In the old days of labor arbitrage centric outsourcing (which of course doesn’t happen anymore) we had two quite clearly defined sets of service provider –
The offshore providers, which rarely interacted above director level and did the low end lift and shift routine work.
The integrators, which worked primarily with the IT and operations leadership to do the higher end work the ERP integration, often overseeing some of the offshore service providers to make sure they were doing their job.
Then the likes of Accenture, IBM and Capgemini realized the offshore firms had eaten their lunch and they rolled out their own offshore delivery functions in 2005-2010 to circumvent the heavy flow of dollars to the Indian-centric majors. Accenture and IBM managed to catch up and compete on price when they needed to, while Capgemini really needed to acquire IGATE last year to be more effective as an offshore provider, in addition to being an integrator. Meanwhile, you had the likes of Deloitte, PwC and E&Y, which chose to stay out of the offshore game and sell integration capabilities as consultants, rather than managed service outsourcers. The losers in all of this were the traditional IT/BPO services providers, such as HP(EDS), CSC, Xerox(ACS) et al whose lunch was eaten by the offshore providers, struggling to compete on price, scale and flexibility.
Then along comes Digital and Automation as the new value drivers and suddenly the game is changing again – labor arbitrage is still a key cost lever, but it needs to be balanced with automation to drive down the cost and increase the productivity even further, while the broader goals of the ambitious C-Suites are to create real digital capabilities to create their markets, not play constant catch up to avoid being disrupted.:
So what are these two emerging groups of service provider?
OneOffice Enablers – focused on designing and enabling the digital customer experience and tying the front to the back to make it all happen (see below). This is where I also see the bigger plays around cognitive happening. Lots more project-based deals for the Deloittes, Accentures, IBMs, KPMGs and emerging players, like Cognizant, which are moving up the value chain and developing deep specialization is various areas of the OneOffice environment (see below). We’ll also see several small consultants emerge in this space with industry specialization.
Back Office Outsourcers – focused on efficiency, automation, arbitrate and scalability. This is where the many of the current crop of offshore-centric and legacy outsourcers will likely end up if they fail to make the right investments… they will push hard to be in the “OneOffice” category, make a lot of the right noises, but the lion’s share of their business will be in this group.
What’s driving this is a marked sense of urgency we are seeing from enterprise leadership we haven’t seen before, where 56% of SVPs and above, in our new Intelligent Operations study, now expect to have intelligent operations in just two years (this number was 30% when we ran a similar study 18 months’ ago):
It’s OK to be DumbOffice, there’s a big market for it. Just be clear what your endgame is and focus on it
Back-end IT providers failing to invest in real domain expertise will always be in the feature and functionality game. Automating incident response, some systems management and help desk querying is probably about the limit to where they can do – but that’s OK, there is a market for cheap IT support and services. There’s a market for cheap call center work, for cheap collections and cheap claims processing support… it’s just going to get a little smaller and more automated.
The future growth lies in addressing the impending talent crunch as the digital tech and talent divide reaches seismic proportions
This is all about who can develop intelligent data practices based on automation, digital and cognitive which are tied to industrialized solutions, horizontals such as F&A, HR, procurement, or verticals like retail, healthcare, insurance etc. Who can work with clients who generally can understand their businesses, apply their challenges to their industries, and forge solutions that keep them viable in disruptive markets. Ultimately, this is about pulling data from the market and the customer and building a platform at the back end that aligns it to the business. The great variable is the human element to evolve to make this really happen (or resist it and watch the companies wither and die). Technology is moving at warp speed, while talent is not – that is the great digital quagmire enterprise clients need to solve, if they are to be successful down the road.
We are approaching a talent crunch of seismic proportions, possibly more destructive than the industrial revolution, because then people were displaced into new industries that needed people to build them…. now they are being displaced by computers. So let’s stop kidding ourselves, the future isn’t looking as pretty for employment growth as the last 20 years, so the need to focus and be great and delivering what we are capable of is key. If you do great DumbOffice, then focus on DumbOffice – there’s a market for that and it’s not going away anytime soon, but if you have the ability to evolve and keep your talent aligned with the unraveling digital customer, there is real opportunity in the OneOffice world.
The Bottom-line: Faster, cheaper, smarter are the watchwords for the Intelligent OneOffice
In a nutshell, increased complexity is demanding increased expertise at the front office of the business, which, in turn, is demanding the back end to respond with more automated, scalable, seamless enablement capability. Faster, cheaper, smarter are the watchwords for OneOffice services now… building on the faster, cheaper, better from yesterday’s world.
There is a lot of buzz about ServiceNow technology. Thousands of developers and partners made their pilgrimage to Knowledge 16, ServiceNow’s customer event in Las Vegas. Service providers are starting to standardize service delivery on the ServiceNow platform and M&A is helping to build out service providers capabilities, as in the case of CSC acquiring Aspediens. Even though ServiceNow tends to position itself as the Enterprise Cloud Company, industry stakeholders are rather enthusiastic about the single data model, the embedded workflows and new ways of collaboration. As such, ServiceNow has the potential to evolve into one of the key building blocks for moving toward As-a-Service because its core value proposition centers on clients accelerating their time to value through faster actions and interactions, overcoming clunky legacy solutions like ITSM.
Buoyed by such buzz and enthusiasm, ServiceNow is aiming to expand the notion of service management to evolving into the “third estate between CRM and ERP,” providing a new cloud-based level of efficiency between the front and back offices. Thus, there are many touch points with the HfS notion of the OneOffice: Digitally driven enterprises must create a Digital Underbelly to support the front office by automating manual processes, digitizing manual documents and leveraging smart devices and IoT where they are present in the value chain. As a result, ServiceNow can be part of a broader innovation ecosystem in which the ability to orchestrate and integrate will become the pivot for creating value and differentiation. Nonetheless, as HfS has stated repeatedly, it is not just about the technology or solution ideals of the As-a-Service Economy, but about the change ideals in equal measure.
Here is the crucial question: How are organizations advancing their innovation agendas?
The recent HfS ServiceNow Services Blueprint highlighted two key issues in that respect: First, ServiceNow itself has been slow in embracing the notion of an ecosystem that goes beyond treating partners as mere sales channels. Thus, co-innovation with partners around vertical offerings and other innovation had not been high on the agenda. This is starting to change though, which is critical as the notion of the As-a-Service Economy is predicated on a collaborative partner ecosystem. Second, there are issues for service providers as well to address as many clients were unhappy with the lack of innovation driven by their supplier. The most successful projects were those in which clients drove the innovation process. This points to a crucial aspect for the journey toward the As-a-Service Economy. The eventual success is less about the technology building blocks and more about a change in mindset.
As the ServiceNow Services Blueprint shows, many clients need help in understanding the direction of travel. What vision do innovations like ServiceNow support? One compelling example for such a change in mindset came on a recent visit to an Atos delivery center in Barcelona that is supporting the 2016 Rio Olympics. It is a shift in mindset because Atos is treating the Olympics as a transformation project. The firm’s executives summarized the challenge of this project by comparing it to a business of 200,000 employees, addressing 4 billion customers, operating 24×7, in a new territory, every 2 years. To deal with such a complexity condensed to a short time frame, Atos did two things: First, it switched its service management to ServiceNow, which is a bold move given the scale of the project and the relative immaturity of the platform. Second, to be able to manage the heterogeneous supplier landscape, Atos is leveraging the SIAM methodology. Furthermore, it is migrating the infrastructure to a centralized cloud delivery model to drive down cost while enhancing agility.
To further highlight the intensity of the project, during London 2012 there were in excess of 255 million IT alerts without a major incident at the Games. This underpins the outcome orientation of the project. What counts to the client is managing a unique complexity without any hiccups in the quality of service delivery.
The Bottom Line: ServiceNow is standardizing service orchestration
ServiceNow has the potential to evolve into one of the key building blocks for moving to As-a-Service, but service providers need to engage proactively with clients to demonstrate the direction of travel as well as leading with a comprehensive innovation agenda. Moves of service providers to standardize broader service delivery on ServiceNow as part of service orchestration strategies reference an increasing maturity on this journey.
Over the next 12 months, we expect a broad maturation across the industry with accelerated levels of M&A. As a result, ServiceNow will continue to be the center of many innovation projects extending to scenarios involving security and IoT. However, we urgently need more reference cases demonstrating the lessons learned from projects to be able to conclude that ServiceNow is the new black—and it’ll last longer than a few episodes in Netflix.
Over the past couple of months, we’ve been working hard to produce a number of documents that look at both market and service provider performances. We just wanted to summarise the ones we have published so far and give you an idea of the ones we are going to be released soon.
The only premium report amongst the published documents is our global market size and forecast report: The HfS Global Market Forecast Report. Although we are in the process of putting together reports on EMEA and Asia Pacific markets to be published this month and next.
If you prefer your research to be freemium, then you can get some of our recent market insights from the Q2 2016 Market Index.
We recently published the HfS Top 50 list of BPO service providers – the first publicly available ranking of the BPO industry in 2016 – which you can download here: HfS BPO Top 50.
We also recorded a podcast discussing some of the findings of the research: BPO Top 50 Podcast.
The next couple of months will include our Q3 market update – which will be released end August/early September – although if some of the service providers results are interesting (and they often are), we’ll publish a look at the early bird results. Also, we will be issuing our view on the impact of Brexit – we decided not to do a knee-jerk growth cutting exercise with our market numbers, but will take a more considered view over the next month. When we have a better idea what the UK government intends to do – hopefully.
The shake up (and potential shake out) of the services market is continuing with 2016 starting to show the unravelling of the winners and the losers more clearly. The following chart shows revenue growth and margin performance of the leading IT and multi-process BPO services providers – these providers are publicly traded, provide quarterly financial results for the services business. Each chart shows the data for the twelve months leading to the end of March (or closest prior month, in the case of providers whose fiscal periods are not aligned with regular calendar quarters).
Incidentally, neither chart shows the position of AWS because we’d have to zoom out too much and you’d see a cluster plus AWS way out to the right! But it would be at 24% margin and over 70% growth for the 2016 chart. So above Cognizant, with a bubble about 10% smaller, two charts over to the right.
To make the charts easy to compare – they are deliberately on the same scale. So you can see the change in the performance from one year to the next.
The most interesting phenomenon is the stretch in market growth between the two years. With the top chart, the latest twelve-month period, showing a broader range of growth rates. With the bottom chart showing a cluster of providers in the middle.
CSC mostly drives the stretch to the left. However, the impending merger of HPE services and CSC will hopefully remove the need for much of the left side of the chart. CSC’s position due in part to poor market performance but mainly because of the split of its Federal business. However, unless they do something drastic to change the perception of them and start to win more business, the position of HP/CSC entity may not shift much from HP’s current position, it’ll just make the bubble bigger.
We see IBM, particularly the old GTS business, struggle to gain momentum, although we anticipate some better traction as changes to its organization and portfolio made over the last 12 months start to have an impact. The repositioning of IBM toward data and cognitive are market winning moves in our view, particularly with the power and potential of Watson. The issue is how the services business positions itself, during the change and afterward. Given the spin-off of services by other hardware heritage services players like HP, Xerox, and Dell – one starts to wonder what parts of the services business will be remaining this time next year!
Accenture took a step to the left during this period. Demonstrating that the shake-up in the traditional services business has hit everyone. However, they still grew in every quarter and performance is picking up – with double-digit growth in its latest financial results. So we anticipate a move right over the next quarter.
The stretch to the right has been driven by robust growth from some of the smaller players and the pure-play BPO firms like EXL, who are small enough to pick up mid-market business, but also large enough to compete for enterprise deals. Plus some of the cloud providers like AWS are still riding the public cloud wave, with that market having significant growth expectations as enterprises slowly move away from legacy hosting models. However, some of the traditional providers are starting to react to changes in the market. These firms are starting to reposition themselves and are willing to invest in their futures. We can see this from the two major European services firms, Atos and Capgemini. With both providers taking a more aggressive stance in the market, bolstering their positions with acquisitions and shifting portfolios to address market coverage issues. The recent transformation and acquisitions are ultimately making them more global in outlook but also focusing more on digital and cloud markets.
The offshore-centric firms hokey pokey has been mixed for the last 18-24 months with the relative performance of all the firms changing, with individual providers performance being up and down. Even the uber-consistent Cognizant and TCS have had a few up and down quarters. Given both firms scale and mixed market conditions, this is not surprising but is worrying when Accenture, Cognizant, and TCS run into growth issues.
As Phil pointed out in his blog about the HP+CSC merger – “we’re operating in a services world obsessed with preserving the past and ignoring the new. The past was all about predictable revenue and highly-visible cost reduction opportunity – there was a method to the madness. But this was because the true value was about doing things slightly better, but at much cheaper costs. The future is not so predictable – it is about being smarter, more business aware, and technically superior to piece it all together for clients. Oh, and without increased investments. It’s hard, and requires a very different focus, which is one of developing talent to learn on the job, one of evaluating experiences professionals to assess their ability to change, of being able to learn new tools and platforms, which require a mixture of process and business understanding to align with real business outcomes.”
Bottom-line: Those providers breaking away from inertia will define the unravelling marketplace
We observed at the start of 2014 that the competitive landscape was increasingly two-tier and that the main differentiator between the two categories is inertia – it is the companies that react quickly to the changing market conditions that are growing, not necessarily the cheap, low-cost providers. This statement still holds true. You can segment into a traditional or new wave, low and high cost, digital / non-digital, operating or transformational – but fundamentally the real x-factor is agility.
We live in times where there is a lot of perceived fast-moving change, but what’s the reality for most traditional businesses? Let’s be honest, technology is changing a lot faster than humans, so how can we be more realistic and practical about looking ahead?
Much focus has been placed on shiny new clean sheet, ‘born digital’ companies such as Uber, AirBnB and Tesla – well funded ‘full stack’ architecture business entities, which have a major marketing messaging advantage in being new, futuristic and being seen to challenge the status quo of how things have been done.
Is this behemoth being installed or removed…?
These firms are a tiny fraction of the ‘real’ business world, but take up a disproportionate amount of mindshare as we struggle to grasp new ways of doing things. Sub-Saharan Africa has never had copper telephony, so that part of the world went straight to 4G mobile networks. Mobile currencies and payments, medical monitoring and other digital attributes quickly became the way of life for residents there, because there was nothing there before. The ‘western’ world has layer upon layer of legacy technologies, amortizations of sunk capital costs, dependencies and established ways of doing things that are hard to change.
Modernizing mature companies is hugely challenging. Moving from known revenue producing business models to new “disruptive” market offerings, business relationships and the design and implementation of the change management required to reinvent is ‘teaching an old dog new tricks’ on multiple levels. Even incremental change is hard for staff who are run ragged keeping the existing plumbing and lighting running, yet the pace of technology evolution is plain for all to see. We are rapidly leaving the IT era, but the next generation of technology is understandably not well understood and highly contextual to business vertical business opportunities and challenges.
Jobs are being automated away in large numbers as part of the sweeping societal change we are going through, raising questions around who the ‘consumers’ of future products will be and where they will find income to pay for things. QWERTY PCs are in the rear view mirror, with mobility and IoT dominating the immediate horizon. Old services models to assist mature enterprise business models are increasingly commoditized while there is arguably a vacuum as to who can provide effective As-a-Service partnerships with business entities which are struggling to modernize. Firms grappling to look good every ninety days in the equity markets cannot afford the investment to rip and replace large parts of their in-flight business infrastructures, but there is much angst and tire kicking to see which partners and suppliers have ‘the right stuff’ to assist in next generation business evolutions.
As I wrote in my previous post, ‘digital’ business conceptualizing has been dominated and overshadowed by marketing activities across online, mobile and other relevant channels. Listening, conversation, selling and support are vital aspects of business, but ‘core digital’ has not been adequately funded or evolved, leaving the ‘traditional’ enterprise services industries awkwardly stuck between old and new. Much focus has been placed on cost savings, including lift and shift of vast amounts of ‘stuff’ from on-premise to cloud without much thought about business opportunities (and challenges) enabled by moving everything online. Services providers have to keep their lights on and cash flowing like any other business – the better ones are chaffing at the bit to provide modern digital services to clients and prospects that are forward-looking, evolutionary, even revolutionary.
Innovation sessions to help ‘set in their ways’ clients find new revenue stream opportunities (and in some cases escape the burning platforms they find themselves on) are essential offerings from services vendors to remain relevant and brand their modern world credibility. Design Thinking is a great way to encourage business process oriented staff to ‘think differently’ about the place of old and new technologies in the evolving world. Ultimately ‘digital’ is the modern tool set available to businesses to evolve to greater efficiencies and revenue streams. However technology changes, people don’t and the challenge for the old guard is in moving with the times, whether on the buy side or the services side.
The Bottom-line: The future is all about data and human collaboration
Today the change challenge is evolving from old to new ways of doing things. Today legacy IT spend still dwarfs next generation spend, but it’s not hard to see the old ways of doing things drying up. What next generation services looks like in a world of AI, cognitive, robotics and IoT at all levels, superb supply chain and Amazon style global retail channels will primarily be focused on orchestration and automation to enable data and human collaborative flows.
The critical factor will be in who does what and when. Blindingly obvious maybe, but timing is everything to keep momentum, revenue streams and evolution unfolding and not stagnating….
Guts, determination and spirit – a touch of daring do? No people. It takes revenues. Cold hard cash. No more, no less. This is one of those times when it is all about the money.
That said, being on the list or not, shouldn’t make a service provider look good or bad – hopefully market forces mean that better/cheaper providers rise through the ranks, but it isn’t necessarily so.
So I’ve penned a short FAQ:
Can we make a mistake?
We are human and from time to time this happens – just send me an email and with your thoughts and we’ll correct. By all means call me names on twitter – but I may shout back…
We can miss companies from time to time and define where revenues go incorrectly. And, occasionally, spell your name incorrectly 😉 Also we may define things differently from you – we are trying to compare like with like as closely as possible. Remember this is an estimate – so if you have further guidance, I’d be happy to have a conversation to let you know how we came up with any of the numbers.
I should be on the list / What do you have to do to get on the list?
Sending us evidence (a financial report or two, would help) that shows latest annual revenues. We use calendar years for our lists usually, so something that shows the relevant quarters would work. But happy to have a discussion with any private firms – just so we can properly establish position. I am not a miracle worker so private companies that don’t publish results and don’t provide guidance may not make the list.
How much do I need to bribe you to change my position?
It pains me to say it but no – we just can’t. The pesky tax man (and our boring accountant) frown on it 😉
That said it is also free to be on the list – you just need to demonstrate that you have the revenues to make it. But I will check against public sources and validate.
I really want to be part of this but I just don’t have the revenues yet – is there anything I can do?
I am writing some short profiles on up and coming providers – let me know what your story is and we may feature you. Although we are mainly interested in IT services and BPO – so although I personally am fascinated by cool software. A software company’s story may get bumped…
Also we may start breaking out new lists – HRO providers, Customer Care, etc… any suggestions are always welcome.
SYNNEX-owned Concentrix today announced a definitive agreement to buy Canadian born Minacs, previously owned by Indian conglomerate Aditya Birla Group and presently owned by two private equity firms. HfS estimates the combined entity will easily surpass $2bn in 2016 and is a singificantly show of force to the rest of the contact center industry.
Minacs is an approximately $500m services firm with 21,000+ employees focused on contact center BPO servicers and a strong background in automotive, with about 40% of revenues coming from that industry. Minacs has always been a solid player with a strong Apple relationship and good marketing analytics/ support capability. The service provider struggled to position itself in the US and trying to get into markets where it had small chances of success, like banking, procurement and a small F&A play. The acquisition price looks reasonable and adds considerable size and scale to Concentrix. While there are some clear signals that Concentrix is looking up the CX value chain (and there are some good upsell opportunities with existing clients), the most prominent feature of this deal will be scale—raising Concentrix to the $2bn level and positioning itself firmly against Teleperformance/ Convergys/ Arvato at the lead end of the market. Not only that, HfS revenue analysis shows the combined entity leading the market in terms of revenue growth:
(Click to Enlarge)
The addition of Minacs would bring Concentrix the following key assets:
Digital Marketing Capabilities/ Loyalty Marketing, especially in the area of automotive where Minacs helps clients navigate OEM. In addition to expertise, Minacs has proprietary marketing automation tools which have been customized for vertical alignment.
Delivery Footprint: The acquisition of Minacs would broaden delivery with sizeable nearshore operations in Mexico, the Dominican and Jamaica and offshore in India and the Philippines.
Analytics: Given that Concentrix analytics story has not been vertically focused, Minacs’ strong industry aligned analytics may help Concentrix to develop analytics expertise in key industries such as automotive, telecom, media and high tech.
Concentrix is wise to build out more digital capabilities in the marketing realm, the way that other pure play providers the way Sykes has with ClearLink, TeleTech is doing with Revana, and Indian BPOs and multi-nationals have been building for a while. This is a natural next step to explore the inherent complements of tying in contact center with the greater picture of customer experience, given the increasingly blurred lines between marketing and customer care. As with all providers attempting to address all elements of the front end, the key will be to combine capabilities on marketing automation with CRM, and bring together customer care and marketing stakeholders within client organizations to make strategic decisions for customer experience.
The challenge for Concentrix will be to stabilize leadership as Minacs has had recent C-Suite attrition issues, high staffing turnover rates and poor organization at Minacs according to glass door reviews. A recent Minacs analytics acquisition also brings the challenge of attempting to cobble together these disparate entities. And the assertion that the acquisition expands Concentrix into Internet of Things (IoT)’ is questionable; this is initially really more depth in automotive.
The Bottom-line: A solid scale play with potential – Concentrix now needs to demonstrate a commitment to enhancing the digital customer experience
The global scale play is compelling as long as the larger entity operates efficiently next year once combined, and enables more depth and a platform for more omnichannel offerings to both sellers and customers. As with all the recent M&A activity in this space, this acquisition is more about added scale than skill, but we would love to see one of the major contact center players acquire one of the design consultancies/ creative agencies to really get in the forefront of the market to address digital customer experience. The implications in the greater market are that the leading contact center operators need to get focused on designing and enabling the digital customer experience—those who don’t will be caught up in the cost focused race to the bottom.
I think I just read one of the most (brutally) honest and practical articles by a guy called Len Kendall, an LA-based marketing executive with a clear penchant for writing. His piece is based on two premises:
The market no longer allows for employing older workers who deserve higher salaries
Technology is killing jobs at a very fast pace that will only continue to accelerate
OK – we all kind of know this. But where this gets interesting is where the discussion shifts to what he constitutes “expensive” workers.
“Thanks to advancements in technology, jobs are becoming more automated. Assuming that we can eventually automate all basic jobs and allow artificial intelligence to conduct more skilled work, there will only be a need for a small group of educated, experienced, but inexpensive workers.”
So what counts as “expensive” workers?
Group A – low-skilled, but still expensive. Large populations of low-skilled workers (varying in age) who require lots of benefits. Companies will look to replace groups of ten or even hundreds of people with one computer to reduce costs. This is the premise behind the new HfS Future Workforce Impact Model, where we expect to see a reduction of a third of low-skilled positions over the next five years in the US in IT/BPO services jobs – an even greater proportion that what we anticipate in India. The cost of healthcare alone in the US can be as high $20,000 per employee per year, not even taking into about wages, payroll tax and other benefits.
Group B – medium-skilled 20- to 50-year-olds, still needed to manage people and technology. These are the mid-career people who have the expertise and experience to manage people and machines. These people command a spectrum of salaries but are willing and able to work efficiently relative to their compensation expectations. They’re still “expensive,” but the ROI remains palatable, since machines cannot run completely independently or manage people…yet. This is where we anticipate new work and job creation at HfS (7% in the US and 14% in India, for example), as many enterprises need high-energy, “affordable” creative talent that can apply technological change to business model change.
Group C – 50+ year olds who are extremely skilled and experienced workers. They can effectively manage people and machines but require very high salaries. Often, due to realities of aging, they cannot operate at same levels of efficiency as Group A or B. This makes them “expensive”. However, as the emergence of digital business models continues apace, this group is moving further and further out of touch with the evolving needs of the business. Being able to compensate very experienced people at the $250K+ salary level will fast become a fading practice, especially if (and when) we reach an economic downturn.
Group A is under serious threat as our automation impact model suggests, Group B is where we anticipate further job creation, and Group C could likely get completely eliminated – and could happen alarmingly quickly. As Len points out:
“During the Industrial Revolution, millions of jobs were eliminated because of machines or development of new products that made others obsolete. The difference between the technological advancements of the industrial revolution versus those of today is that half or more of all future product and service needs won’t be replaced by humans but by computers. Some may argue that we’ll create more jobs to replace those lost, but the last ten years are a clear indication that computation and automation are advancing faster than the invention of new products or industries that require (human) labor”.
As our HfS model has indicated for the services industry, we expect a 7% growth in mid-high skilled job needs in the US, which culminates on a 12% overall decline in IT/BPO services jobs. So in an industry which has technology and labor skills at its core, automation of low-skilled work is outpacing the growth of medium/high skilled work.
The Bottom Line: Preparing for the future if you’re too “expensive” to be employed
If you’re clinging on to that fat paycheck and can see the writing on the wall in your enterprise, then you need to be smart and get ahead of what could happen to you. There’s nothing more frustrating for me than to see highly-experienced executives coming onto the workplace whose salary demands to support their lifestyles are turning off many potential employers. What’s more challenging for the Group C-ers is the desire of forward-thinking employers to hire people who can embrace ambiguity and less structured environments in order to drive innovative business models and understand how to act on data more effectively. This means that executives who’ve been superb at doing specific things in specific ways for many years for one company are likely to be irrelevant to other employers, unless those skills are clearly transferrable, or those specific things provided a real competitive edge to the new employer. So, while you may not be employable anymore from a cost standpoint, you can certainly make yourself financially viable for future work.
Here are some ideas to add to your future financial viability:
Start developing your marketable skills now that you can sell them in the future. Smart employers love being able to hire contract talent for specific tasks – especially on an outcomes basis. However, this will mean a willingness to roll up your sleeves to do work tasks you probably have delegated for the least decade or two. For example, you might have very strong communications skills, and could be great at proofing market collateral, sales pitches, white papers, executive blogs etc. There is good money to be made renting out hour creative writing skills to senior executives, sales heads, CMOs, CEOs etc. But you need to get your hands dirty and be prepared to do real work again. You may be a very polished presenter – so many employers’ today, would love to get their Group B-ers trained to deliver better sales presentations. Moreover, I keep having enterprise clients complain to be how bad service providers are at selling to them – so why not offer up your services to help them improve their selling techniques and “listening” skills etc? And you’ve likely lived through years of change and staff mentoring, so why not offer yourself up to support change management workshops or reorientation / Design Thinking programs. Use those skills and experience to become a great student teacher!
Avoid burnout and prepare for a new financial structure in your life. Len does a very admirable job advising people post 50 how to be smarter with their money. I am not a financial advisor, but I would say that we need to be realistic about our earning potential, as our careers advance. If you want to command serious wages post 50, then you either need to be in a very safe position in your current company, or you need to be smart about how you manage your work/life balance, as you may be working well into your 70s these days. You have a great deal of experience and knowledge to offer, but most companies, today, just don’t want to pay the 300k+/year salaries to enjoy your delights. And even if you are a great survivor, the chances are your company will find ways to wind down your gargantuan salary over the next 3-5 years – and they will burn you out in the process – it’s going to be miserable. So be realistic, figure out how best to go independent as an expert contributor / consultant, or even stay with your current employer on a part-time status where you can do some extra curricular things to to up your salary if you need the extra money. Many employers increasingly love experienced folks as part-time employees – they get the expertise they really want and feel like they get real value for money from them.
So focus on your lifestyle a bit more – how can you early $150K a year for the next 20 years and enjoy your life, than giving yourself a heart attack trying to survive the next few years of disruptive hell and our legacy business attempt to drag themselves out of the Dark Ages? The business world is changing and that fat salaried job for life is really fast slipping away… so be realistic, become a student again if you have to!
I have spoken to nearly twenty client references in the current Workday Services Blueprint research project. I fully expected to talk to many ‘Human Resource’ Directors or IT experts assigned to the ‘HR’ division, as the Workday HCM product has been the most prominent deployment in this market. It has been refreshing to speak to several executives with the word ‘People’ in their title. For example I’ve spoken to a People Services Technology Leader, a Program Manager for People and Culture and a Solution Specialist for People and Culture.
Over the years I have seen some fascinating titles, including many that don’t actually give any clue as to what the person actually does all day. The funniest are the ones where the person has obviously tried to get as many hot topics into the title as possible. ‘Hi. I’m the Chief Worldwide Evangelist for Innovation and Digital Transformation, leading with Design Thinking As-a-Service.’ Huh? It is refreshing to talk to executives who do not need lengthy explanations of their job title. ‘I’m the People Person’. Fantastic! How easy would it be for employees, customers and suppliers to just be able to call the front desk and say, ‘Hi. I’d like to talk to the People person please.’
When I first started out as an analyst, mentors explained to me that IT services was about the bringing together of people, processes and technology. It seems that it has taken most of my career before anyone is actually focusing on the ‘people’ part of this equation. Finally, buyer enterprises and service providers alike are focusing on hiring, motivating and retaining the best talent as they realize that people are their most important differentiator in the market. It is no surprise that enterprises are asking to interview delivery teams in the service provider selection stage, nor that the best client satisfaction scores are attained because of the quality and collaborative nature of the people they worked with. And the best people need to also be people oriented. Technical certifications, relevant enterprise size and industry experience, functional expertise – all these things that can be ticked off on a capability list are important but increasingly taken for granted. The real skill lies in whether they can actually work well with other people. Do they have the necessary social skills and real commitment to help clients and employees? These are the valuable skills needed for enterprises and service providers to succeed in today’s market. Power to the People!
HfS has launched the 2016 Workday Services Blueprint, in which we are assessing the capabilities and vision of 16 Workday service partners. Since the first Workday Services Blueprint published in 2015, this market has exploded. Service providers have been busy investing in organizational structures, acquisitions, partnerships, service development and talent retention programs to remain competitive (see: The Speed Of Change In Workday Services). In our upcoming Blueprint we will assess these strategies in detail and determine who is currently winning the differentiation battle.
Many of the enterprise leaders we have spoken with have indicated a clear corporate strategy to move to cloud applications. Enterprises of all sizes realize that they need to have modern systems to support a more innovative outward looking strategy. Old legacy systems that are clunky and fail to meet business needs in a timely manner are rapidly falling out of favour, and enterprises of all sizes are now seriously considering Workday Human Capital Management (HCM) and/or Financial Management products to bring their processes up-to-date. While most enterprises started with the HCM product, before considering the financials application, others have started with a financials implementation. Either way, clients see the value of running both products on the same platform, aligning with Workday’s own vision for this market. Interestingly enough, enterprises are selecting Workday even if it does not match all of the functionalities of the competitive solutions, because they value Workday’s vision and focus on continual innovation.
Additionally, clients are highlighting that having strong resources is the number one selection criterion as well as the main reason for high client satisfaction rates post deployment. Buyers often request to interview the actual deployment team in the RFP stage. They want to meet the people they will be working with on a daily basis, as ultimately that relationship will determine the success of the project. For their part, service providers have been investing heavily in talent development and retention programs to offer increased career opportunities as well as develop more rounded consultants that are able to support clients at different stages of the development and management cycle.
The real differentiation in all SaaS services is all about ‘how’ a service provider engages and delivers its services. This includes collaborative engagement methodologies and the ability to communicate the ongoing business effectiveness of the Workday solution for clients.
We look forward to sharing more insights from this research over the next few months, before publication of the full Blueprint report in September 2016.
Over the past couple of months, we’ve been working hard to produce a number of documents that look at both market and service provider performances. We just wanted to summarise the ones we have published so far and give you an idea of the ones we are going to be released soon.
SYNNEX-owned Concentrix today announced a definitive agreement to buy Canadian born Minacs, previously owned by Indian conglomerate Aditya Birla Group and presently owned by two private equity firms. HfS estimates the combined entity will easily surpass $2bn in 2016 and is a singificantly show of force to the rest of the contact center industry. 
I think I just read one of the most (brutally) honest and practical 