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In the post-digital world, no one cares much about “offshore” as a strategy - it has become part of the fabric of managing a global operating model, where operations leaders just tap into whatever global resource they need to achieve their desired outcomes. This doesn’t mean that traditional “offshore” global delivery locations, such as India and the Philippines, are going bust overnight. But it does mean the playing field is leveling out as the need for emerging skills trumps the desire simply to reduce labor costs.
Our new State of Industry Study, conducted with KPMG (see above) of more that 450 major global enterprises – shows an increasing majority of customers of traditional shared services and outsourcing feel they have wrung most of the juice offshore has to offer from their existing operations, and aren’t looking to increase offshore investments. When we compare enterprise aspirations for offshore use between the 2014 and 2017 State of the Industry studies, we see a significant drop, right across the board, with plans to offshore services. Organizations are now either looking to make their existing offshore operations more effective, or even reduce them where they can (especially in F&A and HR), using new technologies and smarter process management.
It’s all about future scalability without the linear resource investments
The difference between new style of automation-rich intelligent operations and offshore-centric traditional operations is growing. It’s a bit like comparing the growth of Walmart to that of Amazon – (although it has started to change with its belated online strategy and acquisition of Jet.com), for many decades, the success and growth of Walmart has largely been tied to selling more retail products by continually adding new stores, and continually increasing its supply chain to support them. The firm could produce a linear business forecast that tied revenues to employees and capital infrastructure investments. Expansion and profitability was always dependent upon investing in more people to service need of the increased clientele – both the end customers and suppliers. With Amazon, so much of the customer front end is intelligently automated, adding customers often requires very few additional labor or capital investments - most front line customer support is completely automated, most the point-of-sale promotions are entirely driven by cognitive tools and smart algorithms that tie together customer needs and preferences with all the products on offer.
The offshore model is being dis-intermediated by intelligent automation in a similar way Amazon completely disrupted the traditional retail supply chain
It’s the same dynamic that is impacting the use of affordable offshore people services to be augmented, or even replaced by the almost-free fruits of intelligent automation. While Walmart was always an attractive outlet to push products to market, suddenly that business model is no longer viable when you can push your products to customers without the need for new investments in capital infrastructure or staff.
The emerging brand of more packaged operational services, outcome based services, and As-a-Service offerings – will be much more location neutral. It just doesn’t matter as much to the client where the service is delivered – they will only care if they have a reason to, like compliance, latency, etc… It’s not dissimilar to what’s happening in manufacturing – over the last 20-30 years, it made a load of business sense to displace, for example, 5000 onshore factory workers with the vastly cheaper services on offer in locations such as Taiwan and China, but as manufacturing automation advanced, the same products could be made by 100 workers managing machines. It gradually became more cost effective to bring the work closer to where end customers were situated to speed up inventory replenishment and reduce transportation costs. Why is it any different with finance, or procurement or HR – wouldn’t you rather have support services that were more culturally aligned with your staff and had a better understanding of your business needs?
You could argue that this dramatic shift is caused by automation or a desire for organizations to have more control over parts of their operations. We’ve seen examples of large organizations growing on-shore application development teams, partly because they need additional resources given the increasing numbers of complex customer-facing applications they are designing. But also because the applications needed to address onshore customer needs more directly - with greater personalisation and cultural affinity.
Offshore provides truly effective applications teams in terms of speed of development and technical quality of the final applications, but is less able to deliver the wow factor needed for the digital economy – especially in areas that require cutting-edge design and alignment with emerging digital business models. Also DevOps environments and agile have made on-shore development more cost effective and help deliver the same disciplined development ethos offshore has delivered. This does not mean that application development and maintenance disappears from offshore – far from it. It just means that services being delivered will be from more globally diverse teams and are more outcome-oriented, with offshore services leading the compliance / technical quality aspects of the delivery – at least for applications.
However, we think this is only part of the story, particularly as you move into other process areas, where there isn’t a hugely creative element and the service can be better delivered through automation as processes are standardized (such as back office F&A, HR and Procurement). In addition, areas where cognitive tools and virtual agents are emerging are also slowing the need to add bodies offshore, where self learning systems are really starting to work effectively. This is where the real change lies.
The Bottom Line – No more "location, location, location", it's now "skills, skills, skills"...
In the post-digital world, no-one care’s as much about offshore anymore. Offshore is going to be an ever decreasing part of the consideration for operational managers and their C-Suite. Location will still play its part as a cost lever in some circumstances – but it’s becoming a side issue, in most cases. Service is becoming outcome-led and driven by automation – people will add flair and handle exceptions – the HfS/KPMG survey shows that they aren't thinking about it as an issue. It is either an ingrained part of a legacy operation, which is shrinking over time and a component of a more streamlined automated, As-a-Service delivery model. However, what is clear, is the need for skills to drive business outcomes, and if those can be found offshore, that is a bonus, but not the deciding factor.
The Indian IT/BPO services majors should also be more concerned by President Trump's stance on outsourcing than any other factor over the last 20 years. Not only is offshoring of IT and BPO slowing because of lessening demand, but increased political pressures and policies being driven by the Trump leadership are completely changing the game. When it comes to IT services and BPO, it's no longer about "location, location, location", it's now all about "skills, skills, skills".
Let’s cut to the chase – there have never been times as uncertain as these in the world of business. There is no written rule-book to follow when it comes to career survival. The “Future of Work” is about making ourselves employable in a workforce where the priority of business leaders is to invest in automation and digital technology, more than training and developing their own workforces.
As our soon-to-be-released State of Operations and Outsourcing 2017 study, conducted in conjunction with KPMG across 454 major enterprise buyers globally, shows a dramatic shift in priorities from senior managers (SVPs and above), where 43% are earmarking significant investment in robotic automation of processes, compared with only 28% placing a similar emphasis on training and change management. In fact, the same number of senior managers are as focused on cognitive computing as their own people… yes, folks, this is the singularity of enterprise operations, where cognitive computing now equals employees’ brains when it comes to investment!
My deep-seated fear for today’s workforce is that we’re in danger of becoming this "Lost Generation" of workers if we persist in relying on what we already know, versus avoiding learning new skills that business leaders now need. We have to become students again, put our egos aside, and broaden our capabilities to avoid the quicksand of legacy executives no longer worth employing. We need to become hybrid corporate animals.
So let’s give some examples of these "new skills" we need to develop for ourselves:
Sales people: it’s no longer just about selling and relationship development, it’s about understanding evolving business models, understanding the impact of technology and the importance of smart marketing. You need to be a trusted consultant, not simply good with a 9-iron. Clients needs are increasingly complexifying and you need to be the arbiter of helping them simplify their requirements. Understanding business models is what will make you successful in the digital world.
Software people: it’s no longer about data management, security and making apps function, it’s also about understanding the desired business outcomes associated with these investments and helping your enterprise stakeholders articulate them better, so you can work with them to
This is era of the emerging BPO provider, as IT services stagnate and clients demand greater personalization and attention from business services firms that have the scale, resources, hunger and technology enablement skills to take on increasing complexity and make sense out of the dataswamps plaguing so many of today's businesses.
One such stalwart of BPO, quietly going about its business over the years with steady growth and increasing reputation for solid delivery, is WNS (yes, the one that was spawned out of the British Airways captive back in the day). WNS has performed well over the years, growing business streams in knowledge process domains, finance and accounting, insurance, travel, mid-size banks, contact center and some other areas. It has oft-threatened to make a grander procurement BPO play, but mostly opted to partner with the likes of Denali when the need arised.
In my view, having solid procurement delivery capabilities goes hand in hand with F&A, so it's refreshing to see WNS snap up one of the best pureplay strategic sourcing providers left in the market, which should make the merged entity a Winner's Circle contender later this year when we rerun the Procurement-as-a-Service blueprint:
So let's hear from our Procurement and Supply Chain analyst, Derk Erbé, who's recently emerged from a major analysis of the procurement services market:
WNS + Denali - The Details
To start the New Year with a bang, WNS announced the $40 million acquisition of Denali Sourcing Services. We have covered both WNS and Denali in our December 2016 Procurement As-a-Service Blueprint. WNS is ranked as an Execution Powerhouse, while Denali is a High Performer in the Procurement As-a-Service market.
The acquisition of Denali Sourcing Services is a good move from WNS, and effectively bolsters
Have we ever lived in such unpredictable political times? An unpredictable president-elect, with unpredictable policies in areas where it's hard to predict what will work... or what won't, whatever we predict. But one prediction is certain... HfS has a healthcare analyst who'll keep pounding away at the issues and challenges, where this industry needs to plug capability gaps to be effective... so over to Barbra McGann to give her assessment of the current services market landscape of providers jostling to be in pole position to pivot to support healthcare clients, however things start to unravel...
Much as I’d like to, I can’t foresee the actual future of the U.S. Affordable Care Act (ACA) or healthcare policies under President-elect Donald Trump… anymore than anyone could predict the true outcome of the recent U.S. presidential election. What I do foresee, however, is the increased need for partnerships to focus on what the ACA is designed to accomplish (regardless of its existence) – affordable, accessible, quality health care.
Getting to the heart of the problem –the cost.
There are many people who are upset at having to pay for “other people’s” healthcare costs – which they believe is because of the ACA. And there are many people who are receiving care who didn’t before and wouldn’t otherwise, because of pre-existing conditions or age, for example. And these are often people who when they did get sick, would go straight to an emergency room – an expensive treatment which by the way somehow had its cost passed in some way at some time to, likely, people who today do “not want to pay for other people’s healthcare.” Any way you look at it, costs get spread around.
So let’s look at this issue – cost – from a different angle... how about the angle of reducing or eliminating some of these costs? Reducing the cost of ER visits or readmissions because we can identify and intervene in someone’s pattern of such use or events before they happen because of triggers? Or, increasing the possibilities of people being healthy because of proactive education around nutrition, exercise, and lifestyle?
Partnerships are critical to truly changing the nature and outcome of health care
Just as it “takes a village to raise a child,” it takes a community of partners to create a high quality, lower cost environment for healthy consumers. Those partners include people on the front lines of care everyday—the obvious, like doctors, nurses, pharmacists, social workers – and also professionals who work behind the scenes but have an impact on care and cost – such as billing coordinators, claims processors, and coders. If everyone is thinking about their work, and how changes to the way they work, can impact the healthcare consumer, we have a
2017: The year of the “BandAid Economy” as the new digital world gets smarter and the old one just gets dumber
Thank the Lord 2016 is over. It’s easy for any old big head to claim they “were not surprised with Brexit and Trump,” but they would be lying – this surprised even the most brilliant minds and political experts.
Noone saw this coming – but it’s opened the eyes of many business and political leaders that we are living in transitional times and we desperately need to focus on ensuring we transition our economies, businesses, health and educational establishments to a more stable, secure place, where we can all plan for the future, with a clearer vision of where the world is going. Many people voted for change, without much idea what that change was, besides turning back the clock and ejecting politicians they didn’t trust and didn't talk their language. It is my belief
I, for one, won’t be too sad to see the back of 2016… it just felt like the world kept becoming an increasingly ignorant place to exist. The Internet became the medium to block out information, not share facts and data points to foster intelligent discussion. It (almost) became acceptable to be racist; it (almost) became acceptable to talk about women as sex-objects, as long as it was playful “locker room talk”.
2016 became a time people complained about immigrants taking away their jobs – even though they’d never work those jobs in a million years. It became a time when we all finally realized so many of our politicians had lost touch with so many of the population that they got booted out… sadly only in favor of alternatives that didn’t make any sense, but it must have felt good for the disenfranchised to stick the middle finger up at the establishment.
It became a time when many of us decided we could no longer tolerate people as our Facebook friends, because they just refused to listen to rational arguments and get beyond their prejudices. Let’s be honest, it was a pretty ignorant year.
Hello to a year of, er, maybe a little common sense
So if we could have some good things happen next year….
Trump becomes a pragmatist. Like so many of you here, I am secretly wishing most the guff old Donald was spouting was just, well, guff. As Bernie Sanders told a private meeting of scientists recently, Trump is a very intelligent man. Plus, I believe the guy is not an idealist, he’s a businessman and a pragmatist. It’s my personal hope that he realizes globalization of business is an inevitable occurrence, but I do like his stance on China, and the fact we’ve
My good pal, Steve Rudderham, formerly of Genpact, Capgemini and Accenture fame... and recently anointed the great GBS leader at Kelloggs, posed the irresistible question to me on our Robotic Premier League blog:
Phil, One thing we've struggled with is really where the rubber hits the road in terms of credentials. There are a lot of good innovation "stories" around RPA but several of the players on your list have really struggled to articulate savings and examples outside of their own in-house improvements using macros in excel. When do we expect more maturity in this space in terms of client stories that the rest of the industry can get behind?
Fair enough, Steve, great question... so here's my answer:
@Steve Rudders -
It's early in the morning, the filters are off so I'll just answer your question as bluntly as possible: We live in ignorant times - people are blindly groping for that next vehicle to drive out cost, and RPA currently fits the bill.
I, personally, thought the hype would die down this quarter as companies struggled to figure out what not to automate. Don't get me wrong, the RPA value proposition is tremendous - taking high throughput, high-intensity processes that require large amounts of unnecessary
We did in once, we did it twice... and I bet you never thought we'd do it a third time. Yes, amigos, it's the 2016 airing of how effective the leading service transformation providers are in that beloved RPA space that just refuses to go away...
Source: HfS Research 2016 - Click to Enlarge
Ever since HfS bought the topic to the attention of stakeholders back in 2012, the robotic thrum of RPA throbs louder and louder. With the conference circuit over-flooded with more and more RPA conferences, robotically repeating the same rhetoric, the actual RPA deployments are significantly scaling up and M&A in the space is gaining momentum. Yet, true meaning and definition of what truly constitutes “RPA” are as blurred as ever, as more people jump on the bandwagon who couldn't define cognitive vs digital vs autonomics, if their job really depended on it. Enough reasons to take stock where this industry is at, and add some definition and clarity to this fuzzy world into which we're stumbllng. With that in mind, we asked our analytical Automation Overlord, Tom Reuner, to talk to the industry’s stakeholders who buy, sell, implement and generally go nuts over this stuff... and take a fresh look at the market dynamics.
So, Tom, amidst all this noise what is really going on in RPA these days?
Noise is a good way of describing it, Phil. Yet, underneath the surface, we are seeing clear signs of maturation. This maturity manifests itself in different ways. The pace of change in which the suppliers are building out automation capabilities is nothing short of astounding. Most providers are embracing a holistic notion of Intelligent Automation ranging from RPA to Cognitive Computing to AI all the way to self-learning and self-remediating engines. However, we must be careful not to confuse building out capabilities with traction in the market. At the same time the leading tool providers such as Blue Prism, UiPath and AutomationAnywhere are
So who do you call when you want a robot? When we embarked on the 2016 RPL, we had to evaluate all the professional services firms operating in the space - both to help clients develop an RPA roadmap, evaluate the RPA software options and alignment with their processing requirements, and ultimately get some help implementing the solutions, developing out the RPA team and creating a workable robo/human governance structure. In addition, many clients find themselves in conflict with their BPO providers and need third party help to bring them together to find workable risk-sharing compromises.
What has transpired is several smart people, mostly working for BPO firms, eyed the RPA value proposition emerging, shortly after time we introduced RPA to the services industry in 2012, and they hatched plans to jump ship, club together and do lots of consulting work to build up their organizations.
Due to the murky, complex - and often very technical - needs of RPA, the demand for skilled expertise from real specialists is unprecedented - which is why we've seen the Big 4 leap into this space - but also why we're seeing some of these small, highly-focused, players in real demand. And they're not only making money working with clients seeing to RPA-ify BPO and shared services environment, they are also training many of the service juggernaut services to implement RPA for their clients. In short, there's a lot of business to go round and you will often see these curious RPA pureplay folk huddled in the corners of conferences, sharing war stories and even passing business over to each other because they ae simply too overwhelmed with client demands to take it all on.
So, without further ado, let's take a look at the seven candidates out there in all their naked glory....
Source: HfS Research 2016 - Click to Enlarge
There's been an awful lot of focus on the emerging Robotic Process Automation (RPA) solutions since we unveiled the concept to the services industry in 2012. While early movers, like Blue Prism, have stolen most of the early headlines in the space, we've seen other very effective tools and platforms emerge, such as Kryon Systems, UIPath, WorkFusion and Nice.
However, one solution has been especially rampant in the BPO space (especially in finance and accounting) - Automation Anywhere - whose team has been working tirelessly with leading providers such as Genpact, Accenture and EXL to streamline processes and drive all the associated benefits of automating high volume, high throughput tasks that were previously plagued by unnecessary and costly manual interventions.
So we felt it time to sit down with Automation Anywhere's brainchild and co-founder Mihir Shukla, to learn a little more about what is driving this unprecedented demand for RPA, and where this is all leading as we venture into curious times...
Phil Fersht, Chief Analyst and CEO, HfS Research: Good afternoon, Mihir Shukla. You've been at the forefront of so much of the new thinking and ideas in RPA and Intelligent Automation in the last couple of years. Automation Anywhere almost came out of nowhere. So I'd love to hear a bit more about your background and how you really ended up leading this firm. What was the journey?
Mihir Shukla, CEO, Automation Anywhere: Good to talk with you again, Phil. It's interesting when you look back, how you end up with something. I came to the US to do my PhD around the time when the Internet was just coming around. So I got the disruption bug, and it was a lot more fun disrupting different industries than doing a PhD. 22 years later, I look back and I’m fortunate enough to have led five or six large disruptions in various capacities. First, I started at Netscape, where I had a chance to shape the era of the Internet. Then I worked at Infoseek, which was one of the early search engines, where I got to help define how to access the Internet, how you discover things, and we built an early eCommerce platform. Then I had a chance to be an advisor to OmniSky, creating the first Internet-enabled smartphones. I still remember the time when I was one of the 14 guys in Silicon Valley who could go anywhere in the world and find the nearest restaurant. Today, there are a billion of us who can do that.
There was lots of learning along the way. The genesis of Automation Anywhere came from one of my last disruptions, which was at E2Open, where I had the opportunity to integrate the supply chain of the top 10 high-tech companies. At that time I had a chance to use various BPM tools, enterprise application integration tools, and ETL tools. It was during that experience that I saw the challenges faced in trying to integrate a global supply chain that includes hundreds of applications and thousands of people.
I thinking at that time was there must be a better way to do this.
So in 2003, we started Automation Anywhere—and that was a genesis of RPA. Of course, it wasn't called RPA back then. But the idea was to simulate human behavior on a computer and be able to automate everything we do on a computer screen. And 13 years later, we're the largest provider of RPA solutions. So that's how it all started, and that's where we are today.
Phil: So what can you share with us about Automation Anywhere secret sauce? What is it that makes you guys tick? What is it that you feel has been the catalyst to this hyper-growth that you've been experiencing?
Mihir: There are quite a few things that we do very differently, that are unique to us. First of all, we're the largest and most fluent platform on RPA today. We have over 500 enterprise