HfS Network

Automation Impact: India's services industry workforce to shrink 480,000 by 2021 - a decline of 14%

July 03, 2016 | Phil Fersht

Last week (see post) we revealed the true impact of the emergence of Intelligent Automation on the global industry of 15 million IT services and BPO workers, revealing a net decrease of 9% and ~1.4 million jobs.  

The HfS future workforce impact model predicts the likely impact of the most recent wave of automation on the IT Services and BPO industry. We estimate that the current total IT Service and BPO industry employs c15 million in 2015, with ~3.5 million in India, ~1 million in Philippines, ~5 million in North America and ~4 million in Europe. 

The workers within the worldwide industry have been divided into 3 categories: low skilled, medium skilled and high skilled. Low skilled workers conduct simple entry level, process driven tasks that require little abstract thinking or autonomy. Medium-to-High level workers undertake more complicated tasks that require experience, complex problem solving, ability to learn on-the-job and to work autonomously. The model then applies underlying growth rates for each category linked to market growth. Each scenario has a different set of parameters that will impact each level of worker setting out likely degree of automation for each group and the probability that the job will be automated and in what time frame this is likely to happen. You can read a fuller description of our methodology for our future workforce impact model here.

The low-skilled United States and Indian services workforces are most impacted 

So what does this look like when we drill down to the country levels of the main global delivery locations:  UK, US, India and Philippines?  Let's start with the low-skilled positions, greatest at risk from robotic process automation (RPA): 

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(Click to Enlarge)

As the graphic illustrates, India is set to lose 640,000 and the US 770,000 low-skilled positions by 2021 - these are decreases of 28% and 33% respectively. This is largely because there are a large number of non-customer facing roles at the low-skill level in these countries, when you take into account the amount of back office processing and IT support work that are likely to be automated and consolidated across a smaller number of workers.  On the flip side,

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Posted in: Cognitive ComputingRobotic Process AutomationSourcing Locations

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The broader issues behind Brexit send a frightening message to the services industry

June 26, 2016 | Phil Fersht

The vote for Brexit wasn't really about debating the finer points of EU membership - it was a big thumbs down for the establishment from over half the UK voters who feel disenfranchised.  This is a reflection of the ever-widening gap between the wealthy and the working classes, the educated and the uneducated, the socially-connected ambitious younger generation and the disconnected older generations, who've lost interest in the direction of the modern world that no longer represents their interests.

Moreover, this rebellion against the establishment can be clearly mirrored in many of our enterprises, where similar issues of disenfranchisement are rapidly permeating.

Rote jobs are being eliminated with limited reorientation and progression planning

We talk a lot about the new work and career opportunities being created by digital disruption and digital business models, but these require greater problem solving skills, critical thinking and creative capability, if the World Economic Forum's new jobs report is to be believed:

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And while we can complacently talk about all the exciting work creation the As-a-Service Economy is bringing, we've already precisely pinpointed that 30% of routine, low-value positions

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

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Digital labor will trim 1.4 million global services jobs by 2021

June 24, 2016 | Phil Fersht

It’s time we dispelled the scaremongering and hype and gave you the true picture of how advances in automation tools and methodologies, such as RPA and autonomics, will impact the global IT services and BPO industry over the next five years.

The current debate on these issues is as polarizing as it is confusing. On the consumer-facing side of technology, we have a fervent and far-reaching debate about the ethics of artificial intelligence and automation, led by executives from the likes of Google and Facebook. On the enterprise side, we frequently see quotes from studies from firms such as McKinsey and Gartner predicting seismic job losses through the impact of disruptive technologies that could have a devastating impact on the global economy and society in the next few years.

Yet, many of the leading stakeholders much closer to the true deployment of emerging enterprise Intelligent Automation tools and platforms—namely the service providers, the ISVs and the sourcing advisors—remain on the sidelines when it comes to discussing the true impact of automation as it’s adopted by many enterprises today.

We’ve been talking, for the best part of two decades, about how to “transform” business and IT processes after the cost benefits of labor arbitrage have been maximized. Well, the simple fact is that much of these arbitrage costs are close to optimization for mature services providers that have well-honed global delivery machines. As enterprise clients demand further cost advantages, and as competitors become increasingly aggressive with their service pricing, the focus shifts toward clients attaining outcomes that are not always directly linked to lower headcount rates.

“Intelligent Automation-as-a-Service” is a genuine lever for enterprises to pull for further productivity gains beyond low-cost offshore labor

Consequently, many enterprises that have chosen to externalize their service delivery can enjoy even more cost effective services, as ambitious service providers further rationalize their delivery organizations by taking advantage of automation to standardize and scale service delivery to their clients.  In short, while many enterprises can invest directly in Intelligent Automation into their own processes, they can also simply outsource those processes to service providers, which can embed further productivity gains tied to automation, in addition to labor arbitrage.  “Intelligent Automation-as-a-Service” is quickly emerging as a significant productivity option for enterprises as part of their service delivery.

Sadly, greater productivity and effectiveness through “digital labor” comes at a societal cost—jobs that were once required are no longer needed. However, we would point out that the jobs that are being phased out are no longer being recreated in any case, and much of this shrinkage will likely come from natural attrition as some people leave the service industry for more relevant jobs in other industries.

The Impact of Automation on Services Jobs

The following graphic shows three Automation Impact Scenarios for the IT and BPO services industry, ranging from a modest/conservative prediction which is a continuation of current RPA use to a scenario we consider more likely where adoption of RPA and more Intelligent Automation increases to an aggressive scenario, where automation adoption hits a broader range of the skills. If we examine the most likely outcome, Scenario 2, we see strong growth for highly and medium skilled personnel—with highly skilled positions in our industry increasing by 56%, and medium-skilled by 8%. However, low skilled, routine jobs drop 30% as many of these roles get phased out over the next 5 years, resulting in a net loss of 9% of jobs, totaling 1.4 million:

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The following graphics shows Scenario 2, the Likely Scenario, in more detail, outlining the number

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Posted in: Business Process Outsourcing (BPO)Cognitive ComputingDigital Transformation

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Can HPE + CSC dominate the digital underbelly, or has that ship sailed?

June 19, 2016 | Phil Fersht
Digital Underbelly

Just stare at that digital underbelly... there's a lot of work needed down there!

When the news broke last month about the second largest IT services merger of all time (after the 2008 HP-EDS whopper), the reaction among the services cognoscenti was - and has continued to be - one of confusion.  Big services mergers have just not done very well over the years. HP/EDS was a culture clash of immense proportions - and occurred right before the great recession, while other mergers, like Dell's acquisition of Perot, has resulted in the old Perot business being flipped over to NTT Data at a significant loss, and the Xerox/ACS merger has been shaken up and spun off and needs a major reinvention under new CEO Ashok Vemuri to get the company back on track.  Meanwhile, Capgemini and IGATE are still figuring out the best pieces of each other to mesh together, while not taking their eye off the ball, during the services industries' most cut-throat transition phase.

We heard HPE CEO, Meg Whitman, excitedly address the firm’s key clients and industry analysts at HP’s recent Discover event in Las Vegas, with an obsessive focus on “digital transformation” and the impending impact of “digital disruption”.  However, the real opportunity for HPE isn’t really in the design of digital business models for clients, it’s the enablement of them – it’s the provision of the agile “digital underbelly” to make digital change really happen for enterprises.

It's easy to be cynical about legacy IT services, but there's an awful lot of it to scrap over as enterprises are forced to fix their plumbing

Digesting the merger of these two struggling services giants has resulted in more rumination than most, considering the timing, sheer scale, transitional uncertain market and motivation. This is not a time when most traditional service providers are looking to add more global delivery scale to already large foundations – most are trying to slim down their delivery armies and sales forces,

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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Accenture, TCS, Wipro, Tech Mahindra and Infosys lead the 2016 Telecom Operations As-a-Service Blueprint

June 13, 2016 | Phil Fersht

HfS Telecom guru, Pareekh Jain, is back with his second blueprint looking at service provider capability delivering telecoms business services, following his debut analysis at the end of 2014:

Click to enlarge.

Click to enlarge.

Pareekh, how would you describe the current state of Telecom Operations As-a-Service?

We describe this market as a under-penetrated market. Our research suggests the current global telecom operations market (i.e., business processes under network, fulfillment, assurance, and billing) is perhaps one-third of $10 billion potential.

The telecom market is perhaps only vertical market with the dubious distinction of both enabler and victim of the digital transformation. Telcos have enabled cost-effective communication with likes of WhatsApp, Skype and in turn, they have eaten telco's lunch. Telcos worldwide are struggling to find their right place in the digital world. As-a-Service solutions can enable service providers to help telcos to prepare for the digital era.  The As-a-Service is the model today and for the future in telecom operations services.

Tier 1 telcos have generally been early adopters of telecom operations services. Now, there is an opportunity to provide services to Tier 2 and Tier 3 telcos, too leveraging As-a-Service solutions. As-a-Service solutions are driving growth in this market.

The eight service providers we evaluated for this Blueprint approach this market in essentially two ways. Service providers with strong IT offerings focus more on non-voice solutions whereas pure-play BPO service providers focus more on voice-based solutions. Service providers with strong IT offerings have taken the lead in platforms replacing legacy stack, plug and play business solutions, intelligent automation, holistic security, design thinking, and collaborative solutions while analytics and social is on the agenda of all telecom operations service providers.

How has that changed since our inaugural Telecom Operations Blueprint in 2014?

Pareekh Jain is Research Director, HfS (Click for Bio)

Even back in 2014, we could see many ideals of As-a-Service present in service providers’ offerings. In the last two years, As-a-Service momentum has accelerated.

Compare to our analysis couple of years back, we see the rise in collaborative engagements driving business outcomes. Analytics is now embedded in most of the engagements. Service providers are launching new services incorporating design thinking. We see more examples and use cases of automation. Also, telecom operations service providers are becoming effective brokers of capability by partnering with IT, platforms, local construction companies and telecom domain experts.

We see industrialization of few new service offerings such as network rollout management, revenue assurance in last two years. Also, service providers are constantly innovating with

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Posted in: Business Process Outsourcing (BPO)HfS Blueprint ResultsIT Outsourcing / IT Services

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Futurist Gerd Leonhard to keynote at HfS Cognition this September

June 09, 2016 | Phil Fersht
Futuring Gerd Leonhard will keynote at HfS' Cognition Summit this September

Futuring Gerd Leonhard will keynote at HfS' Cognition Summit this September

Now we have finally managed to get past that frightfully riveting conversation about doing some rudimentary process automation with our invoice processing and customer collections (aka RPA 1.0), we can finally get to the heart of what new technology capability  - much of which is already here - is really doing to our world.

With human brain power and computing power on collision course to become one, the enmeshing of human behaviour and thought processes with self-learning and self-remediating cognitive systems is set to confuse, frighten and - ultimately -  inspire us to change our whole approach to managing our technology investments, making data meaningful, collaborating with work colleagues and creating new business models.

This is our goal, this September, in White Plains, New York, where we are, once again, bringing together the diverse stakeholders of the operations and services industry to get past the fear, and find the inspiration to drag us out of this transition phase, in which we currently find ourselves.

To this end, at HfS we are thrilled to have persuaded Gerd Leonhard, CEO of The Futures Agency, to keynote our HfS Summit, "Cognition: Welcome to the Future of Services", September 14 – 16, 2016 in White Plains, New York. So we sat down with Gerd to get his critique of the future of technology, the emerging quagmire surrounding Digital Ethics and the true potential of Artificial Intelligence..o and how this will all potentially impact our jobs, our societies, our lives, and our humanity...

Phil Fersht, CEO and Chief Analyst, HfS: Good evening, Gerd. Great to have you on the HfS platform today! We're very excited to have you join us at Cognition, our coming flagship event in New York this September. But maybe before we start, could you give me just a little bit about your background and how you've ended up as such a visionary in the Artificial Intelligence (AI) Space these days?

Gerd Leonhard: CEO of The Futures Agency: It's a long story. I'm a futurist. But I started as a musician and producer, and then in the late '90s I went on the Internet and I did a bunch of music startups. It was an interesting time, but I was too early and ahead of my days. I think I realized in

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Cognitive Computing

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HfS adds a new twist to Digital and IoT coverage with Oliver Marks

June 06, 2016 | Phil Fersht
Oliver Marks is Research Vice President, Digital and Internet of Things, HfS (Click for bio)

Oliver Marks is Research Vice President, Digital and Internet of Things, HfS (Click for bio)

You may have seen we've been busy expanding our research team to make sure we can help executives pull all the right value levers to take their enterprises into the As-a-Service Economy. In the old days we put a lot of focus into outsourcing services, until we really made a statement being the first analyst to introduce Robotic Process Automation to the analyst and advisory industry in 2012, before priming the Digital transformation services pump in 2014 and IoT in 2015.

So, we thought it high time we recruited one of the industry's most respected authorities on the digi and IoT topics, Oliver Marks... so without further ado, let's hear a bit more about HfS' newest recruit...

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

Thanks Phil! I’ve got quite an interesting past: I started out in the UK design and advertising business having done a graphic design degree which was remarkably similar conceptually to the current vogue for 'design thinking’ in the tech world. We ran a ‘concepts & copy’ creative shop on

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Posted in: Digital TransformationHfSResearch.com HomepageIT Outsourcing / IT Services

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Meet the Dinamo driving TCS' business process services impressive growth

June 03, 2016 | Phil Fersht
Dinanath (Dina) Kholkar is Vice President and Global Head of BPS at Tata Consultancy Services

Dinanath (Dina) Kholkar is Global Head of Business Process Services at Tata Consultancy Services

As we endlessly debate the future of the global IT service delivery in the wake of advances in automation, digital disruption and the ability to maintain double digit growth rates, one area that has steadfastly kept to respectable growth and improved delivery confidence is our beloved business process outsourcing services.

In fact, we are about to reveal to all of you that the growth in Indian-heritage BPO has been consistently out-performing IT services over the last year.  Why?  Because BPO is several years behind IT in terms of widespread adoption, but is now coming to the forefront as processes can be better-enabled by cloud platforms and maturing global delivery models.

In this vein, I thought it timely to interview Dina Kholkar, TCS' global head of BPS, who has helped steer his division to $1.9 billion at a 6% growth clip... making BPS now represent 12% of the total TCS business...

Phil Fersht, CEO and Chief Analyst, HfS: Good evening, Dina. It's great to have you on HfS for the first time. You've been one of the best kept secrets behind the exciting growth in the Business Process Services (BPO) team at TCS. Maybe you can share a little bit about yourself, your own background and how you ended up leading the highest-growth division in TCS today.

Dinanath (Dina) Kholkar, Vice President and Global Head of BPS at Tata Consultancy Services:  Sure, Phil. I've been at TCS for a very long time. This is my 27th year in TCS! I started in 1990 as part of the IT business. I managed a few IT projects, went on to manage accounts across different geographies, different types of roles. The longest stint I had was in the capital markets area. I also spent a few years in TCS’ R&D unit, predominantly focusing on data warehousing and data mining. Those were the years when data had started becoming a focus in many organizations. I did have a stint in operations when I was managing customers, but I never really managed the business of running operations until I got the opportunity to manage e-Serve, which TCS had acquired from Citibank. After a few years, when it was integrated into TCS, I took on the role of the overall head of the TCS BPS business. So we’ve had quite an exciting and an interesting journey, a journey filled with lot of learning and a lot of customers we’ve been able to positively impact over the years. And I feel quite proud about the type of opportunities that I have gotten and the way I have delivered on the objectives that TCS has laid out for itself.

Phil: So what can you share with us then about the secret sauce at TCS? What is it that makes you guys really tick?

Dina: One thing which I have always seen probably over multiple generations—and all three CEO leaders of TCS—really strikes me is the customer centricity. We go the distance, which means we do whatever we need to do for the customer. We do the right things and ensure that we are taking care of the customer’s business, bringing all we have as an organization to solve problems that the customer has. I think that customer centricity is paramount in the organization. I think we also

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Design Thinking

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Robotic Process Automation has now penetrated a third of enterprises. Time to advance the conversation...

May 30, 2016 | Phil Fersht

RPA 1.0 is a done discussion. We know what it is, we know what it can do, we know how it can augment operations and help digitize broken processes.  To this end, our brand new study on Intelligent Operations, which canvassed the dynamics of 371 global enterprises, already shows a third of them are very active with RPA within their IT and finance and accounting processes:

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RPA is here and being adopted at a fast clip

All the incessant RPA hype has done its job - it has literally dominated IT services and BPO conversations at every conference, provider strategy deck, advisor "new practice" press release and many buyer converations.  Indeed, we can even forgive those cheesy sales presentations from guys who suddenly claimed to have 20 years' experience as automation pioneers and talked about bot farms as if they were actually hand-raised on one...

The overwhelming conclusion is that a large chunk of enterprises are actively implementing it, and

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Posted in: 2015 As-a-Service StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)

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The new HP Enterprise is now the #3 high value IT services provider

May 25, 2016 | Phil Fersht

Love this merger or loathe it, the marriage of HPE and CSC has just spawned the third-largest high value IT services provider in the world - and happened just in the nick of time for our 2016 HfS IT Services Top 25:

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So, let's ask HfS' lead analyst for market sizing and forecasting, Jamie Snowdon (bio), how we fleshed out "High Value IT Services" from the general morasse of IT services:

We estimated all this data from services provider financials. Revenues are fitted to nearest calendar year. We attempt to make the IT services numbers as close to HfS definition as possible—as part of this exercise we exclude revenues from subcontracting, we don’t include BPO or business services revenues in this definition and some product services revenues were classified out of scope, if the equipment serviced is not IT – for example, telephony related equipment. These numbers do not include software-as-a-service, unless included within a broader managed services agreement.

Jamie, how did you come up with the $26 Billion number for the new HPE?

The merger of HPE Enterprise Services and CSC, brings together the high value services of HPE and the commercial revenues of the old CSC business. The $26 Billion revenue figure takes $8 Billion as CSC without the hived-off public sector business, and $18 Billion from HPE Enterprise Services division, much of which was the acquired EDS business unit.

And what's your initial take on the merger, before we get deep into the weeds of the broader implications?

This deal brings together two of the original outsourcing behemoths EDS and old rivals CSC. The reasons for the merger given by management focus on the scale of the new company. Certainly scale was an important requirement for IT outsourcing providers in the past, as it gave flexibility and economies to these asset and labor intensive businesses. However, in asset light world of modern IT managed services and the increased use of automation – scale is not a vital component. It does give them access to the very largest of global deals, but HPE, and depending on location, CSC, would have been able to handle anything that crossed its desk. What we have is two large services businesses that have spent the last 3 years hemorrhaging revenues, because they weren’t offering what many enterprise clients wanted or there was another provider able to do the same task cheaper and more nimbly. This issue is not going to be resolved by this merger. The two firms have to reinvent themselves as a modern services firm when contracts are more open-ended, value is counted in revenue growth, not just cost savings and scale is replaced by other features such as agility and innovation as the key differentiators.

Well, good timing indeed, Jamie, with the new Top 25. Interested readers can download their complimentary POV on the HfS website here.

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

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When did employees become "costs"?

May 21, 2016 | Phil Fersht

Stapler - Office MovieIt suddenly dawned on me what the core issue is with the future of the workplace: the simple fact that company leaders and their stakeholders started viewing employees as walking costs at some stage over the last 30 years, and have devoted a huge amount of focus and energy trying to figure out how to remove as many of them from their business as possible... without it impacting the top line.

Surely, people, human labor should be viewed as a valuable commodity that adds value to a business, not some burden on the profit margin that needs to be eliminated at all costs?  So what's really gone amiss here?

Enterprises hired people into jobs they no longer value. Over the decades, our enterprises have ballooned with staff hired to provide inputs into process chains to keep them ticking over - whether they were writing lines of spaghetti code to make processes flow from one subtask to the next, or producing reports out of SAP for a historical view of the business some manager will archive away

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Posted in: HfSResearch.com HomepageHR StrategySourcing Change Management

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Accenture, Xerox, NGA HR, Aon Hewitt and ADP make the HR Operations-as-a-Service Winner's Circle

May 19, 2016 | Phil Fersht

The market for talent has seen massive fluctuations over the last eight years. The 2008-9 global recession caused massive employment contractions across all major regions, however, the tide has really turned to turn after one of the longest sustained periods of economic growth in the last 200 years, with  the need for fresh talent is on the rise.

Coupled with the rise of the intelligent digital business, these dynamics have forever changed the way organizations have to approach their HR function as seek new expertise and mindsets. As such, optimization and smart thinking across the entire HR stack is a critical requirement to attract, onboard and nurture talent within organizations.

As more and more millennials enter the workplace (now making up a third or staff), employee interaction has to change. The always-on, always-connected workforce is here. Organizations need to adapt HR functions accordingly and embrace mobile and cloud technology that can be accessed anyway and anytime.

Cloud HCM platforms have developed user interfaces that speak to this new workforce, but with ~50% of buyer organizations still using on premise legacy HCM systems, there is still a long way to go for many organizations. By partnering with proven service providers, organizations can now make the migration to the cloud quickly and efficiently. Also by leveraging the managed service expertise of these providers, organizations are more enabled to focus on key moments of truth with employees thereby reducing employee churn and having a more aligned, motivated and focused workforce. 

Knowing the importance of these solutions for the very future of HR, we put our best and brightest on this. And the result is HfS Human Resource Services Research Director Mike Cook's first Blueprint for HfS: HfS Blueprint: HR Operations As-a-Service 2016. So we invited him in to tell us all about it.

HR Ops_Axis

How did this Blueprint take shape, Mike?

In this HR Operations HfS Blueprint, we take a look at the evolution of MPHRO to “As-A-Service”--a services market that is increasingly agile, collaborative and employee-centric. HfS considers this transition in outsourcing a move to the As-a-Service Economy, placing increasing value on diverse

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Posted in: Business Process Outsourcing (BPO)Digital TransformationHfS Blueprint Results

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The back office is dead... long live OneOffice

May 13, 2016 | Phil Fersht

Intelligent OneOfficeIf someone called you "back office", I'd imagine you'd be a little bit offended.  It's probably not much worse than being called "useless", or "about to be automated out of existence"...

But I have good news for you back-office rebels - your time spent festering in the backend of yonder is finally coming to an end. Why?  Because the onset of digital and emerging automation solutions, coupled with the dire need to access meaningful data in real-time, is forcing the back and middle to support the customer experience needs of the front.

Our soon-to-be released study on achieving Intelligent Operations, which canvassed 371 major buyside enterprises, reveals two key dynamics that are unifying the front, middle and back offices:

  1. A "customer first mindset" is the leading business driver driving operations strategies.  Over half of upper management (51%) view their customers' experiences as impacting sourcing model change and strategy, which is placing the relevance and value of the back office in the spotlight.
  2. Three quarters of enterprises (75%) claim digital is having a radical impact. We can debate the meaning and relevance of digital forever, but the bottom line is that enterprise leaders need to (be seen) to have a digital strategy - and a support function which can facilitate these digital interactions and data needs. The old barriers where staff in the back office don't need to think and merely oversee operational process delivery, and those in the middle, which only venture a part of the way to aligning processes to customer needs, are fading away.

Consequently, we're evolving to an era where there is only "OneOffice" that matters anymore,

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Posted in: 2016 Intelligent Ops StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)

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Buyers perceive Accenture, Deloitte and KPMG as the most trusted consultants for achieving Intelligent Operations

May 06, 2016 | Phil Fersht

john-lylyIn 1588, the English dramatist John Lyly, in his Euphues and his England, wrote:

"...As neere is Fancie to Beautie, as the pricke to the Rose, as the stalke to the rynde, as the earth to the roote."

In other words, "Beauty is in the eye of the Beholder", which just about sums up how buyers perceive consultants when they need some serious rethinking and rewiring done to their operations to make them more intelligent:

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So what's actually surprising here?

In the past, you may have expected to see the pureplay strategy houses rule the roost, however, when we break down the Change Management and Solution Ideals enterprises need to achieve more Intelligent Operations, the focus shifts much more to using consultants with real change management, process transformation, analytics and automation chops... this is less about strategy, and more about just driving through the changes. Most company leaders know where they want to go - it's now more about executing a plan to get there:

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The Bottom-line: We're moving to a world where the expertise enterprises need to be successful is really changing 

One of the above firms asked me recently if it should start an automation practice.  My response was "If you're only asking me this now, then you're already too late to the game".  In a nutshell, enterprise operations functions need genuine expertise in adopting a mindset to write off their legacy systems and obsolete processes - and a real understanding of how to approach automation and embrace digital opportunities.

A lot of this is about prioritizing what not to automate and learning where digital transformation actually makes business sense. This is about creating an operations function that can pivot and support the rapid changing needs of the front office with actionable data, that is secure and available in real-time.  This is about defining and devising a digital strategy that has the customer at the forefront of the business and an operational support function that has the customer experience at its core.

Hence, consultants need talent that can not only think creatively with their clients, but also create an ongoing environment for writing off legacy, embracing change and being smart and proactive about leveraging automation and real digital strategies effectively. The speed at which some of these advisors must make the pivot from merely brokering transactional contracts, or spouting off some high level fluffy strategy, to supporting real change is critical - I'd imagine we'll know in the next 9-12 months which ones will genuinely be helping their clients achieve these ambitious ideals.

Posted in: 2016 Intelligent Ops StudyBusiness Process Outsourcing (BPO)Design Thinking

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Teleperformance, Concentrix and Sutherland lead the HfS Contact Center Operations Blueprint

May 03, 2016 | Phil Fersht

Our latest research into intelligent operations reveals a customer first strategy is the biggest driver for C-Suite leaders today, so where more important to focus than what's going on at the call center?  Has there ever been a more compelling time for call center service providers to step up and prove to their clients they can do a whole lot more than execute basic customer services?

Call center services have matured significantly in recent years, where you can find a plethora of providers doing a masterful job managing resources all over the world to deliver affordable voice services - but choosing between them has often never been so difficult.  However, with the need for so many enterprises to focus on the omnichannel customer experience to differentiate themselves, we're now in a critical bake-off between those call center providers delivering real customer value versus those still walking the treadmill of proving legacy voice services at ever-cheaper rates.  Plus, we still have many enterprise buyers who squeeze the life out of their providers on cost, and then expect the provider's A team to show up. Hence, there is a fine balance between the value clients need, the investments they are prepared to make to achieve this value, and the ability of smart providers to invest in As-a-Service models that take advantage of talent, digital technology and automation to deliver high value, without huge increases in headcount investments. Sounds easy, right?

In this vein, we're excited to announce the release of our first Contact Center Operations Blueprint, authored by HfS Research Director and contact center veteran, Melissa O’Brien, the only contact center analyst who's actually lived in the Philippines running a call center operation herself. Melissa's been exploring the cluttered competitive landscape, talking to a huge number of clients and leading providers, to help shed some light on the competitive landscape and where this market is truly heading:

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(Click to enlarge)

Melissa, please give us a flavor for the current state of the contact center operations market

This is a market undergoing a pretty dramatic transformation, in part due to increasing end-customer expectations - ambitious service providers are looking

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCaptives and Shared Services Strategies

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The future of work is about capabilities you (should) already have

April 30, 2016 | Phil Fersht

Fries with that?Soon there will be nowhere left to hide. Everyone’s value is under the microscope from colleagues and management alike.  Whether you turn widgets, manage a process, a set of processes, lead teams or manage team leaders leading teams… or run a whole division… or even an entire organization, you are under constant scrutiny in today’s open workplace.

Everyone has to prove they are useful, add real value and are worth their salaries… or they are toast.  But most importantly, people need to prove they can be trusted.  Employee trust in today’s workplace is about proving you are doing more than just enough not to get fired.

Loyalty is legacy

Most heritage enterprises no longer want to give out gold watches for your turning up everyday for last 30 years… I mean, “thanks for showing up and coasting here for 30 bloody years and making it really hard to fire you”.  I don’t think so… Loyalty means little, but value means everything. The more legacy work we automate/digitize, outsource, replace with software, or just write-off, the more we have to focus on our human skills to justify our existence in today’s workplace.

Tomorrow’s successful workers are those who use their initiative to perform activities, on their own volition, to find new value for their enterprises.  You can’t get any progress or value from methods like Design Thinking if your staff are only checking the boxes to perform their rudimentary employment functions. Design Thinking is about going beyond the norm to challenge the status quo, to think outside the boxes, not just checking them.

You are who you are – your reputation is everything, your ability to forge relationships with colleagues, peers, industry influencers and company leaders who appreciate your value, your perspective and your personality is, really, all you have.  The days when you could get away with hopping from job to job because you were great at bullshitting your way through interviews are dying – any employer with half a brain isn’t recruiting through traditional channels any more.  It’s all about people engaging with people who have established a reputation for adding value, going beyond the basics, and being great to work with.

You need to find new problems, not just solve old ones

But adding value is not just about solving known existing problems, it’s about finding new ones to solve in the future.  You can always find a contractor or an outsourcer to fix a broken set of processes, or correct lines of badly written code. But finding people which can challenge whether those processes or lines of code are even still relevant to meeting your desired outcomes… people who care enough about their jobs and their company’s success to go beyond performing “just adequately enough not to get fired” is the secret sauce for future value.   And that is what new workforce trust is all about – initiative, attitude, personality and trust.

The Bottom-line: There is no secret sauce to staying relevant – it’s about putting our egos aside and becoming students again 

Frankly, I’m sick and tired hearing about “Digital Skills” and “Creative Capabilities” being some far-flung capabilities which you need to go to Millennial school to develop (whatever that is). Digital skills are about understanding your customers’ current experiences and intelligently leveraging every traditional, social and mobile channel touching your business to make them richer. Creative capabilities come from collaborating and challenging yourself with your colleagues and partners.

So correct me if I am wrong, but being successful today is about using capabilities we already have. It’s simply making ourselves students again, finding that hunger to learn about what’s out there and engaging with everyone around us to prove and challenge our theories.  We must ditch this sense of entitlement that dictates we don't need to go back to basics and force ourselves to think, collaborate and learn all over again - or we're going to be done before we know it.

Enterprises need to behave like start-ups, where their people group together for the common cause of making their collective group successful - only willing collaborators with a desire to learn and challenge need apply. We're all part of the Digital Generation - we just need put our egos to one side and own up to the fact we're all students rediscovering what we're all about and what we're capable of...

Posted in: Design ThinkingDigital TransformationHfSResearch.com Homepage

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Accenture, Genpact, IBM, EXL, TCS, Capgemini and WNS lead the first As-a-Service lens of Finance and Accounting

April 24, 2016 | Phil Fersht

Growth in offshore-dominated services may be slowing for traditional IT support services, but for multi-process Finance and Accounting (F&A) services engagements, 2015 saw the market continue to grow at  a 10% clip.

Why? Because F&A outsourcing is about 10 years behind IT outsourcing - in terms of adoption - and is a market that can quickly take advantage of more experienced governance executives, capable service providers that have ironed out many of their past mistakes, and notable advances in analytics, robotic process automation (RPA) and digital technologies.

In short, the shift from enterprise clients approaching F&A engagements largely as a labor-obsessed cost-driven solutions towards outcomes-centric value-obsessed solutions, is now really happening. Yes, we're finally starting to talk about F&A being delivered "As-a-Service".  To this end, for 2016's F&A Blueprint, which covers over 1500 multi-process F&A relationships, we've reoriented the performance innovation and execution scores to reflect each service provider's alignment with the HfS As-a-Service Ideals:

Click to Enlarge

Click to Enlarge

So, what's new about this year's F&A Blueprint?

We've gone deeper than ever before in really getting to the essence of buyer/provider F&A relationships.  In the past, we were as guilty as the rest of the industry of focusing too much on engagements being operationally effective, when we should have placed even greater emphasis on

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Posted in: Business Process Outsourcing (BPO)Finance & Accounting BPOHfS Blueprint Results

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Rescuing BPO from its trough of directionless boredom: Make jobs challenging and creative

April 17, 2016 | Phil Fersht

Bored BPO CatWhen your enterprise is increasingly dependent on hiring "Millennials" with digital skills and lower wage needs, you'd better figure out a plan for creating exciting, challenging career paths, or you're pretty much already doomed.

Sadly, our Talent in BPO study from last year tells a very depressing tale when you ask BPO delivery executives what they think of their BPO career:

Click to Enlarge

Click to Enlarge

What's alarming is the failure of enterprises to create and communicate a viable BPO career path for seven-out-of-eight professionals with under two years' experience.  And - while 63% of newbies strongly agree their job is vital to business performance, a depressing one-in-eight are actually excited by their career choice.  When people get past the first couple of years, their experience clearly improves, but the concern here is how can we attract top (or even middling) talent into BPO careers, when there is such a negative perception of the potential of the job.  If we can't attract the talent, the industry will never progress beyond a cost/efficiency play.

What can we do to attract the "Digital Generation" into the BPO business?

Start new hires on activities that require creativity and critical thinking. Working in BPO has to be about delivering capabilities beyond rote, operational processes.  Today's college graduates are simply not coming out of school willing to perform mundane routine work.  Just look at the new WEF jobs report to see how skills requirements are quickly shifting, as business needs evolve - especially the need for creative skills, going from number ten to number three in merely five years:

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Click to Enlarge

In the past, for example, an accountant would often earn his/her chops processing accounts and doing routine GL work, before progressing to controllership activities, such as budgeting, quality audits, FP&A, forecasting and risk assessment work.  With much better technology and offshoring

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Posted in: 2015 Talent in BPO StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)

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Let's get lean digital with Shantanu

April 15, 2016 | Phil Fersht
Shantanu Ghosh, SVP CFO Services and Consulting, Genpact

Shantanu Ghosh, SVP CFO Services and Consulting, Genpact (Click for bio)

Digital, digital everywhere, but what about the finance function? It took a decade for accountants to make the seismic shift from Lotus 1-2-3 to MS Excel... so how much focus is our favorite business function putting on today's advances in analytics tools, interactive and collaborative solutions, mobility and automation?

Can finance executives really embrace digital to break away from some of the legacy mindsets, processes and technologies that have plagued the function for decades?

Not too many people have been driving the digital agenda as aggressively with the CFO's office than Genpact's Shantanu Ghosh, with his firm's own methodology "lean digital," so we thought it high-time we caught up with him to get his viewpoint on the impact of digital o the finance function.

Phil Fersht, CEO and Industry Analyst, HfS: Shantanu, it's been a couple of years since we've had you on here. Can you tell us a bit about what you're up to in Genpact today?

Shantanu Ghosh, Senior VP & Business Leader - CFO Services and Consulting, Genpact:  Actually, my remit remains pretty similar to what it was two years back. I lead the financial accounting, sourcing and procurement service lines, globally. I also lead consulting across Genpact.

But I'll tell you, the complexities, the scale and the type of solutions involved in all three have changed pretty dramatically in the last two to three years. So it feels like I’m doing a new job every day, even though broadly the remit remains the same.

Phil: I've seen Genpact has been on a real tear, particularly over the last 12 to 18 months. I’ve seen a real uptick, especially in Europe, where you're winning a lot of deals. What's going on? What are you doing differently?

Shantanu: I think there are four things at play, Phil. One, I think it's a result of there or four years of sustained investment in our domain capability and our front-end capability. Obviously, in this business it takes a little bit of time for that to result in winnings in the marketplace, because you have to start engaging with clients at a different level. Then you get into a virtuous cycle, because

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Posted in: Business Process Outsourcing (BPO)Digital TransformationFinance & Accounting BPO

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Twelve ways to survive the race to irrelevance - download your life jacket now!

April 12, 2016 | Phil Fersht

If you weren't able to make our excellent buyers summit at our research partner Cambridge University, we managed to crack the code (finally) on surviving in these disruptive times - in twelve simple steps.  Just download our report and all will become crystal clear:

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

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