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Vendors drive BPO growth by acquiring or developing IP and industry-specific offerings: Insights from TBR’s 1Q14 IT Services Vendor Benchmark

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BPO growth continues to outpace other services, fueled by increased use of analytics and cloud-based BPO solutions, as buyers seek new avenues to trim costs and standardize processes. BPO growth will …

BPO growth continues to outpace other services, fueled by increased use of analytics and cloud-based BPO solutions, as buyers seek new avenues to trim costs and standardize processes. BPO growth will result from the increasing need for analytics-enabled solutions that streamline processes and harvest business insights from organizational and client activity. Vendors continue to invest in Business Process as a Service (BPaaS) platforms that provide process excellence, resource management and industry insight to clients.

Principal analysts Ramunas Svarcas and Patrick Heffernan, along with analysts Elitsa Bakalova and Jennifer Hamel, shared their perspectives on the latest IT services vendor results and provided additional insight into BPO services that are gaining popularity and changing the market landscape in a webinar that aired Thursday, July 24, 2014.

Questions for discussion will included:

• How are vendors developing BPO offerings, intellectual property and industry specialization?
• What technologies drive BPO evolution?
• Which industries are seeing increased demand for BPO solutions?
• Is solution-delivery automation replacing labor arbitrage advantages inherent in the low-cost delivery structure?

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  • 1. TBR’s Professional Services Business QuarterlySM Research Highlights and Outlook Vendors drive BPO growth by acquiring or developing IP and industry-specific offerings Technology Business Research (TBR) Quarterly Webinar Series July 24, 2014
  • 2. 2 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSBQ Research Highlights: Webinar Presenters Elitsa Bakalova Professional Services Analyst Email: elitsa.bakalova@tbri.com Twitter: @ElitsaBakalova Boz Hristov Professional Services Analyst Email: bozhidar.hristov@tbri.com Twitter: @boztbr Patrick Heffernan IT Services Practice Manager and Principal Analyst Email: patrick.heffernan@tbri.com Twitter: @TBR_PatrickH Ramunas Svarcas Professional Services Principal Analyst Email: ramunas.svarcas@tbri.com Twitter: @rjsTBR
  • 3. 3 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. • TBR’s Professional Services Practice provides continual coverage of 33 vendors in published quarterly and semiannual reports. • Of those vendors, 30 are included in our IT Services Vendor Benchmark. o TBR reports are unique for their deep, holistic analysis of leading vendor businesses. o Financial modeling and TBR insights help customers gain a better understanding of vendor business models. o TBR reports and webinars are responsive to client time lines, clear and concise, and provide insights across multiple layers of a vendor’s organization and infrastructure. o TBR’s strategic assessment provides an impartial check on a vendor’s progress toward its strategic objectives. Clients are gaining advantages and better understanding revenue opportunities through our reports and their personal relationships with TBR PSBQ Research Highlights: Webinar Overview TBR’s IT Services Vendor Benchmark delivers unique insight and value through in-depth analysis in a concise, consumable format TBR Professional Services Business Quarterly (PSBQ) Portfolio
  • 4. 4 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSBQ 1Q14 Research Highlights: Key Trends Professional Services Vendor Trends for 1Q14 Portfolio: Vendors integrate industry expertise, cloud and analytics into BPO solutions, transforming clients’ operations from cost centers to value creators. Delivery: Cloud-based delivery models and automation reduce the need for labor resources to deliver services inherent in the low-cost delivery structure. BPO Performance: BPO growth continues to outpace other services as buyers seek new avenues to trim costs and standardize processes. Vendors combine industry capabilities, cloud, analytics, and internal IP and tools to maximize BPO revenue and profits SOURCE: WWW.PPTBACKGROUNDS.NET SOURCE: BLOG.ENTREPENUERARTS.COM SOURCE: FREEWORLDMAPS.NET
  • 5. 5 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSBQ 1Q14 Research Highlights: Key Trends Professional Services Vendor Trends for 1Q14 Vendors combine industry capabilities, cloud, analytics, and internal IP and tools to maximize BPO revenue and profits SOURCE: WWW.PPTBACKGROUNDS.NET SOURCE: BLOG.ENTREPENUERARTS.COM SOURCE: FREEWORLDMAPS.NET Portfolio: Vendors integrate industry expertise, cloud and analytics into BPO solutions, transforming clients’ operations from cost centers to value creators. Delivery: Cloud-based delivery models and automation reduce the need for labor resources to deliver services inherent in the low-cost delivery structure. BPO Performance: BPO growth continues to outpace other services as buyers seek new avenues to trim costs and standardize processes.
  • 6. 6 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. BPO trailing 12-month revenue growth in 1Q14 was driven by vendors’ emphasis on business outcomes and cost savings through provision of horizontal and industry-specific services and integration of analytics and cloud into BPO solutions PSBQ 1Q14 Research Highlights: BPO Performance BPO remains more resilient to decelerating IT services industry growth than other service lines due to its favorable value proposition SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES Note: Includes average trailing 12-month service line revenues from TBR’s IT Services Vendor Benchmark; not representative of a total global market view
  • 7. 7 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. BPO was No. 1 in average TTM revenue growth; however, its growth decelerated in 1Q14 due to factors such as the adoption of Business Process as a Service (BPaaS), which drives down traditional BPO opportunities and shrinks the length and size of contracts PSBQ 1Q14 Research Highlights: BPO Performance Operational and business improvements support BPO’s leading revenue growth, while cloud forces vendors to transform their delivery models SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES Note: Includes average trailing 12-month service line revenues from TBR’s IT Services Vendor Benchmark; not representative of a total global market view. Dots indicate year-to-year growth, and arrows indicate directional change relative to the year-ago quarter.
  • 8. 8 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. BPO growth leaders build scale through acquisitions and platforms for quick delivery and drive revenue expansion by adding industry specialization and analytics to increase value PSBQ 1Q14 Research Highlights: BPO Performance BPO leaders expand vertical-specific offerings, while laggards struggle with price competitiveness due to less-developed global delivery models Growth driven by enhanced industry expertise SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES Note: Includes average trailing 12-month service line revenues from TBR’s IT Services Vendor Benchmark; not representative of a total global market view. Sphere size reflects volume of TTM revenue.
  • 9. 9 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. Industry expertise, partnerships and cloud enable Cognizant and TCS to outperform counterparts and gain market share in the BPO space PSBQ 1Q14 Research Highlights: BPO Performance SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES Industry-specific BPaaS for banking, insurance, pharmaceutical and public sector; cross-industry platforms that cover F&A, procurement, human capital management and analytics; and TCS Digital Software and Solutions Group industry-focused solutions all support TCS’ nonlinear growth. Cognizant develops industry expertise in its global delivery model to enhance its domain expertise and builds platform-based BusinessCloud solutions to enrich its BPO offerings. Cognizant will leverage its rapidly expanding footprint in the Philippines to capture BPO opportunities in the U.S. healthcare vertical. SOURCE: TBR RESEARCH AND ESTIMATES; COMPANY DATA AND ESTIMATES
  • 10. 10 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSBQ 1Q14 Research Highlights: Key Trends Professional Services Vendor Trends for 1Q14 Vendors combine industry capabilities, cloud, analytics, and internal IP and tools to maximize BPO revenue and profits SOURCE: WWW.PPTBACKGROUNDS.NET SOURCE: BLOG.ENTREPENUERARTS.COM SOURCE: FREEWORLDMAPS.NET Portfolio: Vendors integrate industry expertise, cloud and analytics into BPO solutions, transforming clients’ operations from cost centers to value creators. BPO Performance: BPO growth continues to outpace other services as buyers seek new avenues to trim costs and standardize processes. Delivery: Cloud-based delivery models and automation reduce the need for labor resources to deliver services inherent in the low-cost delivery structure.
  • 11. 11 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. Vendors continue to ramp up internal investment in IP-based solutions while purchasing or partnering with niche companies to fill portfolio gaps PSBQ 1Q14 Research Highlights: Portfolio Vendors build industry-specific IP portfolios to differentiate BPO offerings, reduce reliance on labor-based services, and boost revenues and profits Focus on Outcomes Accelerating Analytics, Cloud, Mobility Adoption Integration of Process and Technology Smaller, Shorter Contracts Shift from Labor Arbitrage to Blended Global Delivery Research and Development Mergers and Acquisitions Joint Ventures and Alliances Customer Engagements High Risk High Cost Low Risk Low Cost Medium Risk High Cost Medium Risk Medium Cost New services and/or new processes for delivering services Lead to productivity improvements, new customers, increased profits
  • 12. 12 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. Cloud: BPaaS solutions enhance the value of BPO services by integrating automation and cloud-based delivery. Capgemini, Cognizant, TCS and Infosys invest in BPO platforms through internal innovation initiatives. IBM and Xerox bought niche SaaS vendors to bolster BPO offerings around marketing and claims management. Analytics: Harnessing clients’ data, analytics offerings transform operations from cost centers to value creators. IBM packages capabilities from Watson Group and prior M&As (Cognos, SPSS) into predictive analytics solutions aimed at business functions such as customer experience, fraud detection and risk management. PSBQ 1Q14 Research Highlights: Portfolio Acquisitions and innovation enable BPO vendors to build scale and deliver business value with cloud and analytics technologies As traditional BPO services such as call centers become commoditized, vendors buy and develop technology-enabled offerings that add business value by enhancing productivity and delivering actionable data insights IMAGE SOURCE: LABS.SOGETI.COM IMAGE SOURCE: EHSTODAY.COM
  • 13. 13 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. BPaaS revenue is less than BPO revenue, but automation of processes and security of private cloud attracts cost-driven, process-focused clients SOURCE: TBR AND COMPANY DATA Note: Includes 21 of the 29 vendors covered in TBR’s Managed Private & Professional Services Cloud Benchmark PSBQ 1Q14 Research Highlights: Portfolio BPaaS growth is driven by vendors’ targeted marketing, e-payments and HR capabilities; vendors add vertical flavor and analytics to their BPaaS solutions to appeal to customers in key cloud-adopting industries such as retail, healthcare and financial services
  • 14. 14 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. Genpact integrates consulting, technology and analytics and merges them with proven BPO processes for solutions that improve clients’ businesses Genpact strives to break out of the BPO mold by layering analytics, industry expertise and process re-engineering capabilities over traditional back-office services to solve business problems and reduce operating costs. PSBQ 1Q14 Research Highlights: Portfolio Genpact builds platform solutions based on process knowledge
  • 15. 15 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSBQ 1Q14 Research Highlights: Key Trends Professional Services Vendor Trends for 1Q14 Vendors combine industry capabilities, cloud, analytics, and internal IP and tools to maximize BPO revenue and profits SOURCE: WWW.PPTBACKGROUNDS.NET SOURCE: BLOG.ENTREPENUERARTS.COM SOURCE: FREEWORLDMAPS.NET Portfolio: Vendors integrate industry expertise, cloud and analytics into BPO solutions, transforming clients’ operations from cost centers to value creators. Delivery: Cloud-based delivery models and automation reduce the need for labor resources to deliver services inherent in the low-cost delivery structure. BPO Performance: BPO growth continues to outpace other services as buyers seek new avenues to trim costs and standardize processes.
  • 16. 16 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSBQ 1Q14 Research Highlights: Delivery BPO headcount continues to decelerate as vendors replace the human component of traditional outsourcing with platform-based solutions SOURCE: TBR’S GLOBAL DELIVERY BENCHMARK, SPRING 2014 Note: BPO headcount for 14 IT services vendors: Accenture, Atos, Capgemini, Cognizant, Dell Services, CSC, HCLT, HP Services, IBM GS, Infosys, TCS, T-Systems, Wipro ITS and Xerox *1Q14 numbers are based on TTM average, as the fall iteration of the Global Delivery Benchmark is in progress. As BPO becomes more commoditized, the additional value of integrated cloud and analytics solutions into BPO deals will increase revenue per employee, since cloud and analytics solutions are grounded in technology, not people Cloud and analytics as business disruptors for vendors
  • 17. 17 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSBQ 1Q14 Research Highlights: Delivery Investments in cloud-based BPO platforms enable TCS and Cognizant to climb up value chain as IBM rebalances workforce to position for growth SOURCE: TCS AND TBRSOURCE: COGNIZANT AND TBR SOURCE: IBM AND TBR Delivery automation enables vendors to grow profits faster than revenue; margins are influenced by companies’ abilities to quickly adjust to changing market dynamics with outcome-based solutions TCSCognizant IBM
  • 18. 18 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSP Research Current Topics 1Q14 Report Key Themes • Select Vendor Reports: o Accenture o Atos o Capgemini o Cisco Services o Cognizant o CSC o Dell Services o Fujitsu o HP Services o IBM Global Services o Infosys o TCS o T-Systems o Wipro ITS o Xerox • Select Benchmarks: Business Intelligence Services Vendor, Global Delivery, Healthcare IT Services, Management Consulting, Public Sector IT Services, Managed Private & Professional Services Cloud  Analyze how IT services vendors position to take advantage of the changing security landscape. Assess vendors’ security offerings and how offerings are scaled.  Identify vendor talent management strategies. Highlight the recruitment channels being used to attract graduates such as campaigns and partnerships with universities. Identify training and skill development and leadership and career development. Assess strategies for improved utilization and attrition.  Understand IT services vendors’ near-term outlook for Canada and LATAM and strategies for local market expansion. Identify the verticals being targeted by IT services vendors in Canada and LATAM and the service offerings gaining the most traction among clients in the region. Security Talent Management Canada and LATAM PSBQ Research Highlights: 2Q14 Key Topics TBR will analyze IT services vendors’ investments and strategies to expand in security, Canada and LATAM and successfully manage talent
  • 19. 19 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. Questions? PSBQ 1Q14 Research Highlights
  • 20. 20 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. James McIlroy Vice President of Sales Email: mcilroy@tbri.com Telephone: 603.929.1166 TBR IT Services Vendor Benchmark Webinar Contact Information Twitter: @TBRinc SlideShare: www.slideshare.net/TBR_Market_Insight YouTube: www.youtube.com/user/TBRIChannel LinkedIn: www.linkedin.com/company/technology-business- research Elitsa Bakalova Professional Services Analyst Email: elitsa.bakalova@tbri.com Twitter: @ElitsaBakalova Telephone: 603.929.1166 Boz Hristov Professional Services Analyst Email: bozhidar.hristov@tbri.com Twitter: @boztbr Telephone: 603.758.1882 Patrick Heffernan IT Services Practice Manager and Principal Analyst Email: patrick.heffernan@tbri.com Twitter: @TBR_PatrickH Telephone: 603.758.1834 Ramunas Svarcas Professional Services Principal Analyst Email: ramunas.svarcas@tbri.com Twitter: @rjsTBR Telephone: 603.758.1833
  • 21. 21 TBR Quarterly Webinar Series | 7.24.14 | www.tbri.com | ©2014 Technology Business Research Inc. PSP Syndicated Research Coverage TBR Professional Services Practice Syndicated Coverage *Semiannual publication IT Services Vendors Public Sector Vendors Benchmarks (Benchmark XLS data also available) • Accenture • Atos • Capgemini • CGI* • Cisco • Cognizant • CSC • Dell • Fujitsu • HCL Technologies • HP • IBM Global Services • Infosys • Tata Consultancy Services • T-Systems • Unisys • Wipro IT Services • Xerox • Booz Allen Hamilton* • CACI International* • General Dynamics IS&T* • L-3 Communications* • Leidos* • Lockheed Martin IS&GS* • ManTech* • Northrop Grumman IS&TS* • Raytheon Intelligence, Information & Services* • SAIC* • Global Delivery Benchmark* • Healthcare IT Services Vendor Benchmark • IT Services Vendor Benchmark • Management Consulting Benchmark* • Public Sector IT Services Benchmark • BI Services Benchmark* • Managed Private & Professional Services Cloud Benchmark Management Consulting Vendors • Bain & Company* • Boston Consulting Group* • Deloitte Consulting* • McKinsey & Co.* • PwC* Healthcare IT Services Vendors • Accenture Healthcare IT Services* • CSC Healthcare IT Services* • Dell Healthcare IT Services* • HP Healthcare IT Services* • IBM Healthcare IT Services*
  • 22. About TBR Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators. Serving a global clientele, TBR provides timely and actionable 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.

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