2012 Global Services Compendium - GS100
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2012 Global Services Compendium - GS100



The current model of GS100 is based on market performance and ...

The current model of GS100 is based on market performance and
leadership, breadth of services, spread of global delivery capabilities, and
customer leadership. Next year, we would extend the model to measure
how service providers move towards leveraging platforms and solutions to
deliver the next wave of business value.
Congratulations to all the GS100 companies!



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    2012 Global Services Compendium - GS100 2012 Global Services Compendium - GS100 Document Transcript

    • www.globalservicesmedia.com Annual Issue 2012Annual Global Outsourcing Industry Analysis 2012 Global Services Compendium GS100 Survey þ GS100 List þ GS100 Categories þ ITO Segments þ BPO Segmentsþ
    • editor’s note Facing the New Realities The impact of the turbulent global economy on the growth of the services industry continues to be a widely discussed topic. The other such topic is the possible impact of the political backlash against outsourcing. While the latter can be dismissed as political rhetoric in an election year, the former requires some re-strategizing and deftness on the part of service providers. Growth rates are in single digits in the mature economies and the emphasis is on shorter term, single- function deals. Labor arbitrage is still important and service providers continue to seek low-cost locations. Our conversations with many companies during the GS100 survey re- vealed that while companies are seeking acceleration in revenue growth, profits, and other performance parameters; they are more engaged in acquiring the new capabilities required to address technological and social shifts influencing their customer’s business. n Enterprise software enters a phase of renewal driven by mobility, cloud computing and Software as a Service (SaaS), software manufacturers, and developers are turningEd Nair, Editor to experts in product development.ed@cybermedia.co.in n Contact center outsourcing is seeing renewed growth with customer interactions moving over to non-voice channels and social media. n The HR space is being redefined with greater breadth of cloud-based offerings rang- ing from recruitment to talent management. The impact of social media in managing workforce also requires major reorientation in terms of policies and practices. n The real hotspot is analytics outsourcing. Developments on the technology side in the form of cloud, big data, and business intelligence tools have simplified the area but there is still the need for data scientists to perform analytics. This makes the case eminent for outsourcing analytics. n With increasing number of organizations demanding application’s functionality as a cloud-based services rather than on-premises infrastructure, ADM vendors are of- fering more technology as subscription-based solutions and “pay as you go” ADM offerings. These shifts require major investments for both organic and inorganic scale up. Mostly, global service providers are rich with good financial reserves. Therefore, there would be a slew of M&A deals when services companies would acquire technology companies to own pieces of technol- ogy that would help them offer differentiated services. The current model of GS100 is based on market performance and leadership, breadth of services, spread of global delivery capabilities, and customer leadership. Next year, we would extend the model to measure how service providers move towards leveraging platforms and solutions to deliver the next wave of business value. Congratulations to all the GS100 companies!
    • Contents 46 27Segment Analysisn Application Development & Maintenance: On The Road To Recovery/ 27n OPD: Market is Expected to Reach $19B/ 38 38n Infrastructure Management Services: Cloud Comes With a Promise/ 46n ITO: Status Quo Sustained/ 56 66n Contact Centers: Growth Momentum Continues Amidst Turbulence/ 66n FAO: All Signs Suggest Maturity/ 75 75n ISBPO: Being Explored 56 Aggressively/ 86n PO: The Expanding Scope of PO 94 Contracts/ 94n HRO: From Cost Savings to Strategic 86 Advantages/ 100 106n Analytics Outsourcing: Inside The World of Numbers/ 106 100  |  September 2012 GlobalServices
    • 6 Survey Analysis The 2012 Global Services 100: Defining Leadership in Global IT and Business Advertisers Lists Ø Hildebrando 3 Ø Quatrro 7GS100 Lists Ø Endava 13Ø The GS100 List/ 13 Ø Belatrix 17Ø The GS100 Category Lists/ 19 Ø Hexaware 21Editorial Team Gulnar OberoiEd Nair gulnaro@cybermedia.co.in Ø IBA 29Editor, ed@cybermedia.co.inSmriti Sharma Design Team Ø Prokarma 31smritis@cybermedia.co.in Bhagbat PattnayakSmita Vasudevan Harnek Singh Ø Cybage 36smitav@cybermedia.co.in Pramod S RawatSourabh Chandra Pushp Ø Harbinger 41Sourabhc@cybermedia.co.in Cover: Pramod S Rawat Ø Great Idea 44 Pradeep GuptaSales & Marketing Ø Mexico IT 49 Chairman & MDSatish Gupta Hoshie GhaswallaAVP, satishg@cybermedia. Ø EPAM 53 CEO, Media Businessco.in Ibrahim AhmadGary Bindra Group Editor Ø Luxoft 59gurdeep@cybermedia.co.inGlobalServices September 2012  |  
    • SpecialReport Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis SurveySurvey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysis Survey analysisSurvey analysis Survey analysis Survey analysis Survey analysis Survey analysisSurvey analysis Survey analysis Survey analysis Survey analysis Survey analysisSurvey analysis Survey analysis Survey analysis Survey analysisSurvey analysis Survey analysis Survey analysis Survey analysis Survey analysisSurvey analysis Survey analysis Survey analysis Survey analysis Survey analysisSurvey analysis Survey analysis Survey analysis Survey analysis Surveyanalysis Survey analysis Survey analysis Survey analysis Survey analysisSurvey analysis  |  August 2012 GlobalServices
    • AdvertorialQuatrro Global Services–Spearheading BPO Industry to“Beyond the Existing” Quatrro has realized the benefits of first mover by offering state-of-the-art platform based solu- tions to its clients. It’s businesses are remarkably different compared to most of the other players in the industry whose focus continues to be on headcount, utilizing client owned technology for process delivery and cost reduction while Quatrro’s value proposition is primarily centered on utilizing Quatrro owned / customized technology, platform based services and revenue enhancement. Quatrro leads its peers by at least 3-5 years in servicing the mid market through right shore delivery. Stressing that SMB needs are remarkably dif- ferent from large enterprises, Raman says, “Mid market clients are value conscious and actively seek a lower total cost of ownership. Focusing on cost and transformation led value proposition alone will not help the service providers fulfill the mid market needs. The focus needs to be on enhancing the business value for SMB clients”.Q Illustrated below are various drivers that em- uatrro is recognized as one of the power Quatrro deliver significant value to its mid leading Business Process Outsourc- market clients: ing companies, focused on offering Commenting on Quatrro’s current success, Raman platform based services to Small and adds,” The adoption of our services by over 11,000Medium Businesses (SMBs) globally. The company SMB / SOHOs and leading multi- national companieswhich is spearheaded by the Guru of Indian BPO for their franchise operations is a colossal endorse-industry, Raman Roy, has taken rapid strides over ment of our business strategy. This has been furtherthe years and has lent true meaning to its tagline endorsed through the alliances that we forged with“Beyond the Existing”. It currently has over 130 various technology players in taking their services toenterprise clients, 11000+ SMB & SOHO custom- the mid-market, otherwise found unviable by them.”ers and 500,000+ individual customers in multiple Summing up, Raman says that Quatrro hasgeographies with diverse services covering Risk architected the birth of yet another industry inManagement, Financial Processing, Technical Solu- the services space – the industry of platform basedtions, Mortgage Processing, Interactive Entertain- business services that have no geographic barriersment and Knowledge Services. or limitations.
    • cover storyThe 2012 GS100:DefiningLeadership This is neitherin Global IT a study of 100 companies nor a survey aimedand Business at choosing hundred best companiesProcess based on financial performance. Hundred bestOutsourcing companies they are; chosen through a rigorous methodology...  |  September 2012 GlobalServices
    • survey analysisT his is neither a study of 100 companies nor IT Outsourcing Segments a survey aimed at choosing hundred best Total- $21.2B companies based on financial perform- SO Others 4% 5% ance. Hundred best companies they are; Testing 5%chosen through a rigorous methodology that eval- OPD 7%uates each company across multiple dimensions, ADM 38%measured both quantitatively and qualitatively. ESThe study presents a complete view of the dynam- 8%ics of the most significant segments that make upthe IT and business process outsourcing industry. IMS This is not a list of the 100 largest outsourcing 14%vendors. This list reflects the diversity and overall EA 19%landscape of the service provider community interms of company sizes, countries of origin and BPO Segmentscountries of delivery. Total- $11B FAOThe GS100 Methodology 8% HRO I/SCompanies who opted to participate in the sur- 20% 5%vey were asked to share exhaustive informationthrough an online survey done during 05/12 and KPO06/12. The top 100 list and the names in the catego- 9% CCries are derived using a scientific research method- 53% POology based on several qualitative parameters. 4% CONTRACT SIZES Customer Base- ITO BPO IT Outsourcing (# Customers, 130 Cos.) Upto $5M 15444 2586 $5M to $19M 357 165 New Customers-2011 Existing Active Customers $20M to $34M 177 54 $35M to $50M 55 28 Others 987 342 IT Strategy $51 M to $99 M 23 27 and 809 420 Consulting Total IT O/S $100M to $299 M 14 3 1775 583 IM $300M to $499 M 4 3 2876 285 OPD $500M to $749 M 4 7 1586 697 ES $750M to $ 1B 3 8 885 551 EA $ 1 B to $ 2 B 1 2 4021 967 ADM 1474 More than $ 2 B 0 5977 0 1000 2000 3000 4000 5000 6000 7000 8000 (# of contracts, 130 companies)GlobalServices September 2012  |  
    • cover story survey analysis Revenue by Geographies Customer Base- BPO ($65B, 130 cos.) (# Customers, 130 Cos.) North America New Customers-2011 South America Existing Active Customers Europe Africa & ME Asia Japan Industry-specific 960 328 Australia Australia Japan KPO 3809 780 5% 2% Asia 14% Procurement 222 60 Africa North & ME CC 3145 610 America 3% 47% HRO 396 34 Europe 733 96 FAO 24% South 0 1000 2000 3000 4000 5000 America 6% Verticals Row 4 Telecom 11.11 Retail & Consumer Products 12.93 Media & Information Services 8.40 Manufacturing 10.45% Rev. 2011 Life Sciences 9.11 Insurance 7.24 High Tech 11.26 Healthcare 8.27 Government 5.86 Energy, Resources & Utilities 6.48 Banking & Financial Services 15.84 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.0010  |  September 2012 GlobalServices
    • coming soon...To know more write to arvindr@cybermedia.co.in
    • GS100 GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 list GS100 listGS100 list GS100 list GS100 list GS100 list GS100 listGS100 list GS100 list GS100 list GS100 list GS100 listGS100 list GS100 list GS100 list GS100 listGS100 list GS100 listGS100 list GS100 list GS100 list GS100 listGS100 list GS100 list GS100 list GS100 list GS100 list GS100 list
    • Quality. Productivity. innovation. Endava PErhaPs it’s timE to think again about whErE you outsourcE Endava is a leading IT services organisation, with offices in London, New York, and Glasgow, and delivery centres in Romania and Moldova. Utilising our distributed agile delivery model we are able to deliver significant improvements to quality and productivity enabling our clients to deliver better results from their budgets — ApplicAtion Development — testing — ApplicAtion mAnAgement — DigitAl meDiA — infrAstructure Hosting AnD supportlondon nEw york glasgow romania moldova endava.com 2012 Finalist
    • 2012 GS100 List2012 GLOBAL SERVICES100 COMPANIESSl. No. Company Name1 Achievo Corporation2 Aditya Birla Minacs Worldwide Limited3 Aegis Limited4 Affinity Express5 AJUBA iNTERNATIONAL LLC6 Altisource Portfolio Solutions S.A7 Aspire Systems (India) Pvt. Ltd.8 Auriga Inc.9 Beyondsoft Corporation10 BLEUM INC.11 Blue Star Infotech Limited12 Capgemini13 Chinasoft International Ltd.14 Ci&T15 Ciklum16 City Park Technologies17 Collabera Inc18 CompuCom Systems Inc.19 Convergys Corporation20 Corbus, LLC21 CSC22 Cybage Software Private Limited14  |  September 2012 GlobalServices
    • 2012 GS100 List Sl. No. Company Name 23 DataArt 24 Datamatics Global Services Limited 25 Dextrys 26 eClerx Services Ltd. 27 Endava UK Limited 28 EPAM Systems Inc. 29 Exigen Services 30 EXL Service Holding Inc. 31 Expert Global Solutions 32 First Line Software 33 Firstsource Solutions Ltd 34 FPT Software Co. Ltd. 35 Freeborders, Inc. 36 Genpact Limited 37 GlobalLogic 38 Globant 39 Harbinger Systems Private Limited 40 HCL Technologies Ltd. 41 Hexaware Technologies Limited 42 Hildebrando 43 Hinduja Global Solutions Limited 44 IBA Group 45 iGATE Corporation 46 Indecomm Global Services (I) Pvt Ltd 47 Infosys Ltd. 48 Infotech EnterprisesGlobalServices September 2012  |  15
    • 2012 GS100 ListSl. No. Company Name49 Innominds Software Pvt. Ltd.50 Insigma Technology Co., LTD51 InterGlobe Technologies52 Intetics Co.53 iSoftStone Information Technology (Group) Co., Ltd54 ITC Infotech55 Itransition Software Development Company56 KPIT Cummins Infosystems Ltd.57 Lionbridge58 Lohika Systems, Inc59 Luxoft60 MAVERIC SYSTEMS LIMITED61 MERA62 Microland63 Mindteck (India) Ltd.64 MindTree Limited65 Mistral Solutions Pvt. Ltd.66 Nagarro, Inc.67 Neilsoft Limited68 Neoris69 Neusoft Corporation70 NIIT Technologies71 NorthgateArinso72 Omnitech InfoSolutions Ltd.73 Persistent Systems Limited74 ProKarma, Inc16  |  September 2012 GlobalServices
    • 2012 GS100 ListSl. No. Company Name75 Quatrro Global Services Pvt. Ltd.76 RCG Global Services77 Reksoft78 SaM Solutions79 Scicom (MSC) Berhad80 Serco Global Services81 Sitel Operating Corporation82 SoftServe, Inc.83 Sonata Software Limited84 SPi Global85 Stream Global Services86 Sutherland Global Services, Inc.87 Symphony BPO Solutions Sdn Bhd88 Symphony Teleca Corp89 Synapsis SpA90 Syntel Inc.91 Talentica Software (India) Pvt Ltd92 Unisys Corporation93 VADS Business Process Sdn Bhd94 ValueLabs95 VanceInfo Technologies96 Virtusa Corporation97 WNS Global Services PVT. Ltd98 Xceed99 Xchanging Plc100 Zensar18  |  September 2012 GlobalServices
    • 2012 GS100 category Lists2012 GLOBAL SERVICES 100CATEGORY LISTs Top Global ITO Leaders EPAM Systems Inc. Capgemini Genpact Limited CompuCom Systems Inc. Infotech Enterprises CSC ITC Infotech HCL Technologies Ltd. MindTree Limited Infosys Ltd. Neoris Unisys Neusoft Top Global ADM Leaders VanceInfo Technologies Capgemini Zensar CSC Emerging Mid-Tier Global ADM Leaders HCL Technologies Ltd. iGATE Corporation BLEUM INC. Infosys Ltd. Ci&T Insigma Technology Co., LTD FPT Software Co. Ltd. Syntel Inc. IBA Group Top Mid-tier ADM Companies InterGlobe Technologies Chinasoft International Ltd. KPIT Cummins Infosystems Ltd. Collabera Inc MERAGlobalServices September 2012  |  19
    • 2012 GS100 category Lists NIIT Technologies Leading Mid-tier Infrastructure Management Vendors ProKarma, Inc Aegis Limited SoftServe, Inc. Chinasoft International Ltd. Sonata Software Limited Collabera Inc Specialty ADM Vendors Genpact Limited Achievo Corporation Insigma Technology Co., LTD Cybage Software Private Limited MindTree Limited DataArt NIIT Technologies Endava UK Limited Sonata Software Limited Exigen Services Leading Global OPD Vendors Freeborders, Inc. EPAM Systems Inc. Nagarro, Inc. GlobalLogic Persistent Systems Limited HCL Technologies Reksoft Infosys ValueLabs Infotech Enterprises Top Global Infrastructure Management Vendors Lionbridge Capgemini Persistent Systems Limited CompuCom Systems Inc. Symphony Teleca Corp CSC VanceInfo Technologies HCL Technologies Ltd. Leading Mid-tier OPD Vendors Infosys Ltd. Beyondsoft Corporation Microland Limited Cybage Software Private Limited20  |  September 2012 GlobalServices
    • PARTNER WITH A TEAM OF EXPERTS Global IT Services and Consultancy Provider with the expertise and resources to meet and exceed your expectations every timeVerticals Horizontals Certifications Banking, Financial Services Enterprise Services (SAP, PeopleSoft, Oracle, Microsoft) CMMI Level 5 Travel and Transportation Quality Assurance and Testing Services (QATS) ISO 9001 Insurance and Healthcare Infrastructure Management Service (IMS) ISO 27001 Manufacturing Business Intelligence & Analytics SAS 70 Type II Energy and Utilities Business Process Outsourcing PCI DSS Human Resource Information Technology / HR Outsourcing Enterprise Risk Management www.hexaware.com
    • 2012 GS100 category Lists Globant Leading Engineering Services Vendors Hildebrando Collabera Inc iGATE Corporation HCL Technologies Ltd. Luxoft Infosys Ltd. MindTree Limited Infotech Enterprises Leaders- Global Enterprise Insigma Technology Co., LTD Applications Deployment iSoftStone Information Technology (Group) Capgemini Co., Ltd CSC KPIT Cummins Infosystems Ltd. HCL Technologies Ltd. Neilsoft Limited Infosys Ltd. Global Leaders- Testing Services KPIT Cummins Infosystems Ltd. Capgemini Leaders- Mid-market Enterprise CSC Applications Deployment iGATE Corporation EPAM Systems Inc. Infosys Ltd. Genpact Limited Mid-Tier Leaders- Testing Services Hexaware Technologies Limited Beyondsoft Corporation iGATE Corporation Collabera Inc Insigma Technology Co., LTD EPAM Systems Inc. iSoftStone Information Technology (Group) Co., Ltd Hexaware Technologies Limited Neoris Hildebrando S.A Sonata Software Limited Luxoft VanceInfo Technologies MindTree Limited22  |  September 2012 GlobalServices
    • 2012 GS100 category Lists Neoris InterGlobe Technologies Top Global BPO Leaders Scicom (MSC) Berhad Aegis Limited Symphony BPO Solutions Sdn Bhd Convergys Corporation Xceed Expert Global Solutions Zensar Technologies Genpact Limited Leading Mid-tier BPO Providers Sitel Operating Corporation Altisource Portfolio Solutions S.A Stream Global Services eClerx Services Ltd. Xchanging Plc EXL Service Holding Inc. Global BPO Challengers HCL Technologies Ltd. Aditya Birla Minacs Worldwide Limited Hinduja Global Solutions Limited Firstsource Solutions Ltd Quatrro Global Services Pvt. Ltd. Infosys Ltd. Serco Global Services NorthgateArinso SPi Global Sutherland Global Services, Inc. Syntel Inc. VADS Business Process Sdn Bhd Global Customer Management WNS Global Services PVT. Ltd Leaders Global BPO Niche Leaders Aditya Birla Minacs Worldwide Limited Corbus, LLC Aegis Limited Datamatics Global Services Limited Capgemini Hexaware Technologies Limited Convergys Corporation Indecomm Global Services (I) Pvt LtdGlobalServices September 2012  |  23
    • 2012 GS100 category Lists Expert Global Solutions Leading Mid-tier FAO Vendors Firstsource Solutions Ltd Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. Hinduja Global Solutions Limited Insigma Technology Co., LTD Sitel Operating Corporation Quatrro Global Services Pvt. Ltd. VADS Business Process Sdn Bhd Sutherland Global Services, Inc. Mid-tier Customer Management Global Leaders- Industry-specific BPO Vendors Altisource Portfolio Solutions S.A Altisource Portfolio Solutions S.A Genpact Limited CompuCom Systems Inc. Infosys Ltd. HCL Technologies Ltd. Stream Global Services Infosys Ltd. Sutherland Global Services, Inc. Scicom (MSC) Berhad Unisys SPi Global Sutherland Global Services, Inc. Industry-specific BPO Niche Leaders Xceed Aditya Birla Minacs Worldwide Limited Global FAO Vendors Aegis Limited Capgemini Ajuba International EXL Service Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. Infosys Ltd. Hexaware Technologies Limited WNS Global Services Hinduja Global Solutions Limited Xchanging Indecomm Global Services (I) Pvt Ltd24  |  September 2012 GlobalServices
    • 2012 GS100 category Lists InterGlobe Technologies Capgemini Mindteck (India) Ltd. eClerx Services Ltd. Neusoft Corporation Genpact Limited Quatrro Global Services Pvt. Ltd. SPi Global SPi Global Syntel Inc. Global Procurement Management Leaders- Specialty KPO Leaders Aegis Limited Capgemini Affinity Express Corbus, LLC Chinasoft International Ltd. Genpact Limited CompuCom Systems Inc. HCL Technologies Ltd. Corbus, LLC Infosys Ltd. Datamatics Global Services Limited WNS Global Services HCL Technologies Ltd. Xchanging Infosys Ltd. Global HRO Vendors Insigma Technology Co., LTD Capgemini InterGlobe Technologies NorthgateArinso Quatrro Global Services Pvt. Ltd. Global Knowledge Process Leaders Sutherland Global Services, Inc. Aditya Birla Minacs Worldwide Limited VanceInfo TechnologiesGlobalServices September 2012  |  25
    • SpecialReport Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysisSegment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis Segment Segment analysis Segment analysis Segment analysis Segment analysis Segment analysis analysis Segment analysisSegment analysis Segment analysis Segment analysis Segment analysisSegment analysis Segment analysis Segment analysis Segment analysisSegment analysis Segment analysis Segment analysis SegmentSegment analysis Segment analysisSegment analysis Segment analysis Segment analysis Segment analysis Segment analysisSegment analysis Segment analysis Segment analysis Segment analysisSegment analysis Segment analysis  |  August 2012 GlobalServices
    • Segment Analysis ADMApplicationDevelopment & Software developmentMaintenance : activities in the ApplicationOn the Road Development & Maintenance (ADM)To Recovery Outsourcing space may get postponed in the currentBy Sourabh Chandra Pushp downturn, but it will return with a throttle effect when the economy recoversGlobalServices September 2012  |  27
    • Segment Analysis ADMS oftware development activities in IT market is going the Application Development & through a period Maintenance(ADM) Outsourcing space may of massive change. get postponed in the current downturn, As enterprisebut it will return with a throttle effect when the software enters aeconomy recovers. great renaissance IT environment is facing extreme cost pressures period drivenwith increased expectations and IT executives ex- by mobility,pect more from their ongoing IT applications. ADM cloud computingoutsourcing offers the full scope of services that and Softwareaccelerates IT spend return— development, imple- as a Servicementation and management. It drives measurable (SaaS), softwareimprovements in product quality, reducing defect manufacturersdensity and increasing development productivity. and developersOutsourced ADM contracts are said to improve are increasinglyproductivity by up to 45 percent while it reduces turning to expertsIT-costs by as much as 50 percent. in product ADM outsourcing is a proven means by which development tocompanies can significantly reduce their costs, help them delivercontinuously improve the performance, stability innovation and toand availability of their applications and free up market faster.their existing IT-staff to focus on their strategic Keith Higginsinitiatives. It allows customers to reduce the cost chief marketing officer,and maintenance risk of all ongoing applications, Symphony Serviceswhile still retaining much needed control of theirIT OPEX and core business focus. based offshore vendors like TCS, Infosys, Wipro andThe ADM Market HCL, ADM activity still constitutes a large chunk ofThe ADM market is expected to grow from $51 B in the overall IT outsourcing. Recent years have seen2010 to approx $63 B by 2014 at a rate of 5.7 percent. the entry of other mid-tier vendors like Neoris, By 2015, Forrester expects the market for devel- Auriga and Softtek who have broken ground withopment services to approach $69B USD. non-India offshore delivery. However, India contin- The key ADM themes that dominated the ues to be the leading offshore location.market in 2011 were Cloud, Agile, Security, Analyt- The in-house delivery of IT application, main-ics. These themes have held sway as providers and tenance and processes are still dominant in 2012-buyers both look at taking advantage of the trans- 2013. Research carried by Horses for Sourcesforming AMD landscape. The explosion of technol- predicts 95% of ADM buyers reporting positiveogy and digital content, more pervasive network outcomes. ADM outsourcing saw near around 35connectivity and the continued proliferation of percent inshore activity together with more thansmart hand-held devices has completely reshaped 30 percent outsourced activity as sourcing modelthe ADM market and will continue to dominate. for managing the IT business. Companies have a The ADM segment is still the mainstay of the IT renewed focus on maintenance operations andoutsourcing market. Led by US-based majors such servicing existing applications is now of a greateras IBM, Accenture, HP and Cognizant and India- importance to them.28  |  September 2012 GlobalServices
    • Segment Analysis ADMThe worldwide source ADM market gets in the play easier than ever. Open source and collaboration tools fromspending on Dropbox to Linux-Ubuntu and to Cloud platformsthe enterprise such as AWS Elastic Beanstalk, application develop-application ers across the globe are expecting this to follow for coming years which clearly means new marketsoftware is expected implementations ADM outsourcing.to cross $120.4B ADM Buyers across geographies continued expanding their operations. While ADM marketin 2012, with a 4.5 saw larger number of less-value deals, well-knownpercent increase names in the ADM space signed greater numberfrom 2011 spending of contract renewals. North America continued to hold ace spot with the largest number of ADMof $115.2B deals, next to Europe, on a year-to-year basis. Cloud computing continued to be increasingly adopted in newer ADM deals. ADM Buyers are expecting nothing less thangreat quality, superior customer service and most Changing Landscape: Enterpriseimportant of all, top-notch solutions. In the coming Applications Softwaretime, more contracts are expected to pass on to “The global marketplace is still experiencing a se-emerging ADM destinations, like Brazil, Russia and ries of conflicting and contrasting economic newsEastern Europe. reports, and the full impact of the economic uncer- The ADM industry is going through a signifi- tainty on the enterprise software markets may notcant transformation in their licensing, delivery and be readily assessable until the end of the first halfsupport models. Despite a trend towards increased of 2012,” asserts Tom Eid, research vice presidentADM outsourcing to lower-wage economies, the at Gartner in the official press statement. Spendingcost of developing and maintaining applications in 2012 is anticipated to focus on industry-specificcan still consume more than half of the total IT applications; upgrades to established, mission-criti-budget. cal software; integrating and securing established The most notable theme that changed almost systems and infrastructure; and software as a serv-all ongoing trends for ADM market is the Cloud. ice (SaaS) deployments representing extensions to,With its on-demand, utility-pay for what you use or replacement of, existing applications and newand resource-sharing model, Cloud has galva- solutions.nized businesses and vendors across the industry According to Gartner, the worldwide spendingand ADM market landscape. All the leading ADM on the enterprise application software is expectedplayers have in 2011-12 enabled sections of their to cross $120.4B in 2012, with a 4.5 percent in-portfolio as cloud ADM service offerings with plans crease from 2011 spending of $115.2B.in the pipeline to widen their capability for Cloud With increasing number of organizationsADM market. Other prominent ADM market trends demanding application’s functionality as a cloud-are- Enterprise App Stores and Desktop Services. based services rather than on-premises infrastruc- The Mobile and Cloud application develop- ture, ADM vendors are offering more technologyment is the hottest place to be in the IT industry in as subscription-based solutions and “pay as youthe coming year. With the rise of productivity and go” ADM offerings. This is expected to be a muchcollaboration tools becoming more refined, open needed step by ADM providers positioning them as30  |  September 2012 GlobalServices
    • Segment AnalysisCloud When everyone is speakingcomputing about reducingconversations costs especiallyare slowly overhead in particular,morphing the application’sADM market in quality cannot be compromised, andterms of cloud this realizationcomputing has led to a lot of focusapplication on applicationplatforms maintenance as a discipline over the last few years.more cost-effective and as a way to counter the ef- Ashok Saxenafects of economic recession. SaaS and cloud-based Head, India Engineeringservices are helping established ADM vendors to Centre, Kronosexpand their overall revenue growth. On the account of enhanced SaaS and cloud ap-plication use, enterprise ADM market continues to market is experiencing an ongoing boom in soft-evolve. As tighter capital budgets demand accurate ware development for cloud computing that takesleaner alternatives the ADM growth graph varies advantage of benefits but also issues that will openwithin geographies. up opportunity for new software development ver- ticals. Industry experts believe, the impact of cloudCloud and Android Based service on the ADM market will change the sellingApplication Development and licensing of IT-applications, the way applica-Cloud computing conversations are slowly mor- tion data are handled will undergo a major shiftphing the ADM market in terms of cloud comput- which will induce the data driven applications intoing application platforms. Much of its expectation, the mainstream market.cloud-based ADM are becoming an IT norm and However, for software development the un-less of an exception. In the cloud world, software derlying challenges of Cloud will come into sharpdevelopment has become more complex in terms focus as Cloud’s increasing benefits and risks willof security, reliability, usability and performance prompt the ADM providers to come to grips withand will keep the software development industry it.busy. Besides, Cloud Android is also accelerating the Ashok Saxena, Head, India Engineering Cen- ADM landscape. The unprecedented growth of An-tre, Kronos opines how the whole ADM space has droid devices and the demand for suitable Androidchanged to serve the market forces and meeting applications are fueling a huge demand for ADM.end user expectations. Ashok says, “Most of the Ron DuPlain, Freelance Lead Android & Mobilecloud migrations we see today are applications Web Engineer, says, “Today when everything isfor physical infrastructure and are now taking full centered around mobility, application develop-advantage of the cloud possibilities. The ADM ment has taken vital transformation, both in terms32  |  September 2012 GlobalServices
    • ADMof development and strategy. Application develop- estimated at a five-year compound annual growthment companies are focused to help subscribers rate (CAGR) of 15.4% through 2015. While the U.S.realize the potential of rapidly evolving mobile has led other regions in adoption of maintenancetechnologies.” services, in terms of both traditional and newer cloud-based maintenance services, there is anApplication Maintenance and increase in regional interest and adoption of theseTesting services in Canada, Latin America, Western Europe,All application products need sufficient mainte- and parts of Asia-Pacific.nance and both–investors and developers tend to Independent maintenance and testing for appli-heavily focus on it. cations is growing at 40 to 50 percent globally and There has been a lot of innovation in ADM with expected growth of about 35 to 40 percentspace and several maintenance tools and processes in offshore locations. While various industry reporthave evolved which enhanced the maintenance forecast various geographies to evolve as majorphase which in turn translates the overall quality ADM locations. India has grown to become the larg-of the application. est destination for outsourcing of software mainte- The market for discrete application mainte- nance and testing services, accounting for 32 per-nance worldwide is expected to experience solid cent of the total global ADM outsourcing share. Thegrowth as cloud and mobility drive next phase of application maintenance industry for India is grow-evolution, according to a latest report from IDC ing, export revenues and the number of employeesresearch. IDC estimates that global maintenance have doubled over the last four years in domesticand testing services spending reached $9.4 B in space which is projected to cross $1.5B by 2020. It’s2010, with projections for worldwide growth quite interesting to note that, US alone spends aGlobalServices September 2012  |  33
    • Segment Analysis ADMtotal of $59B on software maintenance. Of this total There has beenspend, $13 B is outsourced as a service to the Asian a drastic shiftcountries, India in particular. The ADM market has in the amountdemonstrated a CAGR of 19-23 percent year-on-year of developmentgrowth, in comparison to 47 percent by the inde- being done in thependent maintenance and testing services. integration and Kalyana Rao Konda, Vice President, AppLabs, testing stagessays-”The consumer demands are leading to in the lifecycletechnology advancements and fierce competition of an IT project,between providers. The survival of providers has compared to whatbecome subjective to the quality of the product was happeningwith superior service. Software maintenance and ten years back.testing plays a vital role in providing reliability This has resultedand quality to consumers to ensure that they don’t in an increasedhave a bad experience on using or buying the demand forproduct they like.” services on Data The current competitive environment and management/consumer demand for sophisticated applications is BI/Analytics,putting increased pressure on businesses to deliver Integration andquality apps at reduced costs and within shorter Testing sides oftime period. This ‘no scope for error’ environment the business,has increased the need for effective software test- which willing. Today, it has become one of the fastest grow- continue to being areas of the corporate IT expenditure. On the key opportunityother hand, meeting customer expectations has areas for allnow become a challenge for enterprises across all organizations.the industries due to the faster delivery cycles and Krishnamurthy R,increasingly competitive landscape. Senior Vice President & Enterprises operating across various industries Head-Global Delivery,and geographies have now realized the need to Collaberadeliver quality products/applications and services tomeet customer expectations. of some of these massive movements. There are aConclusion bewildering range of technologies on the marketWith the economy of developed countries stagnat- today. The good news is that the service industry ising and the threat of recession retuning to major becoming more and more specialized. Companiesglobal players, companies will continue to rely on that want to take advantage of the hottest initia-software development outsourcing and offshoring tives today – be they Saas, cloud or enterprise mobil-for cost control, lean operations and scalability in ity – can get all the assistance they need. The right2012. software development service providers will have As cloud, SaaS, mobility and other trends fun- in-depth knowledge of all these platforms and thedamentally re-shape software development, there competency to deploy them quickly and at a com-is a large, growing market for specialized product petitive price. They will also offer outcome-baseddevelopment specialists. 2012 is just the beginning engagement models that fit each client’s needs.34  |  September 2012 GlobalServices
    • ADM Application Development & Maintenance Top Global ADM Leaders Capgemini Infosys Ltd. HCL Technologies Ltd. Syntel Inc. Insigma Technology Co., Ltd iGATE Corporation CSC Top Mid-tier ADM Companies Chinasoft International Ltd. EPAM Systems Inc. Infotech Enterprises MindTree Limited Neoris Neusoft ITC Infotech VanceInfo TechnologiesApplication Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance ZensarApplication Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development &Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development &Maintenance Application Development & Maintenance ApplicationDevelopment & MaintenanceApplication Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development & Maintenance Application Development & Collabera Inc Genpact LimitedMaintenance Application Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development & Maintenance GlobalServices Application Development & Maintenance September 2012  |  35
    • AdvertorialStretching Value.Scientifically.T o be able to ‘differentiate’ innovatively and The second variable is the fact-file of the prospec- effectively holds a key to attaining global tive vendor. The overlap between these two vari- leadership in the business world. The natu- ables determines whether the vendor qualifies for ral reflex of a brick & mortar company is to the next step in evaluation. The third variable is theadopt a customer-centric ‘differentiator’. IT Service cost—the ratio of the fact-file vs. cost—which deter-companies behave a little different. The fiercely mines the probability of deal closure.contested battle for talent forces them to oscillate Unfortunately, there is one more key variable thatbetween customer centric and employee-centric dif- is often overlooked. This variable resides betweenferentiators. ”Pick any one of the two sides, and then the second and third variable; it represents the effi-inherit the one from ciency of the vendor tothe other,” goes the leverage the fact-filehypothesis! into relevant deliveries. This differentiat- The customer’s loy-ing tactic certifies alties are not with thethe vendor’s dual vendor’s fact-file butrobustness. The seeds tied to satisfactoryof Cybage thought project deliveries at aleadership are sown reasonable cost. In thein the innovativeness IT business world, thisof our ‘differentia- delivery excellencetor’. We believe that is broadly measuredthe organization’s under the followingdifferentiator should attribute equation:not be inherited from the visible Quality, Speed, Consistency, Respon-aesthetics but from the grass root siveness, Attrition Risk, Scalability,implementation of productivities. and Value-add—dividends capturedThe customer-centric and employee-centric dif- with ‘Cost’ in the denominator.ferentiators are like leaves and flowers with great Cybage thought leadership is rooted in thevisual appeal but all the flourish and greenery is innovation applied to stretch ‘productivity’ of allat the mercy of the root’s productivity to absorb the above mentioned attributes that together leadnourishment. to customer’s delight and employee’s rewards. To appreciate this pivotal role of productivity, The above attribute equation is comprehensivelyone needs to dig a little deeper where business optimized, implemented, and internalized organi-partnerships are fortified. Generally, there are three zation-wide at Cybage through this sophisticatedvariables that a customer juggles with to close on business management software system called thea vendor. The first variable is the overall IT needs. ExcelShore® Model of Operational Excellence.
    • Segment AnalysisOPD Market isExpected to Reach$19B By 2015, technology analyst Forrester expects the market for productBy Smriti Sharma development services to approach $19BT he business of devel- and market influence oping new and solu- while staying away from tion-customized software marketing and development is the nucleus of thriving risk, it imperative to engineer thetechnology industry. Product develop- right product, manage it across thement plays a significant role in getting various phases of its lifecycle, manageeconomic returns as well as establishing market the copious risks, deliver the product faster to theinfluence. However, whilst introducing a new prod- market and retaining the capacity to innovate theuct in the market a company is also putting itself at product. The right product strategy is the only waymarketing and development risk. to success in the business of software products. To ensure a company wins economic returns Product mangers have repeatedly taken their38  |  September 2012 GlobalServices
    • OPDcompanies through the journey of transition from There are atraditional product development to value develop- bewildering rangement. This process calls for a lot more innovation of technologiesand this occurs during the stage of engineering. on the market Still the question remains why outsource? It today. The goodis outsourced, much like other services, for the news is that thereasons of getting intellectual property in the service industryform of principles of excellence, best practices, is becomingmethodologies, process templates, engineering more and moreroadmaps, monitoring tools, quality assurance specialized.procedures- carefully applied across various Companies thatstages of product development, further resulting want to takein innovation. advantage of the Large Independent Software Vendors (ISVs) hottest initiativesare creating innovation across various domains today can get allsuch as Cloud enablement, SaaS, Product Lifestyle the assistance theyManagement, etc. need. This year the product development space is Keith Higginsexpected to become increasingly fragmented chief marketing officer,and specialized. Mobility, cloud computing and Symphony ServicesSoftware as a Service (SaaS) continue to be thedrivers of this industry. Software manufacturersare seeking advice from experts to assist them in also offer outcome-based engagement modelsdriving innovation to market faster and at a lower that fit each client’s needs.”cost. Experts are roped in for specific initiativesrevolving around technology, for example, mobil- Market Scenarioity, cloud and SaaS, their industry, business and During pre-crisis times, IT outsourcing was the mostvertical segments. frequently adopted strategy by large companies. As software development is re-shaped by Today, ITO practice has found more support amongstcloud, SaaS, mobility, the demand for specialized the mid-market. As for this segment, cost as well asproduct development is increasing. Keith Higgins, access to skills and services is extremely essential.chief marketing officer, Symphony Services, stated This market segment is also home to some of thein another interview, “2012 is just the begin- most exciting and current technology developments.ning of some of these massive movements. There Taking advantage of this opportunity some of theare a bewildering range of technologies on the independent software vendors are expanding theirmarket today. The good news is that the service footprints in this space. Software companies whoindustry is becoming more and more specialized. have moved to cloud computing and SaaS have wit-Companies that want to take advantage of the nessed significantly larger opportunities.hottest initiatives today – be they Saas, cloud The pricing models offered by vendors areor enterprise mobility – can get all the assist- outcome based pricing, revenue share pricingance they need. The right software development and risk reward pricing. These pricing modelsservice providers will have in-depth knowledge of add to the attractiveness of partnerships. In-all these platforms and the competency to deploy creasingly, buyers are employing risk-rewardthem quickly and at a competitive price. They will partnership model, where the vendors areGlobalServices September 2012  |  39
    • Segment Analysis OPDwilling to absorb a certain amount of busi- of software development and IT resources, avail-ness model risk, across the lifecycle of products. ability of IT talent pool, positive references from OPDs are expanding in Asia and Europe. The the fellow companies/local business community,challenges that companies who have not made to geographical and cultural proximity, strong re-the outsourcing map of product development face search and development (R&D) legacy, political andare poor client-vendor communication, delayed economic stability, Intellectual Property (IP) secu-project delivery, cultural differences etc. rity, proficient English language skills etc. In order to tackle these issues, face-to-face Gartner’s study Predicts 2010: Agile and Cloudcommunication with their vendor’s project man- Impact Application Development Directions, high-agement and project teams should be increased, lighted, “By 2012 ‘agile development methods willemploying additional valuable resources, switching be utilized in 80% of all software developmentto alternative software development methodol- projects’. Although Scrum will continue gaining inogy, bringing in assistance (advisories) to enhance popularity over the coming years, organizationsvendor relationships, encouraging partnering with will not be successful in their transition unless theydifferent vendors to offer more cost-effective en- move toward a team-focused culture. Very fewgagement, etc. organizations use a pure-Scrum approach and most Buyers while zeroing upon a geography should rely on a hybrid approach (waterfall and Agile).keep in mind the following pointers: low costs Organizations struggle to implement true collabo-40  |  September 2012 GlobalServices
    • Segment Analysis OPDration in the context of globally distributed teams. to call on the best talent available. Incumbency isA situation that has amplified in recent years with no longer the advantage it once was.”outsourcing and offshoring of software develop- 3. According to a recent Gartner survey, 30 per-ment projects. On the other hand, teams who cent of large organizations cited enterprisehave successfully moved to Agile see productivity mobility as their top business priority for 2012.improvements especially in ‘the flexibility of the Higgins explains, in the past, the enterprisedevelopment team to respond to shifting require- tended to be a closed and homogenous place.ments’. This is especially true for web-based ap- Employees would typically use one type ofplication developments where rapid responses to a device – like a Blackberry – to communicatechanging environment are critical.” amongst themselves. Enterprises now have to Organizations need to make use of key agile grapple with a dizzying array of business andpractices and invest in training and supportive connected mobile devices, all of which needtools’ infrastructure. Those who do not will end in to communicate seamlessly and securely withlong-term declines in quality and productivity. one another. By outsourcing their enterprise software mobility department, organizationsTop Trends are trying to address this challenge. This year, a1. Cloud, SaaS and mobility has resulted in a lot large number of companies are buying enter- of investments and companies have started prise mobility as a managed service. generating new tools and technology. Many 4. Gartner predicts that 75 percent of all comput- organizations want to use these tools; however, ing will be in public clouds by the year 2020. they do not have domain knowledge or financ- Cloud computing has revolutionized the man- es to integrate the best ones. Thus, companies ner in which companies operate. The manner are moving to outsourcing partners to get the in which companies employ cloud technology specialist assistance they require. Over the next is changing too. A mixture of cloud applica- 12 months, it is expected that companies will tions, platforms and infrastructure is sourced concentrate on building best-in-class technolo- by organizations. As cloud-based companies gies for their clients. They will then use these are becoming more specialized, they are innovative technologies to create products for encapsulating cloud-based tools in their of- their customers as trusted partners. ferings. There are approximately two million2. According to the global consultancy Zinnov, 70 users of Salesforce.com around the world and percent of ISVs look at industry benchmarks every 25 million users of Google Apps. Company’s year to re-negotiate contracts with their services products assist software developers to build partner. Increasingly in 2012 ISVs will be looking private development clouds. Software devel- to add rigorous Service Level Agreements (SLAs) oper and other outcome-based conditions to the com- 5. The high adopted rate of personal health man- mercial engagement model with their services agement systems has laid eggs for an increased partners. demand of new applications. Higgins predicted, Higgins opined, “We predict this will create a sig- “By 2015, as many as 500 million smartphones nificant opportunity for specialist service provid- will have a health-related application on them. ers, as more ISVs will move to a multi-source mod- The Veterans Administration in the US is plan- el involving a spectrum of trusted partners. ISVs ning to rollout 100,000 iPAD tablets across 152 will actively seek out specialist help to address hospitals. Next year, we expect to see a host of specific pain points in their businesses, speed in- new vendors enter the market with innovative novation and reduce costs. They will not hesitate connected healthcare solutions.”.42  |  September 2012 GlobalServices
    • OPD Outsourced Product DevelopmentLeading Global OPD Vendors Leading Mid-tier OPD VendorsEPAM Systems Inc. Beyondsoft CorporationGlobalLogic Cybage Software Private LimitedHCL Technologies GlobantInfosys HildebrandoInfotech Enterprises iGATE CorporationLionbridge LuxoftPersistent Systems Limited MindTree LimitedSymphony Teleca CorpVanceInfo Technologies GlobalServices September 2012  |  43
    • A City of Financial Delivery Center Hangzhou, ChinaH angzhou is located at southern wing of the Yangtze Delta region, which is the most prosperous area in Eastern China; and also the hub of transportation for airport, rail, road and inner-river in southeast China.As the provincial capital city of Zhejiang, Hangzhou is a city with unique charm and extraordinary potential, enjoyed a long historyand culture, unique geographical advantage, healthy natural environment, abundant science and education resources, and solideconomic foundation. It ranked No.1 in “China mainland Best commercial City Ranking” by Forbes magazine, reelected “China’sHappiest Cities” for eight consecutive years, China’s top ten Creative City, China’s top ten Dynamic City and top ten low carbon Cities,the highest honor of the model city of Chinese people’s livelihood and achievements.The city will take scientific development as the main theme and focus on adjusting the economic structures. Efforts will be put into enrich people and increase the city’s competitiveness and social harmony. The urban-rural integration and internationalizationstrategy being the major means, the city will prioritize the well-being of citizens, emphasize the environmental protection, strengthen itsinnovative power, support its real economies, boost its cultural industries and uphold its open-up policy. The urban-rural integration and internationalization mark high-level of urbanization, which also sets path for and facilitates thesustainable development. The two tasks must be embodied in every respect of the city’s social and economic development tosubsequently optimize the allocation of production factors, invigorate the economic development, expand the development spaceand upgrade the development level, as a result of which the city’s people will share the modern civilization and happy lives.To prioritize the well-being of citizens, the city will be dedicated to solving problems and addressing difficulties in the aim of enrichingand benefiting people.To protect the environment, the city will aim to create the first-class ecological, living, legal, administrative and business environmentin order to improve its advantage in this aspect. International Financial Outsourcing Center
    • To strengthen the innovative power, the city will promote the innovation in idea, technology, system, culture and service so as to improve its creativity and development power. To support its real economies, the city will view real economies as the cornerstone, and continuously improve the core competitiveness through industrial structure upgrading. To boost the cultural industries, the city will continue to explore its cultures and traditions in order to carry along and broaden. In addition, the city will seek to realize the cultural prosperity and development in a major degree for the improvement of soft power. To uphold the open-up, the city will widen and broaden the degreeof opening up, and view open-up as the power of reform, development and innovation.In recent years, Hangzhou has issued a series of policies to focus on the implementation of the innovation-driven strategy, acceleratethe development of innovative economy, and speed the development of Hangzhou ten major industries —— cultural and creative,tourism and leisure, financial services, e-commerce, information software, advanced equipment manufacturing industry, the Internetof Tings, biomedicine, energy saving, new energy; especially, vigorously promoted the priority development of service industry,optimizing the development, and the main engine role of the services sector in the Hangzhou Economic Development was moreprominent.By the end of 2011, there are 22 Hangzhou enterprises among the top 500 Chinese enterprises, 30 companies among the top 500Chinese manufacturing enterprises, 37 enterprises among the top 500 Chinese service enterprises, 56 private enterprises among thetop 500 private enterprises in China; more than 20 national services industry high-tech service industry base, the National ElectronicInformation Industry Base, and the Hangzhou national software industry base, etc.Demonstration City of Chinasourcing Hangzhou
    • segment analysisINFRASTRUCTUREMANAGEMENTOUTSOURCING:CLOUD COMESWITH A PROMISEBy Sourabh Chandra Pushp High volatile economic downturn coupled with the ease of cloud delivery is resulting in a surge of demand for IM outsourcing46  |  September 2012 GlobalServices
    • IMSTwo prominent Most of services offered bytrends that will software vendorsshape the IM today will soonlandscape are “As- be offered as ‘as- a-Service’ becausea-Service” Offerings it gives costand Enterprise efficiency which is acceptableServices to most of the customers. As such, enterprisesA lthough, the global macroeconomic will eventually uncertainty will result in sluggish IM be forced to outsourcing activity, the current infra- standardize their structure market is evolving rapidly. infrastructureCombined with advances in standards-based infra- managementstructure, data center transformation, and utility- processes.based cloud computing, the outlook for IM market Brian J Manningcontinues to be dynamic and exciting. President & Managing The Global IM market is expected to touch $180 Director, CSC IndiaB by 2013 and to $355 B by 2016 from $269 B in2011. Worldwide Remote Infrastructure Manage-ment (RIM) Market size is also expected to be in ture in particular will witness a significant growth.the mark of $95 -$108 B. This is accompanied by This is supported by the fact- a significant numberworldwide IT spending forecast to total $3.7 tril- of IT contracts is coming to end. Analysts estimate,lion in 2012, a 2.5 percent increase from 2011. the TCV for the deals that would come to an end in Emerging markets will generate $1.22 trillion next 18 months is around US$85 B. “Infrastructurein IT spending in 2012, representing more than outsourcing, data center and network tower deals31 percent of the worldwide total. The emerging make up a significant portion of the ITO contractsregions of Asia/Pacific, Latin America, the Middle expiring in the near term,” says Ross Tisnovsky,East and Central and Eastern Europe, continue to senior vice president, Everest Group. “Disruptiveshow positive IM outsourcing momentum. And, next generation technologies, such as cloud com-this will see half of emerging market IT spending puting, will introduce new benefits and challengesactivity representing nearly $658 B for the year that the market didn’t see five years ago. As buy-2012. This reasons why the market remain far from ers are looking for more than just cost savings.”saturated. Infrastructure outsourcing constitutes some of the largest ITO contracts coming to term in both NorthDeals and Contracts America and Western Europe. Cloud computing willMost of the IM deals over the last few months have clear visible impact on IM market as Remotesaw a renewal in 2011-12. Large deals continue to infrastructure management outsourcing (RIMO)skew the average deal size. North America saw the as a model is maturing quickly and entering into amaximum activity for deals and contracts followed phase of sustained growth.by UK and Rest of Europe. The IT market, Infrastruc- The buyers’ ITO spending shift will be towardsGlobalServices September 2012  |  47
    • segment analysis IMSthe smaller deals which will challenge the margin coming with multiple infrastructure services modelspressures for service providers. It’s very obvious and competing with traditional IT infrastructurethat the IM deals will increasingly be driven by outsourcing firms. This trend will become strongercloud and RIMO. In the past, technical and percep- in 2012.tion issues caused cloud-infrastructure adoption Two prominent trends that will shape the IMchallenges. But, things have changed now and landscape are “As-a-Service” Offerings and Enter-investments in new innovative solutions with hard prise Services. Both trends are increasingly becom-focus to boost the IM market. ing the norm for Infrastructure services and have Infrastructure spending will be driven by larger gained a considerable adoption momentum. Cloudbuyers and will focus on outsourcing economics infrastructure trend has have been shaping upand service provider consolidation. The BFSI quite aggressively and service providers havevertical in particular, will con- already embraced while clients aretinue to be the dominant adopting it.infrastructure segment; Infrastructure outsourc-other verticals such as ing segment has consist-healthcare and hos- ently been the fastestpitality will also growing segmentwitness strong in- within IT services-frastructure ac- share in the over-tivity. Speaking all IT servicesof geogra- segment hasphies, North increased fromAmerica, will about 15 percontinue to cent in FY2008dominate to about 17 perwhereas Asia cent in FY2012.Pacific is ex-pected to grow Cloudmuch faster. Computing Comes with aTrends That will PromiseReshape the IM Cloud scripts the story ofLandscape Infrastructure ManagementIT infrastructure outsourcing (IM) and there is a reasonhas been one of the mainstays for that. Cloud comput-of IT outsourcing industry. ing is fast emerging on theOver the years, its composition IT infrastructure scenario and ishas changed significantly and likely to play a disruptive role, withtraditional infrastructure model maximum impact visible initially in datahas undergone a massive change. center and applications projects.With advanced technologies remote As cloud emerges as a new stor-server management has become the age market, competition is increas-de facto standard for infrastructure ing with leading infrastructurelandscape. This has led to new names vendors. Although the external48  |  September 2012 GlobalServices
    • segment analysisprivate cloud infrastructure market is still in it’s Cloud approachnascent stage, both small and large enterprises are to infrastructureutilizing it heavily and are the primary consumers will changeof Cloud infrastructure. the traditional By 2016, at least 50 percent of enterprise us- landscape asers will rely primarily on enterprise-mobile client they offer ainstead of a desktop client which means a clear much cheapershift in the traditional IT infrastructure. It’s well alternativesupported by the fact that more than one third to traditionalof the digital data would be stored on the cloud infrastructure–infrastructure by 2016. In 2011 just 7 percent of some businessesconsumer’s digital data was stored in the Cloud can cut theirwhich will grow phenomenally to whooping 36 operational costspercent in 2016. by as much as 85 Recent IDC cloud research shows that world- percent if theywide revenue from public IT cloud services ex- opt for cloudceeded $21.5 B in 2010 and will reach $72.9 B in infrastructure.2015, representing a compound annual growth Sharmila Sahanirate (CAGR) of 27.6percent. This rapid growth rate Mulligan,is over four times the projected growth for the Founder & CEO,worldwide IT market as a whole (6.7percent). By ClearStory Data2015, one of every seven dollars spent on pack-aged software, server, and storage offerings will bethrough the public cloud model. The cloud move- Brian J Manning, President and Managingment is about much more than the cloud. Analysts Director, CSC India, says “While no one can pre-predict an aggregation of Cloud offerings located dict exactly how the IT services marketplace willin the same data center to provide appropriate change, we’re confident that client demand willlevels of performance, security, manageability and grow very rapidly for cloud computing. In 2012,availability. the global market for cloud services is predicted The cloud is no longer a competitive advantage, to surge to US$148.8 B in 2014. This shows thatbut has become an operational necessity. Results there will be a huge transformation in the businessfrom a recent KPMG survey show that 81percent model of any organization.”of businesses are either planning their initial cloud In the year 2012, the impact of the shift tocomputing forays, are in early or advanced stages cloud computing will become apparent. One ofof experimentation or have full implementations. the first obvious effects will be the cloud-drivenBut before moving to the cloud, businesses first transformation of whole industries. Cloud applica-need to examine their current IT infrastructure, us- tion platform/PaaS wars will intensify. Phil Fersht,age and needs. founder of outsourcing consultancy Horses for Worldwide software-as-a-service (SaaS) revenue Sources, calls cloud services the foundation foris forecast to reach $14.5 B in 2012, a 17.9 percent next-generation enterprise sourcing solutions. Heincrease from 2011 revenue of $12.3 B, according believes cloud services will make traditional deliv-to Gartner, Inc. SaaS-based delivery will experience ery of IT services more efficient and cost-effective.healthy growth through 2015, when worldwide He adds, “This new class of outsourcing has the po-revenue is projected to reach $22.1 B. tential to unlock tremendous value for customers.”50  |  September 2012 GlobalServices
    • IMSThe global cal. Also, it provides massive compute power that previously would have only been affordable forinfrastructure select companies.”market will grow Large Internet companies were the first to4.4 percent and leverage the power of the cloud infrastructure. By virtue of their business, they had the easiestreach £463B by 2015 time understanding the pros and cons of the cloudand will hit a 4.5 infrastructure, and they already had the talent in- house to take advantage of it. per cent growth rate by 2013 Cloud Predictions The ability to integrate business applications on smartphone, tablets and other wireless devices is predicted to accelerate SaaS adoption in the The growth of platform as a service (PaaS) and corporate business environment. Forrester forecastscloud computing are driving infrastructure market that the global market for cloud computing willforward. Organizations have now passed the first grow from $40.7 B in 2011 to more than $241 B instages and are implementing cloud architectures 2020. The total size of the public cloud market willfor their enterprise and as a result, the traditional grow from $25.5 B in 2011 to $159.3 B in 2020. IDCrole of the IT infrastructure is changing. predicts that 14.4percent of applications spending On the question of changing role of infrastruc- will be SaaS-based in the same time period and theture services, Raman Sapra, Executive Director- cloud computing marketplace will reach $16.7B inStrategy and M&A, Applications & BPO, Dell Serv- revenue by 2013, a compound annual growth rateices asserts how cloud will play a game changer (CAGR) of 24 percent.role together with enterprise mobility and analyt-ics. “With the rise of cloud, infrastructure manage- SMB and Cloudment services portfolio is bound to get a complete Gone are the days of large enterprises holding themakeover. Emphasis will lie more onto using cloud keys to enterprise-class IT and services. The cloudinfrastructure to overhaul the scope and economics levels the playing field for SMBs. Today’s SMBsof traditional infrastructure services,” says Raman. believes in the cloudy abilities. In an independ- The way in which companies utilise cloud infra- ent survey by Microsoft, 76 Percent of SMBs agreestructure is changing too. Organisations are now that they are the backbone of the economy andsourcing complete business solutions through the almost half of them (53 Percent) expect sales figurecombination of cloud applications, platforms and to grow within next 12-18 months. But, the mostinfrastructure. Cloud approach to infrastructure important finding remains the awareness of thewill change the traditional landscape as they offer Cloud Computing. Majority of them are increasinglya much cheaper alternative to traditional infra- moving to the cloud.structure– some businesses can cut their opera- USA-SMB cloud services market grew 25 percenttional costs by as much as 85 percent if they opt for in 2011 and is asserted to reach $15.1B. Globally,cloud infrastructure. that figure is set to hit $68B by 2014, represent- Sharmila Sahani Mulligan, founder and ing a CAGR of 26 percent. SMB Cloud Market inCEO,ClearStory Data, asserts, “The cloud makes it Asia-Pacific is expected to reach US$16.5B in 2012.possible to store and access data from anywhere, The market for cloud solutions will grow at moreso it can really benefit almost anyone or any verti- than twice the rate of traditional ICT technologiesGlobalServices September 2012  |  51
    • segment analysis IMSin 2011 in these markets. In addition, this region As the firmsis expected to lead worldwide expansion of cloud across the globecomputing markets. scours the Cloud computing is a method to deliver the landscape forcrucial IT needs for any small and midsize busi- ways to focusnesses, for say-cheaper operational infrastructure on their coreand opex agility. The most commonly used cloud competenciesservices are email, instant messaging, voice com- and maintainmunications, and backup. their competitive The number of very small companies (2-10 edge, the mostemployees) using paid cloud services will triple in significantthe next three years. Almost half of them agree value drivers inthat cloud computing is going to become more IT outsourcingimportant for businesses such as theirs. Speaking of is remotethe worldwide public cloud services market, SMBs infrastructurewill drive the market over the next five years. Total managementcloud market both private and public is expected to (RIM) - the off-reach $85B by 2015. In this time frame, the growth premise, oftenwill be driven by SMB consumption of cloud. off-continent, The biggest motivators for migration to the management ofcloud among SMBs are to save money, followed IT infrastructure.by increases in productivity. Cloud allows SMBs to Ben Trowbridgegain access to infrastructure and other IT technolo- CEO-Alsbridgegies that were only leveled for big IT enterprises.By utilizing cloud services, SMBs can stop worryingabout the details of installation and operations for growth. External realities such as the advent of thesophisticated infrastructure and services. SMBs can big data era and greatly enhanced role of mobilitygain access to the high end IT services that requires in enterprises will shape solutions that providersnegligible amount of IT infrastructure. propose on renewed contracts. Recent deal sign- Gartner predicts Small & Medium Business ings are indicative of new trends, such as increas-(SMB) in the insurance industry will have a higher ing popularity of multi-sourcing, decline of “lift &rate of cloud adoption compared to their enter- shift” models, reinvigorated attention to pricingprise counterparts. models, and increased importance accorded to analytics.State of the RIM Market Offshoring of infrastructure managementIn the recent years, a major development has been labor typically realizes a savings of 5 to 20 percentthe convergence of the Remote Infrastructure compared with U.S. labor rates. But do not assumeManagement Outsourcing (RIMO) and traditional these savings are instantaneous. RIM services, asInfrastructure Outsourcing (IO) models. According with outsourcing in general, typically provide ato Everest study on Infrastructure Management, the gradual saving curve as delivery maturity is at-RIMO model is gaining wider acceptance across the tained, usually within the first two years of thebuyers, which in turn is witnessed by an increased engagement.number of IM deals. RIMO, as a model is matur- The banking, financial services, and insuranceing quickly and entering into a phase of sustained industries are leading RIM offshoring growth.52  |  September 2012 GlobalServices
    • segment analysis IMS hibit their adoption of global RIM. The healthcare industry has concerns with the data security and integrity being provided in foreign, nondomestic locations. Healthcare also has much more compli- cated revenue and cost recovery business models, which has some influence on the adoption of global RIM. Even before the arrival of the glo- bal economic downturn, senior business leaders were being challenged to increase prof- itability and efficiency and to drive operational costs down. The allure of outsourcing has always included the prospect of cost reduction through efficiencies and labor arbitrage. Not surprisingly, the increasing interest in RIM services is essential- ly due to the prospect of reducing operational costs and increasing productivity in one IT function. Future An open technology and business envi- ronment, enabled by cloud computing and new outsourcing models, is creating a radically newThese industries often referred to as the “financial approach to the present infrastructure market.services industry,” have been early. RIM service Most of the global infrastructure services outsourc-providers have recognized the opportunity to offer ing providers have a strong vision and strategy forfollow-the-sun delivery models, highly distributed cloud-based services for future offerings.and flexible monitoring and support models, and According to the latest report by technologyin those cases where automation has not replaced analyst firm Ovum, the global infrastructure mar-labor arbitrage, labor cost savings. ket will grow 4.4 per cent by 2015. Ovum’s Infra- The industries that are slow to move toward structure market trends research suggests that itglobal RIM are those that have the lowest transac- will reach £463 B by 2015 and will hit a 4.5 per centtion volumes, such as media and entertainment growth rate by 2013.and professional services. Other industries, such as Although 2011 growth is still not back to pre-re-aerospace and defense and the public sectors, face cessionary levels, the market will return to healthyvarious degrees of government regulations that in- growth of over 4.5 per cent in 2013.54  |  September 2012 GlobalServices
    • IMS INFRASTRUCTURE MANAGEMENT OUTSOURCING Top Global Infrastructure Leading Mid-tier Infrastructure Management Vendors Management Vendors HCL Technologies Ltd. Insigma Technology Co., LTD CompuCom Systems Inc. Sonata Software Limited Infosys Ltd. NIIT Technologies Microland Limited Collabera Inc CSC Aegis Limited Capgemini MindTree Limited Genpact Limited Chinasoft International Ltd. Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development & MaintenanceGlobalServices Application Development & Maintenance September 2012  |  55
    • Segment AnalysisIT OutsourcingStatus QuoWon’t SustainBy Sourabh Chandra Pushp Get ready for a post recession era where IT outsourcing will be adopted by organizations to help them work through financial challenges. Market will not only adopt itself to the new delivery models for user focused value of outsourcing services, the longer known status quo of IT Outsourcing market won’t sustain anymore56  |  September 2012 GlobalServices
    • IT OutsourcingW hile an economic slowdown places In 2012, outsourcing a greater need on organizations will continue for process excellence and reduced to see growth process costs, and organizations driven by costtypically recognize this, it also enhances all the pressure, increasingmain inhibitors to IT outsourcing. complexity to In the mature economies, the IT outsourcing deliver the latestmarket focus is returning even more strongly to technologies andcost reduction while minimizing client investment the need to alignand this market shift leads to massive end-to-end scalability toprocess service delivery transformations. market demand. Andrew Kokes, vice president, global product Andrew Kokesmanagement, Sitel articulated, “In 2012, outsourc- vice president, global producting will continue to see growth driven by cost management, Sitelpressure, increasing complexity to deliver the latesttechnologies and the need to align scalability tomarket demand.” Significant increase in IT spends in US and Europe economic growth could suppressin outsourcing are likely to come from emerging IT spends whereas, the emerging economies suchcompanies and economies. These companies and as India will account for $1.013T.economies have matured to a level where they Chirajeet Sengupta, research director, Everestcan significantly upgrade their IT infrastructure or Group voiced, “Instead of having a multitude ofwant to get there soon enough by leveraging best contracts spread all over, buyers are increasinglyin class IT. In addition, enterprise mobility, cloud trying to consolidate their portfolio and implementcomputing, managed services, machine-to-machine global contracts with uniform standard SLA lead-communications, product engineering service are ing to a fair amount of centralization of spendssome of the areas that will witness growth. and consequently cost savings for the client.” Sengupta believes Infrastructure OutsourcingIT Outsourcing Market & Deals is one of the areas where we can expect to see aWorldwide IT outsourcing revenue totaled $246.6B change, as there is a steady increase in offshoring.in 2011, a 7.8 percent increase from 2010 revenue Traditional onshore infrastructure support servicesof $228.7B, according to Gartner, Inc. However, the are going to go down. This entire wave of consoli-market for IT Outsourcing will go through major dation will evolve a fair degree of system integra-transitions in 2012-13. A spending slowdown post tion, process improvement and process optimiza-recession bounce-back of 2010-11 accompanied by tion. These three are some of the areas that aredebt-related macroeconomic conditions of Europe expected to go up.and potentially the US will accelerate the business The outlook for 2013 is slightly brighter with in-shift from older technologies and providers to new dependent research forecasting that software willnames. Independent research shows, worldwide IT lead the tech market with 5.5 percent growth, fol-spending is on pace to reach $3.6T in 2012, a 3 per- lowed by IT outsourcing with 3.4 percent growth.cent increase from 2011 spending of $3.5 trillion. According to a new forecast from Forrester, Europe Global tech purchases will be $2,122B in 2012, will see 1.2 percent growth in IT purchases in 2012.which is up by Just 5 percent when compared to In terms of US dollars, the European market willprevious year. US, Japan and China are said to be shrink by almost 6 percent, while the US and Asiaon the top for IT purchases in 2012. The slowdown Pacific will both grow by more than 6 percent. TheGlobalServices September 2012  |  57
    • Segment Analysis IT Outsourcing activity in mega-deals (TCV of $1B or contracts withThe five factors that affect the ACV of $100M or more). “The outsourcing market showed improvementIT Outsourcing deals Dave Brown, KPMG during the second quarter on both a year-over- year and sequential basis,” John Keppel, Partner Partnership and innovation: Look for your & President, Research and Managed Services, ISG. service provider to step up as a true partner on He further added, however, the quarter’s growth innovation. That could mean making investments was not enough to prevent a first-half decline to solve problems or providing industry insights to help you excel against the competition. in both value and activity from last year’s record Cloud computing: Cloud solutions are not one- performance. By function area, IT outsourcing size-fits-all, so make sure your contract has the contracts accounted for $13.1B in second-quar- right solution for your company’s needs. ter-2012 TCV, a rise of 6 percent year-over-year Flexibility: As your business continually adapts but a decline of 5 percent sequentially. By region to the marketplace, your ITO agreements and geographic distributions, Asia Pacific turned should be adaptable as well – in terms of the commercial offering, contract terms, staffing and out to be the fastest growth location during the delivery location. second quarter of 2012, driven by activity the Price: It will always be important, but keep in Telecom & Media and Banking, Financial Services mind that next-generation contracts usually & Insurance (BFSI) verticals and Greater China don’t offer as much opportunity for price and Australia New Zealand sub-regions. Speak- reductions as the first time around. Remember that a myopic focus on price can threaten the ing of other regions, America’s TCV of $8.3B rose quality of operations. 6 percent over the same quarter a year ago but Cross-functional service delivery: Consider dropped 6 percent from the first quarter. Europe how IT services can drive new value by improving and Middle East & Africa (EMEA) registered $8.4B back-office functions throughout the enterprise. in TCV, a drop of 21 percent year-over-year and 11Source: blog.equaterra.com percent sequentially. ISG-TPI anticipates a soft third quarter for IT outsourcing business whereas analysts believestudy suggests the sluggish 1.2 percent growth in the coming fourth quarter will likely pick up thethe European ICT market will be reflected in all the IT outsourcing activity on the account of largertech categories except IT outsourcing and hard- deals waiting in the queue. In an another researchware maintenance and IT consulting and integra- conducted by Everest Research, The IT outsourcingtion services, which will grow by 3.3 percent and markets will witness a significant number of con-2.8 percent, respectively. tracts coming to end of term, totaling more than Recent data from TPI Index shows outsourc- US$85B TCV during the next 18 months.ing market improved in second quarter-2012 with The study reasons, because buyers signedTotal Contract Value (TCV) up by 7 percent year- progressively larger deals until the economicover-year data. Despite decline in major outsourc- slowdown struck, more than $US55B of contractsing/IT spending activity, one can exhibit a marginal will expire in the next 12 months, and this declinesgrowth in outsourcing especially for Asia Pacific actually shows a dip in size compared to precedingregion where the market if largely driven by mega- year. “Infrastructure outsourcing, data center anddeals. The study reveals, 173 contract awards dur- network tower deals make up a significant portioning the second quarter represented a drop of 22 of the ITO contracts expiring in the near term,”percent year-over-year and 14 percent sequentially. quoted Ross Tisnovsky, senior vice president, Ever-However, the outsourcing market saw renewed est Group.58  |  September 2012 GlobalServices
    • Segment Analysis IT Outsourcing As outsourcing market is just looking for more Instead of havingthan just cost savings, service providers will likely a multitude offind themselves in an ordeal for contract renewals contracts spreadif they don’t adapt to the emerging preferences of all over, buyers arethe market. increasingly trying Alok Sinha, ITO & President at Xchanging to consolidatebelieves the Service providers too have been busy their portfolio andbidding for new contracts. Many of these are truly implement globalnot new-contracts but existing contracts which contracts withhave been brought back on the table due to the uniform standardcontractual terms signed earlier. The newer con- SLA leading totracts now have smaller parcels and in many cases a fair amount ofcontracted across multiple providers. The renego- centralizationtiated contracts also saw a variety of innovative of spends andengagement models, investment lead and skin- consequently costin-the-game models, outcomes based than pure savings for thevanilla variants, etc., being adopted by the players. client.However, on the other side of the spectrum there Chirajeet Senguptawere many too who were consolidating from mul- research director, Everesttiple suppliers into one or two. GroupVendor LandscapeJohn Cotterell, Chief Executive at Endava as- zone, proximity, cultural empathy and qual-serts, the economic climate is forcing ity of work - and growing rapidly asorganizations to re-evaluate a result. The expectation is thattheir overseas IT outsourcing this trend will continue tooptions. Offshore regions, accelerate.such as India, are prov- For example, Romaniaing not suitable for is increasingly valuableeverything organiza- to organizations requir-tions want to out- ing highly-transaction-source. There is now al, complex ‘agile’ ITan increasing trend projects, with evolvingof organizations business requirementslooking to balance and new technologies.their location risk by This enables them tomoving some IT spends match their IT require-away from offshore, and ments with cost-effective,utilizing alternative, near- swift and successful projectshore talent pools in Eastern delivery.Europe. As per Gartner research, IBM These nearshore locations maintained the No. 1 position, asare becoming more attractive its revenue grew 7.8 percent, andfor IT projects, due to time its revenue accounted for 10.960  |  September 2012 GlobalServices
    • Segment Analysis The Service percent of ITO revenue. IBM was the No. 1 ranked providers too provider in all regions. HP grew below the market have been busy growth rate, but retained the No. 2 worldwide bidding for new market share position with 6.1 percent market contracts. Many of share. Fujitsu, helped by currency gains, overtook these are truly not CSC for the No. 3 worldwide market share position new-contracts but in 2011. Bryan Britz, research director at Gartner existing contracts asserted in the press statement, the strategies will which have been vary as clients are likely to pursue hybrid cloud brought back on strategies requiring providers to deliver some as-the table due to the set-light and some asset-heavy offerings — which contractual terms will result in varying growth trajectories among signed earlier. competitors over the next several years. In a media interview, Arjun Sethi, vice president Alok Sinha ITO & president, Xchanging and partner in charge of A.T. Kearney’s strategic IT practice, asserts about how the emergence of new vendors are challenging traditional outsourcers with solutions that deliver capabilities at a lower price point and thus the need to manage IT opera- tions seamlessly across a multi-vendor environment has increased. He opines how independent cloud- based IT service management tools could enable CIOs to wrestle back control of IT once and for all. Cloud-based service management has many benefits to offer weary CIOs. Its proactive tools enable them to gain control over vendor rela- tionships, experience a far greater ability to understand and serve the needs of business users, and unleash a powerful new source of information for contributing to the achieve- ment of strategic goals. Buyers will be lured by cost structures and cloud portfolio from various pro- viders trying to build a strong market share. Bill Thomas, Partner, KPMG-UK reports in the blog post about how the shared services and outsourcing markets are in a state of flux. He asserts, “In the US, the economy does seem to be about a year or two ahead of Europe at the moment. While in Latin America, Africa, Asia and Rus- sia, there are extraordinary growth stories.” Speaking of the negative62  |  September 2012 GlobalServices
    • IT Outsourcingglobal economic conditions and it’s impact on out- The economicsourcing and IT services, weak consumer demand climate is forcingwill continue to challenge organizations in 2012. organizationsThe most optimism on improving economic condi- to re-evaluatetions is in the Americas, and the least is in Europe. their overseas The continuing emphasis on cost reduction from IT outsourcingkey markets such as the U.S. combined with wage options. Offshoreinflation and staff attrition in India and China will regions, such aslead vendors to enter new lower cost locations India, are provingmoving to parts of India for example which have not suitableyet to experience BPO and may deliver both lower for everythingcost and greater employee loyalty. organizations want to outsource.Cloud Computing and IT There is now anOutsourcing increasing trendThe emerging of cloud computing has a great of organizationsimpact on outsourcing. Gartner’s forecast states looking to balancethat by 2015 the low-cost cloud service will erode their location risk15 percent income the outsourcing service provid- by moving someers. Cloud will change the general picture of the IT spends awaypricing and economics of outsourcing. from offshore, and Fifty percent of new outsourcing deals will be utilizing alternative,significantly Cloud enabled by 2015, according to a nearshore talentnewly released report from Saugatuck Technology pools in EasternInc., titled “The Cloud and Business Services: Key Europe.Trends and Directions Through 2015.” Saugatuck John CotterellTechnology notes that the IT and BPO services chief executive officer, Endavamarket is undergoing a period of deep structuralchange and this is bringing change in the marketpositions and business models of traditional serv- sulting companies will continue to enjoy superiorices providers. Findings from the report show that market growth. As Cloud business solution providersIndian providers will be some of the most aggres- offer integration APIs, Cloud consultants/integratorssive innovators in PaaS through 2013. By leveraging will produce a wide range of adapters, services andCloud delivery models and client trust these provid- toolkits to provide added value for clients. By 2013,ers will attempt to break their linear headcount-to- “non-traditional” service providers with specificrevenue business models. The study also indicate vertical and business IP will aggressively enter thethat through 2013, pure-play Cloud consulting Cloud Business Services market. Saugatuck’s posi-companies will continue to enjoy superior market tion is that “non-traditional” services providers maygrowth. Through 2013, Indian providers will be be the logical front-runners in the race for extend-some of the most aggressive innovators in PaaS. ing niche vertical services from the Cloud to clients.The Indian services providers will take advantage of The ongoing transition to cloud computing willCloud delivery models and client trust to break their have a measurable impact on IT outsourcing as itlinear headcount-to-revenue business models. The would alter the old age IT spending methodolo-study reveals through 2013, pure-play Cloud con- gies and it would also revitalize the traditional ITGlobalServices September 2012  |  63
    • Segment Analysis IT Outsourcing What John Willmott, CEO Nelson Hall expects to see in outsourcing in 2012:  Single digit growth in the mature economies with an emphasis on quick sub-process wins rather than major transformation, with double-digit growth in the emerging and growth economies.  Increased acceleration to new lower-cost delivery locations both onshore, to meet branding and political pressures, and offshore to re-establish high levels of labor arbitrage.  Increased adoption of BPaaS, both embedded within existing end-to-end services and also increasingly in standalone form, and SaaS in ITO.  Continuing emphasis on certainty of outcome in short timescales within the mature economies with process benchmarking and roadmaps key factors in establishing certainty of outcome.delivery to cloud-based offerings. Not only this, into mainstream corporate networks, driving morethis shift to cloud is altering market behaviors and corporate spend in this area.is posing fresh challenges for traditional sourcing Smaller deals will be the talk of the town, inproviders. The cloud will bring integration to out- 2012, macroeconomic factors could force reduced ITsourcing industry in terms of innovation. spend, with buyers doing smaller number of deals New research from the London School of with simpler pricing models, amid strategic conver-Economics and Accenture finds that the cloud will gence between offshore, MNC service providers.have a strong near-term impact on the majority of Global sourcing stakeholders will continue to pursueorganizations. Cloud will escalate the importance new locations due to talent, cost arbitrage and riskof delivering effective service—the quality of the diversification-related considerations.customer experience—as a differentiator of suppli- Companies will continue adoption of hybriders in the IT industry. That, in turn, will change the captive/third-party sourcing models in 2012, andcharacter of the IT Outsourcing industry. efforts will be made to improve captive value by focusing on high-value processes. Captive invest-Conclusion- Cloud, Smaller Deals ments will continue with the majority of setupsand Third Party Sourcing Models and expansions occurring in the Asia Pacific andOther factors that would have high impact on IT CEE geographies in the year to come.Outsourcing are cloud adoption, smaller deals “The IT outsourcing market has matured andand captive sourcing models. In the past, technical price is no longer the foremost driver. Instead,and perception issues have caused cloud adoption next-generation outsourcing deals are aboutchallenges. But continued capital investments will improving service delivery, managing risk, stayingresult in new and sophisticated solutions that will current with the IT market, and positioning yourlead to new hybrid models and new integration business for an uncertain future.”- Dave Brown,approaches, making cloud adoption more main- Principal, KPMG.stream. The rapidly accelerating use of enterprise Get ready for a post recession era where out-mobility, social networking and cloud services in sourcing will be adopted by organizations to helpworkplaces will increasingly require integration them work through financial challenges.64  |  September 2012 GlobalServices
    • ITOutsourcingTop Global ITO LeadersCSCInfosys Ltd.HCL Technologies Ltd.CompuCom Systems Inc.CapgeminiUnisys
    • SEGMENT ANALYSISContact CenterOutsourcing:GrowthMomentumContinues AmidstTurbulenceBy Smita Vasudevan From a post recession to a transformational phase- the global contact center industry marches ahead in tough times as enterprises gear up to increase their customer focus66  |  September 2012 GlobalServices
    • Contact Centre OUTSOURCINGT he last two years saw the contact center Demand for industry moving through a tough yet services provided interesting phase. With 2010 being the from offshore year of gradual recovery post recession (non-U.S.)and 2011 being the year that sparked some new geographiestransformations. This year is probably going to be remains strong.all the more interesting as we see the impact of all Convergysthese combined forces coming to fore – technology continues to seeadvancements, integration of multiple communica- demand for thetion channels, the power of analytics and the social Philippines, Latinmedia puzzle. America and India. The good news is that amidst a sluggish global Mike Cholakeconomy, the contact center industry hasn’t lost its vice president, Convergysgrowth momentum. In fact, if industry experts are Analyticsto be believed, recessionary fears might pave theway for outsourcing growth, as enterprises look atoptimizing the cost of servicing customers and atthe same time increase their focus on improved cus-tomer experience. “Despite the difficulties in 2010 Market Scanand 2011, market participants have expressed high Cost efficiency and language skills continue to beexpectations for multi-year engagements with new the drivers. Asia Pacific, North America, Latin Amer-and existing clients into 2012 going forward,” says ica and Europe continue to be the most prominentMichael DeSalles,Principal Analyst, Frost & Sullivan. destinations for contact centers. The APAC region A notable change over last year is the way in exhibits huge potential for growth and is estimatedwhich contact centers are transforming themselves to be the fastest growing market for contact centersto become a more strategic part of an organization in the coming years. India, China and Philippinesrather than just being a seen as a ‘call center’. The will be the key locations. According to Frost andidea is to attract and retain customers by offering Sullivan, the APAC market showed 8% growth inthem the right type of experience, irrespective of 2011 and is expected to grow at around 10% CAGRwhat communication channel is being used. This through 2017, while the North American contactmight call for some investments in the short run center industry is expected to grow by 3.5% frombut can also go a long way in building customer 2010 to 2017. Latin America remains a prominentloyalty and brand image. location for contact centers, attracting both near- Krishna Baidya, industry manager for ICT, Frost shore and onshore demand and is expected to grow& Sullivan APAC, reveals, ”End customers still value at 10.8 percent through 2017.speed, accuracy and ease of use, but they added a What is expected is a combination of offshorefew elements: the convenience of performing ever- and onshore. High-value complex interactions aremore-complex transactions on the go, personal- expected to remain onshore or nearshore, whileized service at every instance, and seamless move- high volume work is more likely to be sent offshorement among various channels with a consistent to reduce costs.experience at each.” The emergence of non-voice Across verticals, Telecommunication has thechannels and automated technologies have taken largest demand for third party contact centercustomer care interactions to another level and the services. Healthcare and financial sector are otherexpectations have never been this high. major contributors to growth in demand.GlobalServices September 2012  |  67
    • SEGMENT ANALYSIS We see no major It is going to be threat from a combination Philippines. of several India’s contact parameters-speed center industry is of conducting going to be more analytics and quick multidimensional recommendations, while Philippines’ real-time customer industrial growth is feedback, premiumstarting to taper off. support, and technological Vijay Narsapur strategic business practice advances for head, CS, Infosys BPO, increasing sales or reducing costs Rammohan Natarajan SVP, business transformation, Firstsource Solutions workforce, with few emerging competitors. But its Some Important Contact Center   only now that the threat has become so visible in Deals in 2012 the form of Philippines. According to Steve Barker, Deals Contract Value general manager, Sitel, “More recently, the Philip- Universal American & C3 $10 million pines overtook India in business process outsourc- UK Government & Xerox $20 million ing (BPO). The Contact Center Association reported Airtel Africa & Avaya Not available that the Philippines voice revenue doubled over recent years and now exceeds India by more thanCCO Expanding Into Emerging $200 million.” The reason can be a very high affinityEconomies between Philippines and the United States. Com-Enterprises operating in the EMEA are likely to panies that are operating in Philippines are nowface increased complexities as each region exhibits trying to replicate the tactics that proved successfula different level of maturity. For emerging mar- in India. Indian service providers are of the view thatkets like Eastern Europe, there needs to be a good the contact center industry in India is much moreunderstanding of rules of the land. This will drive matured and Philippines, though currently growingoutsourcing to third party service providers. at a higher rate, lacks technical capabilities. Some emerging locations for contact centers are: APAC - The Philippines, Malaysia Key Drivers for CCO Europe - Serbia, Poland, Bulgaria , Romania The major drivers for contact center outsourcing in America (near shore) – Central America and 2012 will be: Caribbean  Optimizing the cost of servicing customers.  Concentrate on core business areas, while rely-Philippines Vs India ing on experts for non core areas like customerThere is a lot of hype surrounding the Philippines’ servicecontact center industry. For years, India was the  Access to better technologies and cloud basedlocation of choice for its high-skilled, low cost services68  |  September 2012 GlobalServices
    • Contact Centre OUTSOURCING Key focus is likely With easy access to be in stitching to real-time different forms of information, a analytics across new generation the organization of ‘always-on’ to leverage new consumers is more found actionable empowered and insights, possibly in demanding than real-time, to make ever. This trend is smarter decisions on the rise as social throughout media proliferates, organization and both online and enhance customer on mobile, across experience. all age groups and demographics. Krishna Baidya industry manager, ICT, Frost & Andrew Kokes Sullivan APAC, global product management, SitelSearch For Improved Customer channels. This information is helping enterprisesExperience Drives Investments decode complex customer behavior and forms theThe ultimate aim for enterprises today is to create basis for framing future customer service strategies.a great customer experience and how well they Predictive analytic tools allow call center agentsare able to do this will decide their ability to retain to identify customer concerns even before he saysand attract customers in the long run. Cost is a big hello. Convergys believes that harnessing the powerconcern but there is also a growing realization that of “Big Data” will be a key trend in 2012.offering the right customer experience can do a lotin improving margins. Numerous surveys support The Transition from Voice to Nonthe fact that customers are ready to pay a little Voiceextra for being served well. Interactions in contact centers are no longer With the explosion of new communication restricted to the four walls of a contact center.channels, a big challenge for enterprises and serv- Voice, the most favored medium of interaction, isice providers would be to offer an optimal custom- increasingly being replaced by a plethora of op-er experience on all these channels. Cholak says, tions like web chats, voice mail, online self service“The experience needs to be consistently applied tools, social media and so on. The whole idea isacross every touchpoint—customers need “any- to make customer interactions simpler and faster.time, anywhere” care. Investments in this area will But is voice going to be lost in this quest for betterbe a major trend to watch out for in 2012. There customer experience? Cholak, reveals, “While 2011can be no single way to great customer experience. Convergys Customer Scorecard Research found that consumers clearly still prefer to talk to agentsThe Power of “Big Data” when dealing with a company, their interest inAnalytics is playing a major role in filtering out other channels is strong.”useful information from the large pool of unstruc- Not only is an increased preference for nontured data coming out of multiple communication voice channels but increased efforts are also beingGlobalServices September 2012  |  69
    • SEGMENT ANALYSIS Contact Centre OUTSOURCING allow customers to lookContact Center Technologies Helping Enterprises for solutions and resolve queries on their own and Convergys shares some real world examples of how technology has helped cut down the dependence improve client key performance indicators: on agents.  A large North American telecommunications company saw a 27% acceptance rate for highly targeted IPTV and DSL cross-sells in their retail But where to draw the stores after implementing a Convergys Cross-sell/Upsell Solution line? Subramanya. C, Chief  A top 10 North American retail bank implemented the Convergys Intelligent Technology Officer, Hinduja Self-Service Solution and increased IVR containment from 89% to 93%, Global Solutions, says, “All resulting in a substantial annual savings a customer wants from us  One of the largest PC manufacturer in the world experienced a 32% increase is to ‘know her’, ‘help her’ in the average number of posts worked per agent per week using the Convergys Social Interactions Solution and ‘remember her’. The knowing and remembering parts can always be auto-made by enterprises to cut down call volumes in mated. However, helping always involves humanorder to reduce costs. Although non-voice interac- touch.” So striking the right balance betweentions are going up at an alarming rate, it is not automation and live support is going to be thelikely to takeover voice anytime soon. Experts key. Sitel shares a similar opinion that the idea willsay that if the percentage ratio is around 80-20 be to cut down costs through technology withoutright now, this is expected to shift to 60-40 by sacrificing the human touch.2015. Narsapur adds, “Non voice communicationis expanding at an alarming rate. So the situa- The Need For “Super Agents”tion is not inconceivable where the two will be Nothing is going to eliminate the need for agentsvery close in volumes.” But one thing is clear now. in a contact center. In fact the agent’s role has onlyVoice is no longer going to dominate customer become more complex now with the emergenceinteractions, its only going to be the part of a big- of multiple channels. Cholak, says,“The use ofger service offering. alternate channels for customer care will undoubt- edly continue to grow, but the agent will remainNew Ways to Interact a critical focal point in a diverse range of chan-While 2011 Convergys Customer Scorecard Re- nels.” Agents have to be trained not for one butsearch found that consumers clearly still prefer every type of interaction possible. Whatever beto talk to agents when dealing with a company, the medium that a customer opts for, the agenttheir interest in other channels is strong, with 13% has to be prepared to listen and deliver the rightsaying they’ve used mobile applications or text kind of response. What these changes mean formessaging for customer care, 11% saying they’ve service providers is that they need to train contactused social media for customer care, and 7% saying center agents for each and every channel of interac-they’ve used webcam or video support with an tion. Cholak adds that the need today is for ‘superagent for customer care. agents’ that are adept at all interaction methods, especially in handling interactions with the ultimateHumanization of Technology multitasking communicators, the Millennials. “TheseEnterprises are using technology to interact and agents could be moved around a call center to ac-engage with their customers in innovative ways, so count for channel volume changes in a given client’sthat cost is optimized and the effort is much lesser. program, driven by new product launches and otherArtificial intelligence tools and Self service options high traffic, multichannel events” he says.70  |  September 2012 GlobalServices
    • CyberMedia Announces its new Platformto Subscribe Magazines on iPad, Android & PC http://digisub.ciol.com DATAQUEST PCQUEST VOICE&DATA BIOSPECTRUMFor collaboration opportunities please get in touch with Manish Verma manishv@cybermedia.co.in
    • SEGMENT ANALYSIS Contact Centre OUTSOURCING Cost reduction is the prime driver, followed by scalability and easier call center management. Gartner research predicts that by 2013 at least 75% of customer-focused call centers will use a form of the cloud in their call centers. Baidya says, “More solution vendors will offer applications in the cloud and offer customers with choices suiting their business needs and scale at that time. Global service providers and large sys- tem integrators are likely to proactively promote such solutions to customers.” The Outlook The year is definitely not going to be a dormant one with lots of transitions happening. A lot of effort will be on establishing a multiple channel strat- egy that gives a unified view of all the different interaction channels being used by a cus-Social Media Puzzle tomer. Automation will con-Social media means big business today. Lots of tinue both in voice and noninteractions happen every moment and you never voice areas, though the scope will be more in nonknow how and what is going to have an impact on voice. There are no signs of non voice channelsthe image of your enterprise. A very high percent- completely taking over voice in the near future,age of customers are turning to social media sites but its expected to take a more dominant shape.and forums to solve problems, search for informa- Social media still needs to evolve completely as ation and voice complaints. And this is acting as a customer interaction channel yet will be attract-wake up call for enterprises to build up their pres- ing significant investments.ence and create a social media strategy. And this presents the big challenge - How to Top CCO Trends in 2012make sense of all the data. What if a social media  Enterprises will invest for better customer expe-strategy backfires? These are questions to be an- rienceswered before enterprises decide to take the leap.  A higher proportion of interactions moving to non voice channelsContact Centers Migrate to the ‘cloud’  Demand for offshore locations remain strong,The combination of BPO and platform based nearshore scores on multiple language skillsservices, BPaaS, is gaining traction more than ever.  Increased efforts will be put in to harness theThere is increased pressure from every corner to power of Big Datalook for newer cost saving options and this has to  Possibility of clients going for consolidation ofbe done without compromising on service qual- vendors for better manageabilityity. As cloud offerings mature and its benefits get  Combined use of agent, analytics and tech-acknowledged, contact center operations too are nology will likely be the strategy for servicegradually being migrated to the cloud. providers.72  |  September 2012 GlobalServices
    • Contact Center Outsourcing Global Customer Management Leaders Aditya Birla Minacs Worldwide Limited Aegis Limited Capgemini Convergys Corporation Expert Global Solutions Firstsource Solutions Ltd Genpact Limited Hinduja Global Solutions Limited Sitel Operating Corporation VADS Business Proces Sdn Bhd Mid-tier Customer Management Vendors Altisource Portfolio Solutions S.A CompuCom Systems Inc. HCL Technologies Ltd. Infosys Ltd. Scicom (MSC) Berhad SPi Global Sutherland Global Services, Inc. XceedApplication Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development & MaintenanceApplication Development & MaintenanceApplication Development & Maintenance Application Development & Maintenance Application Development & Maintenance Application Development &Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development &Maintenance Application Development & Maintenance ApplicationDevelopment & MaintenanceApplication Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development & Maintenance Application Development &Maintenance Application Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development & MaintenanceApplication Development & Maintenance Application Development & Maintenance GlobalServices Application Development & Maintenance September 2012  |  73
    • Segment AnalysisFAO:All Signs SuggestMaturityBy Smriti Sharma In 2011, ACV grew 11 percent punctuated by an all-time high in contract extensions and expansions74  |  September 2012 GlobalServices
    • F&A OutsourcingT he global Finance and Accounting Out- Key reasons sourcing (FAO) market echoed success behind the in 2010 with 18 percent growth (ACV). ‘denominator However, in 2011 this growth diminished effect’ arewhen the market grew by mere 11 percent (ACV). reduction in newThe year 2012 is expected to bring along a positive contract signings,wave of prosperity as the FAO space is projected to reduction inrebound by 10-15 percent (ACV). average size of According to a new analysis titled Finance & new multi-processAccounting Outsourcing Annual Report 2012 FAO contracts, andby Everest Group, “The multi-process FAO mar- risk-averse phasedket is projected to rebound by 10-15 percent and approach to FAO.top $4 to $4.5B in annual contract value (ACV) in Abhishek Menon2012. 2011 saw the market reach an all-time high research director, Everestin contract extensions that along with contract Groupexpansions, represented 70 percent of ACV growthin 2011.” Explaining this further, R U Srinivas,chief executive The FAO market reached $3.8B in ACV in 2011, officer & executive director, Caliber Point, Hexa-representing about $32B in total FAO spending. Last ware BPO, articulated. “More single process (e.g.year also witnessed a drop in total contract values Accounts Payable) contracts are evaluated sepa-(TCV) of new engagements in comparison to 2010. rately; Full-scale FAO deals have become fewer. Abhishek Menon, research director, Everest The market is gradually evolving, with a numberGroup explained the slow growth rate of 2011 of service providers augmenting capabilities tois not a sign of worry but a sign of movement provide technology enabled solutions and con-towards maturity. He highlighted, “Key reasons be- sulting, apart from usual business processes. Thishind the ‘denominator effect’ are reduction in new is also supplemented by the fact that there is nowcontract signings, reduction in average size of new abundant availability of talent at offshore withmulti-process FAO contracts, and risk-averse phased significant domain knowledge. So providers haveapproach to FAO.” a scope to play in a larger field and higher up in In 2011, 72 new contracts were signed and the value chain. Moreover, a number of providersthere were 126 extensions/renewals. The study are building their expertise in FAO within specificpredicts organic growth to continue as contracts industries, and even positioning themselves asvalued $7.3B or more are up for extension within niche offerings.”the next three years. Saurabh Gupta, vice president, Everest Group, The Service Providers’ Territoryarticulated, “Although the market witnessed Last year 60 percent of fresh FAO contracts wereslower than expected growth levels last year, we signed by companies in the revenue bracket of lessnevertheless saw strong growth with nearly 200 than $5B.contracts for new, extended and renewed con- Accenture, IBM and Genpact continue to havetracts. Along with fewer new contracts signed and the strongest foothold in this space. However, assome terminations, we also saw a drop in size of per the same report, in the last five years, the mar-multi-process contracts largely due to cautious buy- ket share of the top three providers has reduceders opting for risk-averse phased approaches.” from 65 percent to 50 percent. 2011’s highest new In current scenario, the deals are fragmented. contracts had Accenture, Capgemini and InfosysGlobalServices September 2012  |  75
    • Segment Analysis Many of these vendors whose performance significantly enhanced providers have on the FAO PEAK MATRIX are EXL Service, HCL, evolved because Infosys, and WNS. of initial IT David Borowski, senior associate, Pace Harmon, capabilities that speaking about service providers said, “Multi-tow- have expanded, er outsourcing providers, e.g., IBM, Accenture, pro-either organically or vide IT and business process outsourcing, as wellthrough acquisition, as a variety of other types of services and products into competitive (e.g., technology, consulting). These providers BPO expertise. often offer comprehensive global delivery services, significant brand recognition, and an opportunity David Borowskisenior associate, Pace Harmon to leverage varied capabilities. India-based general outsourcing providers, e.g., Wipro, Infosys, TCS, offer a broad array of BPO and ITO capabilities, asBPO’s name as service providers. Accenture, TCS, well as other professional services.”and IBM accounted for about 50 percent of total He added, “Many of these providers havecontract value signed in 2011, including new con- evolved because of initial IT capabilities that havetracts, renewals and extensions. expanded, either organically or through acquisi- Market leader Accenture claims its scale, tion, into competitive BPO expertise. Outsourcingintegration and specialization continues to dif- providers with a more direct focus on BPO, e.g.,ferentiate it in the market. Talking about their WNS, Genpact, were often captive shared servicessuccess cards, Tony Chambliss, global offering functions that spun off from parent companieslead for F&A BPO, Accenture, pointed, “We have to provide back office services as a commercialextensive global delivery capabilities, provid- offering. FAO specialists, who focus on a particu-ing a full suite of F&A BPO capabilities across all lar F&A service tower, often stem from a compel-industries from transaction processing through to ling technology-based differentiator. Exampleshigh value finance and analytics. In addition, we include API for procure-to-pay expertise and VWAbring our clients an integrated solution including for order-to-cash expertise (prior to the Capgemi-consulting and BPO that generates business out- ni acquisition).”comes and end-to-end transformation that results Hexaware BPO’s strategy for 2012 vs 2011 hasin true value, improving the performance of the changed with increased focus on FAO; they areclient’s business.” strongly undertaking an Account Based Mining He added, “Accenture’s technology delivery approach to cross-sell/ up-sell Finance & Account-experts have skills and tools to implement enabling ing services within our existing customer base.technology. Accenture also has extended expertise Also, Hexaware is deploying an Offshore-onshorein complementary areas to ensure successful solu- delivery model, supported by our strong networktion delivery,such as change management and of partners. Our Go-to-Market is based on transfor-workforce training. These capabilities, along with mation/ consulting oriented pitch, showcasing ourthe Accenture Global Delivery Network, combine to expertise in creating value apart from cost savings.deliver efficient and effective F&A BPO operations.” The difference between the market leaders and Based on the YoY movement of different serv- major contenders is diminishing.ice providers on the PEAK Matrix, Everest Group Gartner, Inc.’s 2012 reported titled, ‘Magicidentified ‘2012 FAO Market Star Performers’ as Ac- Quadrant for Finance and Accounting BPO,’centure, Capgemini, Genpact, IBM and TCS. Other stamped the following organizations as leaders:76  |  September 2012 GlobalServices
    • F&A OutsourcingAccenture, ACS, A Xerox Company, IBM, Genpact, Menon speaking about the service providerCapgemini, Infosys Ltd., WNS and Wipro. Niche landscape added, “While the market continues toplayers identified: HP, Steria, OPI, Cognizant, HCL be led by three service providers (Accenture, Gen-Technologies and Intelenet. pact, and IBM), other service providers are aggres- Gartner research highlighted, “Leaders are per- sively expanding their market share. As a result,forming well today, both with a clear vision of mar- in the last few years, the market share of the topket direction and by actively building competencies three service providers declined from 64 percent into sustain their leaders position in the market. The 2005 to 50 percent in 2011.”comprehensive F&A BPO players in this quadrant Service provider’s in order to differentiategenerally share superior market understanding, themselves are creating innovation across threehave a global client base, an extensive network dimensions. These dimensions, as per Everest, areof well-distributed and highly populated global non-linear growth, differentiated offering, anddelivery centers catering for multiple languages, a new buyer segments.good balance of transactional and high-end F&Adelivery, and innovative well-communicated and The SMB Spacemarketed sales offerings.” SMB segments adoption rate of FAO doubled over Previous year eyed some strategic M&A activity, the previous year. One of the prominent servicefor example: Capgemini-VWA, EXL-OPI, Serco-In- providers in this space is Quatrro. Speaking abouttelenet, and iGate-Patni. Quatrro’s approach to the mid-market, MonicaGlobalServices September 2012  |  77
    • Segment AnalysisKashyap, senior vice president, new product de- Further voiced, Neeraj Sahgal, general manag-velopment and operations, Quatrro said, “Study- er-technologies, Quatrro, “Most of the large play-ing the mid-market space, we realized that one ers in this market are targeting the Fortune 500key issue this segment faced was the lack of right or top thousand clients. These clients do have thetechnology. One reason they had not outsourced ability to go buy one of finest accounting pack-F&A, while they had outsourced payrolls, is that age or an ERP deployed across all organizations.they do not have the technology that can allow We approach the mid-market segment sayingfinance outsourcing, they may not have the right we know you do not have the strength to buy afinancial strength, to have the right technology, SAP or oracle finance but we do. This way we canto be able to outsource it, to leverage it etc. To work thousand such clients and give them thedo FAO, it was important for us to arm ourselves capability. Then, they can use some of the bestwith the right processes systems and technology, practices that SAP or any other Tier 1 platformso, that we could approach the mid-market with has to offer. We help them in doing end-to-endthis offer.” financial transaction; we process their financials78  |  September 2012 GlobalServices
    • F&A Outsourcingend-to-end, save tax processes and filling of Everest report coined Wipro, Capgemini, and TCSreturns etc. We take care of all those particular as the leaders in innovation with the use of newstatutory requirements.” tools and technologies. Chambliss talking about different models ofIndustries implementing FAO Accenture has employed ar-Last year’s leading verticals were manufactur- ticulated, “Accenture is helping clients consolidateing, hi-tech & telecom, professional services, and more back office processes, leveraging the sharedfinancial services. These verticals accounted for 60percent of the market. Professional services is arelatively a new industry that is gaining traction. Clients are Accenture embraces experience in more than increasinglyforty industries covering communications, media taking an end-to-& technology, financial services, health and public end process viewservice, consumer goods, retail, utilities, chemi- of their financecals and energy. In recent times, Accenture noted operations andparticular interest in F&A BPO from the high-tech, therefore we’retelcom, manufacturing and retail sectors. providing an Genpact provides F&A expertise across many expanded scopeverticals such as manufacturing, pharmaceutical, of processes—asconsumer product goods (CPG), retail, insurance well as bundlingand financial service. of services such Quatrro caters to retail, manufacturing, profes- as F&A andsional services, hotel, auto, educational institu- procurement—totions, not for profit organizations, grocery etc. achieve greater Some of Steria’s big clients come from health- savings.care, telco and media, banking and retail. Tony Chambliss For HGS, FAO’s end-to-end accounting the area global offering lead for F&Ais equity/fund advisory companies and minor subsi- BPO, Accenturedies of MNCs. In the case of volume transaction it isthe BFSI sector. services model, hybrid BPO/shared services model, and bundling BPO and IT outsourcing. Clients areThe Models increasingly taking an end-to-end process viewAs the FAO space matures, the value proposition of their finance operations and therefore we’removes away from cost and thus solutions providing an expanded scope of processes—as welltransform too. as bundling of services such as F&A and procure- Everest report stated that, beyond transaction- ment—to achieve greater savings. Another exam-intensive processes (AP, AR and GL), judgment- ple is moving toward business outcome based solu-intenstive processes such as FP&A were increasing tions, enabling the F&A areas to become strategicincluded in FAO contracts. The trend towards to the value they can generate for the business.”end-to-end solutions (P2P, O2C, R2R) continued HGS FAO Solutions have employed two types ofto gain momentum as opposed to a traditional FAO. Sridhar Krishnamurthy, executive vice presi-piecemeal solution. dent, strategic initiatives, HGS shared, “One is the Service providers are now employing process- end-to-end accounting model where we act as theagnostic solutions across different process areas. CFO role including accounting advisory on statuto-GlobalServices September 2012  |  79
    • Segment Analysis India continues approach’ to interface with a variety of ERP solutions. Their toolsets give flexibility to interact to be the most seamlessly with client’s existing ERPs and has flex- prominent ibility to perform analytics within the toolsets not being limited by clients ERPs. destination on the Quatrro has created a platform. Sahgal ex- F&A map. of the plained, “This is a platform which sits in front of FAO FTEs, 65% are the SAP. It controls the entire operational process, so there are two set of player. One is the client located in India who can access this portal, he has access to all his Across North financial reports, he can transit with us as well as transit all the systems using this portal. He need America and not understand the nuisances of what SAP does, Europe. or any other tier 1 platform would offer, he has a simple interface- he knows the five things that are critical to him and he simply goes ahead and doesry compliances and fund management. The second it. Also, he has access to all the reports at any giventype of practice is volume transactions where we point of time.”take up the AP processes like Vendor Payments & He added, “The other piece is Quatrro people.Employee Reimbursements.” That is where they access the services component of this portal. We define our own set of workflows:Technology Matters who is going to process it, how it is going be done,Technologies play in this domain has advanced somebody is going to do a review make sure all thefrom the basic ‘tie-and-run’ model to an ‘augmen- numbers match. Portal itself has a whole set of log-tation’ model. Menon pointed, “In 2011, technol- ics that are build in to make sure the transactionsogy augmentation had become the new “nor-mal”. Nearly 45 percent of the contracts in 2011leveraged add-on tools such as workflow engines, The Leader’sinterfaces, document digitization, business intel-ligence tools, user portals/dashboards, and project- domainmanagement tools.” Accenture He added, “While most FAO buyers prefer a For more than 20 years, Accenture has been providingtechnology augmentation approach, there exist F&A BPO. It has an established portfolio of more thansituations where buyers are amenable to plat- 80 finance outsourcing contracts for approximately 70 clients in 39 different languages across 150 countries.form-based FAO. Year 2011 witnessed a signifi- These clients are served by more than 10,000 skilledcant increase in adoption of platform-based FAO professionals.solutions, primarily driven by increased adoption Mike Salvino, group chief executive of BPO, Accenturein the mid-market and SMB segment (revenue less said, “Accenture’s positioning in the F&A BPOthan US$5B)” Leaders quadrant by Gartner underscores our ability to bring industry expertise, analytics and innovation Many organizations’ technology landscape is a to our clients, leading to better business insights andcocktail of their developed tools and best-of-breed, outcomes, which we call fourth generation BPO. Wethird-party applications. For example Accenture is feel it also highlights our ability to leverage the cloud,flexible with the software they use. Their technol- social media, mobility and analytics to drive value for our clients, which we call fifth generation BPO.”ogy architecture is designed with a ‘wrap-around80  |  September 2012 GlobalServices
    • F&A OutsourcingInfosys GenpactIn 2004, Infosys BPO’s F&A unit was established. It has Since 1997, Genpact has been selling F&A services. It11 centers in more than 7 countries such as India, China, delivers these services from 25 centers in 10 countries.the Philippines, the Czech Republic, Poland, Mexico and In the past 18 months, it has signed many new dealsBrazil. The company employs approximately 7,000 FTEs in and accomplished 100 percent contract renewals orF&A BPO. extensions.Gautam Thakkar, vice president and head, enterprise Tiger Tyagarajan, president and CEO, Genpact,services, Infosys BPO asserted, “We consider this articulated, “Combined with our widespread globalrecognition as a validation of the strategic investments that delivery capabilities and deep domain expertise in manywe have made in the F&A practice across industry verticals. vertical industries, Genpact’s Smart Enterprise ProcessesOur focus on developing and deploying cutting-edge tools (SEPSM) framework drives additional excellence in F&Ahave helped enhance the effectiveness and efficiency processes and helps our clients achieve bottom-lineof our processes, while minimizing the risk of running impact.”accounting operations through a global delivery model.” XeroxWNS Xerox Services houses 24,000 professionals. They In 1996, WNS began providing F&A BPO services and in operate out of over 90 global service centers, in multiplea short period of time (fiscal 2012) F&A accounted for 19 languages in North America, Central America, Southpercent of WNS’s total revenue (net of repair payments). America, Europe, and Asia Pacific.It embraces 7,000 employees delivering from simple Kent Schnacker, executive vice president, ACS financialtransactions to complex analytical processes, including services group said, “In a communications era whereindustry-specific processes to more than 70 global clients. consumers expect all bills, invoices and documents to beKeshav R. Murugesh, group CEO, WNS stated, “We delivered exactly when and how they prefer, our financebelieve that our capability and position as a leader in and accounting services help organizations deliver qualitythe FAO space is a result of our differentiated market service on a consistent basis. Our clients count on us toapproach coupled with investments designed to provide help keep their customers satisfied.”our clients with the right blend of expertise, talent andtechnology to outperform their competition,” CapgeminiTalking about what is helping WNS, Tasneem Lakdawalla, Christopher Stancombe, global head, FAO, Capgemini,executive vice president, Finance and Accounting, WNS said: “We deliver valuable business outcomes to thearticulated, “Our vertically-led strategy is helping us benefit of our clients efficiently and effectively within adeliver F&A offerings supported by industry-specific strongly controlled environment.”domain expertise, and enabling WNS to better service our Capgemini’s BPO has over 13,000 BPO professionalsclients. We will continue to invest in tools, technology, providing services to customers worldwide. These servicesresources and strategic partnerships which will help drive are provided in 36 languages and are delivered fromplatform-based solutions, increased business process centers located in Australia, Brazil, Canada, Chile, China,efficiencies and differentiated service offerings for F&A,” Guatemala, India, Poland, Sweden and the United States.TCS WiproTCS’ BPO revenue is over $1.1B and it houses 40,000+ Wipro BPO operates from 30 centers in 11 countries,employees. It has presence across 11 countries from including Poland, Romania, China, Japan, Philippines,where it delivers services to more than 200+ customers. Australia, U.S, Canada, Brazil, Mexico and IndiaAbid Ali Neemuchwala, global head, TCS BPO business (Bangalore, Delhi, Chennai, Pune, Hyderabad, Kolkataopined, “TCS’s investments in building industry vertical and Mumbai).expertise in F&A, Manoj Punja, svp and global head, Wipro BPO echoed,our proven transformation methodology - FORE™ “Our ability to leverage our extensive technologydelivering best in class processes, our business model capabilities and shaping the vision for the next generationinnovation of F&A Platform solution delivering Business of F&A outsourcing is a clear differentiator. We feel thisProcess as a service (BPaaS), and unrelenting focus on recognition confirms our strategy and the significantanalytics, risk and controllership are all geared to meet investments that we have made in our F&A practice tothe customer’s needs for an effective and efficient Finance improve our offering and add measurable business valuefunction.” to our clients.”GlobalServices September 2012  |  81
    • Segment AnalysisIndustry Trends Predict Many businesses are refocusing attention on global outsourcing not only to reduce costs but to capitalize on globalizing operations and transformation processes. While cost arbitrage continues to be a key driver, client expectation from F&A BPO is now to transform processes to align to client’s business outcomes and it is becoming increasingly standard to bundle transformation elements into contracts as a standard offering. Clients are also increasingly taking an end-to-end view of their finance operations with outsourcing bundling contracts growing. We expect the role of technology to expand, resulting in a stronger push to software- as-a-service and mobility catalyzing further evolution of BPO. Technology enablement of F&A BPO is now becoming pivotal to development of services and there is an increase in the number contracts where service providers will provide application wrappers to enhance process standardization for buyers. As buyers become more experienced managing F&A BPO processes they will increase their contract scope to include more customized and complex processes including management reporting processes, analytics and other specialized services. Accenture —Tony Chambliss F&A BPO is seeing an increased demand for analytics information derived from the global offering lead for financial processes we manage to enhance client decisions and support functions—the F&A BPO, Accenture ability to turn data into new streams of value. For example, we have built and piloted the Accenture BPO Navigator—a central portal that provides real time visibility into a client’s business performance, including operational and contractual metrics and analytics that is delivered in our private Cloud. This tool provides clients with both a snapshot and detailed view of their business performance and the dashboard shows metric thresholds, trends and compares data across business unit or country. Through analytics, we can analyze this data to provide insights to aid key business decisions. For F&A BPO clients we can process their invoices, collate the spend, map that back to their strategic sourcing agreements and identify rogue spend outside that agreement to drive savings Increased penetration: F&A Outsourcing has not reached all industries and there are a lot of avenues where it can still prove to be useful. Untapped fields like SMEs have yet to be included in the targeted market segments of outsourcing providers. Offshore acceleration: With over 60% of global players outsourcing to India. It is safe to assume that in today’s business environment, it is the norm to outsource finance and accounting functions. SAAS - Software-as-a-Service and cloud-based solutions: They are gaining influence in the industry. Software programs for finance and accounting used to be unaffected by technological advancement Buyer-side sophistication: Buyers are becoming more sophisticated and demanding in terms of service. A more informed market in a very competitive landscape increases the bargaining power of consumers, further resulting to lowering prices. Maybe more F&A captive sales: More and more companies choose to establish an entire F&A team offshore. Divestments such as Citi Group, Lehman, AIG, however, are becoming more common as companies take advantage of the exibility offered by —Sachdev Ramakrishna outsourcing. director, marketing, Steria India82  |  September 2012 GlobalServices
    • F&A Outsourcinged by the Industry The trend is major We are witnessing outsourcing opportunities frequent inclusion of are in the AP processes. ‘onsite component’ in Organizations have had recent deals. In other these internally for years words, the hybrid and are planning to move model (combination of it outside to an offsite onshore/offshore; shared locations to seek more services/outsourcing) is streamlined operations having a good traction. (arising out of best As highlighted, the practices implemented by comprehensive ‘full- FAO Agencies) and to seek scale’ deals have a better cost advantage. become fewer – buyer are evaluating single —Sridhar processes (Accounts —R U Srinivas Krishnamurthy Payable, Record-to- chief executive officer & executive vice president, Report, etc.) as opposed executive director, Caliber strategic initiatives, HGS to multiple processes at Point, Hexaware BPO one go. Another trend is interest towards transformational sourcing, to improve/re-structure the business processes, with help of technology enablement and domain knowledge. Financial Planning & Analysis (FP&A) represents an emerging area in FAO. FAO has moved beyond just AP, AR and GL to realize more benefits. An end-to-end process-driven approach to FAO is also emerging as opposed to a traditional functional and piecemeal approach. Nearly 50 percent of the new contracts in 2011 had end-to-end elements (Procure-to-Pay, Order-to-Cash, Record- to-Report) Industry-specific F&A solutions: There is an increasing trend of “verticalization” in FAO, moving away from the traditional assumption that FAO is a horizontal function. Buyers now consider F&A process as unique to their industry. Thus, domain expertise is emerging as an important source of value from service providers. As a result, many service providers are coming up with industry-specific FAO solutions (e.g., focused offering in travel, telecom, utility etc.). Service providers are also aligning their sales and delivery team along key verticals to make a targeted market approach. The adoption of transaction-based and performance-based pricing has increased. The changing F&A solution elements are driving buyers to reassess pricing structure and —Abhishek Menon, introduce pricing that provides flexibility and/or business-oriented performance. research director, Everest Group GlobalServices September 2012  |  83
    • Segment Analysis F&A OutsourcingAs per the Everest High-end processes such as FP&A are increas- ingly getting included, primarily during extensions.report, buyers continue Adopting more end-to-end approach as op-to focus on an end- posed to siloed and piecemeal approach in or- der to increase visibility, streamline, and to haveto-end process- stronger link to overall business performance.driven approach to He further added, “Buyers are cautious andFAO, as opposed to a they prefer phased approach as opposed to big- bang approach. This is also reflected in new con-traditional functional tract signings and contract extensions/renewals:and piecemeal approach We saw increase in the number of single process con- tracts signed in 2010-2011 compared to previous years. Also, the size of contracts extended/renewed was larger than the size of original contracts because ofthat are going in the system are all authentic are scope and scale expansion during renewals.”all absolutely fine. This is the entire mechanism, India continues to be the most prominent des-by virtue of this, what we are able to do is we are tination on the F&A map. 65 percent of the FAOable to streamline our process; it has also increased FTEs are located in India. Southeast Asia witnessedthe efficiency tremendously. Our total time to the a significant increase in the number of deliverymanual activities that were earlier involved has all centers. Across North America and Europe, there isgone out of the window.” a ramp-up in onshore delivery capabilities. Steria has presence across three leading de-Clients and Delivery Locations livery locations in India namely Noida, ChennaiThe largest client-base of this sector continues to and Pune. Sachdev Ramakrishna, director, mar-be based in US, followed by Western Europe. There keting, Steria India talking about India being theis also an increased trend from buyers in Asia-Pa- preferred location said, “India is the preferredcific region and in Latin America. location for outsourcing F&A services in terms of In the previous year, approximately 50 percent of financial attractiveness, people skills availabilitythe fresh contacts had elements of end-to-end scope: as well as the business environment. Hence moreProcure-to-Pay, Order-to-Cash, Record-to-Report. and more delivery centers are being setup here.There was a noticeable shift from an offshore-centric Moreover, due to rapid growth in credit card,to a balanced onshore-nearshore-offshore model. telecom infrastructure and retail banking penetra- As per the Everest report, buyers continue to tion in India, there is a phenomenal increase infocus on an end-to-end process-driven approach transaction processing of payments and collectionsto FAO, as opposed to a traditional functional and in India domestic market as well.”piecemeal approach. Also, while nearly 90 percent HGS is planning to extend its geographical pres-of the FAO FTE mix continues to be offshore-/near- ence and also the delivery locations. Their two yearshore-centric, 2011 witnessed a significant increase plan is to look for clients from other countries andin onshore delivery center. the same time to zero on cities that can give the Recent times have also noted a significant required number of knowledgeable resources &change in buyer expectation. A major transforma- skill sets for these types of transaction. They are re-tion is that cost saving is no more the only need ferring to the volume transactions here. The end toor driver. This in turn has resulted in the change in end accounting model will have to be in the sameF&A solution elements too. Menon stated: location where the client office is situated.84  |  September 2012 GlobalServices
    • F&A OutsourcingGlobal FAO VendorsCapgeminiEXL ServiceGenpact LimitedInfosys Ltd.WNS Global ServicesXchangingLeading Mid-tier FAO VendorsDatamatics Global Services Ltd.HCL Technologies Ltd.Insigma Technology Co., LTDQuatrro Global Services Pvt. Ltd.Sutherland Global Services, Inc.
    • Segment AnalysisIndustry-Specific BPO:BeingExploredAggressively The ever increasingBy Smriti Sharma, Smita Vasudevan, Sourabh C. Pushpa pressure to curtail costs and the expectation to drive better business outcomes is acting as a big push for the global industry- specific BPO86  |  September 2012 GlobalServices
    • industry specific BPOE nterprises in almost all verticals are Cost arbitrage, currently going through a tough phase, maturity in service plagued by mounting cost pressures provider offerings and customer expectations. What they and rising buyerneed is a unique solution tailor made to their expectations toproblems - a generalized BPO offering from get more outtheir service providers is not going to work of outsourcinganymore. As the situation prevails, an increasing deals are actingnumber of enterprises are exploring industry- as major driversspecific BPO opportunities to drive better busi- for the growth ofness outcomes. According to Horses for Sources industry-specificresearch, there are strong signs of increased BPOadoption of industry-specific BPO solutions, most Ramesh Gopalannotably in Financial Services and Life Sciences, executive vice president,and many other emerging verticals. international operations, Hinduja Global SolutionsWhat is Driving Demand forIndustry-specific BPO? cially in the Healthcare and Life Sciences space. TheAlmost all industries are undergoing radical market is also witnessing the trend towards com-changes and there is increasing competition bining technology and BPO into a single servicewithin each industry. This makes it imperative offering. Bundling together BPO processes alongfor enterprises to look for newer avenues of with IT offerings is giving service providers the op-increasing efficiency and cutting down costs. portunity to expand their footprints.This is a major reason why domain specific of- Although enterprises seem to be a lot moreferings are being aggressively pursued. Enter- industry focused now, the trend towards industry-prises understand that acquiring domain specific specific BPO is not new. Its been there for very long,knowledge can help them add value and be a especially in the areas like mortgage processingdifferentiating factor for their business. and healthcare. According to Gopalan, “Healthcare Financial services, Healthcare, Life Sciences, has always been a very industry-focused vertical. ItMedia, Entertainment and Retail are some of started primarily with transcription processing andthe verticals expected to contribute largely to evolved into customer service and collections.”the growth of industry-specific offerings in the And especially after the US healthcare reforms,near future. the industry is undergoing lots of transformations As the outsourcing industry matures, enter- and the need for industry-specific skills is everprises are looking beyond traditional service increasing. Most of the players catering to health-offerings. They are now looking for services that care clients are doing it through industry-specificcater to the unique needs of the industry that processes. “In the healthcare space, industry-spe-they operate in. Service providers are making cific processes account for more than 80 percent ofsignificant investments in acquiring domain spe- the market share, while horizontal services are onlycific capabilities. Interestingly, industry-specific less than 20 percent” adds Gopalan.BPO is the segment where lots of new providersare entering through niche offerings. Even the Market Estimates & Geographiesestablished IT vendors have been developing Over the next 5 years, vertical specific BPO is ex-BPO niches in this space. This is evident espe- pected to offer a larger opportunity as comparedGlobalServices September 2012  |  87
    • Segment Analysisto horizontal BPO. According to the Nasscom-Ever- Europeanest India BPO Study- Roadmap 2012, the segment companies havepresents an opportunity of US$ 145 – 175 B, which explored locationsis around 60 percent of the entire market. like Ireland, Across geographies, India and Philippines are Scotland andthe only two prominent offshore destinations. Im- Spain - for specificportant nearshore destinations include South and savings in costsCentral America and South Africa. and geographic proximity andSome Prominent Industry-specific South Africa isProcesses emerging as a closeHealthcare outsourcing: According to a report favorite for the UKpublished by US based marketresearch.com, the glo- companies due tobal healthcare BPO market is growing at a healthy the cultural affinityCAGR of 21.4 percent. Healthcare payer outsourcing and good quality ofmarket will also grow at about 30 percent in the the servicesforecast period. Healthcare provider outsourcing Sanjay Venkataramanhas the highest growth rate of 31.9 percent from president, Asia customer2011 to 2016 due to conversion from ICD-9 coding management, Firstsourcesystem to ICD-10 and ICD-10 coding system to beimplemented by October 2013 in the US. Talking about what has worked for this indus- are going to need professional vendors who will betry, Tony Mira, Group CEO and founder of Ajuba able to handle this work effectively.”Solutions, said, “The regulatory changes in the US Overall, the healthcare BPO market is crumbledhave been a driver for the healthcare outsourcing and small players are trying to make their presenceindustry. There are two main reasons – one is ICD- felt, especially in India and China.10, this has created a lot of confusion and concern Accenture (Ireland), Medusind (U.S.), GeBBSwith the healthcare community in US because the Healthcare (U.S.), Omega Healthcare (India), andlevel of education, Inventive (U.S.).sophistication, and The pharmaceuticaltraining is much Overall, the healthcare outsourcing markethigher than the ICD- BPO market is crumbled and is captured by play-9. The people who ers such as Quintilesare ICD-9 trained small players are trying (U.S.), Covance (U.S.),are having difficulty to make their presence felt, PPD (U.S.), Parexelin passing for the (U.S.), Charles RiversICD-10 level. They especially in India   Laboratories (U.S.)are facing difficulty and China and ICON (Ireland) inwith the exist- the CRO space... areing coding in US. This is creating opportunity for some of the major players of this space.offshore company. Second, with the new offshore Publishing outsourcing: The e-book market wasreform the level of patients is expected to increase one of the few markets that grew during recession.by almost 30B. This is going to create an increase Since then, this segment has been witnessing aof work for people in healthcare industry and they positive growth and publishers have been looking88  |  September 2012 GlobalServices
    • industry specific BPOat it as a strong revenue spot. Apart from tackling Key Trends In industry-specificcost pressure, the key drivers for publishing out-sourcing are handling challenges of adapting to Specific BPO  Increased adoption in verticals like Healthcare and lifenew technology, lack of in-house capability and sciences that are undergoing profound changesaddressing new geographies.  Significant investments by service providers US is the most popular publishing outsourcing in enhancing and acquiring industry-specificdestination. India is the most preferred offshore capabilities. Industry-specific analytics and customerdestination followed by Philippines. Indian players intelligence services are evolvingcontinue to focus more on lucrative segments such  Combining BPO with technology as a single offering is a growing trend that we see in the industry-specificas educational, magazines, corporate, B2B, trade BPO spaceand e-books. Over the next three years, all these  BPO service providers are joining hands with clientssegments are expected to remain attractive. for end-to-end service delivery and also, they areMortgage Process Outsourcing: This model scaling up their business competency levels inhas evolved the manner in which companies are handling high value business projectsrunning their mortgage processing requests. Theconventional manner is costly and burdensome andthus they do not operate successfully any longer. Checks, Underwriting Disbursement and Servicing BPO’s mortgage service offerings are crafted Collections Maintenance.to be in sync with the needs of mortgage banking The integration of services (For example, loaninstitutions. Some of the challenges mortgage bank- origination, vendor management, post-closinging institutions face are rising interest rates, increas- processing services, third party services until under-ing instances of borrower default, competitive writing, modification services, technology servicespressures etc. Mortgage BPOs spread their services etc.) is a challenge that vendors face while offeringacross various levels of the mort- mortgage services.gage value chain. Life sciences outsourcing: Research The functions of mortgage and development was the core of aBPO can be categorized under life science company and thusfour divisions: distinct was perceived too valuable toheaders;New Business pass on to others. However,Acquisition, Ap- today under the growingpraisal Title pressure to cut costs and speed development, life science companies and large pharma- ceutical firms have started outsourcing clinical development programs to outside clini- cal research organizations (CROs). Companies depend on CROs to lower costs, access new patients, and comply with complex regula- tory requirements. In return, CROs should aim at becoming long-term strategic partners offeringGlobalServices September 2012  |  89
    • Segment Analysisvalue-added services. States and western Europe to China and India. Clinical development outsourcing is expected The study titled Outsourcing in Life Sciences Ato increase and establish its footprints in different Survey of BayBio Members highlighted, “The keyparts of the globe. Presently, a large percentage of findings of our survey of BayBio life science compa-outsourcing comes from United States and western nies suggest continued growth in clinical develop-Europe. In future, China and India are expected ment outsourcing, with a significant amount ofto make their presence felt on the life sciences growth occurring overseas. The need for externaloutsourcing map. R&D outsourcing is expected to capacity and capabilities is a key driver of outsourcinggrow and also shift geographically from the United today, with a significant focus on reliable, on-time90  |  September 2012 GlobalServices
    • industry specific BPOservice. Current CRO relationships appear to leave an agency’s proprietary or third-party analytics toolsignificant room for improvement. Patient recruit- that may have tons of fancy graphs, lots of numbers,ment, customer-centricity, regulatory compliance, and export complicated spreadsheets -- but it reallyand flexibility of service plans were mentioned as doesn’t tell you how to do anything actionable toparticular areas in which CROs could do a better job. improve your social media marketing with that data.Overall, as companies look to CROs as the answer So if you’re considering using a third party for socialfor internal constraints, they would also like to shift media analytics, make sure that their tool not onlyemphasis from today’s transactional relationships to offers closed-loop reporting, but that the personlong-term strategic development partnerships.” analyzing the data can also tell you how to use thatMedia outsourcing: Media outsourcing is often information to improve your marketing strategy.”looked at as the new wave of outsourcing. This is Other emerging verticals include travel, tele-courtesy an increase in the outsourcing of media com, insurance, supply chain management, tech-work such as online reputation management, data nology, transportation etc.mining, influencer identification and crisis manage-ment etc. Opportunities and Risks On the internet customers talk in real time and Despite its numerous advantages, there are somecompanies have comprehended the fact that mere potential risks and opportunities suppliers need toonline monitoring tools are not sufficient. Soft- identify, and in turn adopt mitigation strategiesware’s can search conversations but they are not for these risks. industry-specific BPO providers areintelligent enough to understand sarcasm. Thus, stressing hard to move up the BPO value chain. BPOhuman beings are required. companies are joining hands with their clients forAlso, all companies are well versed with the fact end-to-end service delivery and also, they are scal-that it is imperative to maintain a good profile on ing up their business competency levels in handlingthe internet. Hence, they look out for third party high value business projects.vendors who are armed with online business mar- Everest study states that primarily one demand-ket skills and also cost ing factor that pusheseffective. Media outsourcing is often suppliers to opt for Social Media Exam- industry-specific BPO isiner’s Michael Stelzner looked at as the new wave cost. While traditionalreport titled 2012 of outsourcing, This is BPO focuses heavily onState of the Social reducing operationalMedia Marketing courtesy an increase in costs, industry-specificIndustry stated, “In the outsourcing of media BPO offerings promise2010, only 14 percent to create business im-of marketers out- work such as online pact. Industry reportssourced social media reputation management, predict that industry-marketing. Last year, data mining etc centric BPO capabilitiesthat number doubled will emerge as an op-to 28 percent. And portunity for suppliersthis year, the percentage rose yet again, with 32 to create top-line impact for their clients and attainpercent of marketers outsourcing social media.” distinctive positioning in an increasingly competitive The report also highlighted,“Since marketers market in the aftermath of economic downturn.are so confused about how to measure social me- While the overall traditional BPO market is high-dia’s ROI, it’s certainly easy to be duped into using ly competitive, the industry-specific market is highlyGlobalServices September 2012  |  91
    • Segment Analysis industry specific BPO Everest predicts that industry-specific BPO will emerge as an opportunity for suppliers to create top-line impact for their clients and attain distinctive positioning in an increasingly competitive market. The financial pressures on vendors to maintain their profit margins may override development of this segment. Industry reports assert that scarce capital, major cutbacks in corporate spending, pressure on prices and margins together with drastic change in the competitive landscape are major threats to industry-specific BPO. While these risks poses threat they also create opportunities for strong players to achieve high performance. While some vendors are clearly content with a thin veneer of vertical capability, others are picking verticals where they feel they can gain an edge over the competition. But it’s a gradual develop- ment, and experts say that it will take patience and attitude on the vendors’ side to invest in the depth of talent they need, and be less concerned about short-term profits and demands. The real challenge lies for the BPO companies in the years to come, as they must-have to create domain expertise to furnish the market require- ments. industry-specific BPO providers will have to showcase their expertise across the various verticals and also align their business model. Financial, manufacturing and business services sectors are expected to be the fastest growing markets. In the IDC report, titled- “Worldwideconcentrated as the industry relevance approach is BPO Services Market Forecaster: Vertical Markets,”now a key ingredient in BPO offerings. For industry- Juan Sacchi, senior research analyst, IDC Europeanspecific BPO services, Analytics and Cloud are play- Services, said “Industry-specific BPO demand is ex-ing game changing roles. But talent and skill issues pected to be relatively slow in 2012 compared withare are gripping the industry. Service providers are 2011. But looking forward, we expect to see indus-spending huge amounts on training and develop- try-specific BPO demand recovering and growingment. Industry experts believe that skill shortages faster than demand for traditional key horizontalare going to be a problem going ahead. BPO services. Despite the fact that cost cutting The prime concerns related to industry-specific and cost control continue to be top priority forprocesses are- reducing operational errors, analyz- BPO investment decisions, more and more we willing real time business performance to standardize see demand in the market for domain or industrybusiness process operations on global-scale and to expertise and services that are able to drive busi-gain more control over the business operations via ness results alongside the traditional cost-cuttingthird party. approach.”92  |  September 2012 GlobalServices
    • industry specific BPO Industry- Specific BPOGlobal Leaders- Industry-specific BPOAltisource Portfolio Solutions S.AGenpact LimitedInfosys Ltd.Stream Global ServicesSutherland Global Services, Inc.Unisys Industry-specific BPO Niche Leaders Aditya Birla Minacs Worldwide Limited Aegis Limited Ajuba International Datamatics Global Services Limited HCL Technologies Ltd. Hexaware Technologies Ltd. Hinduja Global Solutions Ltd. Indecomm Global Services (I) Pvt Ltd InterGlobe Technologies Mindteck (India) Ltd. Neusoft Corporation Quatrro Global Services Pvt. Ltd. SPi GlobalGlobalServices September 2012  |  93
    • segment analysisThe ExpandingScope ofPO ContractsBy Smita Vasudevan Despite a sluggish macr- oeconomic outlook, the global PO market has retained its momentum. Fresh deals, renewals, new technologies and emerg- ing players - there is lot for procurement outsourcing buyers to look forward to this year P ost the 2008 global recession the demand for PO (Pro- curement Outsourcing) has been on the rise. In the post recession phase companies have been facing increasing pressures to cut down procurement costs and deal with concerns relating to volatility in commodity markets. This has been a big driver for the global PO market. Procurement is one of the94  |  September 2012 GlobalServices
    • procurement outsourcingmost important of all the business functions as it It is no longeris directly linked to revenues and has a significant just a bottom linebottom line impact. This is the reason why even savings target forwhen recessionary fears are once again looming procurement; yoularge, PO hasn’t lost its charm. The inherent pres- have to providesure to attain cost savings is more evident now, savings, but inand outsourcing is coming out to be the most the most efficientdesired medium. model that also is helping to furtherGlobal Market Scenario secure the supplyThe sluggish global economy is having a knockdown chain and protectimpact on almost all areas of business. Procurement the end customersoutsourcing too is under the wrath to some extent. in terms of productsUK and US are two very prominent markets for PO, to be sold.and whatever happens in these markets is going to Jason Evanshave a very likely impact on the segment. Despite Vice President, Corbusthat, growth in 2011 was pretty decent with a 14percent growth in annual contract value, whichcrossed $ 1.6 B. According to Everest Group’s Pro-  Geographic adoption will also continue tocurement Outsourcing Annual Report 2012, 60 new expand in terms of global contracts as well asmulti-process PO contracts and 53 renewals/exten- adoption by source geographies such as Asia-sions were signed in 2011, which is the highest ever Pacific and South Americatill now. Everest predicts that the global PO marketwill reach an ACV of $1.8B in 2012, representing Changing Face of Procurementmanaged spends of US$250B. Outsourcing Like most other outsourced services, procurement PO Market in 2011 too is undergoing lots of transformations in this tough phase that demands enterprises to look for  60 new multi-process PO contracts signed in 2011 newer ways of doing things. Buyers are looking at  ACV grew 14 percent to reach US$1.6 billion PO not just as a cost saving initiative but the way  Service providers managing more than US $190B of procurement spend on behalf of their clients to desired business outcomes and this has added to Source: Everest Report titled “Procurement Outsourcing Annual its strategic significance. The role of procurement Report 2012” officer is expanding and there is greater coordi- nation between the procurement officer and the2012 Market Projections CFO. There is also a visible trend towards PO dealsEnd-of-term activity will be significant as 57 per- bundling up with FAO.cent of PO contracts, valued at nearly US$6 billion, Reliance on procurement outsourcing is goingare up for renewal within the next four years up as enterprises look for the expert knowledge Adoption will be led by companies with rev- of service providers, who usually charge a fixed enues over US$1 billion while adoption by price for a certain amount of cost savings. Trans- small/medium-sized businesses (SMB) segment actional procurement, strategic sourcing, compli- will remain sporadic ance management, category management, tactical Adoption in the public sector is expected to procurement and reporting are the common types grow of services being offered today.GlobalServices September 2012  |  95
    • segment analysis An interesting trend is the growing prefer- to choose from.ence for procurement outsourcing among mid For long, PO contracts were focused on indirectmarket companies. Emerging technologies, espe- spends. This seems to be changing now as directcially, cloud-based offerings have made PO serv- spending is also getting added more and more.ices affordable for the mid market. The increas- Rajesh Ranjan, Vice President, Everest, says, “Theing demand in this space is also encouraging market is shifting from classifying spend as directsmall service providers with niche expertize to versus indirect to core versus non-core. While aenter the market. At the same time, large service majority of contract continues to include indirectproviders are bringing out more services spend, inclusion of direct spend is increas-in their PO offerings, especially through ing.” Enterprises are focusing on core directcloud-based offerings. The tough spending, preferring to keep it in house,competition in the service while outsourcing non-core directprovider landscape between spend categories, such as main-the large and small players tenance, repair and overhaul.will keep the momentum These changes are in a waygoing. And this will be a resulting in expanding thegood opportunity for buyers scope of PO contracts. Ranjanto capitalize on, as they have confirms, “The functional scopenumerous options of PO contracts is expanding intoavailable adjacent supply chain processes.” Another change that the market is witnessing is changing buyer expecta- tions. Today enterprises want their PO service providers to come up with end- to-end solutions in source-to-procure and procure- to-pay contracts. The spate of M&A and consolida- tion activities that is happening in the PO market is an indicator of the pressure that service providers face to expand their service capabilities and come out with complete solutions. Prominent Geographies & Verticals North America will be the most dominant market followed by Europe and Asia Pacific. Emerging geographies will be attracting a lot of buyer atten- tion in the PO space, just like most other segments. Low cost and high skilled, talented workforce are primary factors driving demand in these regions. As wage inflation and rising costs have lessened the attractiveness of offshore locations like India and China to some extent, the unexplored loca- tions in Eastern Europe, Middle East and Latin America are gaining popularity. Also since unem- ployment levels in the US and UK are pretty high,96  |  September 2012 GlobalServices
    • procurement outsourcing Merger & Acquisition Deals in 2011 Deal Objective To establish presence in the Australian market with more offerings in Infosys BPO Acquires Portland Group the value-added segment IBM Completes Acquisition of Emptoris To expand Smarter Commerce initiative The market is of value creation varies with process focus, eg; shifting from higher transactional nature of processes in the case classifying spend of P2P-focused buyers present more opportunities as direct versus to create value through process optimization. On indirect to core the other hand, spend reduction is typically a fea- versus non-core. ture of sourcing-related processes, therefore, a key While a majority of value creation lever for sourcing-focused buyers.” contract continues to include indirect The service Provider Landscape spend, inclusion It is definitely a tough phase for service providers of direct spend is with expectations soaring high and uncertainties increasing. prevailing in the global environment. And with Ranjan Rajesh many new entrants coming up its not the same Vice President, Everest playing field anymore. Most service providers are focusing their strategies around three things - peo- ple, process and technology. The focus has been onbuyers will be forced to turn to nearshoring rather hiring and retaining talented people with knowl-than offshoring. edge and experience in niche areas like negotia- Across verticals, demand coming from manufac- tions, spend analytics etc. As clients are becomingturing, retail, BFSI, telecom and energy sectors has more and more demanding, providers are underhelped in maintaining the momentum in the PO pressure to offer access to cutting edge technolo-market. Public sector is also likely to come out as a gies. Investing in technology is going to be anotherhuge driver as governments are also under tremen- big trend among service providers and emergingdous pressure to cut down costs and are ready to technologies like social media, mobility and cloudlook for alternative avenues. computing will have a lot of influence on the type of offerings that providers come up with.Major DriversProcess optimization and compliance are the PO Service Providers’ Landscapeprimary factors that are contributing to growth in  IBM, Accenture and Procurian together accountdemand for PO globally. The cost base for procure- for 70 percent of the PO market in terms of ACVment outsourcing is much larger than other BPO  In 2011, IBM, Accenture, and GEP signed nearlysegments and thus the opportunity is much more. 45 percent of new multi-process PO contracts.PO also has a very high impact on the bottom line  IBM, Accenture, and Xchanging accounted forwhich makes the value proposition quite attractive. about 60 percent of total contract value signedBut at the same time realizing full value out of it in 2012, including new contracts, renewals andcan also be a challenge. Ranjan says, “The extent extensions.GlobalServices September 2012  |  97
    • segment analysis procurement outsourcingA lot will also ing includes the full range of Ariba’s collaborative commerce solutions with Genpact’s procurementdepend on how services led by our SEP framework for makingproduction facilities business processes much more effective,” saidoperate worldwide. Shantanu Ghosh, senior vice president, Practices, Solutions and Transitions, Genpact, in a companyAgainst this press release.“backdrop, supply The Way Aheadshortages are Its a transformational phase for the PO market.expected to remain The industry has definitely come of age with somein the first half and significant changes happening. The value proposi- tion for procurement outsourcing is quite high butrecover gradually the challenge is in attaining its full value.by the second half of There are expectations of adoption rates pick- ing up across all verticals and the market is enter-the yeaR ing a new phase of accelerated growth. As the PO market evolves, service providers are coming out with innovative ways to serve their clients andConsolidation attract untapped segments. Like in all areas, hereThe service provider landscape is a mixed lot with also ‘more for less’ remains the mantra for buyers.different types of players competing together. This Jason Evans, Vice President, Corbus, says, “It is noincludes source-to-contract and procure-to-pay longer just a bottom line savings target for pro-service providers, FAO service providers, advisory curement; you have to provide savings, but in thefirms, supply chain management firms and so on. most efficient model that also is helping to furtherWith niche offerings coming up, specialty players secure the supply chain and protect the end cus-are also expected to enter the scene. The trend to- tomers in terms of products to be sold.”wards consolidation that started a few years back A lot will also depend on how production facili-is very likely to continue strongly, and large players ties operate worldwide. The floods in Thailand andwill try and acquire small and niche players to the earthquakes in Japan has had a serious impactcome up with more expanded service offerings and on the manufacturing facilities in these countries.enhance their service capabilities. Swaminathan D, Though production has resumed, it might take aCEO and MD, Infosys BPO, which acquired Portland while to come to normalcy. Against this backdrop,BPO in 2011, stated in a company press release, supply shortages are expected to remain in the first“This acquisition would significantly deepen our half and recover gradually by the second half ofcapabilities and domain expertise in our sourcing the year.and procurement practice. It will also enhance the Global economies are still struggling to findcompetitiveness, spread of offerings and global their way out of the economic crisis. This will be areach for our clients.” concern for service providers, but they also have Collaboration partnerships between large and the opportunity to attract buyers by helping themsmall service providers will also be a trend to watch streamline procurement costs. Evidences of howout for. For instance, Genpact has expanded their enterprises have attained cost savings through POalliance with Ariba to include Ariba’s cloud based will be a key driver for other enterprises that havesolutions into its offerings. “The combined offer- stayed away so far.98  |  September 2012 GlobalServices
    • procurementoutsourcingGlobal ProcurementManagementLeadersCapgeminiCorbus, LLCGenpact LimitedHCL TechnologiesLtd.Infosys Ltd.WNS GlobalServicesXchangingGlobalServices September 2012  |  99
    • Segment analysisFrom CostSavings to StrategicAdvantages:Global HRO Human resources outsourcingEvolves industry retains its cautious optimism as increasing complexities in HR processesBy Smita Vasudevan and growing uncertainties in the macroeconomic environment creates new reasons for enterprises to outsource their HR transactions.100  |  September 2012 GlobalServices
    • HROO ver the years the Human Resources The need to Outsourcing (HRO) industry has evolve HR gradually matured and the whole practices in HR BPO space has transformed order to caterfrom a mere cost saving initiative to a driving to a youngerforce for adding business value. The traditional workforce will bebelief that HRO is simply a measure to reduce felt more.the burden on HR is changing and the strategic Rajiv Raghunandansignificance of HRO is being acknowledged more strategic business practiceand more. head, HRO and S&F, So how has the year 2012 been for HRO? Infosys BPOThe global HRO market retains its optimism,very much the way it did last year. But thingsare definitely not going to be the same, as single process HRO space and is the fastest growingthe market continues to evolve under the segment right now.influence of some significant changes-chang-ing employee demographics being one of the Market Estimatesmost significant. According to Everest Research, the MPHRO market Of all the forces acting together, two primary remains a consolidated space with few leadingforces are driving global HRO ahead in these players dominating the scene. Top players like Aontough times - HRO becoming a more strategic Hewitt, IBM, Accenture, NGA, ADP etc account forinitiative for enterprises and HR service providers around 80% of the market share. Similar is the casecoming out with new technology innovations. with Benefits Administration where top 3 players,Targeted for multinational companies for a long including Aon Hewitt, Fidelity and Xerox accounttime, HRO is now attracting interest from mid for 70% of the market share. Single process func-market enterprises as well and this is going a be tions like RPO and Learning are relatively frag-a strong catalyst for growth in the coming years. mented markets with numerous service providersAlso the concept of employee engagement is playing together.going to hold a lot of significance. The market is still in a phase of cautious opti- According to GIA’s, Human Resource mism and growth in 2012 is expected to be veryOutsourcing(HRO): A Global Strategic Business much in line with what we saw last year. The MPH-Report, the global market for HRO is esti- RO space has grown around 2% over the last yearmated to reach US$199.6B by the year 2017, and stands at around $ 3.1 B. The RPO segment hasdriven by the increasing need for alignment grown over 27% over the same time and currentlybetween business operations and HR, cost re- stands at around $1.4B. Benefits, the most maturedduction, compliance management, understand market in the HRO space, remains the largest inchanging policy framework and access to key terms of value, currently around $5B.technologies. Globalization & Growth Of Emerging Markets The global HRO market is clearly divided into Multi country capabilities are high on enterpris-two parts - MPHRO and Single process HRO. es agenda as they explore new, emerging marketsAlthough some growth has been evident in all and attempt to break geographical boundaries.forms of HR outsourcing contracts, its the single Enterprises that venture into new areas should beprocess HRO space that is demonstrating an aware of the rules of the land. Local knowledgeaggressive pace of growth. RPO dominates the and experience is very crucial and if they can’t getGlobalServices September 2012  |  101
    • Segment analysisthis on their own, they will need to partner with In 2012 we expecta service provider that has global competencies. organizations allMulti country HRO offerings is thus a big trend in over the world tothe current scenario. have a renewed The ability to scale up is highly essential in these focus on employeemarkets and this is acting as a driver for global HRO. engagement as a way to generateRPO a Big Driver better outcomes For emerging geographies, RPO seems to be the for employees andmost highly demanded HR function. The five year lower costs forglobal RPO deal between pharmaceutical major Eli employers.Lily and HRO service provider Kenexa is a good ex- Rohail Khanample of the growing significance of RPO. The deal group president, HRincludes recruiting in Asia Pacific, Europe and the outsourcing and solutions, ACSAmericas and according to Nelson Hall’s estimates,the deal is worth more than $50 million, one of thelargest RPO contracts till now. Khan says, “Re- the mid market space as well. Saas offerings havecruiting is now one of the three fastest growing made HR technology affordable and reachable forprimary services bigger businesses are expecting mid market enterprises.outside firms to handle. Benefits administration He believes that BPaas will make traditional HRand payroll are the biggest two, but contracting BPO more flexible and easier to consume, with out-out recruiting assistance is a growing trend.” come-based contracts, and flexible ways of engag- ing with specialist providers.Bpaas Opens Up New HRO As a trend, HR service providers will be tying upOpportunities with SaaS providers to offer platform based HRO of-Saas-Based HR services have been around for a ferings. Joining hands with a service provider. Onewhile but its only now with the greater breadth of example is Workday partnering with Accenture andcloud offerings in HR ERP, that its penetrating into Wipro to offer integrated saas Bpo services. Mobility and Self Service High on DemandAs a trend, HR Mobile HR applications are high on enterprises’service providers demand list and service providers will face in-will be tying up creased pressures to offer mobile functionality. Quite related to the emergence of mobility and ITwith SaaS providers consumerization is the growth of self service as ato offer platform preferred way of handling HR transactions. Custers says, “Following the rapid adoption of self servicebased HRO offerings transactions in personal banking, utilities billing,One example is and social media, employees and managers will expect to be able to handle both simple personalWorkday partnering data changes, as well as more complex, multi-stepwith Accenture HR transactions via self service scenarios.” This will have dual benefits - employees will have more con-102  |  September 2012 GlobalServices
    • HROAcross different A striking difference over lastverticals, the demand year is the growthfrom financial in preference forservices, telecom emerging markets. Enterprises areand manufacturing moving beyondwill be a big driver. developed markets and emergingThe retail and locations in APAC,government sectors, Europe and Latin America are gainingthough does not lot of attention.look too bright right Rajesh Ranjannow, shows great Vice President, Everest Researchpotential for futuregrowth Growth Across Segments and Geographiestrol over their data and organizations will be able The GIA report states that the United States andto reduce administrative overheads. Europe account for a major chunk of global HRO services. India still holds a significant position butHow Innovative HR Technologies Are the emergence of alternate centers across geog-Helping Enterprises? raphies like Latin America, Eastern Europe andRajiv Raghunandan, Infosys, points out three ways South East Asia is a key indicator of the expansionin which HR technologies are helping organiza- of HRO across geographies. Raghunandan says,tions: “Today Europe is where US was 4-5 years ago. The Ensuring greater compliance proportion is now 40-40. Rest 20 percent is very Better end user experience by making transac- important. These areas could become innovation tions simpler hotbeds. Lot of what is learned there are replicable Making HR policies flexible enough to accom- in developed markets.” modate a global and mobile workforce Across different verticals, the demand from financial services, telecom and manufacturing will be a big driver. The retail and government sectors, Key Highlights of 2011 though does not look too bright right now, shows  While the overall HRO market grew at a healthy great potential for future growth. rate, the MPHRO grew by a modest 2% to reach an annualized spend of US$3.12B in 2011 Technology Driven Consolidations  Transaction intensive processes are core but The trend towards consolidation in the service talent management components are increasingly considered provider landscape is expected to go on strongly,  The appeal of multi-tenant BpaaS will increase as players look to acquire better technologies and  The M&A and partnership environment continues to global capabilities. Big players often bring in the play out in the marketplace scalability while smaller players bring in nicheGlobalServices September 2012  |  103
    • Segment analysis HRODeal tenures and sizes BPaaS will help overcome some ofare likely to remain the shortcomingsshort and small as of both BPO andenterprises prefer to SaaS. It will add an additionaltread cautiously. The layer of subject-size of MPHRO deals matter expertise to organizationsis also becoming who have movedsmaller as the number into SaaS and who find it hard to beof processes bundled entirely self relianttogether in MPHRO is from a processcoming down level. Michael Custers vice president, global alliancestechnology capabilities, creating a an attractive & strategic marketing, NGAmix. The acquisition of Taleo, an on-demand tal-ent management software company by Oracle is agood example of this. Hot HRO Deals in 2011  MPHRO deal between BAE Systems and LogicaDemand for Short Term Deals  Benefits Administration contract between State ofContinue California and Aon HewittDeal tenures and sizes are likely to remain short  5 yr HR and Payroll Contract between Northgateand small as enterprises prefer to tread cautiously. Arinso and Family MosaicThe size of MPHRO deals is also becoming smaller  RPO contract between Eli Lily and Kenexaas the number of processes bundled togetherin MPHRO is coming down. Raghunandan says, providers are bringing out customized outsourcing“There was a one time change that happened. The models for mid market enterprises.interest of clients to lock themselves into 10 year While cost savings and compliance with complexdeals has gone away a few years back. In the last HR transactions will work as short term drivers,3-4 years there has not been much change in the business transformations and technology innova-duration of deals.” tions will play a big role in the long term. As the HR demographics change and a new Facebook genera-What Lies Ahead? tion gets geared up to work, organizations will haveCurrently many forces are acting together to re- a tough task in front of them in reorganizing theirshape the global HRO landscape. Even against the work environment. Enterprises that start now willbackdrop of a dull and gloomy economic scenario, definitely have an edge when this happens a fewoptimism remains as enterprises aim to reap strate- years down the line. Raghunandan sums up “ Wegic advantages out of HR outsourcing deals. There have to evolve our workforce and we have startedare huge opportunities that are yet to be fully ex- doing that today so that we are better preparedplored, especially in the form of a huge untapped for it.” The message holds a lot for service providersmid market segment. Foreseeing this, service and buyers in the global HRO space.104  |  September 2012 GlobalServices
    • HRO human resource outsourcing Global HRO Vendors Capgemini NorthgateArinsoGlobalServices September 2012  |  105
    • Segment AnalysisAnalyticsOutsourcing:Inside the Worldof NumbersBy Smriti Sharma Advanced analytics will increasingly become a necessity for competitive differentiation106  |  September 2012 GlobalServices
    • Analytics OutsourcingT oday, all organizations operate in a glo- With greater bal environment that is set against the usage of analytics backdrop of cut-throat competition and and increasing regulatory pressure. Business decisions, complexity, therepredictions, introduction of new products… all is a tendency tothese decisions should be drawn after analyzing break analyticsaccurate data. Business analytics arm an organiza- projects intotion with quick and insightful decisions that assist distinctlyan organization in managing its performance and executable partscreating value. and outsource Data is not new to industries. For many years to differentthey have possessed all kinds of data. However, specialized teams.absence of requisite skills and tools made it difficult Reetika Joshifor them to utilize this data. As companies continue senior research analyst,to lack appropriate analytics expertise, they are rely- ValueNotes Sourcing Practiceing on the value of outsourcing in this domain. Cost has never been the driver of the wheels of Reetika Joshi, senior research analyst, Valu-analytics outsourcing. Rather, its clutch has been eNotes Sourcing Practice and co-author of the HFSpressed by highly skilled statisticians with domain analytics report titled ‘Where offshore analytics isknowledge who have the capabilities of develop- heading in 2011’ in another interview spoke abouting insights using data. When these capabilities are what covers in offshore analytics area said, withmarried to specialized tools and technologies, the greater usage of analytics and increasing complex-provider can create impactful knowledge. ity, there is a tendency to break analytics projects Sundar Varadarajan, senior vice president, BIBA into distinctly executable parts and outsource toCOE & PRESALES said, “Business Analytics is one of different specialized teams.the terms that are very broadly used. While tradi- Accordingly, there are four levels in the analyt-tional Business Intelligence (interactive reporting, ics services mix, in ascending order of complexity:slicing and dicing of data) is referred to as analytics 1. Data entry/de-duplication: This includesby many; some may refer to analytics specifically in everything from cleaning to maintenance andthe context of advanced decision support/predic- actual. It is a low-end service and offers lowtive analytics. With volume and variety of data ever revenues to service providers. A large chunk ofincreasing, and with constant evolution of plat- KPO-centric analytics work (almost half) is dedi-forms for computation (for advanced analytics on cated to data preparation.an mpp architecture, in-memory computing, etc.) 2. Intuitive analytics: This entails running theare becoming more viable, this has also enabled models and generating new insights on aadvanced/predictive analytics on petabyte-scale.” continuous basis. The outputs for these services While traditional BI will continue to flourish, may be in the form of dashboards, reports (ofadvanced analytics will increasingly become a ne- different frequencies), alerts, etc.cessity for competitive differentiation, for strategic 3. Model building: This is an advanced level ofanalysis, and for better forecasting, and perform- analytics, where models are designed to predictance management etc. various business outcomes. Statisticians and Growing competition and globalization has econometricians build models focusing on busi-made analytics critical for all businesses to support ness problems/opportunities at hand. In termsstrategic decision making. of offshoring, modeling is done by captives asGlobalServices September 2012  |  107
    • Segment AnalysisBuyers need to plan A large percentage of Genpact’s revenue comes for innovation in from America. It also has presence in Europe, terms of budgeting China, India and Australia. exercise. They may Fortune 500 companies are the big-leaguenot know what that clients for this knowledge service. Carnation Auto innovation is going and GE Money are some of its clients. to be but at least Some of Accenture’s clients are BP and Verizon. they have a budget Connectiva serves service providers in telecom, and that helps media and entertainment. Their customers in- them achieve the clude some of the world’s largest providers with innovation. When I 200+M subscribers as well as greenfield operators say budget, I mean and mid-sized companies. Their customers include there are certain Bharti, T-Mobile, Telefonica, Alcatel Lucent, YTL, things the service IDEA amongst others. Capgemini’s clients includeproviders are going Mazda and Baycorp. to do, buyers have Fortune 500 companies are the big-league cli- got to support ents for this knowledge services. them. Innovation is what most of the buyers are asking for. Rajesh Ranjan, vice president, Everest Rajesh Ranjan vice president, Everest Group Group explained, “Innovation is something which helps you really leap from one level to another. Buyers really want things to improve, and thus well as third-party vendors depending on the they want service providers, who are operating the maturity of the clients’ in-house teams. business process function on their behalf to put4. Solutions: Solutions generally entail “bun- in practice some of the best things that they have dled” analytics components, delivered to clients gulfed out from their experience of working with to address their needs. Providers take a con- some of the other organizations. Also, the services sultative approach and leverage technology to BPO providers provide are their core competency. deliver value. The aim is to render the client Within their core business again, they expect the self-sustaining and create a unified analytics de- provider to be able to bring those best practices livery mechanism. This may be done by deploy- and bring those things they are doing internally to ing an analytics platform or other tools. optimize and provide that benefit.” Apart from the above mentioned IT/BPO provide He adds, “However, I also feel that buyers alsoplenty of value-enhancing analytics components, need to plan and budget for that. In general, in-such as analytics to improve the efficiency of process- novation costs some money, innovation does notes, identify problem areas or sub-processes with cost- come free. Buyers need to plan for that in termssaving potential, and provide reporting and MIS for of budgeting exercise, they may not know whatexisting processes. Often these services are delivered that innovation is going to be but at least theyto the client as value-adds minus additional cost. have a budget and that helps them achieve the innovation. When I say budget, I mean there areWhat do the Buyers Want? certain things the service providers are going toUS and UK continue to be the major markets served do, you have got to support for that, and if theseby analytics service providers. America and Japan things bring the right results, you should be able tohas also won the focus of some vendors. reward the service provider. All these things need108  |  September 2012 GlobalServices
    • Analytics Outsourcingto happen in conjunction to be able to bring in the outsource in the next 12 – 18 months preferredright value for the buyers side.” output based or transaction based pricing models, Extracts from TCS report titled, Future Proof- with about 9% even willing to opt for an outcomeing the Organization through Analytics, based pricing model. A significant 40% of the buyers felt the func-tional expertise in the domain was the key factor Service Providers Landscapein choosing a service provider and an additional The players in this market space can be categorized35% sought experience in the same industry in three divisions. One is the global outsourcing ma- It is also not surprising that influencers continue jor: IBM, Accenture, Capgemini, TCS, Infosys, Wiproto consider presence of a technology platform a etc., the second segment is pure play BPO provider,critical aspect to outsourcing. The buyers tend to though they are not many of them left now,:see this as a relatively low importance factor in WNS,EXL, and the third one is business specialist,decision making since the business and technology these are very few. In the last category, the ques-decisions are made separately. tion is to what extend will they continue to operate Interestingly, among the buyers, more than on their own vs. on getting acquired.50% of those who are currently outsourcing Analytics outsourcing started as financial andsought functional expertise in the partner or- marketing function. Shipping and logistics, manu-ganization, while over 60% of those planning to facturing, supply chain etc. were initially not veryoutsource in the near future said they would look active in this space. However, now they offer goodfor similar experience in the industry. opportunities. Web and web related services, pack- A buyer experienced in outsourcing is perhaps age solutions that mix combine consulting serviceslooking at the nuances that the partner can bring, with delivery are very much in demand.particularly in case of analytics services. Hence, a Chirajeet Sengupta, research director, Everestpartner with enough experience in the domain Group articulated, “Increasingly, there has been ais desirable. For a buyer that has not outsourced shift or blurring of lines between different kind ofbefore, similar industry experience is a confidence market players and their competent quotient. Es-building factor. sentially, this field is open to everyone.” Close to 50% of the buyers in our survey said He explains why some of the large scale ITthat technology and infrastructure were key ele- providers are able to act well in this space. Thements where they looked at their partners for help. reason being they have expertise in handling Also, many buyers are looking to migrate to things like business intelligence and data ware-newer technologies, particularly from the cost and houses. They have experience in handling thosetime to market perspective. Here the support and huge amounts of transactional data Secondly,necessary skills of a technology competent partner they have the scale, they have the deep pocketsfor the buyer is extremely critical. to invest in a particular upcoming space and their Buyers are also looking at process standardization ability to invest is larger than a start-up analyticsfrom their partners, with 28% of the buyers in our house. The third factor is they are able to offersurvey saying that this was critical for them. People certain efficiencies in terms of automation. Theyconsolidation and automation are important in as are able to hire a whole bunch of statisticiansmuch as they help in cutting the costs to the buyers. and put them behind stats terminals to churn out Buyers who were currently outsourcing analytics insights or you can automate 70 percent of that.processes preferred the more traditional FTE based That in itself is a huge advantage.or fixed price model. However, it is interesting to The last thing is that some of the account levelnote that close to 40% of the buyers planning to relationships these organizations have built overGlobalServices September 2012  |  109
    • Segment Analysis Analytics Outsourcingtime have helped them mine into what seems as The ability toa natural expansion of scope. For example, if you undertake analyticsare implementing business intelligence systems for on transactions,retail company and you have a healthy relationship understand thewith that retail company for the last five years; it’s insights andalmost a natural extension to talk about how you then identifyare going to help them mind those insights out of opportunities tothat system. improve and add The IDC MarketScape report evaluated the value to the client’sofferings and capabilities of 10 business analytics business is whatBPO vendors namely: Accenture, Capgemini, Cogni- our clients expectzant, EXL Services, Genpact, HP, IBM, Infosys, TATA from BPO.Consultancy Services (TCS), and WNS. Accenture, Anoop SagooCapgemini, Cognizant, EXL Services, Genpact, HP, BPO cross operating groupIBM, Infosys, TATA Consultancy Services (TCS), and lead, AccentureWNS. Service providers were evaluated based onpotential key strategy measures for success in two as a service on the cloud, Social intelligence andprimary categories: current capabilities and future mining, Advanced (predictive) analytics such as:strategy. Accenture, Capgemini, Genpact and TCS Fraud Analytics in the Financial Services, Insurancewere positioned as as ‘Market Leaders.’ Industry, Higher Education analytics – e.g., predict Mukesh Dialani, research manager, Worldwide student dropout patterns, analyze and predict per-BPO Services, was quoted, “BPO vendors find formances, etc. and Smart Metering related analyt-themselves in a favorable position to assist their ics in the energy/utilities and other industries.clients’ transformation efforts as enterprises face Varadarajan also highlighted the followingnew sources of competition in this global environ- upcoming trends:ment and try to stay competitive by keeping a In addition to the typical analytical solutions onclose check on various business performance met- well-structured corporate or customer data, etc., werics. BPO providers that build competency around are increasing seeing that organizations are havingindustry-specific BPO and analytics outsourcing as to deal with more external data (on social networks,well as exhibit the capability to assist clients with internet, emails, text documents, etc.), a lot ofbusiness consulting services will gain a bigger por- which is unstructured, and needs to be analyzed intion of this business.” conjunction with the structured data; also, the data Anoop Sagoo, BPO cross operating group lead, volume is increasingly huge – we see that effectivelyAccenture, expressed, “BPO today is about min- dealing with this “big data” analytics is becominging the huge volume of transactional data that key and will be a mainstream part of analytics out-is being processed – and using industry expertise, sourcing in the coming years.analytics and innovation to help a client operate Also, with the adoption of platforms and appli-its business better and drive business outcomes. cations on the cloud, analytics-as-a-service, or data-The ability to undertake analytics on transactions, integration-as-a-service are also increasingly beingunderstand the insights and then identify oppor- adopted – e.g., we have seen with a few customerstunities to improve and add value to the client’s and prospects that as a natural extension to ERPbusiness is what our clients expect from BPO.” in a cloud model, analytical services on top of ERPs Varadarajan pointed the following as new (eg., HR analytics as a service) are also becomingopportunities for analytics outsourcing: Analytics more prevalent.110  |  September 2012 GlobalServices
    • Analytics Outsourcing Leaders- Specialty KPO Global Knowledge Process Aegis Limited Leaders Affinity Express Aditya Birla Minacs Worldwide Chinasoft International Ltd. Limited CompuCom Systems Inc. Capgemini Corbus, LLC eClerx Services Ltd. Datamatics Global Services Limited Genpact Limited HCL Technologies Ltd. SPi Global Infosys Ltd. Syntel Inc. Insigma Technology Co., LTD InterGlobe Technologies Quatrro Global Services Pvt. Ltd. Sutherland Global Services, Inc. VanceInfo TechnologiesAnalytics Outsourcing Analytics Outsourcing Analytics Outsourcing AnalyticsOutsourcing Analytics OutsourcingAnalytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics OutsourcingAnalytics Outsourcing Analytics Outsourcing Analytics OutsourcingAnalytics OutsourcingAnalytics Outsourcing Analytics OutsourcingAnalytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics Outsourcing AnalyticsOutsourcingAnalytics Outsourcing Analytics Outsourcing Analytics Outsourcing Analytics GlobalServices Outsourcing Analytics Outsourcing September 2012  |  111