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BPO Becomes A Business Imperative. But Why? Insights from the TBR 1Q13 PSBQ IT Services Benchmark

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The TBR Professional Services research team invites you to view a previously invitation-only webinar that aired on Tuesday, July 16, 2013, for a recap and analysis of vendor performance, with a focus …

The TBR Professional Services research team invites you to view a previously invitation-only webinar that aired on Tuesday, July 16, 2013, for a recap and analysis of vendor performance, with a focus on BPO performance as reported in TBR’s 1Q13 PSBQ IT Services Vendor Benchmark.

Senior Analyst Ramunas Svarcas and Analyst Bryan Belanger shared their perspectives on the latest IT services vendor results and provided additional insight into vendor performance and the future of the IT services market.

Questions for discussion included:

•How is BPO doing relative to the other outsourcing service lines? Has BPO revenue growth run out of steam? If not, where are we seeing traction and why?
•How are BPO-focused firms re-engineering themselves with the commoditization of many BPO services?
•Is analytics being successfully leveraged by BPO firms to help customers?


For more information contact us at marketing@tbri.com

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  • 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C. BPO becomes a business imperative, but why? Insights from TBR’s 1Q13 IT Services Vendor Benchmark Technology Business Research Quarterly Webinar Series July 16, 2013
  • 2. TBR 2 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Webinar Presenters Bryan Belanger Analyst, Professional Services Practice bryan.belanger@tbri.com @bbelangerTBR Ramunas Svarcas Senior Analyst and Engagement Manager, Professional Services Practice ramunas.svarcas@tbri.com @rjsTBR
  • 3. TBR 3 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. • The Professional Services Practices continually covers 35 vendors, publishing quarterly and semiannual reports. • Of those vendors, 30 are included in our IT Services Vendor Benchmark. o TBR reports are unique due to their deep, holistic analysis of leading vendor businesses. o Financial modeling and TBR insights help customers build a better understanding of vendor business models. o TBR reports and webinars are designed to be responsive to client timelines, to be clear and concise, and to provide insights across multiple layers of an organization. o TBR’s strategic assessment provides an impartial reality check on how vendors are performing regarding their strategic objectives and the overall market. Clients are gaining advantages and are better understanding revenue opportunities through our reports and their personal relationships with TBR. PSBQ 1Q13 Research Highlights and Outlook: Webinar Overview TBR’s IT Services Vendor Benchmark delivers unique insight and value through in-depth analysis in a concise, consumable format
  • 4. TBR 4 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Key Trends Professional Services Vendor Trends for 1Q13 BPO is evolving into a strategic imperative: Commoditization of traditional BPO services prods vendors to transform portfolios, largely via M&As. Analytics is driving this BPO evolution: Analytics will become the primary source of BPO differentiation for providers as creating business value beyond cost takes center stage. BPO remains an operational imperative: BPO growth outpaces other services as buyers seek new avenues to trim costs and standardize processes. BPO growth is poised to outpace other service lines during 2013 as customers aim to optimize processes and fuel innovation through analytics
  • 5. TBR 5 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Key Trends Professional Services Vendor Trends for 1Q13 BPO is evolving into a strategic imperative: Commoditization of traditional BPO services prods vendors to transform portfolios, largely via M&As. Analytics is driving this BPO evolution: Analytics will become the primary source of BPO differentiation for providers as creating business value beyond cost takes center stage. BPO remains an operational imperative: BPO growth outpaces other services as buyers seek new avenues to trim costs and standardize processes. BPO growth is poised to outpace other service lines during 2013 as customers aim to optimize processes and fuel innovation through analytics
  • 6. TBR 6 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. Total trailing 12-month BPO revenue for the benchmark firms grew 5% year-to-year in 1Q13, while all other service lines except applications outsourcing faced contraction. Leading BPO performance was driven by: • Buyers’ continued focus on achieving near-term cost takeout and other operational goals • Aggressive investments and growth by emerging market players such as India-centric firms • Resiliency to econonmic headwinds relative to discretionary segments such as C&SI • Initial adoption of next-generation BPO, particularly in the areas of vertical-specific solutions and analytics • Continued penetration of emerging markets Professional Services Vendor Trends for 1Q13 — BPO is an operational imperative PSBQ 1Q13 Research Highlights and Outlook: BPO Performance Operational goals continue to drive BPO performance, with aggressive market entrants such as India-centric players leading the charge
  • 7. TBR 7 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. Average trailing 12-month BPO revenue growth outpaced all other service lines for the third consecutive quarter in 1Q13 as vendors continued to turn to BPO services to cut costs and develop agile, flexible and globally standardized operations. PSBQ 1Q13 Research Highlights and Outlook: BPO Performance Near-term operational needs fuel BPO’s leading growth as customers address near-term needs and evaluate long-term options for IT investment
  • 8. TBR 8 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. While trailing 12-month BPO revenue growth decelerated due to pressures on contract sizes and lengths, the fundamentals of BPO relative to other services segments allowed for greater resiliency to industry growth headwinds. PSBQ 1Q13 Research Highlights and Outlook: BPO Performance BPO displays greater resiliency to IT services industry growth deceleration than other service lines due to its favorable value proposition BPO displays greater resiliency to industry growth deceleration
  • 9. TBR 9 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. BPO growth leaders utilize acquisitions to integrate new technology and/or vertical capabilities into BPO portfolios as well invest in new delivery centers to augment nearshore and onshore capabilities to core markets. PSBQ 1Q13 Research Highlights and Outlook: BPO Performance India-centric vendors continue to gain share from established BPO peers due to M&A-led investments in new solutions and geographies Growth driven by acquisition
  • 10. TBR 10 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. Multiple strategic levers enable TCS to consistently outperform MNC counterparts and gain market share in the BPO space PSBQ 1Q13 Research Highlights and Outlook: BPO Performance Low-cost Delivery Model Investments in Platforms, Indus try Solutions Expansion into New Geographies Capitalizing on Cross-selling and Vendor Churn
  • 11. TBR 11 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Key Trends Professional Services Vendor Trends for 1Q13 BPO is evolving into a strategic imperative: Commoditization of traditional BPO services prods vendors to transform portfolios, largely via M&As. Analytics is driving this BPO evolution: Analytics will become the primary source of BPO differentiation for providers as creating business value beyond cost takes center stage. BPO remains an operational imperative: BPO growth outpaces other services as buyers seek new avenues to trim costs and standardize processes. BPO growth is poised to outpace other service lines during 2013 as customers aim to optimize processes and fuel innovation through analytics
  • 12. TBR 12 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. Vendors are stuck in a BPO “storm,” as shifting buyer demands and preferences create tidal waves in the industry. Providers are investing in alliances, refocusing talent recruitment efforts, establishing global centers and expanding R&D; however, M&As are the most likely to help providers succeeds. Professional Services Vendor Trends for 1Q13 — BPO is evolving into a strategic imperative PSBQ 1Q13 Research Highlights and Outlook: Portfolio Vendors are making multiple portfolio investments and bets to ready their BPO ‘ships’ for rough waters created by shifting customer preferences
  • 13. TBR 13 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. M&A emerges as the most efficient and effective means of developing a next-generation BPO portfolio that addresses table stakes such as cost takeout while concurrently delivering industry-aligned, analytics-driven strategic value. PSBQ 1Q13 Research Highlights and Outlook: Portfolio M&A is the prevailing approach used by vendors in the make, buy or ally spectrum to build a next-generation BPO portfolio Focus on Outcomes Accelerating Analytics, Cloud, Mobility Adoption Integration of Process and Technology Smaller, Shorter Contracts Shift from Labor Arbitrage to Blended Global Delivery Demand for Domain Expertise OLD MODEL (Labor Arbitrage, Lift and Shift) NEW MODEL (End- to-end Process Optimization and Business Outcome Enablement) M&A Alliances Strategic Hiring
  • 14. TBR 14 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Portfolio Vendors’ M&A activity centers on adding domain expertise, augmenting delivery or folding new technologies into BPO solutions Shifting BPO industry forces create vendor capability gaps, particularly related to technology assets, global delivery capabilities and/or vertical expertise, that are best addressed by tuck-in acquisitions activity. Technology Assets Global Delivery Capabilities Domain Expertise/ Solutions BPO Disruptors: • Smaller, Shorter Contracts • Demand for Domain Expertise • Focus on Outcomes • Integration of Process and Technology • Shift From Labor Arbitrage to Blended Global Delivery • Accelerating Analytics, Cloud, Mobility Adoption M&A Targets Outcomes: Domain Expertise: Industry- specific BPO expertise or assets capable of addressing domain- specific outcomes Global Delivery: Diversification of global presence (MNCs) or addition of onshore staff (India-centric vendors) Technology Assets: Address business value outcomes by layering analytics into horizontal/vertical BPO offerings.
  • 15. TBR 15 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. Acquisitions underpin Xerox Services’ consistent BPO growth trajectory and catalyze expansion into emerging growth areas such as cloud PSBQ 1Q13 Research Highlights and Outlook: Portfolio Acquisitions enabled Xerox to maintain BPO growth rates in line with peer averages, despite being the largest BPO vendor covered in the PSP IT Services Vendor Benchmark by revenue. Company Acquisition Date Capabilities Employees Customer Value Group (U.K.) July 2013 Cloud F&A BPO Solutions N/A LearnSomething (U.S.) June 2013 Custom E-learning Solutions 50 WDS (U.K.) July 2012 Customer Care BPO, Analytics 2,000 Symcor (U.S.) October 2011 Financial Services BPO 1,500 XL World (Italy) September 2011 Customer Care in Romania, Albania 1,500 Xerox Services’ Recent BPO Acquisitions
  • 16. TBR 16 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Key Trends Professional Services Vendor Trends for 1Q13 BPO is evolving into a strategic imperative: Commoditization of traditional BPO services prods vendors to transform portfolios, largely via M&As. Analytics is driving this BPO evolution: Analytics will become the primary source of BPO differentiation for providers as creating business value beyond cost takes center stage. BPO remains an operational imperative: BPO growth outpaces other services as buyers seek new avenues to trim costs and standardize processes. BPO growth is poised to outpace other service lines during 2013 as customers aim to optimize processes and fuel innovation through analytics
  • 17. TBR 17 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. Professional Services Vendor Trends for 1Q13 — Analytics in BPO PSBQ 1Q13 Research Highlights and Outlook: Analytics in BPO Analytics will drive BPO investments as outsourcing shifts from a cost and efficiency model to a balanced, solutions-focused value creation model If M&As are the “ship” guiding vendors’ development of next-generation BPO portfolios, analytics is the engine propelling the ship toward this new BPO industry paradigm. As outsourcing buyers increasingly focus on creating value in addition to achieving cost targets, they will seek to partner with vendors that can pair analytics technology expertise and capabilities, traditional BPO, and front- end advisory services to craft holistic, transformational business process solutions.
  • 18. TBR 18 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Analytics in BPO Best-of-breed BPO vendors moved beyond offshore-centric services to focus on delivering business value via analytics BPO Industry Life Cycle and Opportunities Low High Cost Takeout Innovation/ Business Value Opportunity for Vendor Differentiation StrategicFocus Business Process Transformation • Focuses on horizontal and vertical processes • Targets business outcomes • Uses analytics to deliver business insights • Will increasingly focus on standard, cloud-based platforms Lift and Shift • Long-term, large deals • Focused on cost takeout • Rebadging of employees • Targeted F&A, HR Offshore Process Optimization • Offshore delivery • Streamline, automate processes • Expanded beyond F&A, HR Current Model
  • 19. TBR 19 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. Business process transformation combines elements of legacy and emerging models, positioning vendors as client partners that leverage analytics tools and expertise to deliver business insight and value within the context of an outsourcing relationship. PSBQ 1Q13 Research Highlights and Outlook: Analytics in BPO Big data analytics is the foundational tool BPO vendors will utilize to craft holistic business process solutions aligned to industry-specific outcomes • Operationally driven • Emphasizes low-cost offshore delivery • Targets process optimization, simplification, automation • Typically focused on functional areas (F&A, HR) • FTE/transactional pricing model • Leads with a business problem/outcome • Big data analytics tools are utilized to uncover data, translate into business insight • Targets industry-specific needs • Focuses on standardized, cloud-based platforms • Leverages a blended delivery model Legacy BPO Model Emerging BPO ModelBusiness Process Transformation Big Data analytics is the engine that enables vendors to deliver added business value.
  • 20. TBR 20 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. In the long term, leading BPO vendors such as IBM will aim to sell solutions rather than traditional or analytics-enhanced BPO services PSBQ 1Q13 Research Highlights and Outlook: Analytics in BPO IBM leads with a business outcome and crafts an integrated approach that uses analytics and other software assets with services capabilities to deliver a solution. SOURCE: IBM IBM GTM Approach IBM engagements begin with an industry-aligned business outcome, and bundled analytics solutions and services capabilities (GTS) to develop an end-to-end business solution. Watson Engagement Advisor: A call center support tool that uses Watson’s cognitive natural language processing analytics capabilities to augment customer care interactions by functioning as a decision support mechanism for call center agents and/or a direct customer service tool for interacting with customers Client Reference: Banorte, 10-year customer-centric transformational deal
  • 21. TBR 21 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Key Trends New buyers continue to emerge as big data analytics shifts customer focus from cost takeout to business value. BPO vendors can win by shifting their approach from an outsourcing to partnership model that emphasizes bundled, analytics-enabled business process solutions that deliver long-term ROI benefits over traditional lift- and-shift BPO engagements. BPO vendors that transcend stand-alone BPO deals and develop a business transformation partnership model will win in the long term BPO OPPORTUNITY Outsourcing Model Partnership Model
  • 22. TBR 22 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSBQ 1Q13 Research Highlights and Outlook: Key Trends Professional Services Vendor Trends for 1Q13 BPO is evolving into a strategic imperative: Commoditization of traditional BPO services prods vendors to transform portfolios, largely via M&As. Analytics is driving this BPO evolution: Analytics will become the primary source of BPO differentiation for providers as creating business value beyond cost takes center stage. BPO remains an operational imperative: BPO growth outpaces other services as buyers seek new avenues to trim costs and standardize processes. BPO growth is poised to outpace other service lines during 2013 as customers aim to optimize processes and fuel innovation through analytics
  • 23. TBR 23 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. PSP Research Current Topics 2Q13 Report Key Themes • Vendor Reports: o Accenture o Atos o Capgemini o Cognizant o CSC o Dell Services o Fujitsu o HP Services o IBM Global Services o Infosys o TCS o Wipro ITS • Benchmarks: Management Consulting, HITS, Public Sector, Software Alliance  Which vendors are leading and lagging in developing energy and utilities industry solutions? How is the energy vertical performing relative to other markets? What investments are vendors making to craft industry-specific solutions?  How is cloud infrastructure management performing relative to other segments of the cloud services space? What vendors are leading and lagging? How is demand for cloud infrastructure management impacting traditional ITO businesses?  How are vendors’ approaches to big data and analytics evolving? What services areas are vendors targeting the most for analytics services (outsourcing, consulting, integration)? Who are the leaders and laggards? Vertical Strategy: Energy and Utilities Cloud Infrastructure Management Big Data Analytics PSBQ 1Q13 Research Highlights and Outlook: 2Q13 Key Topics TBR will continue to examine vendor business model shifts as investments in industry solutions, cloud and big data analytics accelerate in 2Q13
  • 24. TBR 24 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. Questions? PSBQ 1Q13 Research Highlights and 2013 Outlook
  • 25. TBR 25 TBR Quarterly Webinar Series | 7.16.13 | www.tbri.com | ©2013 Technology Business Research Inc. For further information, please contact: Lindy Hanson James McIlroy Director, Professional Services Practice Vice President, Sales lindy.hanson@tbri.com mcilroy@tbri.com Bryan Belanger Analyst, Professional Services Practice bryan.belanger@tbri.com @bbelangerTBR Ramunas Svarcas Senior Analyst and Engagement Manager, Professional Services Practice ramunas.svarcas@tbri.com @rjsTBR Twitter: @TBRinc SlideShare: www.slideshare.net/TBR_Market_Insight YouTube: www.youtube.com/user/TBRIChannel PSBQ 1Q13 Research Highlights and Outlook: Webinar Presenters and Contacts
  • 26. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C. About TBR Technology Business Research (TBR) is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors. Serving a global clientele, TBR provides timely and accurate market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis. TBR has been empowering corporate decision makers since 1996. To learn how our analysts can address your unique business needs, please visit our website or contact us today. Contact Us 1.603.929.1166 info@tbri.com www.tbri.com 11 Merrill Drive Hampton, NH 03842 USA This report is based on information made available to the public by the vendor and other public sources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable or responsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is not and should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value, purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact Technology Business Research, Inc. for permission to reproduce.