure.
sHaRmila saHani mUlligan,
Founder & CEO, ClearStory Data
ims
GlobalServices September 2012 | 51
The growth of platform as a service (PaaS) and
cloud computing are driving infrastructure market
forward. Organizations have now passed the first
stages and are implementing cloud architectures
for their enterprise and as a result, the traditional
role of the IT infrastructure is changing.
On the question of changing role of infrastruc-
ture services, Raman Sapra, Executive Director-
Strategy and M&A, Applications & BPO, Dell Serv-
ices asserts how cloud will play a game changer
role together with enterprise mobility and analyt-
ics. “With the rise of cloud, infrastructure manage-
ment services portfolio is bound to get a complete
makeover. Emphasis will lie more onto using cloud
infrastructure to overhaul the scope and economics
of traditional infrastructure services,” says Raman.
The way in which companies utilise cloud infra-
structure is changing too. Organisations are now
sourcing complete business solutions through the
combination of cloud applications, platforms and
infrastructure. Cloud approach to infrastructure
will change the traditional landscape as they offer
a much cheaper alternative to traditional infra-
structure– some businesses can cut their opera-
tional costs by as much as 85 percent if they opt for
cloud infrastructure.
Sharmila Sahani Mulligan, founder and
CEO,ClearStory Data, asserts, “The cloud makes it
possible to store and access data from anywhere,
so it can really benefit almost anyone or any verti-
cal. Also, it provides massive compute power that
previously would have only been affordable for
select companies.”
Large Internet companies were the first to
leverage the power of the cloud infrastructure.
By virtue of their business, they had the easiest
time understanding the pros and cons of the cloud
infrastructure, and they already had the talent in-
house to take advantage of it.
Cloud PredictionsThe ability to integrate business applications on
smartphone, tablets and other wireless devices
is predicted to accelerate SaaS adoption in the
corporate business environment. Forrester forecasts
that the global market for cloud computing will
grow from $40.7 B in 2011 to more than $241 B in
2020. The total size of the public cloud market will
grow from $25.5 B in 2011 to $159.3 B in 2020. IDC
predicts that 14.4percent of applications spending
will be SaaS-based in the same time period and the
cloud computing marketplace will reach $16.7B in
revenue by 2013, a compound annual growth rate
(CAGR) of 24 percent.
smB and CloudGone are the days of large enterprises holding the
keys to enterprise-class IT and services. The cloud
levels the playing field for SMBs. Today’s SMBs
believes in the cloudy abilities. In an independ-
ent survey by Microsoft, 76 Percent of SMBs agree
that they are the backbone of the economy and
almost half of them (53 Percent) expect sales figure
to grow within next 12-18 months. But, the most
important finding remains the awareness of the
Cloud Computing. Majority of them are increasingly
moving to the cloud.
USA-SMB cloud services market grew 25 percent
in 2011 and is asserted to reach $15.1B. Globally,
that figure is set to hit $68B by 2014, represent-
ing a CAGR of 26 percent. SMB Cloud Market in
Asia-Pacific is expected to reach US$16.5B in 2012.
The market for cloud solutions will grow at more
than twice the rate of traditional ICT technologies
THe GloBAl InfrASTruCTure MArkeT wIll Grow 4.4 PerCenT And reACH £463B By 2015 And wIll HIT A 4.5 Per CenT GrowTH rATe By 2013
segment analysis
52 | September 2012 GlobalServices
ims
As the firms across the globe
scours the landscape for ways to focus on their core
competencies and maintain
their competitive edge, the most
significant value drivers in IT outsourcing
is remote infrastructure management
(rIM) - the off-premise, often off-continent,
management of IT infrastructure.
Ben tROWBRiDgeCEO-Alsbridge
in 2011 in these markets. In addition, this region
is expected to lead worldwide expansion of cloud
computing markets.
Cloud computing is a method to deliver the
crucial IT needs for any small and midsize busi-
nesses, for say-cheaper operational infrastructure
and opex agility. The most commonly used cloud
services are email, instant messaging, voice com-
munications, and backup.
The number of very small companies (2-10
employees) using paid cloud services will triple in
the next three years. Almost half of them agree
that cloud computing is going to become more
important for businesses such as theirs. Speaking of
the worldwide public cloud services market, SMBs
will drive the market over the next five years. Total
cloud market both private and public is expected to
reach $85B by 2015. In this time frame, the growth
will be driven by SMB consumption of cloud.
The biggest motivators for migration to the
cloud among SMBs are to save money, followed
by increases in productivity. Cloud allows SMBs to
gain access to infrastructure and other IT technolo-
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
sophisticated infrastructure and services. SMBs can
gain access to the high end IT services that requires
negligible amount of IT infrastructure.
Gartner predicts Small & Medium Business
(SMB) in the insurance industry will have a higher
rate of cloud adoption compared to their enter-
prise counterparts.
state of the Rim marketIn the recent years, a major development has been
the convergence of the Remote Infrastructure
Management Outsourcing (RIMO) and traditional
Infrastructure Outsourcing (IO) models. According
to Everest study on Infrastructure Management, the
RIMO model is gaining wider acceptance across the
buyers, which in turn is witnessed by an increased
number of IM deals. RIMO, as a model is matur-
ing quickly and entering into a phase of sustained
growth. External realities such as the advent of the
big data era and greatly enhanced role of mobility
in enterprises will shape solutions that providers
propose on renewed contracts. Recent deal sign-
ings are indicative of new trends, such as increas-
ing popularity of multi-sourcing, decline of “lift &
shift” models, reinvigorated attention to pricing
models, and increased importance accorded to
analytics.
Offshoring of infrastructure management
labor typically realizes a savings of 5 to 20 percent
compared with U.S. labor rates. But do not assume
these savings are instantaneous. RIM services, as
with outsourcing in general, typically provide a
gradual saving curve as delivery maturity is at-
tained, usually within the first two years of the
engagement.
The banking, financial services, and insurance
industries are leading RIM offshoring growth.
segment analysis
54 | September 2012 GlobalServices
ims
These industries often referred to as the “financial
services industry,” have been early. RIM service
providers have recognized the opportunity to offer
follow-the-sun delivery models, highly distributed
and flexible monitoring and support models, and
in those cases where automation has not replaced
labor arbitrage, labor cost savings.
The industries that are slow to move toward
global RIM are those that have the lowest transac-
tion volumes, such as media and entertainment
and professional services. Other industries, such as
aerospace and defense and the public sectors, face
various degrees of government regulations that in-
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.
FutureAn open technology and business envi-
ronment, enabled by cloud computing and new
outsourcing models, is creating a radically new
approach to the present infrastructure market.
Most of the global infrastructure services outsourc-
ing providers have a strong vision and strategy for
cloud-based services for future offerings.
According to the latest report by technology
analyst firm Ovum, the global infrastructure mar-
ket will grow 4.4 per cent by 2015. Ovum’s Infra-
structure market trends research suggests that it
will reach £463 B by 2015 and will hit a 4.5 per cent
growth rate by 2013.
Although 2011 growth is still not back to pre-re-
cessionary levels, the market will return to healthy
growth of over 4.5 per cent in 2013.
ims
GlobalServices September 2012 | 55
inFRastRUCtURe management OUtsOURCing
ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnceApplicAtion 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 & mAintenAnceApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnceApplicAtion 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
Top Global Infrastructure Management VendorsHCL Technologies Ltd.CompuCom Systems Inc.Infosys Ltd.Microland LimitedCSCCapgemini
Leading Mid-tier Infrastructure Management VendorsInsigma Technology Co., LTDSonata Software LimitedNIIT TechnologiesCollabera IncAegis LimitedMindTree LimitedGenpact LimitedChinasoft International Ltd.
IT OuTsOurcIngsTaTus QuO WOn’T susTaIn
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
By Sourabh Chandra Pushp
segmenT analysIs
56 | September 2012 GlobalServices
While an economic slowdown places
a greater need on organizations
for process excellence and reduced
process costs, and organizations
typically recognize this, it also enhances all the
main inhibitors to IT outsourcing.
In the mature economies, the IT outsourcing
market focus is returning even more strongly to
cost reduction while minimizing client investment
and this market shift leads to massive end-to-end
process service delivery transformations.
Andrew Kokes, vice president, global product
management, Sitel articulated, “In 2012, outsourc-
ing will continue to see growth driven by cost
pressure, increasing complexity to deliver the latest
technologies and the need to align scalability to
market demand.” Significant increase in IT spends
in outsourcing are likely to come from emerging
companies and economies. These companies and
economies have matured to a level where they
can significantly upgrade their IT infrastructure or
want to get there soon enough by leveraging best
in class IT. In addition, enterprise mobility, cloud
computing, managed services, machine-to-machine
communications, product engineering service are
some of the areas that will witness growth.
IT Outsourcing market & Deals Worldwide IT outsourcing revenue totaled $246.6B
in 2011, a 7.8 percent increase from 2010 revenue
of $228.7B, according to Gartner, Inc. However, the
market for IT Outsourcing will go through major
transitions in 2012-13. A spending slowdown post
recession bounce-back of 2010-11 accompanied by
debt-related macroeconomic conditions of Europe
and potentially the US will accelerate the business
shift from older technologies and providers to new
names. Independent research shows, worldwide IT
spending is on pace to reach $3.6T in 2012, a 3 per-
cent increase from 2011 spending of $3.5 trillion.
Global tech purchases will be $2,122B in 2012,
which is up by Just 5 percent when compared to
previous year. US, Japan and China are said to be
on the top for IT purchases in 2012. The slowdown
in US and Europe economic growth could suppress
IT spends whereas, the emerging economies such
as India will account for $1.013T.
Chirajeet Sengupta, research director, Everest
Group voiced, “Instead of having a multitude of
contracts spread all over, buyers are increasingly
trying to consolidate their portfolio and implement
global contracts with uniform standard SLA lead-
ing to a fair amount of centralization of spends
and consequently cost savings for the client.”
Sengupta believes Infrastructure Outsourcing
is one of the areas where we can expect to see a
change, as there is a steady increase in offshoring.
Traditional onshore infrastructure support services
are going to go down. This entire wave of consoli-
dation will evolve a fair degree of system integra-
tion, process improvement and process optimiza-
tion. These three are some of the areas that are
expected to go up.
The outlook for 2013 is slightly brighter with in-
dependent research forecasting that software will
lead the tech market with 5.5 percent growth, fol-
lowed by IT outsourcing with 3.4 percent growth.
According to a new forecast from Forrester, Europe
will see 1.2 percent growth in IT purchases in 2012.
In terms of US dollars, the European market will
shrink by almost 6 percent, while the US and Asia
Pacific will both grow by more than 6 percent. The
In 2012, outsourcing will continue
to see growth driven by cost
pressure, increasing complexity to
deliver the latest technologies and the need to align
scalability to market demand.
anDreW KOKesvice president, global product
management, Sitel
IT OuTsOurcIng
GlobalServices September 2012 | 57
study suggests the sluggish 1.2 percent growth in
the European ICT market will be reflected in all the
tech categories except IT outsourcing and hard-
ware maintenance and IT consulting and integra-
tion services, which will grow by 3.3 percent and
2.8 percent, respectively.
Recent data from TPI Index shows outsourc-
ing market improved in second quarter-2012 with
Total Contract Value (TCV) up by 7 percent year-
over-year data. Despite decline in major outsourc-
ing/IT spending activity, one can exhibit a marginal
growth in outsourcing especially for Asia Pacific
region where the market if largely driven by mega-
deals. The study reveals, 173 contract awards dur-
ing the second quarter represented a drop of 22
percent year-over-year and 14 percent sequentially.
However, the outsourcing market saw renewed
activity in mega-deals (TCV of $1B or contracts with
ACV of $100M or more).
“The outsourcing market showed improvement
during the second quarter on both a year-over-
year and sequential basis,” John Keppel, Partner
& President, Research and Managed Services, ISG.
He further added, however, the quarter’s growth
was not enough to prevent a first-half decline
in both value and activity from last year’s record
performance. By function area, IT outsourcing
contracts accounted for $13.1B in second-quar-
ter-2012 TCV, a rise of 6 percent year-over-year
but a decline of 5 percent sequentially. By region
and geographic distributions, Asia Pacific turned
out to be the fastest growth location during the
second quarter of 2012, driven by activity the
Telecom & Media and Banking, Financial Services
& Insurance (BFSI) verticals and Greater China
and Australia New Zealand sub-regions. Speak-
ing of other regions, America’s TCV of $8.3B rose
6 percent over the same quarter a year ago but
dropped 6 percent from the first quarter. Europe
and Middle East & Africa (EMEA) registered $8.4B
in TCV, a drop of 21 percent year-over-year and 11
percent sequentially.
ISG-TPI anticipates a soft third quarter for IT
outsourcing business whereas analysts believe
the coming fourth quarter will likely pick up the
IT outsourcing activity on the account of larger
deals waiting in the queue. In an another research
conducted by Everest Research, The IT outsourcing
markets will witness a significant number of con-
tracts coming to end of term, totaling more than
US$85B TCV during the next 18 months.
The study reasons, because buyers signed
progressively larger deals until the economic
slowdown struck, more than $US55B of contracts
will expire in the next 12 months, and this declines
actually shows a dip in size compared to preceding
year. “Infrastructure outsourcing, data center and
network tower deals make up a significant portion
of the ITO contracts expiring in the near term,”
quoted Ross Tisnovsky, senior vice president, Ever-
est Group.
The five factors that affect the IT Outsourcing deals
DAVE BROWN, KPMG
Partnership and innovation: Look for your service provider to step up as a true partner on innovation. That could mean making investments to solve problems or providing industry insights to help you excel against the competition.
Cloud computing: Cloud solutions are not one-size-fits-all, so make sure your contract has the right solution for your company’s needs.
Flexibility: As your business continually adapts to the marketplace, your ITO agreements should be adaptable as well – in terms of the commercial offering, contract terms, staffing and delivery location.
Price: It will always be important, but keep in mind that next-generation contracts usually don’t offer as much opportunity for price reductions as the first time around. Remember that a myopic focus on price can threaten the quality of operations.
Cross-functional service delivery: Consider how IT services can drive new value by improving back-office functions throughout the enterprise.
Source: blog.equaterra.com
segmenT analysIs
58 | September 2012 GlobalServices
IT OuTsOurcIng
zone, proximity, cultural empathy and qual-
ity of work - and growing rapidly as
a result. The expectation is that
this trend will continue to
accelerate.
For example, Romania
is increasingly valuable
to organizations requir-
ing highly-transaction-
al, complex ‘agile’ IT
projects, with evolving
business requirements
and new technologies.
This enables them to
match their IT require-
ments with cost-effective,
swift and successful project
delivery.
As per Gartner research, IBM
maintained the No. 1 position, as
its revenue grew 7.8 percent, and
its revenue accounted for 10.9
As outsourcing market is just looking for more
than just cost savings, service providers will likely
find themselves in an ordeal for contract renewals
if they don’t adapt to the emerging preferences of
the market.
Alok Sinha, ITO & President at Xchanging
believes the Service providers too have been busy
bidding for new contracts. Many of these are truly
not new-contracts but existing contracts which
have been brought back on the table due to the
contractual terms signed earlier. The newer con-
tracts now have smaller parcels and in many cases
contracted across multiple providers. The renego-
tiated contracts also saw a variety of innovative
engagement models, investment lead and skin-
in-the-game models, outcomes based than pure
vanilla variants, etc., being adopted by the players.
However, on the other side of the spectrum there
were many too who were consolidating from mul-
tiple suppliers into one or two.
Vendor landscape John Cotterell, Chief Executive at Endava as-
serts, the economic climate is forcing
organizations to re-evaluate
their overseas IT outsourcing
options. Offshore regions,
such as India, are prov-
ing not suitable for
everything organiza-
tions want to out-
source. There is now
an increasing trend
of organizations
looking to balance
their location risk by
moving some IT spends
away from offshore, and
utilizing alternative, near-
shore talent pools in Eastern
Europe.
These nearshore locations
are becoming more attractive
for IT projects, due to time
Instead of having a multitude of
contracts spread all over, buyers are increasingly trying
to consolidate their portfolio and implement global
contracts with uniform standard
SLA leading to a fair amount of
centralization of spends and
consequently cost savings for the
client.
chIrajeeT sengupTaresearch director, Everest
Group
segmenT analysIs
60 | September 2012 GlobalServices
IT OuTsOurcIng
percent of ITO revenue. IBM was the No. 1 ranked
provider in all regions. HP grew below the market
growth rate, but retained the No. 2 worldwide
market share position with 6.1 percent market
share. Fujitsu, helped by currency gains, overtook
CSC for the No. 3 worldwide market share position
in 2011. Bryan Britz, research director at Gartner
asserted in the press statement, the strategies will
vary as clients are likely to pursue hybrid cloud
strategies requiring providers to deliver some as-
set-light and some asset-heavy offerings — which
will result in varying growth trajectories among
competitors over the next several years.
In a media interview, Arjun Sethi, vice president
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
The Service providers too
have been busy bidding for new
contracts. Many of these are truly not new-contracts but existing contracts which have been brought back on
the table due to the contractual terms
signed earlier.
alOK sInhaITO & president, Xchanging
segmenT analysIs
62 | September 2012 GlobalServices
sulting companies will continue to enjoy superior
market growth. As Cloud business solution providers
offer integration APIs, Cloud consultants/integrators
will produce a wide range of adapters, services and
toolkits to provide added value for clients. By 2013,
“non-traditional” service providers with specific
vertical and business IP will aggressively enter the
Cloud Business Services market. Saugatuck’s posi-
tion is that “non-traditional” services providers may
be the logical front-runners in the race for extend-
ing niche vertical services from the Cloud to clients.
The ongoing transition to cloud computing will
have a measurable impact on IT outsourcing as it
would alter the old age IT spending methodolo-
gies and it would also revitalize the traditional IT
global economic conditions and it’s impact on out-
sourcing and IT services, weak consumer demand
will continue to challenge organizations in 2012.
The most optimism on improving economic condi-
tions is in the Americas, and the least is in Europe.
The continuing emphasis on cost reduction from
key markets such as the U.S. combined with wage
inflation and staff attrition in India and China will
lead vendors to enter new lower cost locations
moving to parts of India for example which have
yet to experience BPO and may deliver both lower
cost and greater employee loyalty.
cloud computing and IT Outsourcing The emerging of cloud computing has a great
impact on outsourcing. Gartner’s forecast states
that by 2015 the low-cost cloud service will erode
15 percent income the outsourcing service provid-
ers. Cloud will change the general picture of the
pricing and economics of outsourcing.
Fifty percent of new outsourcing deals will be
significantly Cloud enabled by 2015, according to a
newly released report from Saugatuck Technology
Inc., titled “The Cloud and Business Services: Key
Trends and Directions Through 2015.” Saugatuck
Technology notes that the IT and BPO services
market is undergoing a period of deep structural
change and this is bringing change in the market
positions and business models of traditional serv-
ices providers. Findings from the report show that
Indian providers will be some of the most aggres-
sive innovators in PaaS through 2013. By leveraging
Cloud delivery models and client trust these provid-
ers will attempt to break their linear headcount-to-
revenue business models. The study also indicate
that through 2013, pure-play Cloud consulting
companies will continue to enjoy superior market
growth. Through 2013, Indian providers will be
some of the most aggressive innovators in PaaS.
The Indian services providers will take advantage of
Cloud delivery models and client trust to break their
linear headcount-to-revenue business models. The
study reveals through 2013, pure-play Cloud con-
The economic climate is forcing
organizations to re-evaluate their overseas IT outsourcing
options. Offshore regions, such as
India, are proving not suitable
for everything organizations
want to outsource. There is now an increasing trend of organizations
looking to balance their location risk by moving some IT spends away
from offshore, and utilizing alternative,
nearshore talent pools in Eastern
Europe.
jOhn cOTTerellchief executive officer, Endava
IT OuTsOurcIng
GlobalServices September 2012 | 63
delivery to cloud-based offerings. Not only this,
this shift to cloud is altering market behaviors and
is posing fresh challenges for traditional sourcing
providers. The cloud will bring integration to out-
sourcing industry in terms of innovation.
New research from the London School of
Economics and Accenture finds that the cloud will
have a strong near-term impact on the majority of
organizations. Cloud will escalate the importance
of delivering effective service—the quality of the
customer experience—as a differentiator of suppli-
ers in the IT industry. That, in turn, will change the
character of the IT Outsourcing industry.
conclusion- cloud, smaller Deals and Third party sourcing models Other factors that would have high impact on IT
Outsourcing are cloud adoption, smaller deals
and captive sourcing models. In the past, technical
and perception issues have caused cloud adoption
challenges. But continued capital investments will
result in new and sophisticated solutions that will
lead to new hybrid models and new integration
approaches, making cloud adoption more main-
stream. The rapidly accelerating use of enterprise
mobility, social networking and cloud services in
workplaces will increasingly require integration
into mainstream corporate networks, driving more
corporate spend in this area.
Smaller deals will be the talk of the town, in
2012, macroeconomic factors could force reduced IT
spend, with buyers doing smaller number of deals
with simpler pricing models, amid strategic conver-
gence between offshore, MNC service providers.
Global sourcing stakeholders will continue to pursue
new locations due to talent, cost arbitrage and risk
diversification-related considerations.
Companies will continue adoption of hybrid
captive/third-party sourcing models in 2012, and
efforts will be made to improve captive value by
focusing on high-value processes. Captive invest-
ments will continue with the majority of setups
and expansions occurring in the Asia Pacific and
CEE geographies in the year to come.
“The IT outsourcing market has matured and
price is no longer the foremost driver. Instead,
next-generation outsourcing deals are about
improving service delivery, managing risk, staying
current with the IT market, and positioning your
business for an uncertain future.”- Dave Brown,
Principal, KPMG.
Get ready for a post recession era where out-
sourcing will be adopted by organizations to help
them work through financial challenges.
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.
segmenT analysIs
64 | September 2012 GlobalServices
IT OuTsOurcIng
IT OuTsOurcIng
Top Global ITO LeadersCSCInfosys Ltd.HCL Technologies Ltd.CompuCom Systems Inc.CapgeminiUnisys
SEGMENT ANALYSIS
66 | September 2012 GlobalServices
CoNTACT CENTEr ouTSourCING:GrowTh MoMENTuM CoNTINuES AMIdST TurbuLENCE
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
By Smita Vasudevan
CoNTACT CENTrE ouTSourCING
GlobalServices September 2012 | 67
Demand for services provided
from offshore (non-U.S.)
geographies remains strong.
Convergys continues to see demand for the
Philippines, Latin America and India.
MIkE ChoLAkvice president, Convergys
Analytics
The last two years saw the contact center
industry moving through a tough yet
interesting phase. With 2010 being the
year of gradual recovery post recession
and 2011 being the year that sparked some new
transformations. This year is probably going to be
all the more interesting as we see the impact of all
these combined forces coming to fore – technology
advancements, integration of multiple communica-
tion channels, the power of analytics and the social
media puzzle.
The good news is that amidst a sluggish global
economy, the contact center industry hasn’t lost its
growth momentum. In fact, if industry experts are
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
and 2011, market participants have expressed high
expectations for multi-year engagements with new
and existing clients into 2012 going forward,” says
Michael DeSalles,Principal Analyst, Frost & Sullivan.
A notable change over last year is the way in
which contact centers are transforming themselves
to become a more strategic part of an organization
rather than just being a seen as a ‘call center’. The
idea is to attract and retain customers by offering
them the right type of experience, irrespective of
what communication channel is being used. This
might call for some investments in the short run
but can also go a long way in building customer
loyalty and brand image.
Krishna Baidya, industry manager for ICT, Frost
& Sullivan APAC, reveals, ”End customers still value
speed, accuracy and ease of use, but they added a
few elements: the convenience of performing ever-
more-complex transactions on the go, personal-
ized service at every instance, and seamless move-
ment among various channels with a consistent
experience at each.” The emergence of non-voice
channels and automated technologies have taken
customer care interactions to another level and the
expectations have never been this high.
Market ScanCost efficiency and language skills continue to be
the drivers. Asia Pacific, North America, Latin Amer-
ica and Europe continue to be the most prominent
destinations for contact centers. The APAC region
exhibits huge potential for growth and is estimated
to be the fastest growing market for contact centers
in the coming years. India, China and Philippines
will be the key locations. According to Frost and
Sullivan, the APAC market showed 8% growth in
2011 and is expected to grow at around 10% CAGR
through 2017, while the North American contact
center industry is expected to grow by 3.5% from
2010 to 2017. Latin America remains a prominent
location for contact centers, attracting both near-
shore and onshore demand and is expected to grow
at 10.8 percent through 2017.
What is expected is a combination of offshore
and onshore. High-value complex interactions are
expected to remain onshore or nearshore, while
high volume work is more likely to be sent offshore
to reduce costs.
Across verticals, Telecommunication has the
largest demand for third party contact center
services. Healthcare and financial sector are other
major contributors to growth in demand.
SEGMENT ANALYSIS
68 | September 2012 GlobalServices
CCo Expanding Into Emerging EconomiesEnterprises operating in the EMEA are likely to
face increased complexities as each region exhibits
a different level of maturity. For emerging mar-
kets like Eastern Europe, there needs to be a good
understanding of rules of the land. This will drive
outsourcing to third party service providers.
Some emerging locations for contact centers are:
APAC - The Philippines, Malaysia
Europe - Serbia, Poland, Bulgaria , Romania
America (near shore) – Central America and
Caribbean
Philippines Vs IndiaThere is a lot of hype surrounding the Philippines’
contact center industry. For years, India was the
location of choice for its high-skilled, low cost
workforce, with few emerging competitors. But its
only now that the threat has become so visible in
the form of Philippines. According to Steve Barker,
general manager, Sitel, “More recently, the Philip-
pines overtook India in business process outsourc-
ing (BPO). The Contact Center Association reported
that the Philippines voice revenue doubled over
recent years and now exceeds India by more than
$200 million.” The reason can be a very high affinity
between Philippines and the United States. Com-
panies that are operating in Philippines are now
trying to replicate the tactics that proved successful
in India. Indian service providers are of the view that
the contact center industry in India is much more
matured and Philippines, though currently growing
at a higher rate, lacks technical capabilities.
key drivers for CCoThe major drivers for contact center outsourcing in
2012 will be:
Optimizing the cost of servicing customers.
Concentrate on core business areas, while rely-
ing on experts for non core areas like customer
service
Access to better technologies and cloud based
services
Some Important Contact Center Deals in 2012
Deals Contract Value
Universal American & C3 $10 million
UK Government & Xerox $20 million
Airtel Africa & Avaya Not available
We see no major threat from Philippines.
India’s contact center industry is going to be more multidimensional while Philippines’
industrial growth is starting to taper off.
VIjAY NArSAPurstrategic business practice
head, CS, Infosys BPO,
It is going to be a combination
of several parameters-speed
of conducting analytics and quick recommendations, real-time customer feedback, premium
support, and technological advances for
increasing sales or reducing costs
rAMMohAN NATArAjANSVP, business transformation,
Firstsource Solutions
CoNTACT CENTrE ouTSourCING
GlobalServices September 2012 | 69
channels. This information is helping enterprises
decode complex customer behavior and forms the
basis for framing future customer service strategies.
Predictive analytic tools allow call center agents
to identify customer concerns even before he says
hello. Convergys believes that harnessing the power
of “Big Data” will be a key trend in 2012.
The Transition from Voice to Non VoiceInteractions in contact centers are no longer
restricted to the four walls of a contact center.
Voice, the most favored medium of interaction, is
increasingly being replaced by a plethora of op-
tions like web chats, voice mail, online self service
tools, social media and so on. The whole idea is
to make customer interactions simpler and faster.
But is voice going to be lost in this quest for better
customer experience? Cholak, reveals, “While 2011
Convergys Customer Scorecard Research found
that consumers clearly still prefer to talk to agents
when dealing with a company, their interest in
other channels is strong.”
Not only is an increased preference for non
voice channels but increased efforts are also being
Key focus is likely to be in stitching
different forms of analytics across
the organization to leverage new
found actionable insights, possibly in
real-time, to make smarter decisions
throughout organization and
enhance customer experience.
krIShNA bAIdYAindustry manager, ICT, Frost &
Sullivan APAC,
Search For Improved Customer Experience drives InvestmentsThe ultimate aim for enterprises today is to create
a great customer experience and how well they
are able to do this will decide their ability to retain
and attract customers in the long run. Cost is a big
concern but there is also a growing realization that
offering the right customer experience can do a lot
in improving margins. Numerous surveys support
the fact that customers are ready to pay a little
extra for being served well.
With the explosion of new communication
channels, a big challenge for enterprises and serv-
ice providers would be to offer an optimal custom-
er experience on all these channels. Cholak says,
“The experience needs to be consistently applied
across every touchpoint—customers need “any-
time, anywhere” care. Investments in this area will
be a major trend to watch out for in 2012. There
can be no single way to great customer experience.
The Power of “big data”Analytics is playing a major role in filtering out
useful information from the large pool of unstruc-
tured data coming out of multiple communication
With easy access to real-time
information, a new generation
of ‘always-on’ consumers is more
empowered and demanding than
ever. This trend is on the rise as social media proliferates,
both online and on mobile, across
all age groups and demographics.
ANdrEw kokESglobal product management,
Sitel
SEGMENT ANALYSIS
70 | September 2012 GlobalServices
CoNTACT CENTrE ouTSourCING
made by enterprises to cut down call volumes in
order to reduce costs. Although non-voice interac-
tions are going up at an alarming rate, it is not
likely to takeover voice anytime soon. Experts
say that if the percentage ratio is around 80-20
right now, this is expected to shift to 60-40 by
2015. Narsapur adds, “Non voice communication
is expanding at an alarming rate. So the situa-
tion is not inconceivable where the two will be
very close in volumes.” But one thing is clear now.
Voice is no longer going to dominate customer
interactions, its only going to be the part of a big-
ger service offering.
New ways to Interact While 2011 Convergys Customer Scorecard Re-
search found that consumers clearly still prefer
to talk to agents when dealing with a company,
their interest in other channels is strong, with 13%
saying they’ve used mobile applications or text
messaging for customer care, 11% saying they’ve
used social media for customer care, and 7% saying
they’ve used webcam or video support with an
agent for customer care.
humanization of Technology Enterprises are using technology to interact and
engage with their customers in innovative ways, so
that cost is optimized and the effort is much lesser.
Artificial intelligence tools and Self service options
allow customers to look
for solutions and resolve
queries on their own and
cut down the dependence
on agents.
But where to draw the
line? Subramanya. C, Chief
Technology Officer, Hinduja
Global Solutions, says, “All
a customer wants from us
is to ‘know her’, ‘help her’
and ‘remember her’. The
knowing and remembering
parts can always be auto-
mated. However, helping always involves human
touch.” So striking the right balance between
automation and live support is going to be the
key. Sitel shares a similar opinion that the idea will
be to cut down costs through technology without
sacrificing the human touch.
The Need For “Super Agents” Nothing is going to eliminate the need for agents
in a contact center. In fact the agent’s role has only
become more complex now with the emergence
of multiple channels. Cholak, says,“The use of
alternate channels for customer care will undoubt-
edly continue to grow, but the agent will remain
a critical focal point in a diverse range of chan-
nels.” Agents have to be trained not for one but
every type of interaction possible. Whatever be
the medium that a customer opts for, the agent
has to be prepared to listen and deliver the right
kind of response. What these changes mean for
service providers is that they need to train contact
center agents for each and every channel of interac-
tion. Cholak adds that the need today is for ‘super
agents’ that are adept at all interaction methods,
especially in handling interactions with the ultimate
multitasking communicators, the Millennials. “These
agents could be moved around a call center to ac-
count for channel volume changes in a given client’s
program, driven by new product launches and other
high traffic, multichannel events” he says.
Contact Center Technologies Helping Enterprises
Convergys shares some real world examples of how technology has helped improve client key performance indicators:
A large North American telecommunications company saw a 27% acceptance rate for highly targeted IPTV and DSL cross-sells in their retail stores after implementing a Convergys Cross-sell/Upsell Solution
A top 10 North American retail bank implemented the Convergys Intelligent Self-Service Solution and increased IVR containment from 89% to 93%, resulting in a substantial annual savings
One of the largest PC manufacturer in the world experienced a 32% increase in the average number of posts worked per agent per week using the Convergys Social Interactions Solution
CyberMedia Announces its new Platformto Subscribe Magazines on iPad, Android & PC
http://digisub.ciol.com
For collaboration opportunities please get in touch with Manish Verma [email protected]
BIOSPECTRUMVOICE&DATADATAQUEST PCQUEST
SEGMENT ANALYSIS
72 | September 2012 GlobalServices
CoNTACT CENTrE ouTSourCING
Social Media PuzzleSocial media means big business today. Lots of
interactions happen every moment and you never
know how and what is going to have an impact on
the image of your enterprise. A very high percent-
age of customers are turning to social media sites
and forums to solve problems, search for informa-
tion and voice complaints. And this is acting as a
wake up call for enterprises to build up their pres-
ence and create a social media strategy.
And this presents the big challenge - How to
make sense of all the data. What if a social media
strategy backfires? These are questions to be an-
swered before enterprises decide to take the leap.
Contact Centers Migrate to the ‘cloud’The combination of BPO and platform based
services, BPaaS, is gaining traction more than ever.
There is increased pressure from every corner to
look for newer cost saving options and this has to
be done without compromising on service qual-
ity. As cloud offerings mature and its benefits get
acknowledged, contact center operations too are
gradually being migrated to the cloud.
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-
tomer. Automation will con-
tinue both in voice and non
voice areas, though the scope will be more in non
voice. There are no signs of non voice channels
completely taking over voice in the near future,
but its expected to take a more dominant shape.
Social media still needs to evolve completely as a
customer interaction channel yet will be attract-
ing significant investments.
Top CCo Trends in 2012Enterprises will invest for better customer expe-
rience
A higher proportion of interactions moving to
non voice channels
Demand for offshore locations remain strong,
nearshore scores on multiple language skills
Increased efforts will be put in to harness the
power of Big Data
Possibility of clients going for consolidation of
vendors for better manageability
Combined use of agent, analytics and tech-
nology will likely be the strategy for service
providers.
GlobalServices September 2012 | 73
CoNTACT CENTEr ouTSourCING
ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnceApplicAtion 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 & mAintenAnceApplicAtion Development & mAintenAnce ApplicAtion Development & mAintenAnceApplicAtion 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
Global Customer Management LeadersAditya Birla Minacs Worldwide LimitedAegis LimitedCapgeminiConvergys CorporationExpert Global SolutionsFirstsource Solutions LtdGenpact LimitedHinduja Global Solutions LimitedSitel Operating CorporationVADS Business Proces Sdn Bhd
Mid-tier Customer Management VendorsAltisource Portfolio Solutions S.ACompuCom Systems Inc.HCL Technologies Ltd.Infosys Ltd.Scicom (MSC) BerhadSPi GlobalSutherland Global Services, Inc.Xceed
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
SegMent AnAlySiS
74 | September 2012 GlobalServices
Key reasons behind the
‘denominator effect’ are
reduction in new contract signings,
reduction in average size of
new multi-process FAO contracts, and risk-averse phased approach to FAO.
AbhiShek MenOnresearch director, Everest
Group
The global Finance and Accounting Out-
sourcing (FAO) market echoed success
in 2010 with 18 percent growth (ACV).
However, in 2011 this growth diminished
when the market grew by mere 11 percent (ACV).
The year 2012 is expected to bring along a positive
wave of prosperity as the FAO space is projected to
rebound by 10-15 percent (ACV).
According to a new analysis titled Finance &
Accounting Outsourcing Annual Report 2012
by Everest Group, “The multi-process FAO mar-
ket is projected to rebound by 10-15 percent and
top $4 to $4.5B in annual contract value (ACV) in
2012. 2011 saw the market reach an all-time high
in contract extensions that along with contract
expansions, represented 70 percent of ACV growth
in 2011.”
The FAO market reached $3.8B in ACV in 2011,
representing about $32B in total FAO spending. Last
year also witnessed a drop in total contract values
(TCV) of new engagements in comparison to 2010.
Abhishek Menon, research director, Everest
Group explained the slow growth rate of 2011
is not a sign of worry but a sign of movement
towards maturity. He highlighted, “Key reasons be-
hind the ‘denominator effect’ are reduction in new
contract signings, reduction in average size of new
multi-process FAO contracts, and risk-averse phased
approach to FAO.”
In 2011, 72 new contracts were signed and
there were 126 extensions/renewals. The study
predicts organic growth to continue as contracts
valued $7.3B or more are up for extension within
the next three years.
Saurabh Gupta, vice president, Everest Group,
articulated, “Although the market witnessed
slower than expected growth levels last year, we
nevertheless saw strong growth with nearly 200
contracts for new, extended and renewed con-
tracts. Along with fewer new contracts signed and
some terminations, we also saw a drop in size of
multi-process contracts largely due to cautious buy-
ers opting for risk-averse phased approaches.”
In current scenario, the deals are fragmented.
Explaining this further, R U Srinivas,chief executive
officer & executive director, Caliber Point, Hexa-
ware BPO, articulated. “More single process (e.g.
Accounts Payable) contracts are evaluated sepa-
rately; Full-scale FAO deals have become fewer.
The market is gradually evolving, with a number
of service providers augmenting capabilities to
provide technology enabled solutions and con-
sulting, apart from usual business processes. This
is also supplemented by the fact that there is now
abundant availability of talent at offshore with
significant domain knowledge. So providers have
a scope to play in a larger field and higher up in
the value chain. Moreover, a number of providers
are building their expertise in FAO within specific
industries, and even positioning themselves as
niche offerings.”
the Service Providers’ territory Last year 60 percent of fresh FAO contracts were
signed by companies in the revenue bracket of less
than $5B.
Accenture, IBM and Genpact continue to have
the strongest foothold in this space. However, as
per the same report, in the last five years, the mar-
ket share of the top three providers has reduced
from 65 percent to 50 percent. 2011’s highest new
contracts had Accenture, Capgemini and Infosys
F&A OutSOurcing
GlobalServices September 2012 | 75
BPO’s name as service providers. Accenture, TCS,
and IBM accounted for about 50 percent of total
contract value signed in 2011, including new con-
tracts, renewals and extensions.
Market leader Accenture claims its scale,
integration and specialization continues to dif-
ferentiate it in the market. Talking about their
success cards, Tony Chambliss, global offering
lead for F&A BPO, Accenture, pointed, “We have
extensive global delivery capabilities, provid-
ing a full suite of F&A BPO capabilities across all
industries from transaction processing through to
high value finance and analytics. In addition, we
bring our clients an integrated solution including
consulting and BPO that generates business out-
comes and end-to-end transformation that results
in true value, improving the performance of the
client’s business.”
He added, “Accenture’s technology delivery
experts have skills and tools to implement enabling
technology. Accenture also has extended expertise
in complementary areas to ensure successful solu-
tion delivery,such as change management and
workforce training. These capabilities, along with
the Accenture Global Delivery Network, combine to
deliver efficient and effective F&A BPO operations.”
Based on the YoY movement of different serv-
ice providers on the PEAK Matrix, Everest Group
identified ‘2012 FAO Market Star Performers’ as Ac-
centure, Capgemini, Genpact, IBM and TCS. Other
vendors whose performance significantly enhanced
on the FAO PEAK MATRIX are EXL Service, HCL,
Infosys, and WNS.
David Borowski, senior associate, Pace Harmon,
speaking about service providers said, “Multi-tow-
er outsourcing providers, e.g., IBM, Accenture, pro-
vide IT and business process outsourcing, as well
as a variety of other types of services and products
(e.g., technology, consulting). These providers
often offer comprehensive global delivery services,
significant brand recognition, and an opportunity
to leverage varied capabilities. India-based general
outsourcing providers, e.g., Wipro, Infosys, TCS,
offer a broad array of BPO and ITO capabilities, as
well as other professional services.”
He added, “Many of these providers have
evolved because of initial IT capabilities that have
expanded, either organically or through acquisi-
tion, into competitive BPO expertise. Outsourcing
providers with a more direct focus on BPO, e.g.,
WNS, Genpact, were often captive shared services
functions that spun off from parent companies
to provide back office services as a commercial
offering. FAO specialists, who focus on a particu-
lar F&A service tower, often stem from a compel-
ling technology-based differentiator. Examples
include API for procure-to-pay expertise and VWA
for order-to-cash expertise (prior to the Capgemi-
ni acquisition).”
Hexaware BPO’s strategy for 2012 vs 2011 has
changed with increased focus on FAO; they are
strongly undertaking an Account Based Mining
approach to cross-sell/ up-sell Finance & Account-
ing services within our existing customer base.
Also, Hexaware is deploying an Offshore-onshore
delivery model, supported by our strong network
of partners. Our Go-to-Market is based on transfor-
mation/ consulting oriented pitch, showcasing our
expertise in creating value apart from cost savings.
The difference between the market leaders and
major contenders is diminishing.
Gartner, Inc.’s 2012 reported titled, ‘Magic
Quadrant for Finance and Accounting BPO,’
stamped the following organizations as leaders:
Many of these providers have
evolved because of initial IT
capabilities that have expanded,
either organically or through acquisition,
into competitive BPO expertise.
DAviD bOrOwSkisenior associate, Pace Harmon
SegMent AnAlySiS
76 | September 2012 GlobalServices
Accenture, ACS, A Xerox Company, IBM, Genpact,
Capgemini, Infosys Ltd., WNS and Wipro. Niche
players identified: HP, Steria, OPI, Cognizant, HCL
Technologies and Intelenet.
Gartner research highlighted, “Leaders are per-
forming well today, both with a clear vision of mar-
ket direction and by actively building competencies
to sustain their leaders position in the market. The
comprehensive F&A BPO players in this quadrant
generally share superior market understanding,
have a global client base, an extensive network
of well-distributed and highly populated global
delivery centers catering for multiple languages, a
good balance of transactional and high-end F&A
delivery, and innovative well-communicated and
marketed sales offerings.”
Previous year eyed some strategic M&A activity,
for example: Capgemini-VWA, EXL-OPI, Serco-In-
telenet, and iGate-Patni.
Menon speaking about the service provider
landscape added, “While the market continues to
be led by three service providers (Accenture, Gen-
pact, and IBM), other service providers are aggres-
sively expanding their market share. As a result,
in the last few years, the market share of the top
three service providers declined from 64 percent in
2005 to 50 percent in 2011.”
Service provider’s in order to differentiate
themselves are creating innovation across three
dimensions. These dimensions, as per Everest, are
non-linear growth, differentiated offering, and
new buyer segments.
the SMb SpaceSMB segments adoption rate of FAO doubled over
the previous year. One of the prominent service
providers in this space is Quatrro. Speaking about
Quatrro’s approach to the mid-market, Monica
F&A OutSOurcing
GlobalServices September 2012 | 77
Kashyap, senior vice president, new product de-
velopment and operations, Quatrro said, “Study-
ing the mid-market space, we realized that one
key issue this segment faced was the lack of right
technology. One reason they had not outsourced
F&A, while they had outsourced payrolls, is that
they do not have the technology that can allow
finance outsourcing, they may not have the right
financial strength, to have the right technology,
to be able to outsource it, to leverage it etc. To
do FAO, it was important for us to arm ourselves
with the right processes systems and technology,
so, that we could approach the mid-market with
this offer.”
Further voiced, Neeraj Sahgal, general manag-
er-technologies, Quatrro, “Most of the large play-
ers in this market are targeting the Fortune 500
or top thousand clients. These clients do have the
ability to go buy one of finest accounting pack-
age or an ERP deployed across all organizations.
We approach the mid-market segment saying
we know you do not have the strength to buy a
SAP or oracle finance but we do. This way we can
work thousand such clients and give them the
capability. Then, they can use some of the best
practices that SAP or any other Tier 1 platform
has to offer. We help them in doing end-to-end
financial transaction; we process their financials
SegMent AnAlySiS
78 | September 2012 GlobalServices
Clients are increasingly
taking an end-to-end process view
of their finance operations and therefore we’re
providing an expanded scope of processes—as well as bundling of services such
as F&A and procurement—to
achieve greater savings.
tOny chAMbliSSglobal offering lead for F&A
BPO, Accenture
end-to-end, save tax processes and filling of
returns etc. We take care of all those particular
statutory requirements.”
industries Last year’s leading verticals were manufactur-
ing, hi-tech & telecom, professional services, and
financial services. These verticals accounted for 60
percent of the market. Professional services is a
relatively a new industry that is gaining traction.
Accenture embraces experience in more than
forty industries covering communications, media
& technology, financial services, health and public
service, consumer goods, retail, utilities, chemi-
cals and energy. In recent times, Accenture noted
particular interest in F&A BPO from the high-tech,
telcom, manufacturing and retail sectors.
Genpact provides F&A expertise across many
verticals such as manufacturing, pharmaceutical,
consumer product goods (CPG), retail, insurance
and financial service.
Quatrro caters to retail, manufacturing, profes-
sional services, hotel, auto, educational institu-
tions, not for profit organizations, grocery etc.
Some of Steria’s big clients come from health-
care, telco and media, banking and retail.
For HGS, FAO’s end-to-end accounting the area
is equity/fund advisory companies and minor subsi-
dies of MNCs. In the case of volume transaction it is
the BFSI sector.
the Models As the FAO space matures, the value proposition
moves away from cost and thus solutions
transform too.
Everest report stated that, beyond transaction-
intensive processes (AP, AR and GL), judgment-
intenstive processes such as FP&A were increasing
included in FAO contracts. The trend towards
end-to-end solutions (P2P, O2C, R2R) continued
to gain momentum as opposed to a traditional
piecemeal solution.
Service providers are now employing process-
agnostic solutions across different process areas.
Everest report coined Wipro, Capgemini, and TCS
as the leaders in innovation with the use of new
tools and technologies.
Chambliss talking about different models of
implementing FAO Accenture has employed ar-
ticulated, “Accenture is helping clients consolidate
more back office processes, leveraging the shared
services model, hybrid BPO/shared services model,
and bundling BPO and IT outsourcing. Clients are
increasingly taking an end-to-end process view
of their finance operations and therefore we’re
providing an expanded scope of processes—as well
as bundling of services such as F&A and procure-
ment—to achieve greater savings. Another exam-
ple is moving toward business outcome based solu-
tions, enabling the F&A areas to become strategic
to the value they can generate for the business.”
HGS FAO Solutions have employed two types of
FAO. Sridhar Krishnamurthy, executive vice presi-
dent, strategic initiatives, HGS shared, “One is the
end-to-end accounting model where we act as the
CFO role including accounting advisory on statuto-
F&A OutSOurcing
GlobalServices September 2012 | 79
ry compliances and fund management. The second
type of practice is volume transactions where we
take up the AP processes like Vendor Payments &
Employee Reimbursements.”
technology MattersTechnologies play in this domain has advanced
from the basic ‘tie-and-run’ model to an ‘augmen-
tation’ model. Menon pointed, “In 2011, technol-
ogy augmentation had become the new “nor-
mal”. Nearly 45 percent of the contracts in 2011
leveraged add-on tools such as workflow engines,
interfaces, document digitization, business intel-
ligence tools, user portals/dashboards, and project-
management tools.”
He added, “While most FAO buyers prefer a
technology augmentation approach, there exist
situations where buyers are amenable to plat-
form-based FAO. Year 2011 witnessed a signifi-
cant increase in adoption of platform-based FAO
solutions, primarily driven by increased adoption
in the mid-market and SMB segment (revenue less
than US$5B)”
Many organizations’ technology landscape is a
cocktail of their developed tools and best-of-breed,
third-party applications. For example Accenture is
flexible with the software they use. Their technol-
ogy architecture is designed with a ‘wrap-around
IndIA COnTInueS TO Be The MOST PrOMInenT deSTInATIOn On The F&A MAP. OF The FAO FTeS, 65% Are lOCATed In IndIA ACrOSS nOrTh AMerICA And eurOPe.
approach’ to interface with a variety of ERP
solutions. Their toolsets give flexibility to interact
seamlessly with client’s existing ERPs and has flex-
ibility to perform analytics within the toolsets not
being limited by clients ERPs.
Quatrro has created a platform. Sahgal ex-
plained, “This is a platform which sits in front of
the SAP. It controls the entire operational process,
so there are two set of player. One is the client
who can access this portal, he has access to all his
financial reports, he can transit with us as well as
transit all the systems using this portal. He need
not understand the nuisances of what SAP does,
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
it. Also, he has access to all the reports at any given
point of time.”
He added, “The other piece is Quatrro people.
That is where they access the services component
of this portal. We define our own set of workflows:
who is going to process it, how it is going be done,
somebody is going to do a review make sure all the
numbers match. Portal itself has a whole set of log-
ics that are build in to make sure the transactions
the leADer’S DOMAinAccenture For more than 20 years, Accenture has been providing F&A BPO. It has an established portfolio of more than 80 finance outsourcing contracts for approximately 70 clients in 39 different languages across 150 countries. These clients are served by more than 10,000 skilled professionals.
Mike Salvino, group chief executive of BPO, Accenture said, “Accenture’s positioning in the F&A BPO Leaders quadrant by Gartner underscores our ability to bring industry expertise, analytics and innovation to our clients, leading to better business insights and outcomes, which we call fourth generation BPO. We feel it also highlights our ability to leverage the cloud, social media, mobility and analytics to drive value for our clients, which we call fifth generation BPO.”
SegMent AnAlySiS
80 | September 2012 GlobalServices
Infosys In 2004, Infosys BPO’s F&A unit was established. It has 11 centers in more than 7 countries such as India, China, the Philippines, the Czech Republic, Poland, Mexico and Brazil. The company employs approximately 7,000 FTEs in F&A BPO.
Gautam Thakkar, vice president and head, enterprise services, Infosys BPO asserted, “We consider this recognition as a validation of the strategic investments that we have made in the F&A practice across industry verticals. Our focus on developing and deploying cutting-edge tools have helped enhance the effectiveness and efficiency of our processes, while minimizing the risk of running accounting operations through a global delivery model.”
WnS In 1996, WNS began providing F&A BPO services and in a short period of time (fiscal 2012) F&A accounted for 19 percent of WNS’s total revenue (net of repair payments). It embraces 7,000 employees delivering from simple transactions to complex analytical processes, including industry-specific processes to more than 70 global clients.
Keshav R. Murugesh, group CEO, WNS stated, “We believe that our capability and position as a leader in the FAO space is a result of our differentiated market approach coupled with investments designed to provide our clients with the right blend of expertise, talent and technology to outperform their competition,”
Talking about what is helping WNS, Tasneem Lakdawalla, executive vice president, Finance and Accounting, WNS articulated, “Our vertically-led strategy is helping us deliver F&A offerings supported by industry-specific domain expertise, and enabling WNS to better service our clients. We will continue to invest in tools, technology, resources and strategic partnerships which will help drive platform-based solutions, increased business process efficiencies and differentiated service offerings for F&A,”
TCSTCS’ BPO revenue is over $1.1B and it houses 40,000+ employees. It has presence across 11 countries from where it delivers services to more than 200+ customers.
Abid Ali Neemuchwala, global head, TCS BPO business opined, “TCS’s investments in building industry vertical expertise in F&A,
our proven transformation methodology - FORE™ delivering best in class processes, our business model innovation of F&A Platform solution delivering Business Process as a service (BPaaS), and unrelenting focus on analytics, risk and controllership are all geared to meet the customer’s needs for an effective and efficient Finance function.”
GenpactSince 1997, Genpact has been selling F&A services. It delivers these services from 25 centers in 10 countries. In the past 18 months, it has signed many new deals and accomplished 100 percent contract renewals or extensions.
Tiger Tyagarajan, president and CEO, Genpact, articulated, “Combined with our widespread global delivery capabilities and deep domain expertise in many vertical industries, Genpact’s Smart Enterprise Processes (SEPSM) framework drives additional excellence in F&A processes and helps our clients achieve bottom-line impact.”
Xerox Xerox Services houses 24,000 professionals. They operate out of over 90 global service centers, in multiple languages in North America, Central America, South America, Europe, and Asia Pacific.
Kent Schnacker, executive vice president, ACS financial services group said, “In a communications era where consumers expect all bills, invoices and documents to be delivered exactly when and how they prefer, our finance and accounting services help organizations deliver quality service on a consistent basis. Our clients count on us to help keep their customers satisfied.”
Capgemini Christopher Stancombe, global head, FAO, Capgemini, said: “We deliver valuable business outcomes to the benefit of our clients efficiently and effectively within a strongly controlled environment.”
Capgemini’s BPO has over 13,000 BPO professionals providing services to customers worldwide. These services are provided in 36 languages and are delivered from centers located in Australia, Brazil, Canada, Chile, China, Guatemala, India, Poland, Sweden and the United States.
Wipro Wipro BPO operates from 30 centers in 11 countries, including Poland, Romania, China, Japan, Philippines, Australia, U.S, Canada, Brazil, Mexico and India (Bangalore, Delhi, Chennai, Pune, Hyderabad, Kolkata and Mumbai).
Manoj Punja, svp and global head, Wipro BPO echoed, “Our ability to leverage our extensive technology capabilities and shaping the vision for the next generation of F&A outsourcing is a clear differentiator. We feel this recognition confirms our strategy and the significant investments that we have made in our F&A practice to improve our offering and add measurable business value to our clients.”
F&A OutSOurcing
GlobalServices September 2012 | 81
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 F&A 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 F&A 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 F&A 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 F&A BPO is seeing an increased demand for analytics information derived from the financial processes we manage to enhance client decisions and support functions—the 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 F&A 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
—tony chamblissglobal offering lead for
F&A BPO, Accenture
Increased penetration: F&A 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 F&A captive sales: More and more companies choose to establish an entire F&A team offshore. Divestments such as Citi Group, Lehman, AIG, however, are becoming more common as companies take advantage of the exibility offered by outsourcing.
—Sachdev Ramakrishnadirector, marketing,
Steria india
inDuStry trenDS PreDict eD by the inDuStry
SegMent AnAlySiS
82 | September 2012 GlobalServices
The trend is major outsourcing opportunities are in the AP processes. Organizations have had these internally for years and are planning to move it outside to an offsite locations to seek more streamlined operations (arising out of best practices implemented by FAO Agencies) and to seek a better cost advantage.
—Sridhar krishnamurthy
executive vice president, strategic initiatives, HGS
We are witnessing frequent inclusion of ‘onsite component’ in recent deals. In other words, the hybrid model (combination of onshore/offshore; shared services/outsourcing) is having a good traction.
As highlighted, the comprehensive ‘full-scale’ deals have become fewer – buyer are evaluating single processes (Accounts Payable, Record-to-Report, etc.) as opposed to multiple processes at one go.
Another trend is interest towards transformational sourcing, to improve/re-structure the business processes, with help of technology enablement and domain knowledge.
—r u Srinivaschief executive officer &
executive director, Caliber Point, Hexaware BPO
Financial Planning & Analysis (FP&A) 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 F&A 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 F&A 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 F&A solution elements are driving buyers to reassess pricing structure and introduce pricing that provides flexibility and/or business-oriented performance.
—Abhishek Menon, research director, Everest
Group
inDuStry trenDS PreDict eD by the inDuStry
F&A OutSOurcing
GlobalServices September 2012 | 83
F&A OutSOurcing
that are going in the system are all authentic are
all absolutely fine. This is the entire mechanism,
by virtue of this, what we are able to do is we are
able to streamline our process; it has also increased
the efficiency tremendously. Our total time to the
manual activities that were earlier involved has all
gone out of the window.”
clients and Delivery locationsThe largest client-base of this sector continues to
be based in US, followed by Western Europe. There
is also an increased trend from buyers in Asia-Pa-
cific region and in Latin America.
In the previous year, approximately 50 percent of
the fresh contacts had elements of end-to-end scope:
Procure-to-Pay, Order-to-Cash, Record-to-Report.
There was a noticeable shift from an offshore-centric
to a balanced onshore-nearshore-offshore model.
As per the Everest report, buyers continue to
focus on an end-to-end process-driven approach
to FAO, as opposed to a traditional functional and
piecemeal approach. Also, while nearly 90 percent
of the FAO FTE mix continues to be offshore-/near-
shore-centric, 2011 witnessed a significant increase
in onshore delivery center.
Recent times have also noted a significant
change in buyer expectation. A major transforma-
tion is that cost saving is no more the only need
or driver. This in turn has resulted in the change in
F&A solution elements too. Menon stated:
High-end processes such as FP&A are increas-
ingly getting included, primarily during extensions.
Adopting more end-to-end approach as op-
posed to siloed and piecemeal approach in or-
der to increase visibility, streamline, and to have
stronger link to overall business performance.
He further added, “Buyers are cautious and
they prefer phased approach as opposed to big-
bang approach. This is also reflected in new con-
tract signings and contract extensions/renewals:
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
scope and scale expansion during renewals.”
India continues to be the most prominent des-
tination on the F&A map. 65 percent of the FAO
FTEs are located in India. Southeast Asia witnessed
a significant increase in the number of delivery
centers. Across North America and Europe, there is
a ramp-up in onshore delivery capabilities.
Steria has presence across three leading de-
livery locations in India namely Noida, Chennai
and Pune. Sachdev Ramakrishna, director, mar-
keting, Steria India talking about India being the
preferred location said, “India is the preferred
location for outsourcing F&A services in terms of
financial attractiveness, people skills availability
as well as the business environment. Hence more
and more delivery centers are being setup here.
Moreover, due to rapid growth in credit card,
telecom infrastructure and retail banking penetra-
tion in India, there is a phenomenal increase in
transaction processing of payments and collections
in India domestic market as well.”
HGS is planning to extend its geographical pres-
ence and also the delivery locations. Their two year
plan is to look for clients from other countries and
the same time to zero on cities that can give the
required number of knowledgeable resources &
skill sets for these types of transaction. They are re-
ferring to the volume transactions here. The end to
end accounting model will have to be in the same
location where the client office is situated.
AS Per The eVereST rePOrT, BuyerS COnTInue TO FOCuS On An end-TO-end PrOCeSS-drIVen APPrOACh TO FAO, AS OPPOSed TO A TrAdITIOnAl FunCTIOnAl And PIeCeMeAl APPrOACh
SegMent AnAlySiS
84 | September 2012 GlobalServices
F&A OutSOurcing
Leading Mid-tier FAO VendorsDatamatics Global Services Ltd.HCL Technologies Ltd.Insigma Technology Co., LTDQuatrro Global Services Pvt. Ltd.Sutherland Global Services, Inc.
Global FAO VendorsCapgeminiEXL ServiceGenpact LimitedInfosys Ltd.WNS Global ServicesXchanging
Segment AnAlySiS
86 | September 2012 GlobalServices
induStry- Specific BpO: Being explOred AggreSSively
The ever increasing pressure to curtail costs and the expectation to drive better business outcomes is acting as a big push for the global industry-specific BPO
By Smriti Sharma, Smita Vasudevan, Sourabh C. Pushpa
induStry Specific BpO
GlobalServices September 2012 | 87
Cost arbitrage, maturity in service provider offerings
and rising buyer expectations to
get more out of outsourcing
deals are acting as major drivers
for the growth of industry-specific
BPO
rAmeSh gOpAlAnexecutive vice president, international operations, Hinduja Global Solutions
Enterprises in almost all verticals are
currently going through a tough phase,
plagued by mounting cost pressures
and customer expectations. What they
need is a unique solution tailor made to their
problems - a generalized BPO offering from
their service providers is not going to work
anymore. As the situation prevails, an increasing
number of enterprises are exploring industry-
specific BPO opportunities to drive better busi-
ness outcomes. According to Horses for Sources
research, there are strong signs of increased
adoption of industry-specific BPO solutions, most
notably in Financial Services and Life Sciences,
and many other emerging verticals.
What is driving demand for industry-specific BpO?Almost all industries are undergoing radical
changes and there is increasing competition
within each industry. This makes it imperative
for enterprises to look for newer avenues of
increasing efficiency and cutting down costs.
This is a major reason why domain specific of-
ferings are being aggressively pursued. Enter-
prises understand that acquiring domain specific
knowledge can help them add value and be a
differentiating factor for their business.
Financial services, Healthcare, Life Sciences,
Media, Entertainment and Retail are some of
the verticals expected to contribute largely to
the growth of industry-specific offerings in the
near future.
As the outsourcing industry matures, enter-
prises are looking beyond traditional service
offerings. They are now looking for services that
cater to the unique needs of the industry that
they operate in. Service providers are making
significant investments in acquiring domain spe-
cific capabilities. Interestingly, industry-specific
BPO is the segment where lots of new providers
are entering through niche offerings. Even the
established IT vendors have been developing
BPO niches in this space. This is evident espe-
cially in the Healthcare and Life Sciences space. The
market is also witnessing the trend towards com-
bining technology and BPO into a single service
offering. Bundling together BPO processes along
with IT offerings is giving service providers the op-
portunity to expand their footprints.
Although enterprises seem to be a lot more
industry focused now, the trend towards industry-
specific BPO is not new. Its been there for very long,
especially in the areas like mortgage processing
and healthcare. According to Gopalan, “Healthcare
has always been a very industry-focused vertical. It
started primarily with transcription processing and
evolved into customer service and collections.”
And especially after the US healthcare reforms,
the industry is undergoing lots of transformations
and the need for industry-specific skills is ever
increasing. Most of the players catering to health-
care clients are doing it through industry-specific
processes. “In the healthcare space, industry-spe-
cific processes account for more than 80 percent of
the market share, while horizontal services are only
less than 20 percent” adds Gopalan.
market estimates & geographiesOver the next 5 years, vertical specific BPO is ex-
pected to offer a larger opportunity as compared
Segment AnAlySiS
88 | September 2012 GlobalServices
to horizontal BPO. According to the Nasscom-Ever-
est India BPO Study- Roadmap 2012, the segment
presents an opportunity of US$ 145 – 175 B, which
is around 60 percent of the entire market.
Across geographies, India and Philippines are
the only two prominent offshore destinations. Im-
portant nearshore destinations include South and
Central America and South Africa.
Some prominent industry-specific processeshealthcare outsourcing: According to a report
published by US based marketresearch.com, the glo-
bal healthcare BPO market is growing at a healthy
CAGR of 21.4 percent. Healthcare payer outsourcing
market will also grow at about 30 percent in the
forecast period. Healthcare provider outsourcing
has the highest growth rate of 31.9 percent from
2011 to 2016 due to conversion from ICD-9 coding
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-
try, Tony Mira, Group CEO and founder of Ajuba
Solutions, said, “The regulatory changes in the US
have been a driver for the healthcare outsourcing
industry. There are two main reasons – one is ICD-
10, this has created a lot of confusion and concern
with the healthcare community in US because the
level of education,
sophistication, and
training is much
higher than the ICD-
9. The people who
are ICD-9 trained
are having difficulty
in passing for the
ICD-10 level. They
are facing difficulty
with the exist-
ing coding in US. This is creating opportunity for
offshore company. Second, with the new offshore
reform the level of patients is expected to increase
by almost 30B. This is going to create an increase
of work for people in healthcare industry and they
are going to need professional vendors who will be
able to handle this work effectively.”
Overall, the healthcare BPO market is crumbled
and small players are trying to make their presence
felt, especially in India and China.
Accenture (Ireland), Medusind (U.S.), GeBBS
Healthcare (U.S.), Omega Healthcare (India), and
Inventive (U.S.).
The pharmaceutical
outsourcing market
is captured by play-
ers such as Quintiles
(U.S.), Covance (U.S.),
PPD (U.S.), Parexel
(U.S.), Charles Rivers
Laboratories (U.S.)
and ICON (Ireland) in
the CRO space... are
some of the major players of this space.
publishing outsourcing: The e-book market was
one of the few markets that grew during recession.
Since then, this segment has been witnessing a
positive growth and publishers have been looking
European companies have
explored locations like Ireland,
Scotland and Spain - for specific
savings in costs and geographic
proximity and South Africa is
emerging as a close favorite for the UK
companies due to the cultural affinity and good quality of
the services
SAnjAy venkAtArAmAn president, Asia customer
management, Firstsource
OVErAll, ThE hEAlThCArE BPO mArKET IS CrUmBlEd And SmAll PlAyErS ArE TryInG TO mAKE ThEIr PrESEnCE fElT, ESPECIAlly In IndIA And ChInA
induStry Specific BpO
GlobalServices September 2012 | 89
Key Trends In industry-specific Specific BPO
Increased adoption in verticals like Healthcare and life sciences that are undergoing profound changes
Significant investments by service providers in enhancing and acquiring industry-specific capabilities. Industry-specific analytics and customer intelligence services are evolving
Combining BPO with technology as a single offering is a growing trend that we see in the industry-specific BPO space
BPO service providers are joining hands with clients for end-to-end service delivery and also, they are scaling up their business competency levels in handling high value business projects
Checks, Underwriting Disbursement and Servicing
Collections Maintenance.
The integration of services (For example, loan
origination, vendor management, post-closing
processing services, third party services until under-
writing, modification services, technology services
etc.) is a challenge that vendors face while offering
mortgage services.
life sciences outsourcing: Research
and development was the core of a
life science company and thus
was perceived too valuable to
pass on to others. However,
today under the growing
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
at it as a strong revenue spot. Apart from tackling
cost pressure, the key drivers for publishing out-
sourcing are handling challenges of adapting to
new technology, lack of in-house capability and
addressing new geographies.
US is the most popular publishing outsourcing
destination. India is the most preferred offshore
destination followed by Philippines. Indian players
continue to focus more on lucrative segments such
as educational, magazines, corporate, B2B, trade
and e-books. Over the next three years, all these
segments are expected to remain attractive.
mortgage process Outsourcing: This model
has evolved the manner in which companies are
running their mortgage processing requests. The
conventional manner is costly and burdensome and
thus they do not operate successfully any longer.
BPO’s mortgage service offerings are crafted
to be in sync with the needs of mortgage banking
institutions. Some of the challenges mortgage bank-
ing institutions face are rising interest rates, increas-
ing instances of borrower default, competitive
pressures etc. Mortgage BPOs spread their services
across various levels of the mort-
gage value chain.
The functions of mortgage
BPO can be categorized under
four divisions: distinct
headers;New Business
Acquisition, Ap-
praisal Title
Segment AnAlySiS
90 | September 2012 GlobalServices
value-added services.
Clinical development outsourcing is expected
to increase and establish its footprints in different
parts of the globe. Presently, a large percentage of
outsourcing comes from United States and western
Europe. In future, China and India are expected
to make their presence felt on the life sciences
outsourcing map. R&D outsourcing is expected to
grow and also shift geographically from the United
States and western Europe to China and India.
The study titled Outsourcing in Life Sciences A
Survey of BayBio Members highlighted, “The key
findings of our survey of BayBio life science compa-
nies suggest continued growth in clinical develop-
ment outsourcing, with a significant amount of
growth occurring overseas. The need for external
capacity and capabilities is a key driver of outsourcing
today, with a significant focus on reliable, on-time
induStry Specific BpO
GlobalServices September 2012 | 91
service. Current CRO relationships appear to leave
significant room for improvement. Patient recruit-
ment, customer-centricity, regulatory compliance,
and flexibility of service plans were mentioned as
particular areas in which CROs could do a better job.
Overall, as companies look to CROs as the answer
for internal constraints, they would also like to shift
emphasis from today’s transactional relationships to
long-term strategic development partnerships.”
media outsourcing: Media outsourcing is often
looked at as the new wave of outsourcing. This is
courtesy an increase in the outsourcing of media
work such as online reputation management, data
mining, influencer identification and crisis manage-
ment etc.
On the internet customers talk in real time and
companies have comprehended the fact that mere
online monitoring tools are not sufficient. Soft-
ware’s can search conversations but they are not
intelligent enough to understand sarcasm. Thus,
human beings are required.
Also, all companies are well versed with the fact
that it is imperative to maintain a good profile on
the internet. Hence, they look out for third party
vendors who are armed with online business mar-
ket skills and also cost
effective.
Social Media Exam-
iner’s Michael Stelzner
report titled 2012
State of the Social
Media Marketing
Industry stated, “In
2010, only 14 percent
of marketers out-
sourced social media
marketing. Last year,
that number doubled
to 28 percent. And
this year, the percentage rose yet again, with 32
percent of marketers outsourcing social media.”
The report also highlighted,“Since marketers
are so confused about how to measure social me-
dia’s ROI, it’s certainly easy to be duped into using
an agency’s proprietary or third-party analytics tool
that may have tons of fancy graphs, lots of numbers,
and export complicated spreadsheets -- but it really
doesn’t tell you how to do anything actionable to
improve your social media marketing with that data.
So if you’re considering using a third party for social
media analytics, make sure that their tool not only
offers closed-loop reporting, but that the person
analyzing the data can also tell you how to use that
information to improve your marketing strategy.”
Other emerging verticals include travel, tele-
com, insurance, supply chain management, tech-
nology, transportation etc.
Opportunities and risks Despite its numerous advantages, there are some
potential risks and opportunities suppliers need to
identify, and in turn adopt mitigation strategies
for these risks. industry-specific BPO providers are
stressing hard to move up the BPO value chain. BPO
companies are joining hands with their clients for
end-to-end service delivery and also, they are scal-
ing up their business competency levels in handling
high value business projects.
Everest study states that primarily one demand-
ing factor that pushes
suppliers to opt for
industry-specific BPO is
cost. While traditional
BPO focuses heavily on
reducing operational
costs, industry-specific
BPO offerings promise
to create business im-
pact. Industry reports
predict that industry-
centric BPO capabilities
will emerge as an op-
portunity for suppliers
to create top-line impact for their clients and attain
distinctive positioning in an increasingly competitive
market in the aftermath of economic downturn.
While the overall traditional BPO market is high-
ly competitive, the industry-specific market is highly
mEdIA OUTSOUrCInG IS OfTEn lOOKEd AT AS ThE nEw wAVE Of OUTSOUrCInG, ThIS IS COUrTESy An InCrEASE In ThE OUTSOUrCInG Of mEdIA wOrK SUCh AS OnlInE rEPUTATIOn mAnAGEmEnT, dATA mInInG ETC
Segment AnAlySiS
92 | September 2012 GlobalServices
induStry Specific BpO
concentrated as the industry relevance approach is
now a key ingredient in BPO offerings. For industry-
specific BPO services, Analytics and Cloud are play-
ing game changing roles. But talent and skill issues
are are gripping the industry. Service providers are
spending huge amounts on training and develop-
ment. Industry experts believe that skill shortages
are going to be a problem going ahead.
The prime concerns related to industry-specific
processes are- reducing operational errors, analyz-
ing real time business performance to standardize
business process operations on global-scale and to
gain more control over the business operations via
third party.
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
BPO Services Market Forecaster: Vertical Markets,”
Juan Sacchi, senior research analyst, IDC European
Services, said “Industry-specific BPO demand is ex-
pected to be relatively slow in 2012 compared with
2011. But looking forward, we expect to see indus-
try-specific BPO demand recovering and growing
faster than demand for traditional key horizontal
BPO services. Despite the fact that cost cutting
and cost control continue to be top priority for
BPO investment decisions, more and more we will
see demand in the market for domain or industry
expertise and services that are able to drive busi-
ness results alongside the traditional cost-cutting
approach.”
induStry Specific BpO
GlobalServices September 2012 | 93
induStry- Specific BpO
Global Leaders- Industry-specific BPOAltisource Portfolio Solutions S.AGenpact LimitedInfosys Ltd.Stream Global ServicesSutherland Global Services, Inc.Unisys
Industry-specific BPO Niche LeadersAditya Birla Minacs Worldwide LimitedAegis LimitedAjuba InternationalDatamatics Global Services LimitedHCL Technologies Ltd.Hexaware Technologies Ltd.Hinduja Global Solutions Ltd.Indecomm Global Services (I) Pvt LtdInterGlobe TechnologiesMindteck (India) Ltd.Neusoft CorporationQuatrro Global Services Pvt. Ltd.SPi Global
segment analysis
94 | September 2012 GlobalServices
the expanding scope of po contracts
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
By Smita Vasudevan
Post 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
procurement outsourcing
GlobalServices September 2012 | 95
It is no longer just a bottom line savings target for procurement; you
have to provide savings, but in
the most efficient model that also is helping to further secure the supply chain and protect
the end customers in terms of products
to be sold.
Jason evansVice President, Corbus
most important of all the business functions as it
is directly linked to revenues and has a significant
bottom line impact. This is the reason why even
when recessionary fears are once again looming
large, PO hasn’t lost its charm. The inherent pres-
sure to attain cost savings is more evident now,
and outsourcing is coming out to be the most
desired medium.
global market scenarioThe sluggish global economy is having a knockdown
impact on almost all areas of business. Procurement
outsourcing too is under the wrath to some extent.
UK and US are two very prominent markets for PO,
and whatever happens in these markets is going to
have a very likely impact on the segment. Despite
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-
curement Outsourcing Annual Report 2012, 60 new
multi-process PO contracts and 53 renewals/exten-
sions were signed in 2011, which is the highest ever
till now. Everest predicts that the global PO market
will reach an ACV of $1.8B in 2012, representing
managed spends of US$250B.
PO Market in 201160 new multi-process PO contracts signed in 2011
ACV grew 14 percent to reach US$1.6 billion
Service providers managing more than US $190B of procurement spend on behalf of their clients
Source: Everest Report titled “Procurement Outsourcing Annual Report 2012”
2012 market projectionsEnd-of-term activity will be significant as 57 per-
cent of PO contracts, valued at nearly US$6 billion,
are up for renewal within the next four years
Adoption will be led by companies with rev-
enues over US$1 billion while adoption by
small/medium-sized businesses (SMB) segment
will remain sporadic
Adoption in the public sector is expected to
grow
Geographic adoption will also continue to
expand in terms of global contracts as well as
adoption by source geographies such as Asia-
Pacific and South America
changing face of procurement outsourcing Like most other outsourced services, procurement
too is undergoing lots of transformations in this
tough phase that demands enterprises to look for
newer ways of doing things. Buyers are looking at
PO not just as a cost saving initiative but the way
to desired business outcomes and this has added to
its strategic significance. The role of procurement
officer is expanding and there is greater coordi-
nation between the procurement officer and the
CFO. There is also a visible trend towards PO deals
bundling up with FAO.
Reliance on procurement outsourcing is going
up as enterprises look for the expert knowledge
of service providers, who usually charge a fixed
price for a certain amount of cost savings. Trans-
actional procurement, strategic sourcing, compli-
ance management, category management, tactical
procurement and reporting are the common types
of services being offered today.
segment analysis
96 | September 2012 GlobalServices
An interesting trend is the growing prefer-
ence for procurement outsourcing among mid
market companies. Emerging technologies, espe-
cially, cloud-based offerings have made PO serv-
ices affordable for the mid market. The increas-
ing demand in this space is also encouraging
small service providers with niche expertize to
enter the market. At the same time, large service
providers are bringing out more services
in their PO offerings, especially through
cloud-based offerings. The tough
competition in the service
provider landscape between
the large and small players
will keep the momentum
going. And this will be a
good opportunity for buyers
to capitalize on, as they have
numerous options
available
to choose from.
For long, PO contracts were focused on indirect
spends. This seems to be changing now as direct
spending is also getting added more and more.
Rajesh Ranjan, Vice President, Everest, says, “The
market is shifting from classifying spend as direct
versus indirect to core versus non-core. While a
majority of contract continues to include indirect
spend, inclusion of direct spend is increas-
ing.” Enterprises are focusing on core direct
spending, preferring to keep it in house,
while outsourcing non-core direct
spend categories, such as main-
tenance, repair and overhaul.
These changes are in a way
resulting in expanding the
scope of PO contracts. Ranjan
confirms, “The functional scope
of PO contracts is expanding into
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 M&A 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 & verticalsNorth 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,
procurement outsourcing
GlobalServices September 2012 | 97
Merger & Acquisition Deals in 2011
Deal Objective
Infosys BPO Acquires Portland GroupTo establish presence in the Australian market with more offerings in the value-added segment
IBM Completes Acquisition of Emptoris To expand Smarter Commerce initiative
of value creation varies with process focus, eg;
higher transactional nature of processes in the case
of P2P-focused buyers present more opportunities
to create value through process optimization. On
the other hand, spend reduction is typically a fea-
ture of sourcing-related processes, therefore, a key
value creation lever for sourcing-focused buyers.”
the service provider landscapeIt is definitely a tough phase for service providers
with expectations soaring high and uncertainties
prevailing in the global environment. And with
many new entrants coming up its not the same
playing field anymore. Most service providers are
focusing their strategies around three things - peo-
ple, process and technology. The focus has been on
hiring and retaining talented people with knowl-
edge and experience in niche areas like negotia-
tions, spend analytics etc. As clients are becoming
more and more demanding, providers are under
pressure to offer access to cutting edge technolo-
gies. Investing in technology is going to be another
big trend among service providers and emerging
technologies like social media, mobility and cloud
computing will have a lot of influence on the type
of offerings that providers come up with.
po service providers’ landscapeIBM, Accenture and Procurian together account
for 70 percent of the PO market in terms of ACV
In 2011, IBM, Accenture, and GEP signed nearly
45 percent of new multi-process PO contracts.
IBM, Accenture, and Xchanging accounted for
about 60 percent of total contract value signed
in 2012, including new contracts, renewals and
extensions.
The market is shifting from
classifying spend as direct versus indirect to core
versus non-core. While a majority of contract continues to include indirect
spend, inclusion of direct spend is
increasing.
ranJan raJeshVice President, Everest
buyers will be forced to turn to nearshoring rather
than offshoring.
Across verticals, demand coming from manufac-
turing, retail, BFSI, telecom and energy sectors has
helped in maintaining the momentum in the PO
market. Public sector is also likely to come out as a
huge driver as governments are also under tremen-
dous pressure to cut down costs and are ready to
look for alternative avenues.
major driversProcess optimization and compliance are the
primary factors that are contributing to growth in
demand for PO globally. The cost base for procure-
ment outsourcing is much larger than other BPO
segments and thus the opportunity is much more.
PO also has a very high impact on the bottom line
which makes the value proposition quite attractive.
But at the same time realizing full value out of it
can also be a challenge. Ranjan says, “The extent
segment analysis
98 | September 2012 GlobalServices
procurement outsourcing
consolidation The service provider landscape is a mixed lot with
different types of players competing together. This
includes source-to-contract and procure-to-pay
service providers, FAO service providers, advisory
firms, supply chain management firms and so on.
With niche offerings coming up, specialty players
are also expected to enter the scene. The trend to-
wards consolidation that started a few years back
is very likely to continue strongly, and large players
will try and acquire small and niche players to
come up with more expanded service offerings and
enhance their service capabilities. Swaminathan D,
CEO and MD, Infosys BPO, which acquired Portland
BPO in 2011, stated in a company press release,
“This acquisition would significantly deepen our
capabilities and domain expertise in our sourcing
and procurement practice. It will also enhance the
competitiveness, spread of offerings and global
reach for our clients.”
Collaboration partnerships between large and
small service providers will also be a trend to watch
out for. For instance, Genpact has expanded their
alliance with Ariba to include Ariba’s cloud based
solutions into its offerings. “The combined offer-
ing includes the full range of Ariba’s collaborative
commerce solutions with Genpact’s procurement
services led by our SEP framework for making
business processes much more effective,” said
Shantanu Ghosh, senior vice president, Practices,
Solutions and Transitions, Genpact, in a company
press release.“
the Way aheadIts a transformational phase for the PO market.
The industry has definitely come of age with some
significant changes happening. The value proposi-
tion for procurement outsourcing is quite high but
the challenge is in attaining its full value.
There are expectations of adoption rates pick-
ing up across all verticals and the market is enter-
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
attract untapped segments. Like in all areas, here
also ‘more for less’ remains the mantra for buyers.
Jason Evans, Vice President, Corbus, says, “It is no
longer just a bottom line savings target for pro-
curement; you have to provide savings, but in the
most efficient model that also is helping to further
secure the supply chain and protect the end cus-
tomers in terms of products to be sold.”
A lot will also depend on how production facili-
ties operate worldwide. The floods in Thailand and
the earthquakes in Japan has had a serious impact
on the manufacturing facilities in these countries.
Though production has resumed, it might take a
while to come to normalcy. Against this backdrop,
supply shortages are expected to remain in the first
half and recover gradually by the second half of
the year.
Global economies are still struggling to find
their way out of the economic crisis. This will be a
concern for service providers, but they also have
the opportunity to attract buyers by helping them
streamline procurement costs. Evidences of how
enterprises have attained cost savings through PO
will be a key driver for other enterprises that have
stayed away so far.
A lOT WIll AlSO DePenD On hOW PrODucTIOn FAcIlITIeS OPerATe WOrlDWIDe. AGAInST ThIS BAckDrOP, SuPPly ShOrTAGeS Are exPecTeD TO reMAIn In The FIrST hAlF AnD recOVer GrADuAlly By The SecOnD hAlF OF The yeAr
GlobalServices September 2012 | 99
procurementoutsourcing
Global Procurement Management LeadersCapgeminiCorbus, LLCGenpact LimitedHCL Technologies Ltd.Infosys Ltd.WNS Global ServicesXchanging
Segment analySiS
100 | September 2012 GlobalServices
From CoSt SavingS to StrategiC advantageS: global Hro evolveS
Human resources outsourcing industry retains its cautious optimism as increasing complexities in HR processes and growing uncertainties in the macroeconomic environment creates new reasons for enterprises to outsource their HR transactions.
By Smita Vasudevan
Hro
GlobalServices September 2012 | 101
The need to evolve HR
practices in order to cater to a younger
workforce will be felt more.
rajiv ragHunandanstrategic business practice
head, HRO and S&F, Infosys BPO
Over the years the Human Resources
Outsourcing (HRO) industry has
gradually matured and the whole
HR BPO space has transformed
from a mere cost saving initiative to a driving
force for adding business value. The traditional
belief that HRO is simply a measure to reduce
the burden on HR is changing and the strategic
significance of HRO is being acknowledged more
and more.
So how has the year 2012 been for HRO?
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
the market continues to evolve under the
influence of some significant changes-chang-
ing employee demographics being one of the
most significant.
Of all the forces acting together, two primary
forces are driving global HRO ahead in these
tough times - HRO becoming a more strategic
initiative for enterprises and HR service providers
coming out with new technology innovations.
Targeted for multinational companies for a long
time, HRO is now attracting interest from mid
market enterprises as well and this is going a be
a strong catalyst for growth in the coming years.
Also the concept of employee engagement is
going to hold a lot of significance.
According to GIA’s, Human Resource
Outsourcing(HRO): A Global Strategic Business
Report, the global market for HRO is esti-
mated to reach US$199.6B by the year 2017,
driven by the increasing need for alignment
between business operations and HR, cost re-
duction, compliance management, understand
changing policy framework and access to key
technologies.
The global HRO market is clearly divided into
two parts - MPHRO and Single process HRO.
Although some growth has been evident in all
forms of HR outsourcing contracts, its the single
process HRO space that is demonstrating an
aggressive pace of growth. RPO dominates the
single process HRO space and is the fastest growing
segment right now.
market estimatesAccording to Everest Research, the MPHRO market
remains a consolidated space with few leading
players dominating the scene. Top players like Aon
Hewitt, IBM, Accenture, NGA, ADP etc account for
around 80% of the market share. Similar is the case
with Benefits Administration where top 3 players,
including Aon Hewitt, Fidelity and Xerox account
for 70% of the market share. Single process func-
tions like RPO and Learning are relatively frag-
mented markets with numerous service providers
playing together.
The market is still in a phase of cautious opti-
mism and growth in 2012 is expected to be very
much in line with what we saw last year. The MPH-
RO space has grown around 2% over the last year
and stands at around $ 3.1 B. The RPO segment has
grown over 27% over the same time and currently
stands at around $1.4B. Benefits, the most matured
market in the HRO space, remains the largest in
terms of value, currently around $5B.
Globalization & Growth Of Emerging Markets
Multi country capabilities are high on enterpris-
es agenda as they explore new, emerging markets
and attempt to break geographical boundaries.
Enterprises that venture into new areas should be
aware of the rules of the land. Local knowledge
and experience is very crucial and if they can’t get
Segment analySiS
102 | September 2012 GlobalServices
this on their own, they will need to partner with
a service provider that has global competencies.
Multi country HRO offerings is thus a big trend in
the current scenario.
The ability to scale up is highly essential in these
markets and this is acting as a driver for global HRO.
rPo a big driver For emerging geographies, RPO seems to be the
most highly demanded HR function. The five year
global RPO deal between pharmaceutical major Eli
Lily and HRO service provider Kenexa is a good ex-
ample of the growing significance of RPO. The deal
includes recruiting in Asia Pacific, Europe and the
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-
cruiting is now one of the three fastest growing
primary services bigger businesses are expecting
outside firms to handle. Benefits administration
and payroll are the biggest two, but contracting
out recruiting assistance is a growing trend.”
bpaas opens up new Hro opportunitiesSaas-Based HR services have been around for a
while but its only now with the greater breadth of
cloud offerings in HR ERP, that its penetrating into
the mid market space as well. Saas offerings have
made HR technology affordable and reachable for
mid market enterprises.
He believes that BPaas will make traditional HR
BPO more flexible and easier to consume, with out-
come-based contracts, and flexible ways of engag-
ing with specialist providers.
As a trend, HR service providers will be tying up
with SaaS providers to offer platform based HRO of-
ferings. Joining hands with a service provider. One
example is Workday partnering with Accenture and
Wipro to offer integrated saas Bpo services.
mobility and Self Service High on demandMobile HR applications are high on enterprises’
demand list and service providers will face in-
creased pressures to offer mobile functionality.
Quite related to the emergence of mobility and IT
consumerization is the growth of self service as a
preferred way of handling HR transactions. Custers
says, “Following the rapid adoption of self service
transactions in personal banking, utilities billing,
and social media, employees and managers will
expect to be able to handle both simple personal
data changes, as well as more complex, multi-step
HR transactions via self service scenarios.” This will
have dual benefits - employees will have more con-
In 2012 we expect organizations all
over the world to have a renewed
focus on employee engagement as a way to generate better outcomes
for employees and lower costs for
employers.
roHail KHangroup president, HR
outsourcing and solutions, ACS
AS A TRend, HR SeRVIce pRoVIdeRS wIll Be TyInG up wITH SAAS pRoVIdeRS To offeR plATfoRm BASed HRo offeRInGS one exAmple IS woRkdAy pARTneRInG wITH AccenTuRe
Hro
GlobalServices September 2012 | 103
key Highlights of 2011While the overall HRO market grew at a healthy rate, the MPHRO grew by a modest 2% to reach an annualized spend of US$3.12B in 2011
Transaction intensive processes are core but talent management components are increasingly considered
The appeal of multi-tenant BpaaS will increase
The M&A and partnership environment continues to play out in the marketplace
A striking difference over last year is the growth
in preference for emerging markets.
enterprises are moving beyond
developed markets and emerging
locations in ApAc, europe and latin
America are gaining lot of attention.
rajeSH ranjan Vice President,
Everest Research
trol over their data and organizations will be able
to reduce administrative overheads.
How innovative Hr technologies are Helping enterprises?Rajiv Raghunandan, Infosys, points out three ways
in which HR technologies are helping organiza-
tions:
Ensuring greater compliance
Better end user experience by making transac-
tions simpler
Making HR policies flexible enough to accom-
modate a global and mobile workforce
growth across Segments and geographiesThe GIA report states that the United States and
Europe account for a major chunk of global HRO
services. India still holds a significant position but
the emergence of alternate centers across geog-
raphies like Latin America, Eastern Europe and
South East Asia is a key indicator of the expansion
of HRO across geographies. Raghunandan says,
“Today Europe is where US was 4-5 years ago. The
proportion is now 40-40. Rest 20 percent is very
important. These areas could become innovation
hotbeds. Lot of what is learned there are replicable
in developed markets.”
Across different verticals, the demand from
financial services, telecom and manufacturing will
be a big driver. The retail and government sectors,
though does not look too bright right now, shows
great potential for future growth.
technology driven Consolidations The trend towards consolidation in the service
provider landscape is expected to go on strongly,
as players look to acquire better technologies and
global capabilities. Big players often bring in the
scalability while smaller players bring in niche
AcRoSS dIffeRenT VeRTIcAlS, THe demAnd fRom fInAncIAl SeRVIceS, Telecom And mAnufAcTuRInG wIll Be A BIG dRIVeR. THe ReTAIl And GoVeRnmenT SecToRS, THouGH doeS noT look Too BRIGHT RIGHT now, SHowS GReAT poTenTIAl foR fuTuRe GRowTH
Segment analySiS
104 | September 2012 GlobalServices
Hro
technology capabilities, creating a an attractive
mix. The acquisition of Taleo, an on-demand tal-
ent management software company by Oracle is a
good example of this.
demand for Short term deals ContinueDeal tenures and sizes are likely to remain short
and small as enterprises prefer to tread cautiously.
The size of MPHRO deals is also becoming smaller
as the number of processes bundled together
in MPHRO is coming down. Raghunandan says,
“There was a one time change that happened. The
interest of clients to lock themselves into 10 year
deals has gone away a few years back. In the last
3-4 years there has not been much change in the
duration of deals.”
What lies ahead?Currently many forces are acting together to re-
shape the global HRO landscape. Even against the
backdrop of a dull and gloomy economic scenario,
optimism remains as enterprises aim to reap strate-
gic advantages out of HR outsourcing deals. There
are huge opportunities that are yet to be fully ex-
plored, especially in the form of a huge untapped
mid market segment. Foreseeing this, service
providers are bringing out customized outsourcing
models for mid market enterprises.
While cost savings and compliance with complex
HR transactions will work as short term drivers,
business transformations and technology innova-
tions will play a big role in the long term. As the HR
demographics change and a new Facebook genera-
tion gets geared up to work, organizations will have
a tough task in front of them in reorganizing their
work environment. Enterprises that start now will
definitely have an edge when this happens a few
years down the line. Raghunandan sums up “ We
have to evolve our workforce and we have started
doing that today so that we are better prepared
for it.” The message holds a lot for service providers
and buyers in the global HRO space.
deAl TenuReS And SIzeS ARe lIkely To RemAIn SHoRT And SmAll AS enTeRpRISeS pRefeR To TReAd cAuTIouSly. THe SIze of mpHRo deAlS IS AlSo BecomInG SmAlleR AS THe numBeR of pRoceSSeS Bundled ToGeTHeR In mpHRo IS comInG down
Hot HRo deals in 2011MPHRO deal between BAE Systems and Logica
Benefits Administration contract between State of California and Aon Hewitt
5 yr HR and Payroll Contract between Northgate Arinso and Family Mosaic
RPO contract between Eli Lily and Kenexa
BpaaS will help overcome some of the shortcomings of both Bpo and SaaS. It will add
an additional layer of subject-matter expertise to organizations
who have moved into SaaS and who
find it hard to be entirely self reliant
from a process level.
miCHael CuSterS vice president, global alliances
& strategic marketing, NGA
Hro
GlobalServices September 2012 | 105
Human reSourCeoutSourCing
Global HRO Vendors
Capgemini
NorthgateArinso
Segment AnAlySiS
106 | September 2012 GlobalServices
AnAlyticS OutSOurcing: inSide the WOrld Of numberS
Advanced analytics will increasingly become a necessity for competitive differentiation
By Smriti Sharma
AnAlyticS OutSOurcing
GlobalServices September 2012 | 107
Today, all organizations operate in a glo-
bal environment that is set against the
backdrop of cut-throat competition and
regulatory pressure. Business decisions,
predictions, introduction of new products… all
these decisions should be drawn after analyzing
accurate data. Business analytics arm an organiza-
tion with quick and insightful decisions that assist
an organization in managing its performance and
creating value.
Data is not new to industries. For many years
they have possessed all kinds of data. However,
absence of requisite skills and tools made it difficult
for them to utilize this data. As companies continue
to lack appropriate analytics expertise, they are rely-
ing on the value of outsourcing in this domain.
Cost has never been the driver of the wheels of
analytics outsourcing. Rather, its clutch has been
pressed by highly skilled statisticians with domain
knowledge who have the capabilities of develop-
ing insights using data. When these capabilities are
married to specialized tools and technologies, the
provider can create impactful knowledge.
Sundar Varadarajan, senior vice president, BIBA
COE & PRESALES said, “Business Analytics is one of
the terms that are very broadly used. While tradi-
tional Business Intelligence (interactive reporting,
slicing and dicing of data) is referred to as analytics
by many; some may refer to analytics specifically in
the context of advanced decision support/predic-
tive analytics. With volume and variety of data ever
increasing, and with constant evolution of plat-
forms for computation (for advanced analytics on
an mpp architecture, in-memory computing, etc.)
are becoming more viable, this has also enabled
advanced/predictive analytics on petabyte-scale.”
While traditional BI will continue to flourish,
advanced analytics will increasingly become a ne-
cessity for competitive differentiation, for strategic
analysis, and for better forecasting, and perform-
ance management etc.
Growing competition and globalization has
made analytics critical for all businesses to support
strategic decision making.
Reetika Joshi, senior research analyst, Valu-
eNotes Sourcing Practice and co-author of the HFS
analytics report titled ‘Where offshore analytics is
heading in 2011’ in another interview spoke about
what covers in offshore analytics area said, with
greater usage of analytics and increasing complex-
ity, there is a tendency to break analytics projects
into distinctly executable parts and outsource to
different specialized teams.
Accordingly, there are four levels in the analyt-
ics services mix, in ascending order of complexity:
data entry/de-duplication: This includes
everything from cleaning to maintenance and
actual. It is a low-end service and offers low
revenues to service providers. A large chunk of
KPO-centric analytics work (almost half) is dedi-
cated to data preparation.
intuitive analytics: This entails running the
models and generating new insights on a
continuous basis. The outputs for these services
may be in the form of dashboards, reports (of
different frequencies), alerts, etc.
model building: This is an advanced level of
analytics, where models are designed to predict
various business outcomes. Statisticians and
econometricians build models focusing on busi-
ness problems/opportunities at hand. In terms
of offshoring, modeling is done by captives as
1.
2.
3.
With greater usage of analytics
and increasing complexity, there
is a tendency to break analytics
projects into distinctly
executable parts and outsource
to different specialized teams.
reetikA JOShisenior research analyst,
ValueNotes Sourcing Practice
Segment AnAlySiS
108 | September 2012 GlobalServices
well as third-party vendors depending on the
maturity of the clients’ in-house teams.
Solutions: Solutions generally entail “bun-
dled” analytics components, delivered to clients
to address their needs. Providers take a con-
sultative approach and leverage technology to
deliver value. The aim is to render the client
self-sustaining and create a unified analytics de-
livery mechanism. This may be done by deploy-
ing an analytics platform or other tools.
Apart from the above mentioned IT/BPO provide
plenty of value-enhancing analytics components,
such as analytics to improve the efficiency of process-
es, identify problem areas or sub-processes with cost-
saving potential, and provide reporting and MIS for
existing processes. Often these services are delivered
to the client as value-adds minus additional cost.
What do the buyers Want?US and UK continue to be the major markets served
by analytics service providers. America and Japan
has also won the focus of some vendors.
4.
A large percentage of Genpact’s revenue comes
from America. It also has presence in Europe,
China, India and Australia.
Fortune 500 companies are the big-league
clients for this knowledge service. Carnation Auto
and GE Money are some of its clients.
Some of Accenture’s clients are BP and Verizon.
Connectiva serves service providers in telecom,
media and entertainment. Their customers in-
clude some of the world’s largest providers with
200+M subscribers as well as greenfield operators
and mid-sized companies. Their customers include
Bharti, T-Mobile, Telefonica, Alcatel Lucent, YTL,
IDEA amongst others. Capgemini’s clients include
Mazda and Baycorp.
Fortune 500 companies are the big-league cli-
ents for this knowledge services.
Innovation is what most of the buyers are
asking for. Rajesh Ranjan, vice president, Everest
Group explained, “Innovation is something which
helps you really leap from one level to another.
Buyers really want things to improve, and thus
they want service providers, who are operating the
business process function on their behalf to put
in practice some of the best things that they have
gulfed out from their experience of working with
some of the other organizations. Also, the services
BPO providers provide are their core competency.
Within their core business again, they expect the
provider to be able to bring those best practices
and bring those things they are doing internally to
optimize and provide that benefit.”
He adds, “However, I also feel that buyers also
need to plan and budget for that. In general, in-
novation costs some money, innovation does not
come free. Buyers need to plan for that in terms
of budgeting exercise, they may not know what
that innovation is going to be but at least they
have a budget and that helps them achieve the
innovation. When I say budget, I mean there are
certain things the service providers are going to
do, you have got to support for that, and if these
things bring the right results, you should be able to
reward the service provider. All these things need
Buyers need to plan for innovation in
terms of budgeting exercise. They may
not know what that innovation is going
to be but at least they have a budget
and that helps them achieve the
innovation. When I say budget, I mean
there are certain things the service
providers are going to do, buyers have
got to support them.
rAJeSh rAnJAnvice president, Everest Group
AnAlyticS OutSOurcing
GlobalServices September 2012 | 109
to happen in conjunction to be able to bring in the
right value for the buyers side.”
Extracts from TCS report titled, Future Proof-
ing the Organization through Analytics,
A significant 40% of the buyers felt the func-
tional expertise in the domain was the key factor
in choosing a service provider and an additional
35% sought experience in the same industry
It is also not surprising that influencers continue
to consider presence of a technology platform a
critical aspect to outsourcing. The buyers tend to
see this as a relatively low importance factor in
decision making since the business and technology
decisions are made separately.
Interestingly, among the buyers, more than
50% of those who are currently outsourcing
sought functional expertise in the partner or-
ganization, while over 60% of those planning to
outsource in the near future said they would look
for similar experience in the industry.
A buyer experienced in outsourcing is perhaps
looking at the nuances that the partner can bring,
particularly in case of analytics services. Hence, a
partner with enough experience in the domain
is desirable. For a buyer that has not outsourced
before, similar industry experience is a confidence
building factor.
Close to 50% of the buyers in our survey said
that technology and infrastructure were key ele-
ments where they looked at their partners for help.
Also, many buyers are looking to migrate to
newer technologies, particularly from the cost and
time to market perspective. Here the support and
necessary skills of a technology competent partner
for the buyer is extremely critical.
Buyers are also looking at process standardization
from their partners, with 28% of the buyers in our
survey saying that this was critical for them. People
consolidation and automation are important in as
much as they help in cutting the costs to the buyers.
Buyers who were currently outsourcing analytics
processes preferred the more traditional FTE based
or fixed price model. However, it is interesting to
note that close to 40% of the buyers planning to
outsource in the next 12 – 18 months preferred
output based or transaction based pricing models,
with about 9% even willing to opt for an outcome
based pricing model.
Service Providers landscape The players in this market space can be categorized
in three divisions. One is the global outsourcing ma-
jor: IBM, Accenture, Capgemini, TCS, Infosys, Wipro
etc., the second segment is pure play BPO provider,
though they are not many of them left now,:
WNS,EXL, and the third one is business specialist,
these are very few. In the last category, the ques-
tion is to what extend will they continue to operate
on their own vs. on getting acquired.
Analytics outsourcing started as financial and
marketing function. Shipping and logistics, manu-
facturing, supply chain etc. were initially not very
active in this space. However, now they offer good
opportunities. Web and web related services, pack-
age solutions that mix combine consulting services
with delivery are very much in demand.
Chirajeet Sengupta, research director, Everest
Group articulated, “Increasingly, there has been a
shift or blurring of lines between different kind of
market players and their competent quotient. Es-
sentially, this field is open to everyone.”
He explains why some of the large scale IT
providers are able to act well in this space. The
reason being they have expertise in handling
things like business intelligence and data ware-
houses. They have experience in handling those
huge amounts of transactional data Secondly,
they have the scale, they have the deep pockets
to invest in a particular upcoming space and their
ability to invest is larger than a start-up analytics
house. The third factor is they are able to offer
certain efficiencies in terms of automation. They
are able to hire a whole bunch of statisticians
and put them behind stats terminals to churn out
insights or you can automate 70 percent of that.
That in itself is a huge advantage.
The last thing is that some of the account level
relationships these organizations have built over
Segment AnAlySiS
110 | September 2012 GlobalServices
AnAlyticS OutSOurcing
time have helped them mine into what seems as
a natural expansion of scope. For example, if you
are implementing business intelligence systems for
retail company and you have a healthy relationship
with that retail company for the last five years; it’s
almost a natural extension to talk about how you
are going to help them mind those insights out of
that system.
The IDC MarketScape report evaluated the
offerings and capabilities of 10 business analytics
BPO vendors namely: Accenture, Capgemini, Cogni-
zant, EXL Services, Genpact, HP, IBM, Infosys, TATA
Consultancy Services (TCS), and WNS. Accenture,
Capgemini, Cognizant, EXL Services, Genpact, HP,
IBM, Infosys, TATA Consultancy Services (TCS), and
WNS. Service providers were evaluated based on
potential key strategy measures for success in two
primary categories: current capabilities and future
strategy. Accenture, Capgemini, Genpact and TCS
were positioned as as ‘Market Leaders.’
Mukesh Dialani, research manager, Worldwide
BPO Services, was quoted, “BPO vendors find
themselves in a favorable position to assist their
clients’ transformation efforts as enterprises face
new sources of competition in this global environ-
ment and try to stay competitive by keeping a
close check on various business performance met-
rics. BPO providers that build competency around
industry-specific BPO and analytics outsourcing as
well as exhibit the capability to assist clients with
business consulting services will gain a bigger por-
tion of this business.”
Anoop Sagoo, BPO cross operating group lead,
Accenture, expressed, “BPO today is about min-
ing the huge volume of transactional data that
is being processed – and using industry expertise,
analytics and innovation to help a client operate
its business better and drive business outcomes.
The ability to undertake analytics on transactions,
understand the insights and then identify oppor-
tunities to improve and add value to the client’s
business is what our clients expect from BPO.”
Varadarajan pointed the following as new
opportunities for analytics outsourcing: Analytics
as a service on the cloud, Social intelligence and
mining, Advanced (predictive) analytics such as:
Fraud Analytics in the Financial Services, Insurance
Industry, Higher Education analytics – e.g., predict
student dropout patterns, analyze and predict per-
formances, etc. and Smart Metering related analyt-
ics in the energy/utilities and other industries.
Varadarajan also highlighted the following
upcoming trends:
In addition to the typical analytical solutions on
well-structured corporate or customer data, etc., we
are increasing seeing that organizations are having
to deal with more external data (on social networks,
internet, emails, text documents, etc.), a lot of
which is unstructured, and needs to be analyzed in
conjunction with the structured data; also, the data
volume is increasingly huge – we see that effectively
dealing with this “big data” analytics is becoming
key and will be a mainstream part of analytics out-
sourcing in the coming years.
Also, with the adoption of platforms and appli-
cations on the cloud, analytics-as-a-service, or data-
integration-as-a-service are also increasingly being
adopted – e.g., we have seen with a few customers
and prospects that as a natural extension to ERP
in a cloud model, analytical services on top of ERPs
(eg., HR analytics as a service) are also becoming
more prevalent.
The ability to undertake analytics
on transactions, understand the
insights and then identify
opportunities to improve and add
value to the client’s business is what
our clients expect from BPO.
AnOOP SAgOOBPO cross operating group
lead, Accenture
GlobalServices September 2012 | 111
AnAlyticS OutSOurcing
AnAlytics OutsOurcing AnAlytics OutsOurcing AnAlytics OutsOurcing AnAlytics OutsOurcing AnAlytics OutsOurcingAnAlytics OutsOurcing AnAlytics OutsOurcing AnAlytics OutsOurcing AnAlytics OutsOurcing AnAlytics OutsOurcing
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Leaders- Specialty KPO Aegis LimitedAffinity ExpressChinasoft International Ltd.CompuCom Systems Inc.Corbus, LLCDatamatics Global Services LimitedHCL Technologies Ltd.Infosys Ltd.Insigma Technology Co., LTDInterGlobe TechnologiesQuatrro Global Services Pvt. Ltd.Sutherland Global Services, Inc.VanceInfo Technologies
Global Knowledge Process LeadersAditya Birla Minacs Worldwide LimitedCapgeminieClerx Services Ltd.Genpact LimitedSPi GlobalSyntel Inc.