We’re excited to speak at four sessions at Nasscom in Mumbai, culminating with our State of Industry session at 11.15 this morning. Come along and discuss what’s really going to hit us down the road…
We’re excited to speak at four sessions at Nasscom in Mumbai, culminating with our State of Industry session at 11.15 this morning. Come along and discuss what’s really going to hit us down the road…
The pharma industry has been in a state of constant flux for a very long time. I can recall intense discussions at the turn of the Millennium, when we debated how the industry could survive the demise of the blockbuster drug model amidst the rise of generics… yes it still prevails.
The quirkiest issue I have observed with pharma, over the years, is that their leading firms like to outsource all the high-value work, such as contract manufacturing, drug discovery and R&D, while keeping the back office stuff inhouse, namely IT, HR and F&A. Pharma has been the weird stepchild of outsourcing – moving out the core, while retaining the non-core.
Fortunately, we have Barbra McGann, our Executive Vice President, Business Operations Research, to lead the charge in researching our first-ever Blueprint Report on Pharmaceuticals Industry-Specific BPO to delve into how our leading pharma are behaving, and how the service providers are performing to attend to their needs.
So let’s ask Barbra to take few minutes to tell us about the report…
Why produce this Blueprint report now, Barbra?
There is some pretty spectacular and mind-boggling activity today in the pharmaceuticals industry, with the 3-D printing of pills, use of IBM Watson to cull through reams of data and help diagnose and personalize therapies, and edible devices that can transmit data and images. Behind the scenes, too, there are some significant changes underway that are also critical to helping this industry—enabling it to operate in a way that re-focuses on the patient, and helps pharmaceutical, biotechnology and medical technology companies shorten trial times and accelerate time to market, increase medical adherence, reduce risk, and manage compliance. This operations support, having taken shape over the past two decades as the Pharma BPO industry, is on its way now to the As-a-Service Economy—with service providers bringing together industry and operations experts, digital technology and new operating models to collaborate with willing service buyers.
Two of the significant ways that pharmaceuticals companies “touch” consumers are in the R&D process and through sales and marketing (aka commercial services). The pharma BPO market in this Blueprint covers clinical data management services, safety management services, regulatory affairs support, and related sales and marketing—all activities that we recognize are part of a highly regulated, complex market in the midst of global Read More
Go on – dare you to be honest =)
You may have noticed we’ve been doing a little expansion at HfS recently… And a big part of this was building out our European presence and adding more industries to our research coverage.
One industry we’ve always been passionate about is energy, and how that sector is dealing with huge regulatory impact post the Paris Climate Agreement – where both energy providers need to rip up their operating models to survive, and enterprise energy consumers can take advantage of new sources of renewable energy to gain a competitive edge.
So who better than to hire an Amsterdam-based energy expert with a penchant for technology and research? So without further ado, let’s introduce you to our new Managing Director for Research, Derk Erbé…
Welcome, Derk! Can you share a little about your background and why you have chosen research as your career path?
Thanks for the warm welcome. I’m very excited about joining HfS. I feel research, and the role of the industry analyst brings everything I experienced in my career and found to be critical together. I have been in the trenches of technology implementations, business transformations and operating Read More
Revisiting our As-a-Service study from late last year (click here to download your copy if you somehow missed it), we realized 10% of the respondents were in C-level positions. So we thought it worth comparing the C-Suite’s views on what would significantly impact their firm’s As-a-Service journey, when compared to their middle-management layer:
Provider-replacement therapy popular among three-quarters of the C-Suite. A staggering 77% of leadership want to see their legacy service providers replaced, compared with only 27% of their middle management. This is because corporate leaders have reaped the labor arbitrage fruits from legacy outsourcing, and know their middle layer is getting fat-and-happy meeting their SLAs and performance metrics. Nothing will change without forcing the issue – the incumbent provider has Read More
This company may have its digital transformation strategy spot-on, but it could definitely benefit from some Design Thinking to maximize its brand opportunities and re-imagine its customer experience:
Unprecedented pressure being applied to operations leaders to drive more value, without huge investment increases, is forging a dire need for the vast majority of service buyers and their providers to change how they work together. The legacy model of “we pay, and you deliver for cheap and we don’t really want you getting involved with helping us do things better” has to change. Otherwise, enterprise leadership will find new service partners and operations heads to take them forward.
The simple fact that 80% of services buyers simply aren’t engaging with their providers in a collaborative way, as revealed at last month’s buyers working summit in Harvard, emphasizes how critical it is to infuse the methods of Design Thinking into most of today’s flagging engagements:
So we set out on a unique Blueprint research exercise, led by myself (Phil Fersht) and supported by HfS analyst Hema Santosh, where we interviewed a host of enterprise clients on their experiences with Design Thinking exercises with their service providers, using our new Blueprint Methodology to assess their innovation and execution performances. Many of these clients were not the usual rose-tinted reference clients heavily wined and dined by the providers – they were from the HfS buyer community, who could give us an unvarnished, honest appraisal of their Design Thinking exploits.
We focused on those leading service providers, currently involved with Design Thinking as a key component of their As-a-Service delivery model. While we acknowledge there are many design boutiques and consultancies out there, we specifically focused this Blueprint on the capabilities of the leading outsourcing service providers.
And this is how the emerging service provider landscape is taking shape:
Phil, why is Design Thinking so relevant to the future of outsourcing?
Most of the outsourcing industry is still trying to figure out what’s possible beyond doing labor arbitrage really well – because that’s what we do. Sorry, but there I said it – we officially have an identity crisis.
We’re trying to forge a new identity for ourselves and re-imagine what our careers, our services and our platforms could be like if we only figured out how we can define, prioritize and realize business outcomes that are valuable, as opposed to merely keeping the same old factory ticking over at the lowest possible cost.
Digital technologies, robotics software, analytics tools, BPaaS platforms and artificial intelligence can only be effective and impactful once enterprises have re-designed their processes in a way that drives them towards their desired business outcomes. This has always been the case with (now legacy) ERP implementations, where thousands of clients have blown billions of dollars on enterprise software they simply never could mold effectively to their businesses. They weren’t finding problems to solve, they were creating new ones they didn’t need in the first place.
Following on from our recent discussion on Social Intelligence, I drew some real inspiration from this recent speech from Bollywood actor R. Madhavan, who touches on three critical elements for success (combined with your sheer determination to succeed and to seize opportunities):
In November 2014, we released the industry’s Maturity Model for Robotic Process Automation deployments. The model provided a guide for what service providers and enterprise clients must do to become proficient and scaled in achieving the efficiency and cost benefits that this technology can provide in business processes and IT delivery.
Now Charles Sutherland has updated the RPA Maturity Model and has created a service provider-specific version. Soon he’ll publish a version specific to the enterprise environment as to highlight the differences but also to recognize some of the commonalities in strategy and operations between the two as well.
The RPA Maturity Model is designed around two different components. The first component is comprised of 17 elements, each of which covers different aspects of RPA strategy or RPA operations that have come out of the dozens and dozens of discussions, briefings and site visits over the last 3 years. The second component is the levels of RPA Maturity that can be used to assess comparative states of RPA maturity across the Elements.
There are now four Levels of RPA Maturity, three of which are uniquely defined based on the requirements of each of service providers and enterprises and one of which is a shared Level for the integration of RPA between service providers and enterprises across the same business and IT processes.
So, have at it. And let us know what you think.
Amidst all the feverish talk of acquisitions and divestitures in the services industry of late, spare a thought for one dynamic service provider focusing its growth the organic way: Genpact. The business process service giant has been stealthily hiring talent left right and center in recent times – mainly from its competitors – as it sharpens its focus on operations services in the finance, procurement and supply chain business services markets.
And we’re impressed with its latest deal – the absorption of respected procurement consulting firm Strategic Sourcing Excellence (SSE), which propels Genpact’s procurement-as-a-service capability to the forefront of the market – at a time when procurement BPO decisions are increasingly being made by the CFO, which is where Genpact rules the roost. Hence a timely move and a smart play to really get to grips on this market. So who better than our own procurement guru, Charles Sutherland, to take a closer look at this integrative move and its impact on the global procurement-as-a-service market space…
Movin’ On Up In Procurement Outsourcing
In June of 2015, we published our HfS Blueprint on Procurement As-a-Service which the continued evolution of this market around end to end and modular solutions enabled by cloud technologies and supported by ever deeper category management expertise. At that time, we placed Genpact as one of our “High Performers” with strengths in transactional procurement, process automation, geographic reach and a focus on continuous improvement. But we also felt that by comparison to the market leader Accenture, Genpact still had to further develop capabilities in category management, market intelligence and transformational procurement consulting to challenge for a leading position across the entire market.
We thought that Genpact would likely combine an inorganic acquisition strategy with organic activities such as the aggressive recruitment of category managers and rolling out new technology investment to make a push to move into our Procurement “Winner’s Circle” in 2016. And while we Read More
Utilities organizations are under real pressure on many fronts to improve their operational performances, with many are facing competition for the first time as a result of deregulation and feisty competitors offering genuinely disruptive solutions.
We asked HfS Research Director, Reetika Joshi, to take a deep look at the marketplace, with the resulting HfS Blueprint Report: Utilities BPO 2015 looking at traditional BPO services, in addition to emerging As-a-Service platforms and evolving commercial models. Plus, Reetika uncovers robotic process automation (RPA) and analytics in service delivery.
So let’s get an up-close view from Reetika:
What’s on the minds of utilities services buyers, Reetika?
Our Blueprint research shows that utilities face a harsh reality in dealing with a burning platform for change today. They need to address three sets of sweeping industry forces:
It’s on… 2016 is the year that will separate the service dinosaurs from the savvy cannibalizers, as revenue growth slides towards negative territory and the onus shifts from selling more buttocks on seats to maintaining sexy profit margins.
Cutting to the chase, the technology and business services industry is becoming a very different place, and those of us failing to adapt, should start considering alternative career plans. I hear massage therapy is in high demand these days…
So what will really happen as we embark on our negative revenue growth journey? Here are five scenarios detailing how this will play out…
1) Big sucks – especially for providers… so get smaller and smarter. You’re still huge, clunky, siloed and political, constantly looking at “new” ways to reduce the workforce, while only being allowed to bid on big legacy deals, where the advisor is (still) squeezing everyone for price and your marketing team is still pretending you’re delivering nextgen solutions to clients (which you really aren’t). Under all the swirl of nonsense, you’re strategy is still really all about carting in even cheaper, younger kids from even cheaper, more remote places, and quietly ushering your burned out middle-management the exit. Meanwhile, as the allure of big provider life fades, many of the stars you want to keep are getting enticed by the thriving start up scene. Yes, people, being big and clunky is an increasingly crappy place to be, and many people reading this will be nodding violently that this is where they, quite frankly, are.
2) The mid-tier BPOs and up-and-coming As-a-Service providers have a great opportunity to steal the show. You either need to find sole source clients prepared to co-invest with you in their futures, or start to cater for new-gen deals that force you to build out your multitenant delivery Read More
We’ve pooled all the big discussion topics from our recent service buyers summit in Harvard and let our analysts loose to demand 10 big things the industry needs to address if we are going to drag ourselves away from legacy land and avoid becoming massage therapists… and venture into the promised land of the As-a-Service Economy:
1. Outsourcing is now part of a broader management capability; it is not a standalone profession. Outsourcing is a competency that is learned on the job and through real experience as opposed to a qualification or certification. It is an ongoing, amorphous capability that has no end-state or stamp of perfection, it is the ability to partner to improve constantly processes, outcomes and performance. Outsourcing is a means to improvement, access to resources and better capability, usually not the means to a specific end.
2. Intelligent Automation has emerged as a core competency for operations staff. Like outsourcing,Robotic Process Automation (RPA) is a means to improve processes and applications, but rarely the ideal end-state – it typically is retrofitted to make legacy applications and processes function more automatically and efficiently. Legacy operations delivery and BPO can only achieve a certain level of efficiency, without a well-planned Intelligent Automation roadmap. RPA is one of the leading technologies to provide efficiency improvement in rules based tasks and processes, but Intelligent Automation (see link) is also now including the adoption of real time self-learning techniques, predictive analytics and cognitive computing.
3. Ambitious providers will cannibalize their revenues when their buyers give them more to work with. Moving forward, buyers will need to make some new investments in Intelligent Automation (especially RPA) technology and expertise, while the service providers will ultimately have to concede they may need to reduce the FTE provision on their side, as automation takes effect. A service provider must prove it can redeploy “freed-up FTEs” on their clients’ higher value Read More
While the benefits of the cloud and the pervasiveness of new digital technology impact our professional and personal lives – more than at any point in history – the need for the tech skills to make this all work has never been under so much intense pressure.
Not every firm can drop $200K a year on whizkid programmers who can actually handle this stuff, so the focus moves to those firms which can do this effectively and affordably. The industry’s only dedicated engineering services analyst, Pareekh Jain, has been micro-focused on the emerging engineering service industry over the past couple of years and today unveils the industry’s first unvarnished view of software product engineering capability of the leading service providers.
This is our second engineering services Blueprint. In the first one, we focused on the provision of engineering services for physical products. In this Blueprint, we look at Software Product Engineering (SPE) services in detail. So let’s turn to Pareekh to learn more about his Blueprint experience in this emerging space:
Pareekh, how do you see this market evolving and what are the key drivers for software product engineering services?
This market is very dynamic today. A few years ago there were only a few specialized and small service providers who strategically focused on this market. Large service providers generally treated this market and clients more opportunistically. Their product engineering service capability was relatively small and often sat inside a larger ADM practice. Overall the attractiveness of ISV market was not high enough for large service providers to make investments to serve this market in detail. Now the market attractiveness has increased because of two reasons. First, as ISVs (Independent Software Vendor) are moving to As-a-Service, they need help. Second, as more and more products are software driven in IoT world, enterprises need help too. Traditional software product engineering outsourcers were ISVs. Later internet companies who faced similar challenges of scalability, reliability as ISVs also became a major customer segment. What we are now witnessing is an emerging trend with the rise of IoT that all products and industries are becoming smart and will need software solutions for scalability, reliability and connectivity. The traditional ISV market had limited potential and was driven by the R&D spend of ISVs but this much greater market for software products beyond ISVs has huge potential. Consequently, service providers both large and specialized are increasing their attention on and capabilities to serve this market. We have observed new specialized service providers have also emerged in this space in the last few years.
And how did the Blueprint analysis turn out?
This Blueprint analysis was interesting. First we researched how service providers are making investments in helping ISVs transition to As-a-Service economy and used these criteria also in evaluating service provider capabilities.
The scope of this Blueprint was software product engineering services for ISVs and internet companies. We excluded software product engineering work for enterprises because it is still an emerging area and there is a lack of a common understanding among service providers of what enterprise work will qualify as ADM versus SPE.
We evaluated 13 service providers for this study. These service providers include providers which are China centric, Eastern Europe centric, Latin America centric, and 100% domestic US sourcing centric in addition to India centric service providers. This is much geographically dispersed than most other outsourcing markets we research.
There are five service providers in our Winner’s Circle – Cognizant, HARMAN, HCL, EPAM, and TCS (in Read More