Pinnacle Model - Digital Maturity in GICs By H Karthik Partner, Global Sourcing Practice Everest Group

1. ®
Pinnacle Model™ – Digital Maturity in GICs
Shared Services Forum | Bangalore
November 30, 2018
H. Karthik, Partner – Everest Group

2. Proprietary & Confidential. © 2018, Everest Global, Inc. 2®
Decrypting digital in GICs
Social & interactiveCloud
MobilityAutomation Analytics
Others
(e.g., cybersecurity, IoT)

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58
70 69
76
97
H1 2016 H2 2016 H1 2017 H2 2017 H1 2018
GICs are increasingly supporting the digital agenda of the enterprise;
India is a leading destination for digital
New Global Inhouse Center (GIC) setups2
Number
Share of new GICs supporting digital services1
Digital1 services – GIC market size by delivery geography
2017; Percentage
India
Nearshore
Europe
APAC
(excluding India)
LATAM
52%
49%50%
45%
36%
1 Deals including component of digital services (e.g., IoT, Cloud, Social Media, Mobility, Analytics, Big Data, Cybersecurity, Blockchain, and Automation)
2 New GIC setups in offshore / nearshore delivery locations; excludes new GIC setups in onshore locations
68-72%
8-12%
12-17%
4-6%

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We identified digital Pinnacle GICs™ based on their
focus on business outcomes and capability maturity
Level2Level1Level3
Typical AdvancedBasic Leaders
Outcomes
Capability Maturity
Strategic impact
Operational impact
Cost impact
Scale &
penetration
Breadth & depth
of services
Talent
Operating model
and level of
influence
Innovation
Pinnacle GICs™
Everest Group’s GIC Digital Pinnacle Assessment™ 2018
®
™
Based on 55+
responses from
leading GICs

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Pinnacle GICs generated
53% ROI from digital
initiatives while 44% of other
GICs are yet to achieve ROI
Pinnacle GICs achieved
46% improvement
in operational metrics, compared
to 19% by other GICs
68% Pinnacle GICs
generated significant strategic
impact, compared to 37%
other GICs
Cost impact Operational impact Strategic impact
Pinnacle GICs™ significantly exceed other GICs across three key
impact areas

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Pinnacle GICs™ have generated 53% ROI from digital initiatives
while 44% of other GICs are yet to achieve ROI
Pinnacle GICs™ Other GICs
Cost impact
Percent of GICs who have already
achieved ROI
28%
8%
Average cost savings from digital
initiatives
100%
56%
3.5X
Average time taken to achieve ROI from digital
initiatives (in months)
15
17
Average return on investment (ROI)
from digital initiatives
53%
29%
1.8X

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Average improvement of digital initiatives on operational metrics
Operational impact
Pinnacle GICs have achieved ~2.5X improvement in operational
metrics compared to other GICs
Pinnacle GICs™ Other GICsAverage improvement
Increase in process accuracy
Reduction in process cycle time
Improvement in SLA compliance
Improvement in staff productivity
16%
24%
16%
21%
35%
48%
50%
50%
46%19%

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About 68% Pinnacle GICs™ have generated significant impact in
strategic areas, compared to 37% of other GICs
Percent of GICs achieving significant (high to very high impact1) impact on strategic areas
Create new POCs / prototypes
Reduce cost of innovation
(fail fast, fail cheap)
Improve customer experience
Decrease time-to-market
26%
49%
40%
33%
46%
73%
73%
82%
68%37%
Strategic impact
Pinnacle GICs™ Other GICsAverage share
Pinnacle GICs have
delivered ~2X revenue
growth impact for the
parent through digital
initiatives, as compared
to other GICs
1 Based on survey responses

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Pinnacle GICs™ started their digital journeys differently
Pinnacle GICs Other GICs
Pull by GIC
proactively created PoCs and
showcased capability to seek buy-in
Demand creation
Push by parent
parent driven mandate
to foray into digital
Efficiency improvement
with technology as an enabler Strategic focus
Technology adoption
as per parent requirements
Intentional
largely project-based
Cross-functional
collaboration
Informal
no structured approach
Dimension

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Pinnacle GICs™ have differentiated capabilities
Performance measurement
Retention
Learning &
development
Acquisition
Talent
Operating
model & level
of influence
Metrics
Operating model for
digital services
Influence with parent
Breadth and
depth
of services
Breadth
Depth
Low
Contributionto
capabilitymaturitygap
Scale &
penetration
Scale
Penetration
Other capabilities for Pinnacle GICsDifferentiated capabilities for Pinnacle GICs
Innovation
Success
measurement
Ownership
EnablersSources
(internal/external)
High

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Pinnacle GICs™ have achieved ~2X penetration than other GICs,
across digital segments
Average penetration
(i.e., GIC’s digital scale as a ratio of overall
enterprise's digital scale)
Automation
Cloud
Mobility
Cybersecurity
Social &
interactive
Analytics
43%
37%
37%
34%
30%
28%
16%
21%
19%
17%
14%
16%
22%
14%
Scale &
penetration
Penetration
Scale
Pinnacle GICs™ Other GICs
Maximum penetration in
each of these segments is
>50%; reaching ~70% for
some GICs
Miscellaneous
(e.g., IoT

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Pervasiveness across BUs and depth within specific digital
segments are differentiating factors for Pinnacle performance
Breadth & depth
of services
71%
55%
39%
19%
Supporting
multiple/most BUs
(Pervasiveness)
Providing end-to-end
support within digital
segments (Depth)
Breadth of digital
segments supported is
not a differentiating
factor for driving
Pinnacle performance
Pinnacle GICs™ Other GICs
Depth
Breadth
Percent of GICs across the following dimensions

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Pinnacle GICs™ are winning the war for digital talent across multiple
dimensions
Talent model maturity index Key approaches for talent retention
Talent
Learning &
development
Acquisition
Retention
Performance
measurement
77%
75%
59%
50%
56%
64%
45%
44%
Retention
Learning &
development
88%
81%
81%
71%
73%
69%
70%
54%
Performance
measurement
Acquisition
Offering
relevant/challenging
work opportunities
Focused L&D
initiatives
Creating specialist
career paths
Differentiated work
environment
Pinnacle GICs™ Other GICs

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Pinnacle GICs™ have moved the needle on several dimensions
of the operating model; opportunity to step-up in leading digital
Percent of GICs across the following dimensionsOperating model &
level of influence
Metrics
Operating model
Influence with
parent
73%
64%
62%
40%
37%
31%
Digital teams embedded within
BUs; coordinated through a
centralized digital team
Currently using / planning to
use output/outcome-linked
metrics to measure impact
Influence with parent to lead
design/execution of parent
digital strategy
Pinnacle GICs™ Other GICs
Opportunity to upshift even
for Pinnacle GICs

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Pinnacle GICs™ adopt a comprehensive approach to innovation
82%
82%
73%
73%
37%
56%
54%
35%
Sourcing ideas from both
external and internal ecosystem
Measuring impact of innovation
projects on business outcomes
of parent
Dedicated innovation teams
with defined mandates
Leading execution of innovation
initiatives and contributing to
design/ideation
Innovation
Success
measurement
Sources
Enablers
Ownership
Pinnacle GICs™ Other GICs
Percent of GICs across the following dimensions

16. Proprietary & Confidential. © 2018, Everest Global, Inc. 16®
Scale & penetration
Don’t be constrained by scale Talent
Offer relevant and challenging
opportunities consistently to retain talent
Breadth & depth of services
Prioritize depth over breadth
Operating model and level of influence
Act proactively and intentionally consider
leading vs. following
Innovation
Intensify focus; institutionalize by aligning
metrics with outcomes
How can you deliver Pinnacle Model™ performance?

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Thank you!
H. Karthik
Partner, Global Sourcing
h.karthik@everestgrp.com
T: +91-80-42764533 | M: +91-981-130-7853
www.everestgrp.com

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