If I had a rupee for everytime someone had told me that Indian based providers are…
a) Running out of steam;
b) Just offering staff augmentation at lower prices;
c) Suffering from such bad wage inflation that the house of cards is about to come down;
d) Providing services of such low quality that everyone is following Randy Mott’s lead and backsourcing everything;
…I would have at least a month’s worth of app testing at my disposal right now.
However, the sustained growth surge of the leading Indian majors is proving much more resilient than the naysayers are claiming and I would argue has created a dynamic where many of the traditional providers may never find a return to prominent growth. Let’s discuss…
Global business is never going back to the way it was
Many of these people are simply waiting for the world to return the ways of pre dot.com crash days, where clients paid the exorbitant fees of consultants for “transformation projects” and dumped hundreds of millions into dysfunctional ERP projects that often achieved little beyond creating meaningless work to support faltering processes, many of which are now rendered obsolete.
I hate to be the hearer of bad news, but the world really has moved on since then, and the emergence of the Indian majors has been a bi-product of the emerging opportunities for enterprises to shed their bloat and create an environment to do things differently. Cloud computing platforms, improving analytics opportunities and the advantages of lower-cost global delivery are the three main game-changers in today’s business environment – and this isn’t going to change anytime soon.
What we’ve witnessed is the Indian majors literally doubling their share of the global market in barely four years, while the “traditional” onshore-centric IT and business service providers have largely floundered. With the notable exception of Accenture, the onshore-centric major providers have only managed to post growth rates in the low single digits, with both HP and CSC revenues actually lower in 2013 than in 2009. Over the same period, the major Indian-based offshore-centric providers all grew annually in double figures with Cognizant expanding at almost 30% year-on-year over the last four years:
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Nine reasons why the offshore-centric providers have enjoyed their unprecedented growth
It’s time to acknowledge one of the phenomenons of the electronically-connected era of global business – brand India and its emergence as a key component of the IT and operations back office for the Global 2000 – and it’s done it while using Indian delivery as the hub. It would be convenient just to pass this off as the effect of labor arbitrage and resultant price pressures, but over this period of time, all of the onshore-centric suppliers have steadfastly developed significant offshore presence and access to an abundance offshore resources at genuinely massive scale. At HfS, we have identified the following nice elements that have been the main reasons for the success of the Indian majors:
1) Brand. India’s brand in IT services has matured in last 5 years – whereas businesses, in the past, were seen to be using Indian offshore-centric providers for primarily low-cost services, now they are genuinely going to offshore-centric /India-based providers for IT value and knowledge, as costs have leveled out across all providers for bread-and-butter business and IT services. The offshore-centric providers increasingly benefit from India’s growing brand equity, as well as their own.
2) Customer satisfaction. Many clients like the more humble approach of the offshore-centric providers, where delivery managers are more flexible, and “going the extra mile” for clients is never an issue. Moreover, many of the offshore-centric providers’ account managers are not constantly trying to “go up the totem pole” within their clients to sell more services and undermine their client relationships. Client like to feel in control of their provider and the Indian approach often gives then that.
3) Client understanding. The “penetrate and radiate” strategy of the leading Indian offshore-centric providers has worked wonders. Once they have developed an understanding of their clients’ institutional processes, their clients do not want to kick them out – even if they haven’t performed as well as hoped. Getting to know the “warts and all” of clients creates an incredibly sticky and sustainable relationship. While many of the onshore-centric providers shy away from small projects as they like to concentrate in the big, high margin engagements, many of the Indian providers love to take on the small stuff, preferring to take the longer view that once they get embedded within a client, their opportunities will quickly emerge. Any advisors reading this will empathize with the enthusiasm of the Indian firms to chase after all types of business, not matter how small or unappealing it may often be.
4) Incentivized and entrepreneurial employees. Offshore-centric providers have driven success within employees by offering incentive based pay and share options. This has helped to tie employee success and corporate success together. Anyone who’s attended their sales offsites and customer events will quickly see how entrepreneurial some of their staff are – always keen to engage and build relationships.
5) Hunger. The offshore-centric providers are clearly hungrier for the business – always eager for more business and always eager to please their clients. Clients like hunger and determination, as long as it is supported by execution, which the offshore-centric firms work hard of achieving. In addition, when providers show passion and determination to please their clients, they earn a lot more forgiveness from their clients when they do mess up, as opposed to creating constant escalations and issues that can derail a relationship.
6) Aggressive pricing. Both TCS and Cognizant are great examples of keeping the prices competitive, even when the Western providers, such as Accenture and IBM, have also brought their prices down to similar levels. Moreover, the Indian majors tend to carry much less overhead than their traditional competitors, where many have much thinner layers of management and administrative and marketing functions, which enable them to be much more aggressive when they need to drop the price points to win business.
7) Sticking to client commitments. The offshore-centric providers value strong customer relationships and, as mentioned above, often go the extra mile in a deal, this is just as true when things do not go as planned. When things don’t go to plan the offshore-centric providers are less inclined to “change order” their clients to death, which is frequently the criticism of their Western counterparts.
8) Innovation. In many cases client increasingly cite some of the Indian offshore-centric providers as innovative – constantly coming to them with new ideas, offerings and capabilities. They frequently see their client base as fertile ground to develop BPaaS platforms around client situations to be used with other clients, and are often willing to do this at much lower cost when compared to their illustrious competitors. Many take the longer view of building future business through new endeavors than simply trying to maximize revenue from current situations. While onshore-centric providers are also capable of providing great innovative offerings to their clients, some of the offshore-centric providers have surprised their clients with their ideas and capabilities. Sometimes beating client expectations with innovation is more important than selling innovation at $500/hour.
9) Executive relationships. Indian offshore-centric providers have done a great job of having their senior executives available for their clients, when requested – many of them have the mobile phone number of the CEO, even though the provider is well into the billions in revenues. Most senior clients have met the likes of Frank at Cognizant, Chandra at TCS and Tiger at Genpact, while very few clients of the big traditional providers are able to say the same about the Megs, Ginnis, Pierres etc.
The Bottom-line: The future winners will be those which can adapt today’s winning services formula to the evolving technology and business domain needs
Most of the onshore-centric providers need to take a good look at the success of the offshore-centric providers and see what characteristics from these Nine Steps they are lacking. While many arguments can be made the the Indian juggernaut has to slow down (and it eventually will), these firms and their armies of passionate employees are not going away anytime soon. Quite simply, the traditional providers need to offer something different for clients that they actually need – and to be able to offer a level of service at similar costs that the Indian majors are providing. Yes, there are some real factors that could diminish the competitiveness of the Indian majors, namely rising domestic wages, rupee appreciation, robotic process automation, Cloud based offerings and the availability of skilled BPO staff, however they have proven very adept at protecting their existing business, while continuing to grow their market share.
However, everyone needs skilled and affordable labor to underpin delivery, and while advanced in technology and automation will reduce the amount of staff clients may need in the future, there will be the emergence of new skill demands, such as data scientists, process and domain specialists and technology experts in emerging areas such as mobility and Cloud. From what we’ve witnessed over the past decade, the Indian majors have been ahead of the game when it comes to developing a pipeline of young talent, while keeping the management overhead down… their next challenge is to adapt this to the changing demands of the clients and not rest on their laurels. If anything, it may be harder for some of the traditional providers to fight their way back into the services game than the Indian majors to continue their surge…
If you get a fleeting moment to wrench yourself away from your twitter feed, formatting that PowerPoint deck that’s on its 18th cycle, or that excruciating conference call you are seriously not listening to, then you could do a lot worse that take a gander at our new report glamorously entitled, “BPO on the Brink of a New Generation: Technology Transformation“.
In order to attempt to capture your attention, even for said fleeting moment, we analyzed the performance of 189 BPO buyers and the role technology is, could, and will potentially play to help them achieve their desired business goals.
Why BPO clients which have tech-enabled their processes are achieving better performance and outcomes
One of the key takeaways from the research was analyzing the varying performance BPO providers based on the maturity of their client’s approach to BPO across the following three categories:
“Lift and Shift” (49% of the market): Those BPO clients which have merely shifted their existing people and processes, with very limited transformation or standardization, over to the service provider;
“Process Transformation, limited Technology” (23% of the market): Those BPO clients which have performed a genuine transformation of their processes, but have yet to introduce any new technologies to enhance process flows, analytics or delivery;
“Technology Enabled Transformation” (28% of the market): Those BPO clients which have invested in a wide-scale technology transformation of their BPO processes.
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Buyers with technology-enabled BPO outperform for standard operational delivery
Firstly, those buyers with technology-enabled transformational BPO are reaping much better results from their standard services (80% view their engagements as quite to highly effective). This is indicative of the impact technology enablement can bring to standardizing processes and workflows that underpin process delivery and enable greater visibility and control for clients.
According to one finance executive at a major media enterprise responsible for overseeing a finance and accounting BPO initiative, “Our provider implemented some workflow tools that enabled our accounts payable process to be fully automated. As a result, we’ve been able to reduce the amount of sub-tasks from 36 to 23, our payments cycle has sped up considerably, and we have much faster access to cash flow data and overall visibility over our processes.” As the chart above illustrates, automation capability is one of the areas that is vastly improved with technology enablement of process workflows (80% see real effectiveness). Technology clearly offers one of the fastest tracks to demonstrable improvement, in terms of ROI, with BPO engagements.
Buyers with better technology-enablement of BPO are able to make the shift away from an FTE-based model
52% of buyers with technology-enabled BPO are seeing real progress towards shifting away from the “lift and shift” BPO model where the only value metric is based on cost per employee. This is twice the proportion of those clients which haven’t undergone technology-enablement of their BPO processes.
According to the finance executive at the media firm, “since we renewed the contract, we now are paying for our accounts payable service purely by cost per invoice processed, we have greater visibility and predictability into our costs now”. Other BPO clients, still operating in less mature models without technology-enablement universally struggle to move away from the FTE model as they simply do not have the data and visibility of their transactions. While some clients have embarked on some gainshare initiatives, for example offering incentives to their providers for speeding up their collections processes, or making greater savings from spend management, they have found it nigh-on impossible to develop the predictability of transaction volume without a strong technology underpinning.
Cloud-enabling process is a major driver for adding common standards and workflows; however legacy ERP implementations are holding back many enterprises
Another key factor in shifting away from an FTE model is to move processes into the cloud, which enables them to be universally accessible across an organization with one set of standards and workflows. Unsurprisingly, over half (52%) of the buyers who have undergone a technology transformation can boast effectiveness of process delivery in the cloud, which is a real driver behind shifting away from an FTE model. However, one key factor holding back many buyers is their heavy reliance on on-premise ERP which proves very cumbersome when it comes to cloud enabling many back office processes which are still mired in legacy software-based frameworks.
“Our finance processes are so tied to our back-end data warehouses and our custom-built ERP that we’re years away from moving them to a cloud model”, stated one BPO client. However, HfS is seeing more progress moving HR process into the cloud, especially with many companies investing in Workday’s emerging HR platform. One client pointed out that “Workday has enabled us to unify our hire-to-retire processes across our North American operations is just a few months. Our provider has been able to help us implement the software and make rapid progress away from many of the manual processes we were relying on previously. Moving to a cloud model has enabled us to unify processes rapidly across manufacturing plants”.
Technology-enabled BPO has enabled buyers to achieve greater analytical insight and innovative capabilities
Most strikingly, technology-enabled BPO buyers are achieving real effectiveness in higher value areas, namely new ideas/initiatives (50%), analytical insight (45%) and even gainsharing with their providers (42%). While clearly there is room for improvement in these areas, it is notable how those buyers, which have invested in technology to enable their BPO, are able to focus on higher value outcomes. One major global hi-tech company has been working with its provider to develop a finance dashboard tool that helps provide real-time access to revenue cycle data. What is innovative about the initiative is that the provider is developing the tool at limited cost, with the agreement with the buyer that they can resell the tool to other clients when fully developed. HfS sees this as a genuine example of BPO gainsharing and innovation that adds significant value to both buyer and provider, and gives the buyer access to the best skills and expertise from their provider without paying exorbitant fees.
Additionally, many of those buyers which have ventured into technology-enabled BPO, are clearly excelling at developing new ideas and initiatives. Much of this is because the more streamlined and standardized the operations become, the more buyers can focus on the higher value areas that can add real value to their business and align their operations with the corporate goals. One finance controller for a leading consumer products firm expands on this dynamic, “We embarked on a major initiative with our provider to roll out a unified financial system after we had undergone the initial BPO transition. Now we’re fully operational, our finance staff is able to focus on planning and analysis activities and providing much more relevant data to our leadership team than previously. In the earlier phases of our BPO they were consumed with just getting through the day with our basic operations – now things are running better than ever and our finance team is performing at a level we have never seen before.”
The Bottom-line: Both buyers and service providers need to up their game if they want to capture more value through BPO
Buyers and service providers need to re-think all of the existing “analog” steps processes which may currently be eased by technology but which aren’t fundamentally digital in nature. The move to digital process platforms is inevitable as buyers and providers continue to search for ongoing savings, but it won’t happen in the near term. The investment budgets of most BPO service providers remain too low to fuel digital innovation, while at the same time the majority of buyers and service providers still think in terms of FTEs more than process outcomes when contracting. Buyers also need to revamp their governance skills to cover these new capabilities, while many service providers need to invest in the higher caliber talent, analytics capabilities and technology platforms required to create this value. In short, the BPO industry’s ability to change is still slower than what buyers claim they want and expect, and what service providers claim they can actually deliver.
Click here to read all related posts from the 2014 “Technology in BPO Study”
Click here to download the full research report “BPO on the Brink of a New Generation: Technology Transformation”, authored by Phil Fersht and Charles Sutherland and conducted with the support of Accenture
Ned May, Senior Vice President, Research (click for bio)
If you think mobile has transformed your personal life, think about what it’s doing to enterprises around the world.
On the latest HfS Podcast, Mark Reed-Edwards talks with Ned May, Senior Vice President, Research at HfS and author of the new HfS Blueprint: Enterprise Mobility Services about the earth-shattering changes impacting the mobile-enabled enterprise.
How have companies started to use enterprise mobility? What’s been behind the great growth? Which enterprises made it into the Winners’ Circle. Listen now to get the answers to those questions… and lots more.
Mike Salvino is Group Chief Executive, BPO at Accenture (click for bio)
If there’s one face that’s been consistent with the growth and maturation of BPO over the last decade you’d have Accenture’s Mike Salvino right up there in the Hall of Fame. (In fact… he did recently get inducted into the IAOP Outsourcing Hall of Fame).
Having begun his career with Accenture’s ITO business in the late 80’s and 90’s, Mike spent time on the BPO front lines with one of the industry’s first pureplay BPO providers, Exult and its eventual acquirer Hewitt, before finding his way back to Accenture in 2006 where he led their F&A business before taking full responsibility for the company’s entire BPO function, where, today, BPO proudly stands as one of the firm’s major divisions and strategic focal areas, alongside the firm’s technology growth platform and consulting businesses.
So we managed to lure “Sal” away from his son’s basketball practice and his beloved North Carolina golf course to discuss the BPO troika – people, processes and technology – and the progress BPO is making to create new career tracks for millions of employees and a long-term sustainable industry of which we can all be proud…
Phil Fersht (CEO, HfS): Good afternoon, Mike, thanks for joining us. So your focus on “BPO Generations,” has really become written into BPO industry lore since you articulated it three years’ ago. You were one of the first to map out the stages the industry needs to go through to be successful with your “Generations” continuum and our new research (see report) shows that buyers are carrying stock in what you call “Generation Three” (Opex) and around half of them expect to be in “Generation Four” (Insight) in a couple of years. Is this realistic, in your opinion, based on the quality of today’s relationships and can both buyers and providers to up their game?
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Mike Salvino (Group Chief Executive, BPO, Accenture): Yes, Phil, I do think it’s realistic. Let me first start with where we’ve come from because I think that will help us understand why I think it’s possible for the industry to move into the fourth generation in the next few years. We have achieved a lot over the last 25 years and we’ve finally built the industry that we wanted way back in the early 90s.
If you think about the industry as a mountain range—we’ve climbed to the peak of one mountain and at that peak I think that we can give ourselves credit for a trillion dollar industry. We can give ourselves credit for global operations – and that’s really third generation BPO. We’ve achieved silent running, we’ve achieved the ability to process transactions and we’ve been able to do it with a 24×7 mind set. The other thing that’s really key at the top of that first mountain, and with third generation BPO, is that we have achieved client confidence. Clients now can look at providers and say “Yes, I can count on them for cost savings.”
Clients today can also depend on this sourcing model to be scalable, meaning we have the ability to scale up and scale down while managing risk. And last but not least, I think we have proven out that third generation BPO works for back office functions like F&A and procurement and also industry-specific front office processes like healthcare and mortgage processing. Now, having said that, most deals still start with us wanting to manage the risk, get the client cost savings and just get the transaction processed appropriately. The sooner we can move through that, I think the better off we’re going to be.
If we turn our attention now to the real industry opportunity, which is to get to the peak of the second mountain and move into the fourth generation of the market, we need to focus on producing real business outcomes. The only way you can do that is if, on top of all that transaction processing, you really have analytics, if you really have industry knowledge and if you really know how to take that information and get it into the hands of somebody that can create the business impact. What I mean by that, Phil, is so many times I think we do come up with good analytics off of the transaction processing and we do have really good industry insight based on those analytics. But if we don’t get the information into the hands of the right people then it goes nowhere. In this day and age of technology, specifically with mobile apps and social media, we should be able to get that information into the right hands. So that’s what is needed to cross that chasm between the two mountains, or third and fourth generation outsourcing, and a long winded way of saying I think we can do it.
Clients may not start there all the time, they may start in third. But I think throughout their journey of outsourcing, everybody will want to aspire to get to fourth gen. It will be a journey but the industry is getting there.
Phil: This takes me to the issues around how we can develop BPO as a career. Do you think there needs to be more focus on BPO as an actual profession as opposed to a job, and do you think that’s at the core of a lot of these change issues clients are tackling right now?
Mike: Absolutely. I keep using this “two mountain” theme because I do want to celebrate where we’ve gotten to today – to the top of one mountain. But I believe the only way we’re going to cross the chasm and get to the top of that that next mountain and achieve greater business outcomes is through investing in our people:
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HfS did some research last year on the “talent gap” in outsourcing. As you know, it showed that as an industry we’re not investing enough in our people. We’re not giving them the skills they need to generate insights and create business outcomes. I saw four key points in your research:
First, and amazingly, two thirds of all outsourcing buyers are struggling to achieve any business value or outcomes beyond cost reduction and efficiency.
Second, and maybe equally as startling, barely one third of buyers believe their governance teams can define business outcomes, or have the necessary analytical skills to drive innovation.
The third key point is that fewer than half of buyers train their outsourcing teams in continuous improvement, and only a quarter train their people in analytics.
The fourth point is key as well. It’s not just training that’s the problem – the lack of career paths for outsourcing managers is creating high attrition.
It’s not a flattering picture. I think there are three steps that we need to take with our people to address these challenges and move the industry forward.
The first thing that we need to do is invest in training our people. Our people need broader skill sets and deep industry and functional knowledge, not just processing skills. They need to be fluent in key technologies that are driving services today, like analytics, cloud, social and mobility. We need to train them in global operations and in what I call “change management,” or the ability to get the information into the hands of the right people. These are skills anyone entering business today would want to have.
The second thing is to inspire people to have a career in outsourcing and to understand their career path. They need to understand the timeline it takes to become an outsourcing professional and then how to do it. So it could be you come out of graduate school, after two years you’re a global operations and functional expert and after five years you know global operations and functions and you may know analytics. After seven years you’re running teams and after ten years you’re running a business.
I think the need is very clear and people want to hear it, from both buyers and providers and analysts, no matter where we are: the industry needs career path. We’ve got to be clear about what I call “recognition and rewards,” and the titles that people will have along the way because those are very important to folks. We also have to be clear about their pay and how to achieve more pay when they perform.
Step three is creating an environment for learning. I’ve seen a lot of people take the next step in their career, Phil, and go from what I call “hero to zero.” In their old role they were fantastic, just phenomenal and then they move into a new role and all of a sudden they’re not getting it done. Now why is that? I think it’s about creating the right learning environment and remembering that learning is 70:20:10 and I love that:
Seventy percent comes from doing. We’ve got to create an environment where people can do, where people can learn, where people can apply the training they’ve been given. And they’re going to fail. It’s important to have the kind of environment where people are allowed to do that. If you watched the Olympics, you can’t tell me that the people doing the half pipe haven’t fallen so many times that they’re just tired of it. It only takes one or two times where you nail it to remember what’s right, that it feels good and you can move forward from there. So you’ve got to create an environment where people can “do” and that’s 70 percent of the learning.
The other 20 percent is coaching and so many times that’s where a lot of the senior folks in the industry come in. They need to coach their people, be transparent and be direct.
The last 10 percent is the training.
In addition to these three steps, I’ve found was there’s also an intangible. People call it “authentic leadership.” You have to make sure that people are engaged and that they know that you care about them both professionally and personally: you care about what they’re doing in their community and their careers.
At Accenture, we created a rally cry called “Grow BPO.” Grow BPO is not a campaign, it’s not a project, it’s not an initiative. It’s a mindset and it stands for growing the business, growing yourself and ultimately, growing others. When we launched four years ago we focused on helping people find balance in their lives and taking time to recharge their batteries.
We made it a priority that you didn’t end focus on your personal life and we thought that if you were good in your personal life you would be even better at work, and you know what, I can’t tell you how well that worked.
The second year of this mindset we focused on the theme of “Pass It On,” to encourage people to give back and share what I like to call their time, treasure and talent both inside the organization and externally in the community. It could be that you were going to have a brownbag lunch with people on your team or it could be going and building houses for Habitat for Humanity. That’s when the mindset really kicked in.
Last year our focus was called “BPO and Me,” and we talked to all 57,000 BPO employees about their career paths and we celebrated the diversity of talent that we had. This year we’re focused on the theme of collaboration and the notion of “Connected BPO” to drive better teaming internally, with folks in the industry and with clients.
So my point in all this is, if we’re going to cross the chasm and seize the opportunity before us to grow the industry, we need to make outsourcing a career people are attracted to. It needs to be viewed as a unique and rewarding opportunity for people to grow and apply their skills, to do interesting work with top global clients — helping them innovate and transform and become high performing businesses.
Up next in part two, Mike talks about how companies can drive change and what he would do if he was ordained as the Lord of BPO for one week…
Since the divestment of its voice business to Concentrix, IBM’s medium-term strategy with its BPO business lines has been squarely under the microscope.
From our standpoint at HfS, it’s abundantly clear that an ambitious 49% of enterprise BPO clients are shifting towards a two-pronged requirement of both operational and transformational (what HfS terms as “Progressive”) service needs. With this in mind, is Ginni Rommety’s revamped IBM corporate strategy geared towards the firm’s long-term success as a BPO provider?
IBM has been evaluating areas of its business where it may be losing its competitive edge and/or profit margins are simply getting too squeezed, which explains its other recent sell-off of its x86 server business to Lenovo. Two years into the job, it is clear that Ginni is focusing on high-margin cloud software, analytics and services, as opposed to commodity computing and storage. So if the cheap, low-margin businesses are becoming no-goers for the firm, where does this leave their BPO business, which has grown up on the transactional, highly scaled and fungible, low-wage employee model?
The winning BPO providers in today’s market are those which have proven credentials to run standard business services at competitive prices, with the business transformation, analytical and IT enablement capability to take ambitious clients to new thresholds of value. Not dissimilar to the development of the IT outsourcing business over the past two decades, the capability to run the standard operations for clients has become commoditized at increasingly low-margins, while the higher margin work lies with the integration and consulting areas, tied to those outsourced operations.
However, the major distinction between BPO and ITO that we, at HfS, are seeing with maturing BPO delivery is that it simply is not as easy to separate the “transactional” from the “higher value, progressive activities”. Simply put, if you outsource your cash apps, invoice processing, collections and general ledger consolidation operations to one provider, it is nigh-on impossible to bring in another provider to run financial planning and analysis, auditing, treasury, risk compliance activities, if that second provider does not have an institutional knowledge of your ground-up bread and butter processes.
Can providers like IBM prosper in BPO if they sell-off their lower-margin operation services?
In essence, the industry shift from “Lights-on” to “Progressive” Outsourcing requires a two-pronged delivery approach from providers: transactional process services and higher-value transformation services. At HfS, we believe that this shift from a world of “Lights-on Outsourcing” to one of “Progressive Outsourcing” entails a massive degree of change for both clients and service providers if this is to be successful. So many of the elements of Progressive Outsourcing are so significantly different from where this marketplace has been languishing for the last twenty years, there is, in essence, a chasm to cross in terms of the level of change management needed to discard legacy enterprise practices that are still so entrenched in so many organizations. The following exhibit shows the before and after picture for outsourcing buyers and providers faced with the BPO chasm:
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Hence, the big question for IBM is whether the firm will continue to invest in its “Lights On” BPO business lines in order to profit from the higher value fruits on offer with the “Progressive” business and IT needs of maturing BPO clients. With its key top tier BPO rivals, namely Accenture, Capgemini and Genpact, clearly moving along this two-pronged path of operational and transformational delivery, IBM needs to demonstrate a similar commitment to the BPO industry.
Clearly, IBM wants to deliver cloud software, consulting and integration services in HR, finance, supply chain and marketing areas where it can reap the rewards of the tastier margins, but HfS is concerned those incumbent providers of the BPO operations will get first bite at the higher-margin cherry. At HfS we are already witnessing management consultants increasingly competing head-on with service providers in progressive service areas where the client requirements are moving from an “as is” lift and shift of services to a “to be” roadmap of where the company expects to be in the next two-to-three years. So where does this leave IBM BPO business, when it’s not appearing fully-focused and its competitors are throwing the kitchen sink at the space?
IBM holds some trump cards to lead from the front, but questions remain…
To the credit of IBM’s Global Process Services (GPS) leadership, it has put a bold face forward to the industry with regards to its focus on its Progressive capabilitles, most notably in the following areas:
Analytics. The IBM story on analytics is as good as anything we hear today in the marketplace, especially with the billion-dollar investments IBM has made in analytics technology and tools over the last 5 years. It also topped the service provider market for innovation in the recent HfS analytics blueprint assessment. However, many of these analytics deals grow incrementally from relationships where there is deep-rooted operational delivery (i.e. start small and grow over time). With all of IBM’s prime competitors offering analytics capabilities that are tied to the operational model, it’s clear that shedding process work will harm future growth opportunities.
Industry and Functional Acumen. Like some of the other BPO providers that are integrated into consulting led organizations with deep industry practices, IBM BPO has access to owned (and borrowed) resources to a breadth of industry process knowledge that is a critical building block to solutioning for the world of Progressive BPO. The firm also has added organization scientists and data assets through the Kenexa acquisition that bring deep and differentiated functional expertise as well. However, a recent visit to the IBM BPO website (see link) surprised us when we observed so many offerings including in the Concentrix sell-off which, although having voice components, are not predominately voice-based, namely Health Administration, Insurance, Public Sector and Banking (outside of Lending) services, where visitors are all redirected to the Concentrix website. This makes us further question IBM’s commitment to the market for the medium term, as the Concentrix sell off was clearly more than solely the call center services that it had originally led analysts to believe.
Technology Platforms. IBM has access to a great breadth of software tools and applications, which can be built into BPO solutions. Although many of these tools are also used by other BPO providers under license, it is the opportunity to build broad industry and functional solutions around them that could be one of the leading differentiators for IBM. Given IBM’s research capabilities and the right commitment, this could be the way to cross the chasm faster than its competition. HfS would particularly like to see progress/performance in integration amongst the different assets and approaches, however, such as how employee self-service interfaces and adoption for areas such as HR and travel and expense are factored into overall workforce productivity that ultimately impact business results. In addition, there are several tremendous technology acquisitions that are noticeably absent from its BPO dialog, such as Sterling Commerce and Emptoris. Does this mean IBM really wants to be the systems integration provider for technology, as opposed to the business services provider for operations, enabled by technology.
Process Automation. IBM has its own solution for the emerging area of robotic process automation (an area we at HfS love to talk about at the moment) in Blueworks Live. Like other tools for this automation, we’re looking for the first broad reference client case studies but this is certainly a step in the right direction.
The Bottom-line: IBM has significant potential to dominate the Progressive BPO market, but it needs to reassure industry its heart is truly in it
IBM has been a core part of this business since it picked up PwC’s BPO operations in 2002 and has placed itself at the forefront of core business services markets such as F&A, Procurement and Analytics. Its technology prowess, massive client base and global scale put the firm in a tremendous position to dominate for years to come, but the recent gray clouds hovering over the firm are raising doubts as to its future direction.
Simply put, clients’ needs are maturing and they are demanding results faster than ever – they want providers who understand their business model and are not afraid to roll their sleeves up to progress them to new levels of productivity. If IBM is moving away from delivering lower-margin operations (i.e. the “lights-on” services), surely it will be at a major disadvantage when it comes to winning the higher-value (progressive) work.
Hence, HfS would have major concerns about its positioning for Progressive BPO services, were IBM to seek to sell off the lower-margin elements of its F&A, Procurement or HR businesses, like it has with its customer services BPO business. So far, we have no indication that this is the firm’s intention, but a more concise statement of intent from Rometty and a definitive business services roadmap would be welcome.
HfS Subscribers can access the full research article authored by Phil Fersht, Charles Sutherland, Jamie Snowdon and Christa Degnan Manning by clicking here
HfS SVP, Research, Christa Degnan Manning (click for bio)
HfS SVP, Research, Christa Degnan Manning just published some scorching hot new research (Doing Less With More) on what it will take to make workers more productive and engaged. Based on research of nearly 5,000 employees worldwide, the survey also assessed human resources service providers in rewards, remuneration, and recognition (including payroll, benefits, and employee contact center outsourcing), interviewing enterprise buyers, users, and multi-process HRO providers of these services.
To learn more about this research, HfS’ Mark Reed-Edwards talked with Christa in the latest episode of the HfS Podcast.
At long last… this April we have everything you’ve ever wanted to know about Robotic Process Automation and never dared to ask, in a sponsor-free, puff-free hour of open, undiluted interactive argument, debate, tomfoolery an enlightened nonsense, from the most knowledgeable group of robotics junkies we could muster.
We’ve heard the hype and the bravado, and listened to the whining doubters… so surely it’s time to get to the real issues around Robotic Process Automation (RPA) on the table. So, without further ado, HfS has assembled the ultimate panel of robotic genii to ramble rambunctiously about the realities of robotics.
Up for Discussion:
What, exactly, is robotic process automation?
Does RPA really have potential to be the next “game changer” for the outsourcing business, or is this just a few rogue process junkies chasing a quick buck?
Can RPA really displace humans in the outsourced back office, or just add some incremental efficiencies?
If RPA lives up to its potential, will it rapidly reduce the reliance on offshore labor in outsourcing engagements?
Is RPA the key to breaking the FTE model and shifting to a non-linear approach for business and IT services?
Will a new crop of service providers emerge which target outsourcing contract renewals promising to drive 20%+ savings on existing labor arbitrage arrangements through RPA?
Can some enterprises actually bypass outsourcing by going down the RPA path – and how much can RPA add value in shared services and GBS environments?
And why are we here – do we matter?
Your Referee:
Phil Fersht, Founder and CEO, HfS Research
Your Panel of Robotic Genii:
Charles Sutherland, Executive Vice President, HfS Research
Lee Coulter, CEO Shared Services, Ascension Health
Pradip Khemani, Director, Global Business Services, Blue Shield of California
Alastair Bathgate, CEO, BluePrism
Chetan Dube CEO, IPSoft
Ian Barkin Global Head of Innovation, Sutherland Innovation Labs
So join us next month, where we have buy-side executives piloting robotics projects, the CEOs of the two most prominent software firms actually developing RPA solutions, a service provider actually rolling out robots with its clients and – of course – analysts who have a point of view on the whole thing!
One of the recent phenomena of the BPO business over the last couple of years has been the growth and improvement of the mid-tier competitors to emerge as genuine rivals for major enterprise deals. As many of these engagements become more specialized and complex, they need increased attention and focus from the provider – and, in many cases, buyers feel they are getting the red carpet treatment from some of the smaller pure-play providers.
When you look at the hyper growth of the ITO business over the last decade-plus, it was this “penetrate and radiate” strategy that propelled the likes of Cognizant and TCS to the forefront of the IT services business. Their clients would start with 20 FTEs, then that would increase to 100, then 300, then 1000…. and before you knew if they’d eaten the lunch of the HPs and IBMs and were already checking out the dessert menu.
So why is BPO any different? The mega deals of pre-recession days are long-gone and we are now entering a phase of solid, steady industry growth in the 5-10% range. These are the times the ambitious BPOs need to develop relationships with clients that will probably start small, but can snowball to have huge potential in the future, once they have figured out the right model and have learned to work together.
Keshav R. Murugesh is the Group Chief Executive Officer of WNS Global Services (click for bio)
One such firm that rode the early BPO wave, survived the recession, and has just enjoyed its best ever year, where it almost reached the $500m revenue milestone and grew 8% (well above the industry average)… is WNS. Competitors hate it when WNS appears on the bake-off roster as they know how determined and competitive the firm is, while many clients hear from other WNS clients that the firm really works hard for its business and puts tremendous energy and focus into its delivery.
However which way you look at the firm, it has emerged in its own right and is challenging the elite for deals it would never have got a sniff at even three years ago. So let’s hear from the man at the helm who has overseen this transformation, Keshav Murugesh, who graciously took some time out from his batting practice to speak to us…
Phil Fersht (CEO, HfS): Keshav, we’re really pleased that you’ve found time to talk to us, as WNS has been making quite a lot of noise in the marketplace, especially since you came on board in 2010. Would you please start by giving us an intro to your own background and how you ended up running a BPO business?
Keshav Murugesh (CEO, WNS): Well, I was an accountant at one point in time, and knew I had to make my life a little more interesting. So I worked with the Indian affiliate of British American Tobacco for about 13 years. But rather than focusing on the traditional tobacco business, I actually helped the company change its entire market positioning and increased its market capitalization by creating several new businesses. As a conglomerate, it had various divisions — edible oil seeds, financial services, real estate and so on. And, finally I stepped into the information services division of the business and helped create a company called ITC Infotech.
At the end of those 13 years, I had learned a lot in terms of creating new businesses and value for shareholders. I also realized that the next 50 years was going to be driven by progress around the IT and the IT-enabled side of the business, and that’s when I decided to make the big move to a company that had IT as its focus.
So in 2002, I joined Syntel, an IT services company as CFO, and very quickly became its COO and then CEO. During my time there, the focus was on becoming an end-to-end services company that covered both IT and business processes. Consequentially, the company saw a surge in revenue and market capitalization.
When I was approached in 2010 for the WNS role, frankly, I did not know much about the company. But as I conducted my research, I came to understand that it really was the pioneer in the BPO space given its British Airways lineage, had a great culture and a fantastic roster of clients. I also realized that it seemed to have lost its way and hadn’t really focused on its long-term strategy over the preceding three or four years. Hence, it seemed an exciting challenge for any CEO to take up! Since then, we have been highly focused on creating a differentiation, establishing a new story in the marketplace and driving value for all stakeholders.
Phil: WNS has been around for a long time in the BPM/BPO space, but it seems like things have changed a bit recently. The company seems to be a little more aggressive and there seems to be a lot of good thinking coming out of the business. What is changing in the company?
Keshav: We have focused on three key differentiators that are resonating well in the marketplace and driving business momentum for us.
First, we launched an end-to-end, vertically aligned go-to-market strategy three-and-a-half years ago. In each of our carefully selected verticals we have a leader who comes from the industry who understands the pain points of the clients extremely well. We have also integrated sales, sales support, operations and operations support, and created domain expertise inside each of these verticals. And, we have matrixed the traditional horizontal processes across these verticals.
Second, we are focused on driving much more automation and technology absorption inside each of our processes, and leveraging what we call a “non-linear model approach” such that head count and revenue are de-linked. We embraced this model because we realized three years ago that clients want to pay for business outcomes, rather than inputs. This has become so key for us that we are probably one of the few companies that actually reports the revenue we generate from non-FTE models, which happens to be approximately 35 percent.
Third, we are focused on building a very client-centric partnering model wherein our senior domain people actually walk the corridors of our key clients, getting involved in their strategic thinking. This enables us to help our clients achieve true business transformation and leverage the outputs from decision-support systems.
Phil: You talk a lot about this need to break away from the linear growth model, and it is something that is absolutely dominating our conversations with the industry right now. It’s encouraging to hear that you feel such a large proportion of WNS’s revenue is now non-linear. What are the catalysts for this? How are the clients going to shift their behavior and mindsets away from this legacy model of paying per employee?
Keshav: The first thing we do is present our numbers to our clients and stakeholders, and explain to them how our investments in automation, platforms, innovative thinking, partnerships and capability creation have enabled our revenue to grow but kept our headcount growth at a very slow pace. For example, in the fiscal’s first quarter, we grew almost 12.6 percent constant currency revenue, and headcount grew less than one percent. In the next, we grew about 10 percent, but headcount grew by about three percent.
With clients we have worked with for a longer period of time, we are enabling them to understand what they actually spent in a particular area or what kind of impact they are getting from that spend. We then help them move away from their FTE model to an outcome or output based model. So they are no longer focused on how we are doing the work, what kind of automation is being introduced or where we are delivering the work from; instead, they are focused on the business results we have generated for them.
With newer clients and people dipping their toes into the model for the first time, we understand the pressure, we understand their inability or hesitation to move directly into this model. So we actually go down the path with them, jointly coming up with a total cost of operation in a particular area, and then over a period of time leading them into a differentiated model.
And we keep on pushing that message with our sales people, with our client partners, and with our clients to help them understand that in the long-term, working with partners as an extension of their enterprise is extremely important. From our point of view, it means that we are constantly investing in technology, we are constantly innovating in terms of how we deliver processes, and that we are jointly creating structures for improving the outcomes of our business processes.
Phil: Putting your NASSCOM BPM Council chairman’s hat on for a minute… if visitors from 10 years into the future had a look at today’s BPO industry and the initiatives that are being undertaken, what do you think they would think of everything we are doing?
Keshav: I think anyone coming in 10 years from now and looking at how the NASSCOM BPM Council has positioned the industry for the next 30 years will be very positively surprised. For example, the numbers we put out at the last BPM conference stated the industry would grow at a CAGR of almost 13 percent, to $50 billion in 2020.
We know for a fact that the old ‘outsource your mess for less’ model is all over and done with. The future is going to be completely about specialization. So the NASSCOM Council has picked three initiatives that we believe will drive the world’s BPM map for the next 10 to 15 years.
First, we are driving a complete rebranding of the BPM industry. We are changing the name of the industry from BPO to BPM to signify the dramatic changes that have taken place in the kind of services we deliver, and in the kind of people that we now bring into the industry. The reality is that almost 35 percent of the Indian BPM industry today consists of domain experts such as Ph.D.s, statisticians and doctors. But many people do not realize this fact. So this massive rebranding exercise will help individuals understand how compelling a place this is for highly qualified people to work in.
Second, we are creating an ecosystem for talent. We have actually mapped all the key horizontals and verticals, and developed and documented 111 job families. Realizing that the future is going to be about advanced skills, we are emphasizing skills development as opposed to recruiting just for degrees or qualifications. We are now focused on curriculum and core development, and anyone involved in this industry around those 111 job families will go through an appropriate testing program, and will keep qualifying themselves throughout their journey.
Third, we are focused on creating a center of excellence approach for two or three key services that India will be known for in the future. With this, India will be the first country people associate with high-end and IT-driven services, just as we think of Colombia or Costa Rica for great coffee, and Japan or Taiwan for advanced electronics.
Phil: Finally, Keshav, how do you check out of the job of running a company like WNS to actually spend time with your family and friends and things like that? It must be hard.
Keshav: I am very fortunate because I switch off very easily. I telecommute a lot and I do a lot of work on phones, on airplanes and in the car and things like that. When I’m in town but not in the office, I may well be spending time with friends or family.
Phil: Well, thanks for your time, Keshav – it’s been great hearing your views, and I am sure many of our readers will enjoy reading the discussion.
Keshav: Thanks, Phil, it’s been a pleasure.
Keshav Murugesh is Chief Executive Officer at WNS Global Services. You can read his bio here.
“Rewritten by machine and new technology, and now I understand the problems you can see”
Source: “Video Killed the Radio Star” by the Buggles, 1979
Yes, even back in ’79, when a portly Christian Bale wore a hairpiece and the first nudist beach was established in the United Kingdom, the world was already beginning to zone in on the power of automation. Well maybe it wasn’t, but we were trying to find a clever way to connect the Buggles, American Hustle with Automation and BPO… so let’s have HfS’ own automation star, Charles Sutherland, shine some light on this one…
The Stagnation of Gamification
It wasn’t that long ago that in certain circles of the outsourcing market, there was a great deal of excitement about how gamification was a trend which would have a real and meaningful impact on how work was done in delivery centers around the world. Books were written, conferences like GSummit were organized and in general there was an emerging belief that if you made even the most routine work more “fun” organized around mini-games, competitions, points and leaderboards rates of employee engagement and retention would rise and with that overall productivity in the outsourcing market. A full disclosure now, I believed in this at the time and in many respects still due although as I’ll explain, I no longer see this as a wide-sweeping trend and instead as a niche approach for certain roles and workforces now in the future. So while the books still reside on my Kindle, I’m now moving to the belief that at least in the world of BPO and GBS, it won’t be the gamification of roles rather it will be the process automation of roles that will define this world over the next several years.
While it’s true, that gamification may not have made it into the standard discourse in the BPO and GBS marketplace, our recent study of technology trends in BPO suggests that by comparison to process automation and the members of the SMAC stack (Social, Mobility, Analytics and Cloud), Gamification is at best the present, likely the past and certainly not the future technology trend. What has emerged in its place is process automation.
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Why and Why Not Gamification in BPO
Gamification was attractive in BPO as a possible solution to some structural challenges in the industry. How do you keep employees engaged and retained when their daily work isn’t always interesting and rarely varies? How do you appeal to new millennial and Gen-Y employees who live in a gamified environment earning “rewards” such as FourSquare badges or posting their Candy Crush Saga conquests on their smartphones when they leave work each day but work on citrixed green screen mainframe claims systems during their days? How do you foster competition between employees to be more productive when you aren’t able to shower them with direct financial rewards? To these problems gamification seemed like the answer. If somehow you could just make the work more “fun” than surely these problems would recede and the benefits would begin to accrue both to service providers and their clients.
Charles Sutherland is EVP Research, HfS (click for bio)
Only it’s been hard to gamify enterprise applications or at least the ones that most employees in the BPO marketplace need to use each and every day. Building rewards and badges and point systems and attractive graphical interfaces has taken a back seat to just getting multiple legacy applications to speak to each other and just delivering the process in an effective and efficient manner at a lower cost. It turns out the theory of gamification is great but the business case is much harder to secure for a BPO contract. When it comes to front office staff inside an enterprise there are plenty of examples of successful products like Cognizant’s Motivate to get greater productivity and engagement but that’s a much harder sell inside a BPO especially now that instead of motivating employees in mundane roles to increase productivity you can simply automate out the least exciting, most mundane of work.
You still have attrition in a gamified environment and your BPO employees still get bored with flashy games and competitions as they will always want something new in the same way that people jump to the newest smartphone app or social media tool. An automated process, by contrast, is best when it doesn’t change and the servers processing the work aren’t asking for new screens ever. The business case is also clearer. Develop the process automation flows and then pull in the transactions and then release your employees to engage in other tasks.
The Bottom-line: Why gamify a standard process when you can replace the human element altogether?
To be fair we are still in the early days of the current iteration of process automation applications from the likes of IPSoft, Blue Prism and UIpath to name a few and the BPO reference clients are still pending but the underlying trend seems clear.
So, why invest heavily in gamifying a standard process for your BPO employees when you can replace the human element altogether? It’s for this reason that our surveyed BPO buyers clearly see that there is an increasing importance for process automation going forward, so much so that it has likely now “killed the gamification star” for the future.
You only need to face the simple fact that 50% of corporate office space (in the US alone) is now left unused to understand that the connected worker is becoming less and less tethered to her/his desk – they are mobile. While Marissa Meyer is making valiant efforts to reverse this trend, the unfortunate news for her is that more and more workers want to be mobile, so if you want to the best talent, you’d better be able to cater for their mobile needs.
Quite simply, the speed by which Mobility is dominating our personal and business lives is staggering, and the capability of providers to mobilify their services to keep enterprises functioning is becoming increasingly significant by the day as a services differentiator. So let’s take a peek at the results of the first Blueprint Report into Enterprise Mobility Services, where HfS analyst Ned May scoured over 10,000 datapoints across 270 Enterprise Mobility services contracts:
Click to Enlarge
Ned, firstly, can you talk about some of the business-specific uses of Enterprise Mobility that you’re seeing?
For some industries, Mobility is already table stakes, for example:
* Shipping: One of the earliest to adopt mobile solutions. Proprietary devices manage both the package status and the delivery fleet to provide real time information all the way back to the consumer. * Market Research: In the field surveys now get entered immediately in a laptop – reducing costs and allowing for on the fly targeting of needed demographics.
For some it’s quickly getting there, for example:
* Healthcare Insurance: Membership apps for healthcare apps running on tablets allow sales reps to customize, quote, and close a new membership in the field and in a much more engaging way then possible via even a laptop. * Travel: Flight attendants are being equipped with phablets tied into passenger data and entertainment systems that are also able to receive food and beverage requests all in an effort to better manage travelers and provide a personalized experience for everyone on the plane.
And some likely future uses:
* Car Insurance: Auto insurers will tailor car policies not based on actuarial tables and demographics but instead on real data gathered about each individuals driving habits gleaned from sensors in their smartphones. * Retail: High-end retail shopping will become an augmented experience as laptops get handed out (or in store apps downloaded) that provides context around every item in the store, makes recommendations for complimentary purchases, directs buyers to the location of an item, allows for purchase of items sold out in one’s size, and even allows one to purchase items as they gather them rather than wait at the end to check out.
So what’s been driving the Enterprise Mobility market?
The rapid proliferation of smartphones is fueling a broad range of mobile activity across most enterprises today. Firstly, there a need for the first wave of customer-facing mobile initiatives to be better integrated with existing content and commerce platforms, and secondly, many businesses are pursuing more radical change by embracing Mobility internally across the enterprise. The Blackberry was a phenomenal communication tool, but its limited interface offered little opportunity for further integration with the business.
When CEOs began to demand enterprise level access for their iPads and iPhones, they unleashed a torrent of activity that very few IT departments had the wherewithal to stop. Today. that activity now has the potential to change fundamentally the way many of a businesses’ underlying processes are performed. In conducting this research, we found most enterprises fall within one of three stages of enterprise mobile adoption:
The first stage and the one where most companies reside today is characterized by the addition of a mobile interface to a discrete app. Typically, these interfaces are created within silos that enable some core function such as customer engagement or field support and they are often initiated outside of IT department in areas like marketing and sales.
The second stage of adoption we saw – and one getting a good amount of attention today – is those companies where the priority is to integrate many of their mobile initiatives that are underway. This stage occurs when an enterprise realizes the disparate activities will yield greater gains if they are rationalized within a cohesive approach. For example, by tying together a sales system with a customer care portal they can enable more seamless client lifecycle.
The third stage is what we label transformation and is characterized by those that are bringing about radical change to an underlying business process by leveraging new ways to harvest and interact with information via these devices. Few businesses are operating at this level today but those that are will mostly likely be tomorrow’s leaders.
Ned, what are the key challenges facing IT departments looking to Embrace Mobility today?
One of the biggest challenges most enterprise IT departments face today is how to rationalize all the disparate mobile activities currently underway across their enterprise. As functional departments outside of IT – areas like sales, marketing, and even HR – began to drive the selection and adoption of new enterprise applications they often layered in a mobile interface either at the outset or in a later refresh stage. This led to a hodgepodge of activity without a cohesive strategy. The end result is an enterprise riddled with multiple mobile entry points and interfaces that employees and customers alike are challenged to navigate. In short, the concept we know as the consumerization of the enterprise resulted in what could best be termed the Appification of the enterprise and today many companies are realizing that this model is not driving the hoped for efficiencies but rather it is at best driving confusion and at worst customer dissatisfaction.
So how should business executives approach an Enterprise Mobility initiative?
Ned May is SVP, IT Services Research, HfS (Click for bio)
What I recommend for anyone tasked with driving a Mobility initiative in their organization, is to take a step back from whatever point solution they are looking to enable or refine, and to conduct a more thorough assessment of their organization’s overall Mobility readiness. Before another dollar is spent on development, a cohesive Mobility strategy is required – even if the short term recommendation from that strategy is to continue letting individual departments add the mobile interfaces they need. Nearly every service provider I spoke with for this report has this type of offering in place to conduct these assessments. Many, if not most, will even provide this for free, yet very few enterprises took advantage of this in 2014.
And how did the Winners shake out?
The Winner’s Circle Features a Mix of provider groups and strategies. The four leaders in our analysis represent a diverse mix of strengths and strategies:
Accenture brings deep vertical industry expertise grounded in business needs and by combining this with a significant investments within user experience and UI design it has the ability to produce truly transformative mobile initiatives at global scale.
IBM made its mantra of MobilityFirst one of its four key corporate initiatives for 2014 and with its broad portfolio of proprietary platforms – many of which are some of the leading tools within Mobility – the company is in a great position to deliver on that promise.
Infosys hasa robust portfolio of proprietary IP and solutions that allows it to more quickly address many Enterprise Mobility needs at relatively low cost.
Tech Mahindra’s roots lie in the telecom industry a space it continues to serve deeply today and in doing so it brings a deep understanding around the future evolution of devices and networks that helps it meets the future needs of an enterprise.
Close behind the ranking of these four providers were another seven that made it into our High Performers group. These seven were loosely clumped into two subgroups – one group excelling in execution and the other in innovation. The innovators were iGate, Tieto, Cognizant and Capgemini and those stronger in execution were HP, EPAM, and Virtusa though it should be noted that each brought strengths in the other areas as well.
Net-net, Ned, what are the key takeaways?
The Market Remains Immature: Though we identify five service providers in our Winner’s Circle and another six High Performers, there is considerable room for every service provider to move up and to the right. We expect the market to look very different in a year’s time.
Service Provider Capabilities Span Three Areas – Application Development, Integration, & Transformation: Enterprise buyers are advised to carefully assess their unique needs and make sure they engage with an appropriate service provider within one of these three. Boutique App developers will serve some buyer needs the best while leaving others without the solution they need. The same goes for a skilled integrator that might be lacking strength in up front UX / UI design.
The Market as a Whole Skews toward Innovation: On average, every service provider ranked higher on the scale of innovation then they did on execution highlighting the challenge of delivering excellence in a rapidly emerging market. This provides an opening for any service provider excelling in this regard.
Mobility Is Not Just a Device: Leading service providers are recognizing Mobility is about untethered data and not merely communicating to a screen on a phone. Offerings in telematics and efforts to make use of this data will be a big theme in 2014.
Mobility is Becoming Commoditized: Despite the relative immaturity of the market as a whole, parts of it are already rapidly becoming commoditized. e.g. Device Management an area that has seen a wave of roll up acquisition activity is now seeing SaaS like offerings that aim to simplify – even automate – the task.
Thanks, Ned, for an excellent synopsis of the new Blueprint
HfS subscribers can click here to download their copy of the 2014 Enterprise Mobility Services Blueprint Report
If you get a fleeting moment to wrench yourself away from your twitter feed, formatting that PowerPoint deck that’s on its 18th cycle, or that excruciating conference call you are seriously not listening to, then you could do a lot worse that take a gander at our new report glamorously entitled, “
Since the divestment of its voice business to 
