TBR T E C H N O L O G Y B U S IN E SS R E SE A R C H , IN C. TBR’s Professional Services Business Quarterly SM Research Highlights and Outlook Vendors drive BPO growth by acquiring or developing IP and industry-specific offerings Technology Business Research (TBR) Quarterly Webinar Series July 24, 2014
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Vendors drive BPO growth by acquiring or developing IP and industry-specific offerings: Insights from TBR’s 1Q14 IT Services Vendor Benchmark
BPO growth continues to outpace other services, fueled by increased use of analytics and cloud-based BPO solutions, as buyers seek new avenues to trim costs and standardize processes. BPO growth will result from the increasing need for analytics-enabled solutions that streamline processes and harvest business insights from organizational and client activity. Vendors continue to invest in Business Process as a Service (BPaaS) platforms that provide process excellence, resource management and industry insight to clients.
Principal analysts Ramunas Svarcas and Patrick Heffernan, along with analysts Elitsa Bakalova and Jennifer Hamel, shared their perspectives on the latest IT services vendor results and provided additional insight into BPO services that are gaining popularity and changing the market landscape in a webinar that aired Thursday, July 24, 2014.
Questions for discussion will included:
• How are vendors developing BPO offerings, intellectual property and industry specialization? • What technologies drive BPO evolution? • Which industries are seeing increased demand for BPO solutions? • Is solution-delivery automation replacing labor arbitrage advantages inherent in the low-cost delivery structure?
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TBR
TECHNOLOGY BUSINESS RESEARCH, INC.
TBR’s Professional Services Business QuarterlySM
Research Highlights and Outlook
Vendors drive BPO growth by acquiring or developing IP and industry-specific offeringsTechnology Business Research (TBR) Quarterly Webinar Series
• TBR’s Professional Services Practice provides continual coverage of 33 vendors in published quarterly and semiannual reports.• Of those vendors, 30 are included in our IT Services
Vendor Benchmark.o TBR reports are unique for their deep, holistic analysis
of leading vendor businesses.o Financial modeling and TBR insights help customers
gain a better understanding of vendor business models.o TBR reports and webinars are responsive to client time
lines, clear and concise, and provide insights across multiple layers of a vendor’s organization and infrastructure.
o TBR’s strategic assessment provides an impartial check on a vendor’s progress toward its strategic objectives.
Clients are gaining advantages and better understanding revenue opportunities through our reports and their personal relationships with TBR
PSBQ Research Highlights: Webinar Overview
TBR’s IT Services Vendor Benchmark delivers unique insight and value through in-depth analysis in a concise, consumable format
TBR Professional Services Business Quarterly (PSBQ) Portfolio
Portfolio: Vendors integrate industry expertise, cloud and analytics into BPO solutions, transforming clients’ operations from cost centers to value creators.
Delivery: Cloud-based delivery models and automation reduce the need for labor resources to deliver services inherent in the low-cost delivery structure.
BPO Performance: BPO growth continues to outpace other services as buyers seek new avenues to trim costs and standardize processes.
Vendors combine industry capabilities, cloud, analytics, and internal IP and tools to maximize BPO revenue and profits
Vendors combine industry capabilities, cloud, analytics, and internal IP and tools to maximize BPO revenue and profits
SOURCE: WWW.PPTBACKGROUNDS.NET
SOURCE: BLOG.ENTREPENUERARTS.COM
SOURCE: FREEWORLDMAPS.NET
Portfolio: Vendors integrate industry expertise, cloud and analytics into BPO solutions, transforming clients’ operations from cost centers to value creators.
Delivery: Cloud-based delivery models and automation reduce the need for labor resources to deliver services inherent in the low-cost delivery structure.
BPO Performance: BPO growth continues to outpace other services as buyers seek new avenues to trim costs and standardize processes.
BPO trailing 12-month revenue growth in 1Q14 was driven by vendors’ emphasis on business outcomes and cost savings through provision of horizontal and industry-specific services and integration of analytics and cloud into BPO solutions
PSBQ 1Q14 Research Highlights: BPO Performance
BPO remains more resilient to decelerating IT services industry growth than other service lines due to its favorable value proposition
SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES
Note: Includes average trailing 12-month service line revenues from TBR’s IT Services Vendor Benchmark; not representative of a total global market view
BPO was No. 1 in average TTM revenue growth; however, its growth decelerated in 1Q14 due to factors such as the adoption of Business Process as a Service (BPaaS), which drives down traditional BPO opportunities and shrinks the length and size of contracts
PSBQ 1Q14 Research Highlights: BPO Performance
Operational and business improvements support BPO’s leading revenue growth, while cloud forces vendors to transform their delivery models
SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES
Note: Includes average trailing 12-month service line revenues from TBR’s IT Services Vendor Benchmark; not representative of a total global market view. Dots indicate year-to-year growth, and arrows indicate directional change relative to the year-ago quarter.
BPO growth leaders build scale through acquisitions and platforms for quick delivery and drive revenue expansion by adding industry specialization and analytics to increase value
PSBQ 1Q14 Research Highlights: BPO Performance
BPO leaders expand vertical-specific offerings, while laggards struggle with price competitiveness due to less-developed global delivery models
Growth driven by enhanced industry
expertise
SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES
Note: Includes average trailing 12-month service line revenues from TBR’s IT Services Vendor Benchmark; not representative of a total global market view. Sphere size reflects volume of TTM revenue.
Industry expertise, partnerships and cloud enable Cognizant and TCS to outperform counterparts and gain market share in the BPO space
PSBQ 1Q14 Research Highlights: BPO Performance
SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES
Industry-specific BPaaS for banking, insurance, pharmaceutical and public sector; cross-industry platforms that cover F&A, procurement, human capital management and analytics; and TCS Digital Software and Solutions Group industry-focused solutions all support TCS’ nonlinear growth.
Cognizant develops industry expertise in its global delivery model to enhance its domain expertise and builds platform-based BusinessCloud solutions to enrich its BPO offerings. Cognizant will leverage its rapidly expanding footprint in the Philippines to capture BPO opportunities in the U.S. healthcare vertical.
SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES
Vendors combine industry capabilities, cloud, analytics, and internal IP and tools to maximize BPO revenue and profits
SOURCE: WWW.PPTBACKGROUNDS.NET
SOURCE: BLOG.ENTREPENUERARTS.COM
SOURCE: FREEWORLDMAPS.NET
Portfolio: Vendors integrate industry expertise, cloud and analytics into BPO solutions, transforming clients’ operations from cost centers to value creators.
BPO Performance: BPO growth continues to outpace other services as buyers seek new avenues to trim costs and standardize processes.
Delivery: Cloud-based delivery models and automation reduce the need for labor resources to deliver services inherent in the low-cost delivery structure.
Cloud:BPaaS solutions enhance the value of BPO services by integrating automation and cloud-based delivery.
Capgemini, Cognizant, TCS and Infosys invest in BPO platforms through internal innovation initiatives.
IBM and Xerox bought niche SaaS vendors to bolster BPO offerings around marketing and claims management.
Analytics:Harnessing clients’ data, analytics offerings transform operations from cost centers to value creators.
IBM packages capabilities from Watson Group and prior M&As (Cognos, SPSS) into predictive analytics solutions aimed at business functions such as customer experience, fraud detection and risk management.
PSBQ 1Q14 Research Highlights: Portfolio
Acquisitions and innovation enable BPO vendors to build scale and deliver business value with cloud and analytics technologiesAs traditional BPO services such as call centers become commoditized, vendors buy and develop technology-enabled offerings that add business value by enhancing productivity and delivering actionable data insights
BPaaS revenue is less than BPO revenue, but automation of processes and security of private cloud attracts cost-driven, process-focused clients
SOURCE: TBR AND COMPANY DATA
Note: Includes 21 of the 29 vendors covered in TBR’s Managed Private & Professional Services Cloud Benchmark
PSBQ 1Q14 Research Highlights: Portfolio
BPaaS growth is driven by vendors’ targeted marketing, e-payments and HR capabilities; vendors add vertical flavor and analytics to their BPaaS solutions to appeal to customers in key cloud-adopting industries such as retail, healthcare and financial services
Genpact integrates consulting, technology and analytics and merges them with proven BPO processes for solutions that improve clients’ businesses
Genpact strives to break out of the BPO mold by layering analytics, industry expertise and process re-engineering capabilities over traditional back-office services to solve business problems and reduce operating costs.
PSBQ 1Q14 Research Highlights: Portfolio
Genpact builds platform solutions based on process
Vendors combine industry capabilities, cloud, analytics, and internal IP and tools to maximize BPO revenue and profits
SOURCE: WWW.PPTBACKGROUNDS.NET
SOURCE: BLOG.ENTREPENUERARTS.COM
SOURCE: FREEWORLDMAPS.NET
Portfolio: Vendors integrate industry expertise, cloud and analytics into BPO solutions, transforming clients’ operations from cost centers to value creators.
Delivery: Cloud-based delivery models and automation reduce the need for labor resources to deliver services inherent in the low-cost delivery structure.
BPO Performance: BPO growth continues to outpace other services as buyers seek new avenues to trim costs and standardize processes.
BPO headcount continues to decelerate as vendors replace the human component of traditional outsourcing with platform-based solutions
SOURCE: TBR’S GLOBAL DELIVERY BENCHMARK, SPRING 2014
Note: BPO headcount for 14 IT services vendors: Accenture, Atos, Capgemini, Cognizant, Dell Services, CSC, HCLT, HP Services, IBM GS, Infosys, TCS, T-Systems, Wipro ITS and Xerox*1Q14 numbers are based on TTM average, as the fall iteration of the Global Delivery Benchmark is in progress.
As BPO becomes more commoditized, the additional value of integrated cloud and analytics solutions into BPO deals will increase revenue per employee, since cloud and analytics solutions are grounded in technology, not people
Cloud and analytics as business disruptors for vendors
Investments in cloud-based BPO platforms enable TCS and Cognizant to climb up value chain as IBM rebalances workforce to position for growth
SOURCE: TCS AND TBRSOURCE: COGNIZANT AND TBR SOURCE: IBM AND TBR
Delivery automation enables vendors to grow profits faster than revenue; margins are influenced by companies’ abilities to quickly adjust to changing market dynamics with outcome-based solutions
PSP Research Current Topics 1Q14 Report Key Themes• Select Vendor Reports:o Accenture o Atoso Capgeminio Cisco Serviceso Cognizanto CSCo Dell Serviceso Fujitsuo HP Serviceso IBM Global Serviceso Infosyso TCSo T-Systemso Wipro ITSo Xerox
• Select Benchmarks: Business Intelligence Services Vendor, Global Delivery, Healthcare IT Services, Management Consulting, Public Sector IT Services, Managed Private & Professional Services Cloud
Analyze how IT services vendors position to take advantage of the changing security landscape. Assess vendors’ security offerings and how offerings are scaled.
Identify vendor talent management strategies. Highlight the recruitment channels being used to attract graduates such as campaigns and partnerships with universities. Identify training and skill development and leadership and career development. Assess strategies for improved utilization and attrition.
Understand IT services vendors’ near-term outlook for Canada and LATAM and strategies for local market expansion. Identify the verticals being targeted by IT services vendors in Canada and LATAM and the service offerings gaining the most traction among clients in the region.
Security
Talent Management
Canada andLATAM
PSBQ Research Highlights: 2Q14 Key Topics
TBR will analyze IT services vendors’ investments and strategies to expand in security, Canada and LATAM and successfully manage talent
PSP Syndicated Research CoverageTBR Professional Services Practice Syndicated Coverage
*Semiannual publication
IT Services Vendors Public Sector Vendors Benchmarks(Benchmark XLS data also available)
• Accenture• Atos• Capgemini• CGI*• Cisco• Cognizant• CSC• Dell• Fujitsu• HCL Technologies• HP• IBM Global Services• Infosys• Tata Consultancy Services• T-Systems• Unisys• Wipro IT Services• Xerox
• Booz Allen Hamilton*• CACI International*• General Dynamics IS&T*• L-3 Communications*• Leidos*• Lockheed Martin IS&GS*• ManTech*• Northrop Grumman IS&TS*• Raytheon Intelligence, Information
& Services*• SAIC*
• Global Delivery Benchmark* • Healthcare IT Services Vendor
Benchmark• IT Services Vendor Benchmark • Management Consulting Benchmark*• Public Sector IT Services Benchmark• BI Services Benchmark*• Managed Private & Professional Services
Healthcare IT Services Vendors• Accenture Healthcare IT Services*• CSC Healthcare IT Services*• Dell Healthcare IT Services*• HP Healthcare IT Services*• IBM Healthcare IT Services*
TBR
TECHNOLOGY BUSINESS RESEARCH, INC.
About TBR
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