HfS Network

It's back... the industry's seminal study on outsourcing and shared services!

September 29, 2016 | Phil Fersht

Posted in: Business Process Outsourcing (BPO)HfS Surveys: All our Survey PostsIT Outsourcing / IT Services

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Accenture Acquires DayNine and positions itself at the forefront of the race for Workday services supremacy

September 26, 2016 | Phil Fersht

Why do the eyes of HR people always light up when you mention the word “Workday”?  Has Workday become the “complete suite” for the HR function, in a similar vein that SAP did with the CIO in the 1990s? 

Well, judging by the feverish excitement from the leading service providers to scoop up the best and brightest of the star niche players, the battle for Workday services supremacy has hit fever pitch, with Accenture following IBM’s and KPMG’s recent acquisitive forays in the space with the purchase of DayNine.

So over to HfS analyst, Khalda de Souza, author of our Workday Services Blueprint 2016 report to giver her take on what this means to the future of Workday services:

What did we tell you last week? Workday Services Blueprint 2016: Lots of Changes in this still Immature Market . Yes – this market is moving fast with even more consolidation in the Workday services market!

Accenture’s latest move in this competitive game has potentially check-mated its closest competitors, at least in the short-term. Instead of just acquiring a set of specific technical or geographical delivery capabilities, Accenture has targeted one of the leading Workday services partners in the market.  Both service providers did very well in the recently published Workday Services Blueprint 2016 report. We positioned Accenture and DayNine in the Winner’s Circle because they both demonstrated depth of experience and capabilities, impressive investment in tools and technologies to support deployments, and a focus on talent retention, all supported by strong client references. In fact, we positioned DayNine as the best executor in the Blueprint.

We estimate that the combined entity has a total of 1,275 people in the new Workday practice, including an estimated 1,152 certified Workday consultants. This is bigger than the largest Workday practice we have seen so far at Deloitte. Moreover, Accenture consultants hold an average of 2 Workday certifications each, and at DayNine this figure is 3.5, among the top 4 in the Blueprint.

Of course, it’s not all about pure scale. DayNine gains access to Accenture’s broader consulting capabilities and innovation around service development. Accenture gains access to medium sized enterprises and additional skills in Europe, which is a hot growth area for Workday services next year.  This initiative also aligns neatly with Accenture’s Cloud First growth agenda. It acquired Salesforce services partner, Cloud Sherpas last year (see: Why Accenture's acquisition of Cloud Sherpas is both an offensive and defensive move) and  more recently, Italy-based Salesforce solutions provider, New Energy Group.

The Bottom Line:  DayNine was one of the last "hidden Workday jewels" waiting to be snapped up... now Accenture needs to make 1+1=3 to deliver

By acquiring DayNine, Accenture will have the opportunity to create genuine synergy from this acquisition, if they can realise the ’1+1=3’ value proposition that this appears to be on paper. Yes, there is a lot of work to do as there always is when acquiring any IT services entity. But if the strategic alignment and energy from Accenture Cloud First Applications lead,  Saideep Raj,  Accenture Workday practice lead, Beth Boettcher,  and DayNine CEO and co-founder, Tim Ramos (who will lead the new Accenture DayNine group), is anything to go by, the main recommendation for competitors is to Watch Out!

 

Premium HfS subscribers can access the new HfS Blueprint Report: Workday Services 2016 here. 

Posted in: Business Process Outsourcing (BPO)HfSResearch.com HomepageSaaS, PaaS, IaaS and BPaaS

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Goodbye Denial… we’ll miss you!

September 18, 2016 | Phil Fersht

Don’t you just love being in Denial? That wonderful place where all you have to do is show up for work, do the same old, same old… and everything just keeps on ticking along. Isn’t it so cool to wake up in the morning and proclaim to the world that you’re just so excited to plonk your behind down in your tried and trusted swivel chair and keep those lovely green lights staying on?

Well, I have bad news for, Denial-lovers, because we finally all accepted, at the HfS Cognition Summit this week in Westchester New York, that we have to bid our fond farewells to that nice cosy place, where linear growth and green light happiness were taken for granted, where it was OK to have lots of manual workarounds to keep workflows going, when robots were visitors from the future, as opposed to appearing on your desktop to run repetitive loops on your invoice processing…

As our recent study of 371 major enterprise shows, well over half (56%) of senior leaders now expect to see major moves towards intelligent operations within two years. Compared to our 2015 study, where 70% were still looking at a 5 year horizon:

 

Click to Enlarge

Two years is real, it's a time span that impacts us all today, not one where we are procrastinating, or simply leaving the problem to someone else, once we have left our current job.  

By why now?  What's wrong with a few extra years wallowing peacefully in Denial?

Social media is leaving us with nowhere to hide. Let's face facts here - RPA technology, by and large, is nothing new - much of it has been around for the last decade and beyond.  "Cloud" has been around for so long, we've almost forgotten about it.  Cognitive tools are still largely smart macros and algorithms (again, nothing new), while Rolf Faste was harping on about Design Thinking to Stanford students in the 1980s. The reality, today, is that we're educating ourselves (and hyping ourselves) at a breathtaking daily pace and, suddenly, if you don't have an automation strategy, are tinkering with cognitive capability and have some clue how to make your enterprise behave more "digitally", then you are officially legacy. The way we think, operate, manage and communicate is becoming brutally exposed - in almost every business situation with which we deal. If you are behind the curve, everyone knows it very quickly and you are typecast as the walking corporate dead. There is nowhere to hide, people... it's time to purchase that one-way ticket out of Denial, before that long-awaited career move making sandwiches becomes your future.

Offshoring never was a permanent solution, it's part of the gearbox of value levers. Remember all those times we debated the accidental "career" that is outsourcing? When shifting back office work to cheaper labor pools around the world was a special skill, a unique capability that only a very select group of us, endowed with this blessed experience, could boast? What we weren't really considering, back in Denial-day, was that offshoring work was only the first phase in a quest for better efficiency and value. Just because you signed a five year deal to shift the work of 500 headcounts to a be carried out at lower cost elsewhere, didn't mean you weren't intending to search continually for new ways to innovate in the future?  Most enterprises that have outsourced IT and business process work today are already putting real pressure on their operations leadership to commit to new, identified value levers, with an automation strategy being the prime lever that is the natural sequential transformation phase for most operations, whether or not they are outsourced.

Digital disruption is driving more urgency and paranoia among enterprise leaders. In many industries today, digital business models can completely take established legacy enterprises out overnight. If you are (for example) an insurance firm with 10,000+ people processing claims onshore using green screen computers, a bank which still has hundreds of branches employing tellers from the 1970s, or a retail outlet with no mobile app strategy, you are at dire risk of competition coming at you with a completely app-ified, user friendly, intuitive and cognitive business model, supported by low-cost sourced operations. If you have failed to see what could be coming at you, and do not have that salvage plan already in play, where you are ripping out that costly, unnecessary legacy, with a plan to compete against your potential "uberized" new competitor, you really are doomed. If you are a highly paid enterprise leader who is not aware of what could happen, without a plan to counter it, you might not be in a job for much longer... 

The Bottom Line:  Leaving Denial is one thing, but make sure you arrive successfully in Optimistic Reality

If there's one thing that we all need to stamp out, it's the pessimism and fear-mongering - most of it's unwarranted, unfounded and irresponsibility created by people who should know better. The reality is, we are dealing with some disruption to jobs, as automation, when implemented well, can reduce some transactional headcount (which we predict as having a 9% negative impact over the next five years, and will be largely offset by natural attrition and workers evolving their skills into other areas).

In my view, the real threat comes in the form of disruptive competitors using digital platforms and cognitive computing that can wipe out your enterprise overnight. Imagine a new bank appearing, with a great mobile app, immediate customer service via chat / phone etc.  Or a rival insurance firm that delivered everything you needed at half the premiums, but twice the usability?  You'd switch in a heartbeat wouldn't you?  And these capabilities are here today, they're not coming tomorrow.

And also remember that the threat of legacy extinction is with mid/advanced career folks, not our kids... they'll always adapt and survive, as they have the digital skills and awareness to do what modern businesses need. It's the 35+ generation that needs to get with the program and grasp how to manage automation initiatives, how to understand a cognitive workflow, how to determine and execute a digital business model. It's the mature executives who have been basking far too long in the delights of Denial and must make a hasty exit to Optimistic Reality. 

Posted in: 2016 Intelligent Ops StudyHfSResearch.com HomepageSourcing Change Management

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Let's rewrite the Future of Services this week in New York!

September 10, 2016 | Phil Fersht

Friends, Robots, Contractmen,

Fed up with all the hype and noise clogging up your inbox? Worried that you've already been digitally disrupted and your Roboboss is poised to subject you to a life of sandwich making? Well, worry no more, as next week we will cut through this horrendous hogwash to uncover the true picture of global services: What is really legacy? What is really relevant? And how can we define our careers amidst all the noise and confusion?

This week, the industry elite will convene to face some hard truths we need to tackle so we can clear a roadmap for what the future holds. I have never faced a time when people are so scared, confused and unsure what do to be successful in this As-a-Service Economy

"Sourcing" is no longer about plastering various shades of lipstick on shared services and outsourcing. It's about integrating all the levers of new value we can derive from labor arbitrage, global talent, inhouse centers, outsourcers, automation tools, advanced analytics and cognitive. Call this the "As-a-Service Economy" or the "Digital Era" or "Outsourcing 5.0" (OK, I just made that one up), but today's real deal is that we're all in the business of defining and achieving outcomes using whatever means at our disposal to be successful.

I am personally very excited to meet so many of you at our 13th HfS Buyers Summit next week in New York (see the agenda here) at a time when there's never been a greater need for industry stakeholders to take a deep breath, collect our thoughts and share our experiences on where our industry is heading.

I hope you can join us this week to raise a glass of wine and get the real conversation started!

 

Posted in: Cognitive ComputingOutsourcing Events

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Whoever said the omnichannel was a myth?

September 09, 2016 | Phil Fersht

Posted in: Absolutely Meaningless ComedyContact Center and Omni-Channel

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Why is Gartner spewing such irresponsible and unsubstantiated data about "robobosses"?

August 29, 2016 | Phil Fersht

Clients are being subjected to such a load of nonsense about the impending impact of robotics and cognitive computing on enterprise jobs, many are literally terrified. Conversing with the "head of automation" for a F500 organization today, is akin to meeting a Secret Service agent in a clandestine alleyway. These people do actually exist, but most have to conduct their work under a veil of secrecy, due to the level of discomfort and panic our robo-commentators are making in the presses.  

Remember the panic about jobs getting shipped offshore?  Well, that is child's play compared to the emerging tumult of fear being generated by jobs being completely eliminated by robotics. Net-net, people are frozen stiff with fear, and it's the responsibility of respected analysts, consultants, academics and journalists alike to educate and world using real, substantiated facts. Sadly, the likes of Gartner, McKinsey, Oxford University and our beloved Stephen Hawking, all seem hell-bent on capitalizing on the panic to grab the headlines (read my post earlier this year) as opposed to dispelling much of the ridiculous scaremongering about the impact of automation on job losses.  

At HfS, we published a very thorough analysis on the impact of automation on global services jobs, showing there is likely to be modest downsizing of ~9% over the next five years as low-end tasks are increasingly automated across major service delivery locations.  And this 9% will be immersed in natural attrition and redeployment of workers to other industries, as global services streamlines and matures as an industry. Yes, there will be impact, and it will be somewhat painful to absorb for some enterprises, but it's not the impending workforce apocalypse these people are predicting. 

So why, pray tell, is Gartner, a respected voice in IT research, continually pounding us with continual scaremongering that we're all doomed to the will of the robot, and we may as well start preparing for a life of unemployment, or sandwich making? Oh wait, robots can even make sandwiches, right?

Peter Sondergaard, Gartner's Head of Research, predicted one in three jobs will be converted to software, robots and smart machines by 2025.  OK, that's so far out in the future, I think Peter's on pretty safe ground here - he's probably going to have cashed in his Gartner stocks long before then, in any case, and be on a golf cart somewhere, when one very earnest soul decides to dig into the Gartner archives of previous decades to read very old research, with very dodgy predictions, that absolutely noone care about anymore.  So we'll let Peter off the hook here - he wanted to make a splash at his Symposium and he achieved exactly that.

But then we get treated to this almighty whopper from Fran Karamouzis, a vice president and distinguished analyst at Gartner...

By 2018, more than three million workers globally will be supervised by "robo-bosses".  Wow - isn't this barely more than a year away? Excellent, so Fran's going to be around to declare automation glory when global employment goes through a robo-geddon so seismic, it'll be like all three terminators visited from the future at once  to change the world? My god - what is going on here? The suggestion that an employee will be supervised by a machine simply cannot be corroborated by any meaningful research...

So why do we, at HfS, view claims like this as factually incorrect and irresponsible? 

There is only one very shaky example of "robo advisors" in the industry. The most cynical implementations of automation that HfS has come across, thus far, where direct replacement of human labor by robots is the declared outcome, are examples such as Royal Bank of Scotland, where virtual agents, deployed as “robo advisors” are solely deployed to replace FTEs.  We've also witnessed a service provider radically downsizing some delivery staff claiming success of its robotics strategy (only to find out later these staff were simply redeployed elsewhere).  Let's be honest here, the onus so far seems to be about firing people and using "robotics" as the smokescreen. While Intelligent Automation decision-making will undoubtedly increase (view our Continuum here), we see no examples of employees being supervised by bots. At HfS, we are covering every deployment in the industry, and are just not seeing it.

We still haven't had a real debate on the ethics of automation and cognitive computing in the B2B environment. Suggestions that employees will be supervised by bots can be traced to the broader discourse on Artificial Intelligence, where more consumer-facing technologies are discussed with undercurrents of movies, such as the Matrix. These discussions tend to focus on technology capabilities of providers like Google and Facebook. However, we haven’t seen a similar debate in the B2B space. If anything, the B2B urgently needs a debate on the ethics of automation, in light of these nascent cognitive capabilities. But to surmise that robobosses will be so prevalent in barely over a year before we've even had these debates is quite absurd.

The speed of internal organizational change is painfully slow. The tendency from clients with automation is to pilot first, rather than to go full scale, and every ambitious forecast is always waylaid by the reality of interacting with legacy systems.  Most of today's Robotic Process Automation(RPA) tools are simply being retrofitted into smoothing over manual processes within legacy technology environments with obsolete processes. They are adding efficiency to broken operations, which may, in the future, lead to a lesser need for headcount in low value work areas.  Talking about today's enterprises being so close to investing in Robo bosses is just very wide of the mark.  What's more, much of this RPA technology has been around for more than a decade - this stuff isn't exactly revolutionary, it's just becoming more popular as enterprises figure out further efficiencies beyond initiatives such as offshore outsourcing and shared services

Cognitive tools are only just emerging. While IBM has done a stellar job aligning its Watson capabilities with the healthcare industry (read our report here) and software experts such as IPSoft's Amelia and Celaton have some compelling client stories to tell, the focus on self-learning and intuitive cognitive solutions are mainly confined to customer service technology and virtual assistant chatboxes.  Talk to the call center BPO providers and they're really only just figuring this out.... forget robobosses, we're still just trying to figure out some basic software to make chatboxes work better these days. Moreover, with Watson, our research shows it's best application today in the medical field is helping flesh out the bad science and saving scientists serious amounts of time doing their research.  Meanwhile Celaton, in the UK, has created a really cool tool to help Virgin trains handle emailed customer queries.  But the long and short, here, is that Intelligent Automation solutions today are great at augmenting processes and unstructured data pools, not replacing real people who make real decisions doing real jobs.  

The definition of robo bosses, and the potential value, of robobosses is missing. There is, however, something to be said for the value of increased automation combined with analytics to better understand the impact — measured by targeted business outcomes — in a more realtime way during a contract with a “gig economy” worker (or any worker).  Such knowledge can help us intervene and train/coach a project “going south” sooner, or catch fraud fastest, or identify a worker to “gets it faster”. Along these lines, we see value in "robo advice", but the point also needs to be made that these "robobosses" (give me a break) do not work alone, such as with Watson and health / medical diagnosis and treatment, they work in tandem with doctors / clinicians, changing and refining the dr/clinician job (freeing up that person to be more targeted and more of a coach than a statistician) with the intent of better medical results.  These robo tools (or whatever we call them) do not replace the doctor / clinician. 

Monitoring software has existed for decades... so when does it become a "Roboboss"? Currently, there are probably a million or more workers just in the UK (for example) managed by extreme monitoring of some kind. The Amazon style warehouse pickers, fast food cooks, many call center agents, delivery drivers, assembly line factory workers are subject to time monitoring and computers giving them tasks. We're just not sure when this turns into a roboboss?  

Bottom Line: The real "roboboss" is the human worker who can use Intelligent Automation tools effectively

It today's swirl of gibbering noise around the social media presses, it's the responsibility of leading analysts, advisors and academics to be the voices of sanity and reason, when it comes to topics as critical as the future of work elimination through Intelligent Automation technology.  The vendors love the hype as it gets them attention with clients, but analysts who like to take money from these vendors have a responsibility to articulate the realities of these technologies to their clients. They are great at augmenting work flows, and even aiding medical discoveries, but this is the real value - it's not about sacking people.  It's about making operations function better so people can do their jobs better.  The real "roboboss" is the human enterprise operator who can use smart Intelligent Automation tools to enhance the quality of their work.

Net-net, industry analysts, advisors, robotics vendors, academics and service providers need to engage with clients around how all these disruptive approaches will affect talent management as well as organizational structures. Even without these apocalyptic scenarios, some job functions are likely to either disappear or be significantly diminished (as our 9% forecast reveals). Equally, we need to talk about governance of these new environments, touching upon ethical, but also practical, issues. This is not only a necessity for the broader adoption, but also offers high value opportunities. 

I'll probably get a few nasty messages as a result of this piece, but I sincerely hope this has the outcome of steering our industry conversation in a more realistic direction, backed up by real data and experts who prefer realistic conversation that mere headline-grabbing and panic creation.  

A special shout out to Cartoonist and Innovation evangelist Matt Heffron for penning this little gem:

Click to Enlarge

Posted in: Cognitive ComputingConfusing Outsourcing InformationRobotic Process Automation

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Beware men in gray suits: Clients want more senior women, more real client stories and less automation hype

August 27, 2016 | Phil Fersht

We set out a few weeks' ago, with support from NASSCOM, to test the views of service buyers, advisors and providers on what the BPO industry needs to do to make the leap from delivering mere efficiency to one that can provide genuine strategic value to clients (if this is indeed possible).  

As we filter through the first results, what immediately leaped out at me was the following:

 

Clients want more women leaders and real case studies... more than anything else

"Why are these providers and advisors dominated by boring men in gray suits?"  bemoaned several clients at one of our HfS Summits recently (where more than half the buyers executives present were actually female).  This is a serious issue, folks. Our industry has - somehow - become dominated by too many dinosaur service provider executives with their lavish air-miles accounts and two iPhones* (why do some people insist on having more than one iPhone?  Are they really that popular?), who have, at the same time, somehow lost all records of actual client success stories that justify their new vernacular around "digital transformation" and "automation".

In fact, during one service provider briefing last week (which will remain nameless), we asked an executive to explain how he defined "Digital Transformation" (after many utterances of said phrase) and the poor chap was positively floored that he was asked to define what he was talking about. These people seem to be obsessed with recanting the vogue buzz phrases, without the need anymore to know what they really are. Can we just call it "technology" again and go back to sharing real examples of how technology can enable and transform client performance? Can we just explain what all this hype is surrounding automation and emphasize that most of today's RPA technology has actually been around for more than a decade in many shapes and forms?

Here, it's abundantly clear that we need to see more women - and, dare I say it, more youthful executives, who can simply connect better with the clients.  Everything has become so dominated by the men in gray suits, who talk in increasingly more impressive riddles that are becoming increasingly distant from reality.  Moreover, we need to dispel much of the hype surrounding automation and jobs impact:  Gartner's unsubstantiated claim that "more than three million workers globally will be supervised by robobosses in just 18 months' time", is simply irresponsible and unprofessional. It's time to make it real and drop the hype and scaremongering...

The Bottom Line: It's time for progressive change from within to break ourselves out of this legacy holding pattern 

The industry has spoken, and it's not pretty - clients are fed up with the same old selling, the same old unsubstantiated hype and the same old cronies dishing it out. Change only comes when we look at progressive change, not successive change. This means we must stop making the same old mistakes by replacing jaded middle managers with more faceless middle managers with a hype-upgrade; this means we must stop plastering out turgid marketing that was really a rip-off of the other ten competitors, with a different logo slapped on it.

We need real people selling and delivering our solutions, who can listen to what clients need and can really empathize with them, who are diverse across the genders, the age groups and the ethic backgrounds. We need to start talking real English again, and less of the manifested garbage we can't resist spewing out to mask our insecurities. As our whole 2017 research theme at HfS is centered on... it's simply time to start making everything real again and redefine our industry as something that is geared up for our clients' real needs, not needs we are trying to convince them they have! 

*In full disclosure, the author of this article has been seen once sporting a gray suit and did possess two iPhones for a brief period of time.  He has since changed his ways...

Posted in: Business Process Outsourcing (BPO)HfS Surveys: All our Survey PostsHfSResearch.com Homepage

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You can bet your mortgage-as-a-service on Accenture, Wipro, Cognizant and TCS

August 24, 2016 | Phil Fersht

Perhaps the best example of the evolving As-a-Service delivery model that immerses all the value levers of global delivery; namely offshore talent, cognitive automation tools, analytics and the digital customer experience, can be found in the burgeoning mortgage processing industry.  With banks going all out to sell highly competitive mortgages at record low interest rates, the onus to manage the whole process both efficiently and intelligently, while battling all the regulatory demons, has never been so great.

Two years after our inaugural Blueprint in Mortgage BPO Services, we took a fresh look at this industry… here’s announcing the findings of the HfS 2016 Mortgage As-a-Service Blueprint, led by HfS banking analyst, Reetika Joshi.

The concept of delivering mortgage As-a-Service, using plug and play digital business services is still in its infancy. We’re not quite at “push button, get mortgage” as an industry – and the verdict is out on whether this is the right message to send for a lending environment that is still rebuilding itself, seven years after the 2008 housing crash. How do you do this without raising eyebrows? You’ll have to ask Quicken Loans, as they learn from the backlash of their Super Bowl campaign with that very slogan.

Reetika, how do you view the 2016 Service Provider Landscape?

Our HfS Blueprint methodology assesses service providers based on two critical axes: Execution and Innovation. We gather data to support our analysis from client reference interviews, market interviews, RFI submissions and exhaustive service provider briefings.

In this Blueprint, we identified four As-a-Service Winners: Accenture, Cognizant, TCS and Wipro. These service providers have the strongest vision for As-a-Service delivery in the mortgage industry, and are driving collaborative engagements with clients to bring this vision to life. They are making significant investments in future capabilities in automation, technology and borrower experience to continue to increase the value over time. 

The High Performers in this year’s Blueprint are a highly competitive set of service providers:  Genpact, Infosys, ISGN/Firstsource, Sutherland Global Services and WNS. They have high execution capabilities and are growing their client bases as a result of investments in future capabilities and innovation. These service providers have the pieces in place for As-a-Service delivery, and need to focus on consistently bringing these capabilities to clients and scaling up with broad, multi-client solutions. We expect them to challenge the Winner’s Circle leaders in the next couple of years, with each building on unique strengths and assets in this vertical. 

We see Unisys and Xerox as the Execution Powerhouses. These service providers are strong in operational excellence with ubiquitous technology platforms in their respective markets, and need to focus on value chain expansion and innovation in their services stack:

Click to enlarge

Why does mortgage needs to have a different approach and response to “digital disruption”?

Despite this sensitivity, other industry forces still march on; regulation, homebuyers and a new breed of disruptive fintech firms are steadily shifting the entire mortgage industry towards generally being more digitally enabled. Lenders have this big ask today: how to carefully balance their investments in new technologies, with changing consumer needs, volatile rate

Read More »

Posted in: Financial Services Sourcing StrategiesHfS Blueprint ResultsHfSResearch.com Homepage

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Social media has turned us into a society of gibbering digital morons

August 19, 2016 | Phil Fersht

As someone who has profited very nicely from social media (I helped build an analyst company with blogging and social at the heart of our culture), I am probably not the most appropriate person to speak out against the negative side of social media’s impact.  But, as Gerald Ronson once famously espoused to the editor of the Guardian newspaper, “Opinions are like arseholes, everyone has one”, I just can’t help myself, so I’ll give you mine…

2008 was a financial disaster fueled by greedy bankers; 2016 a political disaster fueled by social media wankers.  Opinions on politics.  My god – back in the day, people pretty much kept quiet on their views until they had some facts to back them up.  Today, they just have a bloody opinion and want to get it out there, regardless of whether they can justify it or not. When they get into an argument, they just try and shout louder, rather than listening to reason.  David Cameron has been guilty of one of the biggest political snafus of modern times, where he went to the public with a complex decision to be made.   Instead, all he succeeded in doing was allowing every opinionated idiot with a twitter account to air his or her views on society at large, until the vote become one about him and the establishment and not whether Britain should remain in the EU. (And you wonder why Hitler loved referenda…)

All social media has achieved is providing a platform for people to spout off unsubstantiated rubbish, as opposed to a collaborative opportunity for them to learn more about what’s truly going on in the world.  Then we advance to the lovely US media and the most insufferable election in history, where reality got somehow lost in a maelstrom of hype, tweets and many unsubstantiated facts that really dumb people actually believe.  All I can say is that I cannot wait for the election to be over so we can actually get back to some normalcy of running a country again.

The tech and services industry has complete lost itself in the socially-driven hype. So let’s reflect on what happened to our industry over the last couple of years.  For a while, social media was fun – we could debate the trials and tribulations of real services and real technology and how to improve ourselves.  Suddenly, the facts have got lost somewhere are we’ve arrived at this dark place where it’s more about who’s making the loudest noise than who’s talking the most sense.  Every supplier of tech and services talks up “Digital” but never defines it – with few to no clients to reference their capabilities.  They talk “automation” with little clue how to do it, with (again) no clients as reference points. Myself and my team have sat through hours and hours of deathly dull briefings where we’ve actually had analysts bemoaning the fact that the providers failed to brief them on the subject at hand.  It’s really that bad. 

The Bottom-line:  It’s time to find our way (somehow) back to reality

Let’s be brutally honest - we’ve all lost the plot.  Why are tech and service providers so obsessed with sounding the best as opposed to proving they’re the best?  Why do so many analysts and consultants just parrot each other, as opposed to having real opinions and real substantiated viewpoints?  Why have so many enterprise buyers buried their heads under the bedcovers, scared to come out until someone dared to explain to them what this new bullxxxt was all about?

It’s time to make things real again… we owe it to ourselves and our clients to talk about how buyers/end-users adopt these emerging solutions - what are they doing, which processes are being impacted, what outcomes are being achieved. We need to focus on real industry dynamics to learn why is digital so relevant to retail; omni-channel to travel; block chain to banking; cognitive to healthcare etc. We need truly to understand and articulate how today's workforce grasps these emerging concepts and drives them in practice - how can experienced professionals reorient their capabilities, and the younger generation be embraced into the workforce? What are the career progression plans in these areas?  While technologies advance, how are staff advancing (or failing to advance) with them?

Unless we really dig deep to stop using our social foghorns to spout the loudest and start focusing on being the more real, we are truly doomed to a future of increased stupidity, naiveté and confusion.  It’s time we all broke form these habits and refocused on what is really happening in the world.

Posted in: HfSResearch.com HomepageHR Strategy

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Meet the HfS team in Bangalore next month for NASSCOM BPM Strategy Summit!

August 18, 2016 | Phil Fersht

We're excited to fly over some of the HfS star analysts to meet with the delegates at this year's NASSCOM BPM Strategy Summit, where HfS is the exclusive content partner with the theme "The Next Big Goal - From Effective to Strategic, can BPM get this one Right?".  And the more discerning of you will notice that the theme is centered on HfS' own Eight Ideals of the As-a-Service Economy.

So what are you waiting for?  Book your flight and place now!

Venue:  Hotel Leela Bangalore

Date: 22-23 September 2016

And if you'd like to meet with some of the HfS team, drop us a quick note and we'll see what we can do.

Posted in: Business Process Outsourcing (BPO)Outsourcing EventsThe As-a-Service Economy

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I'm going through an analog transformation...

August 17, 2016 | Phil Fersht

For the first time since Al Gore and Donald Trump founded the Internet, I am braving a few days in the analog world on a camp-site up in Canada somewhere.  In fact, I don't think this place has even undergone analog disruption yet... 

 

Posted in: Absolutely Meaningless Comedy

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Welcome to the era of outsourcing stability. Now let’s automate stuff

August 10, 2016 | Phil Fersht

Question: Why are we becoming so obsessed with Automation and As-a-Service relationships?

Answer: Because outsourcing has worked so effectively, we can now look to new levers to pull to find that next threshold of value 

Question: Will the next person who says “Outsourcing is just so Passé" get a punch in the face?

Answer: Yes

Barely three years’ ago, we were still lamenting that nagging lack of innovation in outsourcing relationships and the inability of service providers to deliver those transformational delights to their clients after they had come through with their promised cost savings. But let’s face it, the FTE-based labor arbitrage model has really worked – and a lot better than we thought it would, during those heady days of offshore screw-ups. I can barely remember the last time I sat on the receiving end of a group of clients throwing their service providers under the bus because they couldn’t get the procure-to-pay transition right, or got caught sneaking through change-orders to fix their dodgy coding.

Service relationships are more stable than ever, but focus is shifting to As-a-Service delivery and Intelligent Automation

You only need to look at the intentions of 371 major enterprise buyers towards their outsourcing contract renewals from our new Intelligent Operations Study to get the picture that this isn’t an industry in delivery turmoil, about to self-combust because deal flow isn’t growing at quite the clip it was a couple of years’ ago. In fact, only one-in-four IT services clients today are even considering ditching their current partner, and a even lesser proportion with their BPO provider.  However, many do want to make the switch to As-a-Service contracts:

Click to Enlarge

The focus on automation is the logical next phase of value once stability of global service delivery has been reached. 

The availability of smart automation tools and platforms from the likes of Automation Anywhere, BluePrism, IPSoft, Nice, UIPath, WorkFusion and Redwood have really been conversation catalysts to get the automation conversation to the table. In fact, most of the buyers we’ve been interviewing in our current Intelligent Automation blueprint are still in the

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Posted in: 2016 Intelligent Ops StudyRobotic Process AutomationThe As-a-Service Economy

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Did Randstad just pay $429m too much for Monster?

August 09, 2016 | Phil FershtMike Cook

Usually when there is an acquisition in the tech/services space, you can always appreciate why the deal was done; no matter how cynical you try to be, there is always some gold in there to dig out. 

However, in the case of Dutch staffing giant Ranstad buying the shriveled remains of a legacy resumé-based online recruitment firm that made its name during the dot-com days, my reaction is simply one of “Why? Just why?”  The business was cratering (albeit slowly, but steadily) in a world where most people just don’t use Monster anymore to do their recruiting and job hunting—it’s a business from a bygone era. But there’s always someone out there ready and willing with the ego to resurrect a dinosaur (or a Monster in this case).  So I asked the question to our HR-as-a-Service analyst, Mike Cook, to give us the answer...

Mike, Is there a Monet in the Monster or has LinkedIn already Rinsed the Shop?

Phil, Once Randstad blows off the dust from Monster, will it like what it finds? In the thrift shop of the recruitment market there are treasures to be found but in a market that has been turned on its head by the LinkedIn juggernaut, there isn’t much left. 

In its strategic priorities for 2015-2016 Randstad aimed to capture positive growth opportunities as well as be in the top 3 scale positions in each market it participates in. Over the last 12 months this strategy has been bearing fruit—following the acquisitions of twago, Careo Group, Obiettivo Lavoro and RiseSmart.

However, these acquisitions have just been dwarfed with Randstad announcing the acquisition of one of the true veterans of the online recruitment market—Monster, for $429 million in cash. This represents a sale price of $3.40 per share, a premium of 63.7% over Monday's closing stock price. But it's worlds away from Monster's $8 billion market cap achieved in early 2000. With much of the market questioning the 47% premium Microsoft paid for (a still extremely relevant) LinkedIn (see post), one should wonder about the wisdom of paying such a price for a site that is declining in popularity.

Monster was one of the original online recruitment leaders but has struggled to stay ahead of the pack and has lost significant market share in recent years. Direct competition is fierce in this industry and recent acquisitions, such as Indeed.com taking over Simply Hired, have highlighted this.

So what does this acquisition mean for Randstad?

  • Bolsters Randstad’s staffing and RPO capabilities: The increased footprint this acquisition gives Randstad should prove beneficial and provide improved service delivery to the provider's staffing and RPO clients. However, the value of Monster's candidate database is questionable. Unlike LinkedIn, which users update regularly, job seekers usually abandon job search site profiles when they're not actively searching for a role.
  • Raise Randstad’s profile, particularly in the US: Currently Randstad’s US operation accounts for around 20% of its revenue. Considering its aim to be in the top 3 of each of its markets, the acquisition of Monster with its US-heavy revenue model (70% revenues from North American operations in 2015) may make sense.

Outside of these takeaways, it is difficult to see the value for Randstad in this deal. Monster looks to be the pensioner still wearing high tops, shades and a tank top, with its platform now largely outdated and its market share no longer what it once was. The likes of LinkedIn have disrupted this market to such a degree that legacy online recruitment sites are struggling to survive. This bid for survival is being played out in the massive consolidation currently taking place in this market. The one card that online recruitment sites still have to play is in the contingent workforce market, but with Microsoft is looking to steamroll its way into this area, through LinkedIn—and the forecast looks less than sunny.

Posted in: Business Process Outsourcing (BPO)HR OutsourcingHR Strategy

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HfS unveils the first ServiceNow Services Blueprint report, with CSC, Cognizant and Accenture leading the pack

August 08, 2016 | Phil FershtTom Reuner

HfS readers are used to us relentlessly preaching the inexorable journey toward the As-a-Service Economy. And you still aren't get familiar with the  Eight Ideals, then you must have locked in solitary confinement for the last year...

But there are many missing pieces in that big jigsaw. Service management, while unspectacular, is a critical component of the digital underbelly of the OneOfficeas HfS has termed it. As ServiceNow is aiming to expand the notion of service management to evolving into the “third estate between CRM and ERP,” providing a new cloud-based level of efficiency between front and back office, we have asked our Intelligent Automation expert in residence, Tom Reuner, to take stock as to where the ServiceNow ecosystem has advanced to.

Click to enlarge

Tom, there appears to be a buzz around ServiceNow in the industry? Is the hype justified and where does it fit in strategically for buyers?

Amidst the marketing noise in our industry, ServiceNow still stands out. And that, Phil, is quite an achievement as service management is really not among the sexiest of topics. You can see that in thousands of developers and partners having made their pilgrimage to Knowledge 16, ServiceNow’s customer event in Las Vegas this year. Crucially though, ServiceNow has

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Posted in: SaaS, PaaS, IaaS and BPaaS

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Christine's Chapel... Services Gospel

August 06, 2016 | Phil FershtChristine Ferrusi Ross

 

Christine Ross is Research Vice President, Strategy & Product Development,
HfS Research (Click for Bio)

Anyone with a real history in the services industry will be familiar with the insights of one Christine Ferrusi Ross, who spent many years leading the services and sourcing practice for Forrester Research, during the firm's heighday.  And in pre-HfS days, I used to enjoy meeting Christine for lunches when we would bemoan the state of the research analyst industry and what needed to be done to revitalize how analysts do research. Little did we realize back then we would be able to shake up the analyst industry together in an analyst firm not beholden to the whims of their paying suppliers and analysts confined to covering tiny slices of software markets.  So when we got the opportunity to bring Christine, or "CFR" as her colleagues like to call her, to help shape our events and research strategies, it wasn't a difficult decision... especially when you hear her views about moving to outcome-based contracts.

Welcome Christine!  Can you share a little about your background and why you have chosen research and strategy as your career path?

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Posted in: IT Outsourcing / IT ServicesOutsourcing HerosSecurity and Risk

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We are all outcome workers, whether we like it or not...

July 30, 2016 | Phil Fersht

If you run any type of business operation or P&L, you're quickly realizing your number one challenge is getting your people to help you achieve the results your business needs to be successful. Your strategy has to be about promoting a mindset where people focus on what they are contributing to the business, not the amount of hours they spend "at work".  

Whether you are a workaholic slogging an 80-hour a week, or a 20-hour a week work-at-home mom/dad, you are going to be measured on what you are contributing to the business - so it's really all about setting the right outcome expectations with your employer.  Simply sending through a weekly timesheet with a bunch of vague activities is a waste of everyone's time.  Agree in advance with your boss what outcomes are expected of you and focus your time on meeting them... and if you can achieve them working 10 hours a week sitting by a pool in the sun, or slaving away for 100 hours in your basement really doesn't matter anymore - it's whether you delivered those outcomes expected of you. You just need to decide whether that job suits you and your own goals in life.  Today's successful working relationships are being defined by employers and workers sharing outcomes that both are motivated to meet. If those outcomes do not gel, then that working situation will not survive. 

And this isn't some fancy new vision for talent only a few businesses are adopting - this is the only way firms can really function today, if they want to be successful. Everyone on the payroll needs to add tangible, easy-to-explain value… otherwise why are they on the payroll?  It’s easy to turn your PC on in the morning and forward emails around the place, but what is your real value?  

The only six questions that matter when it comes to outcome-based employee performance

  1. Which customers have you delighted recently?
  2. What new relationships have you made that add value to our business?
  3. What work have you done that excited people inside and outside of the business?
  4. How are you helping energize your colleagues and exciting them with new ideas?
  5. How have you helped add value to new business wins?
  6. How have you contributed to new initiatives that improve productivity and effectiveness?

Cutting to the chase, if you think all you have to do is turn on your PC on at 9.00am and shut down at 5.00pm, mindlessly immersing yourself in forwarding and adding to chains of emails between your hourly Facebook visits, bi-hourly LinkedIn visits and your twice-daily moronic retweeting of some crap you never really bothered to read (but the title sounded impressive), then you’re pretty much done.  Go check on your pension plan, because you may be hitting those funds long before you had anticipated.

As an employer myself, I gave up caring what staff do during the day – trust me, you’ll drive yourself insane if you go old-school with the old micro-management.  New school management is simply asking staff those 6 questions - and requiring answers to them. 

So what activities should outcome-centric employees do during the day?

  • Limit email activity to one email a time. Scan your messages and quickly decide which ones require a response.  The pick them off one at a time. Do not click out and re-check them all again.  Just answer then quickly one at a time until all the important ones are done.  The minute you start trying to multi-task your email your lose focus and you’ll spend all day faffing around your inbox like packing up your hotel room with a hangover…
  • Call people who matter. Remember when you actually spoke to people?  You got things done, you created friendships and new ideas.  Something nearly always happens when you speak to someone.  List the 5 people you need to talk to and focus on them for a couple of days.
  • Read something that makes you smarter. We all get loads of interesting stuff shoved at us and let’s face it, we probably ready 5% of it at best. Stop.  Pick out the one article you know will make you super damn smart at your key work task at hand and read the damn thing.  Make a decent cup of tea, go sit somewhere quiet and read it. 
  • Turn off Facebook. Seriously – there is nothing in there to help you do your job better.  Do it with a glass of wine in the evening if you have nothing better to do.  If HfS did a productivity analysis impact on the global economy due to Facebook-faffers, it’s probably in the billions…
  • Write something. We’re all analysts now, so focus on writing something that your think you are expert in.  It’s a great way to build credibility and if forces you to be a better communicator.  We all went to school, we can all type, we can all read, we can all talk, so why can’t we put out thoughts to print?  Just write like you talk, like you’re explaining your views on something to someone down the pub… or explaining to your Mom what you actually do.  Everyone is an expert insomething… hell, if you’re not, you might as well give up now.
  • Exercise. Not much is worse for you that staring into a 12 inch laptop screen 18 hours a day while guzzling caffeine and noshing last night’s pizza… so pick out the best time of the day to get your heart pounding. It’s the best thing ever, but organize when you do it, otherwise you’ll hit 5.00pm and you know full well it’s just not going to happen…

The Bottom-line:  we must change our work habits if we are to survive in this work-outcome environment

Personally, I never thought the work environment would reach some of the current depths it has today for so many people, but the impact of “digital” has not been very good, when it comes to the productivity and effectiveness of so many workers.  So many people are just burned out from picking up terrible digital work habits (and many at quite a young age).  So change how you work.  Just do it, and you’ll start to experience a very old feeling you’ve probably long forgotten:  job satisfaction.

Posted in: Buyers' Sourcing Best PracticesDesign ThinkingHR Strategy

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The HfS BPO Top 50: ADP, Xerox and Accenture lead the way

July 26, 2016 | Phil Fersht

Ever wondered who the leading 50 BPO providers are across the globe, when we add up all relevant revenues?  Well, you need look no further:

Source: HfS Research 2016 estimated from services provider financials. Revenues are fitted to nearest calendar year. We attempt to make the BPO services numbers as close to HfS definitions as possible. The market primarily used for this list is the horizontal BPO processes of F&A, HR, Customer Care/CRM, and Procurement. Some industry-specific back office processes are included but we have excluded specialist categories, for example, banking securities.

We have segmented the providers into 5 broad categories: HRO specialists, Customer Care specialists, Multi-process BPO, Multi-process IT & BPO and document management providers. The specialist areas: document management, customer care and HRO should be fairly clear—the vast majority of the services these company provides in BPO is related to this category. The IT multi providers and BPO multi providers—divides the companies that provide multiple types of BPO services into those with an IT heritage and those without. These categories are subjective; we based these splits partly on the type of services they provide and individual company background. For example, Accenture provides multiple types of BPO service and has a sizable IT services business so we have described as a IT multi.

HfS subscribers can download the full report, authored by Jamie Snowdon, Barbra McGann and Phil Fersht by clicking here

Posted in: Business Process Outsourcing (BPO)HfSResearch.com Homepage

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It's cognitively conjugal as Amelia and Accenture renew their vows

July 19, 2016 | Phil Fersht

The most "tangible" value of cognitive automation, in today's consumer-centric enterprise, is the use of the virtual agent, where customer engagement is increased without heavy incremental investments in support staff. This isn't about simply replacing a real customer service rep with an avatar, it's augmenting the existing customer experience, usually using the same or similar resources.  

For example, if you have a bad travel experience, or purchased a product that wasn't quite what you expected, the chances are you would simply shrug it off and get on with your life - and probably avoid using those same sellers again in the future, if given the choice. However, if those sellers used interactive technologies that were very familiar, or very easy to find and use, where you could simply type in your issue, in your own time, without the need to pick up a phone and wait in some queue (or write some email to some anonymous address), you may just find the effort to input a couple of lines saying "my experience just wasn't that good". 

That information is critical to the seller - and how they choose to deal with it could make the difference between them winning out or losing in this market.  Just think about how easy Uber, AirBnb, Amazon et al make it for you to deal with them - you will continue to use those services because the digital customer experience is just so much better... they make you feel like they listen.   Customers today like effortless interaction, where they just need to click and type what they want in their own time - and what makes it come alive is when they feel they are engaging with someone and not merely sitting in a queue as an open help desk ticket number waiting to be closed. 

If you get a chance to kick the tyres with one of the most exciting cognitive virtual agent solutions, IPSoft's Amelia, you start to realize that customer service can be radically improved by incorporating the virtual agent to augment the real one.  And the beauty of this is, the sellers do not need to spend huge incremental sums to increase their consumer engagement - they are essentially doing a lot more with what they currently have using smart cognitive technology.  

So it's no surprise that I got just a little bit excited when Amelia's mothership enterprise, IPSoft, announced a comprehensive partnership with Accenture to build an industry leading practice in the cognitive customer experience.  So sit back, relax, and enjoy this discussion between myself, IPSoft's CEO, Chetan Dube and Accenture's Chief Technology Officer, Paul Dougherty.

Phil Fersht, HfS CEO and Chief Analyst: So let's get straight to the point here, Chetan and Paul. Why have you come together and what is so unique about this partnership? 

Paul Daugherty, CTO, Accenture
Paul Daugherty, Chief Technology Officer, Accenture

Paul Daugherty, CTO, Accenture: Hi Phil - great to be here. Let me start and then Chetan can add in. You know that the immediate reasons we've come together, the obvious reason we came together is we see a real market with our enterprise clients for artificial intelligence based solutions. And we've been working with Chetan the team at IPsoft for a while and with Amelia we see a real potential to be at the vanguard of working with IPsoft  to pioneer new use cases in terms of using AI to tackle business problems in a new way. So the first reason is we see the market we see the technology being ready. We are excited about what IPsoft  has done with Amelia and we see an opportunity. I guess, stepping back from that, this is also to me a very important step in what we are seeing in the evolution of enterprises really transforming to the digital economy.

And Chetan will remember a lunch we had when we met for the very first time. We got very excited as we talked to each other a couple of years ago about what we saw as AI evolved and as the digital technology revolution continued, we saw a point coming where AI would allow companies to really rethink the way that they do business and rethink the way that they conduct business processes within their organizations. And that's I guess why this is such an important relationship from my perspective strategically, because we are starting to see as we move through the digital revolution as we help clients transform they need new approaches and new solutions to deal with the speed of business, to deal with the masses of data that they have, to deal with the new demands that they have as they move to the digital wave. And we see Amelia really serving a purpose there and helping to really rethink and revolutionize the way we conduct some of the business processes. That’s the way I’d answer it. Chetan, I’d be interested in your view on it, too.
 

Chetan Dube, CEO, IPsoft
Chetan Dube, CEO, IPsoft

Chetan Dube, CEO, IPsoft: Yeah. I would echo what Paul said. Yes, I remember that lunch, Paul, when we had brainstormed. AI is totally disrupting everything. But what is required for true value creation for the companies? Some have realized tremendous value and the others have been somewhat slow to realize value creation in their digital quest. What is required? Well, you do need the digital labor component.

But that's not all that you need. You need business transformation—and Accenture brings business transformation brilliance. And there are many companies that are experts in strategies and there are many companies that are experts in implementation. Accenture is one that amalgamates both. Couple that with cognitive technologies and you have the potential of realizing the true outcomes that were promised by the digital age. So that's what brought us together. How high the technology is going to allow some people to soar is going to be determined by the people who are captaining the ship. And in this case we have an incredible deal of confidence in Paul and his team at Accenture and how much transformation they will be able to bring by harnessing true cognitive abilities together.

Phil: So Chetan, for our global audience which might not be so familiar with Amelia, can you briefly summarize its value and potential? What can Amelia do which other cognitive solutions cannot?

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Posted in: Cognitive ComputingRobotic Process Automation

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OneOffice or DumbOffice? Service providers are bifurcating again

July 16, 2016 | Phil Fersht

In the old days of labor arbitrage centric outsourcing (which of course doesn't happen anymore) we had two quite clearly defined sets of service provider -

  • The offshore providers, which rarely interacted above director level and did the low end lift and shift routine work.
  • The integrators, which worked primarily with the IT and operations leadership to do the higher end work the ERP integration, often overseeing some of the offshore service providers to make sure they were doing their job. 

Then the likes of Accenture, IBM and Capgemini realized the offshore firms had eaten their lunch and they rolled out their own offshore delivery functions in 2005-2010 to circumvent the heavy flow of dollars to the Indian-centric majors. Accenture and IBM managed to catch up and compete on price when they needed to, while Capgemini really needed to acquire IGATE last year to be more effective as an offshore provider, in addition to being an integrator. Meanwhile, you had the likes of Deloitte, PwC and E&Y, which chose to stay out of the offshore game and sell integration capabilities as consultants, rather than managed service outsourcers. The losers in all of this were the traditional IT/BPO services providers, such as HP(EDS), CSC, Xerox(ACS) et al whose lunch was eaten by the offshore providers, struggling to compete on price, scale and flexibility.

Then along comes Digital and Automation as the new value drivers and suddenly the game is changing again – labor arbitrage is still a key cost lever, but it needs to be balanced with automation to drive down the cost and increase the productivity even further, while the broader goals of the ambitious C-Suites are to create real digital capabilities to create their markets, not play constant catch up to avoid being disrupted.:

So what are these two emerging groups of service provider?

OneOffice Enablers - focused on designing and enabling the digital customer experience and tying the front to the back to make it all happen (see below).  This is

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Posted in: Business Process Outsourcing (BPO)HfSResearch.com HomepageIT Outsourcing / IT Services

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Will you really have to retire at 50? Not if you're smart about marketing and repackaging your skills

July 11, 2016 | Phil Fersht


I think I just read one of the most (brutally) honest and practical articles by a guy called Len Kendall, an LA-based marketing executive with a clear penchant for writing. His piece is based on two premises:

  1. The market no longer allows for employing older workers who deserve higher salaries
  2. Technology is killing jobs at a very fast pace that will only continue to accelerate

OK – we all kind of know this.  But where this gets interesting is where the discussion shifts to what he constitutes “expensive” workers. 

"Thanks to advancements in technology, jobs are becoming more automated. Assuming that we can eventually automate all basic jobs and allow artificial intelligence to conduct more skilled work, there will only be a need for a small group of educated, experienced, but inexpensive workers."

So what counts as “expensive” workers?

  • Group A – low-skilled, but still expensive.  Large populations of low-skilled workers (varying in age) who require lots of benefits. Companies will look to replace groups of ten or even hundreds of people with one computer to reduce costs.  This is the premise

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Posted in: Design ThinkingHR Strategy

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