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Monthly Archives: Aug 2016

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

August 24, 2016 | Phil Fersht

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

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

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

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

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

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

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

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

Click to enlarge

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

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

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Posted in: Financial Services Sourcing StrategiesHfS Blueprint Results

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Who Are the As-a-Service Winners in Energy Operations? HfS’ inaugural Energy Operations Blueprint reveals frontrunners Accenture, EPAM, Infosys, Wipro and TCS

August 24, 2016 | Derk Erbé

Why An HfS Research Blueprint for the Oil & Gas Industry?

Tumultuous times in the Oil & Gas industry. Understatement of the day I hear you say… Time for a rigorous look at the role service providers play to help Oil & Gas clients battle adversity. 

The Oil & Gas industry is on the cusp of a significant transformation. Economic, societal, market, political and regulatory pressures are coming together bringing immense challenges for companies to solve through more effective and lower cost operations.

HfS sees a significant role for next generation services providing flexibility to scale up and down, agility to deal with a volatile environment and fully leverage digital technologies and digital enabled business and operating models now and in the future. 

What does this Blueprint cover?

This is not a beauty contest about size, revenue and global scale. There is a place for smaller providers that excel in a niche and help clients on their As-a-Service journey. 

One of the key attributes we looked for in this Blueprint process was if the service provider has a real Oil & Gas practice, not a collection of contracts with a sign “Oil & Gas Practice” slapped onto it. In this light we are interested in the way service delivery is organized, the availability of industry domain expertise, investments in industry talent, acquisitions of companies with industry specific capabilities and partner ecosystems. Another point of emphasis in our research is the move to As-a-Service, how service providers are enabling new ways of working, how automation and analytics are used to tackle industry specific challenges and the level of innovation brought to clients.  

Key Market Dynamics

 Two dynamics jumped out at us during the Energy Operations Blueprint process:

Oil & Gas Companies Looking for New Levers: As the focus of the industry is on cost reduction, production optimization and operational efficiency, automation and outsourcing are two principal levers available to the industry. The name of the game for Oil & Gas is: Fix the basics and leverage new technologies. Oil & Gas executives are forced to have a good look at their strategy. Key questions include:

  • What is the core of our enterprise?
  • What do we need to do internally, what differentiates us from the competition?
  • What parts of our processes can we automate?
  • Can we outsource what we can’t automate?

 Buyers Perception of Service Provider Becoming More Strategic: A pivotal changing dynamic in the market is how buyers look at their service providers. With the renewed focus on outsourcing as a lever to deal with the pressures in the volatile business environment, Oil & Gas clients tell us they look beyond labor arbitrage and see service providers as an extension of their organization. They want deeper relationships with their providers and forge stronger ties between internal and external staff. They look at their service provider(s) to help the organization become more flexible and scalable, ramping up and down in the cyclical business of Oil & Gas.

Who is Standing Out? The Service Provider Landscape and Blueprint Grid Performance

All of the 13 service providers that participated in this Blueprint share the conviction that innovation is crucial to helping their Oil & Gas clients through this volatile environment. Most of them have a unique set of offerings and capabilities. There are a couple of clusters of expertise. For example, KPIT and HCL, focus on a specific area of the value chain; TCS, Infosys, Wipro, Accenture, IBM and Cognizant, focus on strong domain expertise and consulting-led delivery; and EPAM, Atos, Luxoft, Harman and Tech Mahindra, lead with engineering or Digital Transformation with credible experience from other industries.

As-a-Service Winners are service providers that are in collaborative engagements with clients, and making recognizable investments in future capabilities in talent and technology. These providers are also leading in incorporating analytics and BPaaS to deliver insight driven services: Accenture, EPAM, Infosys, TCS and Wipro. I’ll highlight two Winners here: 

Accenture has tremendous breadth and depth in its capabilities and experience serving the oil and gas industry. Its commitment to innovation in technology and service delivery and bringing digital platforms to the industry make it one of the leading service providers in the move to the As-a-Service Economy. 

Wipro’s Oil & Gas practice holds a lot of domain expertise, which Wipro combines with innovation in digital, cognitive computing and automation (Holmes) and commercial models. What stands out is Wipro's ability to bring valuable, new As-a-Service propositions to the market, enabling the introduction of clients' new reimagined digital business models, a crucial capability for success in Energy Operations.

 High Performers show solid performance in either technical execution or services innovation but may not show an innovative services vision or lack execution momentum against what is potentially possible: Atos, Cognizant, HCL, KPIT and Tech Mahindra. Atos impressed us with their vision on Holistic Security and Industry 4.0 experience, two key areas for the future of Oil & Gas. 

Harman, IBM and Luxoft are ranked as High Potentials, emerging players bringing highly innovative approaches and overall vision to the market, but lacking in the complete build-out.
IBM is struggling to transition from being firmly entrenched in ‘traditional' services, and has been on the wrong end of consolidations in the industry. However, what caught our attention is IBM's capability that puts it on the forefront of advanced analytics services, with heavy investment in cognitive capabilities. We have seen a number of interesting applications of Watson with Oil & Gas clients, for instance using predictive data science to leverage more than 30 years of collective knowledge and experience in a cloud based knowledge platform. With the Big Crew change firmly underway, this an important area for Oil & Gas companies. 

What is Next? Sustaining the Momentum of Change

The downturn in the Oil & Gas industry and sustained low oil price has created a momentum for change in the industry. But will it continue if the oil price goes up again—what happens when it hits $60 per barrel? Many industry executives shared a concern that without the economic necessity of cost cutting, the industry will return to a complacency that will slow the pace of innovation and change.

This Blueprint shows that, in addition to cost reductions, the industry needs to be focused on business outcomes relating to talent, operational efficiency, organizational flexibility and scalability and time to market. The way forward is through more collaborative engagements that incorporate the achievement of these business outcomes. The Energy Operations Blueprint provides a comprehensive overview of the industry and identifies ingredients for long-term business value along the As-a-Service Journey.

I’ll wrap this up by emphasizing again the importance of true partnerships. To survive the oil price slump and come out stronger Oil & Gas companies need partners that proactively bring innovation and are willing to co-invest in technology, collaboration and talent.

HfS Premium Subscribers can click here to download their copy of the new 2016 Energy Operations Blueprint Report.

Posted in: Business Process Outsourcing (BPO)EnergyHfS Blueprint Results

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

August 19, 2016 | Phil Fersht

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

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

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

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

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

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

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

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

Posted in: HR Strategy

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Where is AWS in relation to the other IT services players? And a sneak peek at Q2 provider chart…

August 19, 2016 | Jamie Snowdon

Sometimes it’s all in the fine print. We often put a small comment at the bottom of our charts that gives additional details about the data and a note of anything which specifically impacts the chart. A note we often add to the quarterly bubble charts we do is that we haven’t included one provider or another because if we added them it would skew the chart. One question I get asked fairly frequently is where AWS would feature on the chart.

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Posted in: IT Outsourcing / IT Services

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Gazing into the Automation Crystal Ball

August 19, 2016 | Tom Reuner

As the leading authority on Intelligent Automation, HfS gets inundated with requests to size and forecast the market.

Our standard answer continues to be another question: “How can you size a market that is not defined?†Suffice it to say, we have seen some of our peers put numbers out. Yet, how do we actually size the market? Do we aggregate licensing revenues by the tool providers? Do we draw a big mind-boggling number on AI into the sand? Or can we assess the addressable market beyond the bleeding obvious that every IT or business process is conceivably an opportunity for providers?

Until we have clearly segmented and defined markets, the value of market data is probably on the limited side. But don’t get me wrong, my learned colleague Jamie Snowdon can model any of those markets. He not only publicly declared his love for market sizing and forecasting but his Twitter handle is statement of modesty: he is one of the best in the business. And where it makes sense, we draw very visible lines in the sand, as in the case on the impact of automation on talent and jobs.

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Posted in: Cognitive ComputingDigital TransformationRobotic Process Automation

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

August 18, 2016 | Phil Fersht

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

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

Venue:  Hotel Leela Bangalore

Date: 22-23 September 2016

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

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

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Recalling a Bill Gates Joke Amidst Vehicle Recalls

August 18, 2016 | Pareekh Jain

When I was in college, I heard an incident involving Bill Gates and his comments about innovation in the automotive industry in the late 90s. Later, I found that Bill Gates comments were extrapolated and converted into a then very popular joke among automotive engineers. The irony is that joke is coming true now for car makers, but it is a good opportunity for engineering service providers.

It goes like this--

Bill Gates: If the automotive industry had kept up with technology like the computer industry has, we would all be driving 27 dollar cars.

Automotive Industry: Yes, but would you want your car to crash twice a day?

(Sources here & here)

And guess what? Two decades later, cars have become more like software and vehicle recalls have skyrocketed.

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Posted in: Procurement, Engineering & Supply Chain Outsourcing

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Retailers Need a Digital Architect to Save their Legacies

August 18, 2016 | Melissa O’Brien

Most of the coverage of the Walmart/Jet.com deal has focused on whether this helps the firm compete more effectively with Amazon. Speaking as an Amazon addict, ahem, loyalist, my initial thought was there is no way this deal even comes close to having the intended impact. But as I dwelled on it further, I realized the more interesting facet of this news is how ecommerce competition is driving a fundamental change in the retail business model to support today’s digitally savvy customer; namely to architect a digital strategy that carves out a new value proposition for traditional retailers.

Walmart brings “digital brain” Marc Lore into the fold as its architect

This acquisition is as much about platform, relationships and customers as it is about the experience and savvy of Marc Lore, who also launched Diapers.com, which was acquired by Amazon in 2010. This is a tangible sign of Walmart looking to “get digital” in the core of the company—hiring someone who has turned boring legacy markets upside down by making the unsexy task of shopping for products like diapers and laundry detergent easy and appealing to yuppies and millennial shoppers. 

The biggest part of this strategy is about better serving and understanding the customer. Retail, arguably more than any industry, has a real competitive need to move away from general segmentation to individual personalization. Jet.com leverages technology in a way that enables lower cost and greater personalization with its dynamic pricing engine. The retailer has also grown substantially in terms of membership and product availability and has been hyped as a potential Amazon disruptor since its inception.

Retail self-disruption is critical – where does the store fit in?

Emerging digital business models are disrupting retail in a way that legacy companies like Walmart simply cannot respond to fast enough and remain viable. Headlines of store closings are ubiquitous, while others scramble to leverage stores more effectively and invest in digital (such as Kohl’s use of ApplePay). For legacy brick and mortar retailers, the key is finding the right balance of in-store and online shopping capabilities, and ensuring a seamless experience between the two. In terms of physical real estate, writing off legacy isn’t necessarily the best approach- it’s about morphing and shaping that legacy into something that meets customer demand and supports the digital customer. Retailers like Macy’s, which has just announced significant store closings, may be missing out on an opportunity to use their real estate legacy to their advantage by making those stores points of shipping, pick up, or experience. And let’s not forget that today online sales are still a very small percentage of retail sales overall.  One advantage of the Jet.com acquisition (over say Diapers.com being absorbed by an online native) is that it can leverage Walmart’s massive brick and mortar presence as a point of shipment for products.   

The Bottom-line: You don't have to completely write-off legacy - it’s about morphing legacy businesses to meet customer demand. Digital architects can save traditional retail if they adopt this approach     

Retailers need to have leadership that addresses the overarching digital picture—a digital architect. They also need to master personalization in the same way that ecommerce natives have. This is no easy feat. In the case of Walmart/Jet.com, it is just one more example of on how difficult it is to redefine and recreate an existing legacy company into a digitized company, and addressing the need to understand the digital customer more effectively.  Walmart has recognized that it cannot rest on its laurels—a company that was once seen as innovative because of its supply chain practices, but lost its edge over time, is making a bold move to revitalize the innovation.  The challenge lies in integrating these two very different creatures. The acquisition is bold, and the market is taking notice—now begins the tough job of making it work for the digital shopper. 

Posted in: Business Process Outsourcing (BPO)Contact Center and Omni-ChannelDigital Transformation

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I'm going through an analog transformation...

August 17, 2016 | Phil Fersht

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

 

Posted in: Absolutely Meaningless Comedy

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Interview: Meet Sunjeet Ahluwalia, the sales elephant from India!

August 15, 2016 | Bram Weerts

At HfS, we’re growing fast in a very competitive and volatile market… and with growth comes change - but change is always good if you ask me! The most fun in jobs is when you have changes - you learn new things, get new ideas and you meet new people to help accommodate the change.

HfS is always on the lookout for serious talent that can help our clients become even more successful. So happy days when I heard that some serious quality was on the lookout for some new chapter in his life. Sunjeet Ahluwalia has joined per August, and today I wanted to give you a little more background about him.

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Posted in: About Us

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No more (offshore) heroes anymore? The big shift left continues.

August 11, 2016 | Jamie Snowdon

Q2 2016 has been an exciting quarter of results so far, with a few surprises particularly amongst the large offshore providers. We commented on the pressure on Infosys caused by its results last month.

We see a real change in fortune amongst the big players, certainly over the last two quarters. With the players with strongest growth rates over the last three years, TCS and Cognizant dropping year on year growth to single digit.

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Posted in: IT Outsourcing / IT Services

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Why We Should Love Procurement

August 11, 2016 | Derk Erbé

Last month, my colleague Bram Weerts declared the procurement function at risk of extinction.

But all is not lost! I see some very powerful paths Procurement can take to become a more appreciated and valuable business function in enterprises.

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Posted in: Business Process Outsourcing (BPO)Procurement, Engineering & Supply Chain Outsourcing

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

August 10, 2016 | Phil Fersht

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

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

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

Answer: Yes

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

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

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

Click to Enlarge

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

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

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

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

August 09, 2016 | Phil FershtMike Cook

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

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

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

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

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

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

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

So what does this acquisition mean for Randstad?

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

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

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

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

August 08, 2016 | Phil FershtTom Reuner

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

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

Click to enlarge

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

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

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Posted in: SaaS, PaaS, IaaS and BPaaS

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Why Cognitive Product Support is in full swing

August 08, 2016 | Pareekh Jain

It’s hard to overstate the importance of product support to software and high-tech companies. Good product support helps in customer satisfaction and influences purchase and repurchase decisions.  

But what is good product support? Ideally, it’s where no support is required. Although companies should strive to develop products that require minimum product support, they should also look at improving the customer experience and reducing time spent on product support. Overall product support systems should be cognitive, intelligent and self-improving.

This is all the more important because most customers in the As-a-Service Economy are used to a customer-centric user experience and instant gratification. They expect the same for software and high-tech firms in both the consumer and enterprise segments. Companies need to minimize the need for product support, provide an improved customer support experience, and improve the effectiveness and timelines for product support. 

Most companies outsource product support. But, whether in-house or outsourced, improving product support typically means adding headcount or seats, which will increase costs. Adding seats may improve responsiveness but may not improve customer support effectiveness.

There has to be a better way to do it. Enter the As-a-Service Economy, in which product support can be re-imagined and existing product support process can be disrupted. 

Goodbye legacy product support and welcome cognitive product support

The product support process can be made cognitive or intelligent by leveraging analytics, automation, and engineering approach.  The business outcome and productivity gains committed in the contract will drive the adoption of cognitive product support levers and deliver value to the enterprises. Our estimation based on case studies we discussed shows that software and high-tech companies can save about 40% of total product support cost by moving to cognitive product support as shown in the Exhibit. This 40% saving is over and above any labor arbitrage which service providers promise when they leverage offshore resources.

Exhibit: Value Proposition of Reimagined Cognitive Product Support Process

Apart from reduction in product support cost, cognitive product support increases customer satisfaction by

  • Reduce MTTR by increasing resolution accuracy
  • Reduction in invalid escalations to backline/frontline
  • Increase Self Service to maximum extent possible
  • Improve forecasting accuracy

Both users and enterprise will benefit from cognitive software product support but existing outsourcing relationships need to be revisited

In our research, we’ve found that biggest obstacle for software and high-tech firms in achieving cognitive or intelligent operations is their existing outsourcing relationships. Some of our buy-side customers believe that their primary service providers though are providing the good quality support they are still using legacy ways and nothing has changed in the product support process in the last ten years.

Enterprises should leverage cognitive product support if not for savings then for customer satisfaction. Phil recently had a very bad experience in customer support from a large high-tech enterprise. He had to speak to 16 reps to resolve the issue. No prize for guessing that this large high-tech enterprise will not be Phil’s first choice at the time of repurchase.

Net-Net, software product support is ripe for disruption. Progressive software and high-tech product companies will not hesitate to leverage cognitive software product support and futureproof their value-driven product operations.

HfS subscribers can click here to download the full POV, which details our research and recommendation on cognitive software product support

Posted in: Procurement, Engineering & Supply Chain Outsourcing

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Using the Wisdom of Crowds and the Wisdom of Experts in Book Selection and Service Provider Selection

August 07, 2016 | Pareekh Jain

I have been an avid book reader for as long as I can remember. And when I look back, I am amazed how my process of book selection has changed over time from the wisdom of crowds to the wisdom of experts. There are parallels to the outsourcing industry, including sourcing advisors and analysts.

While I was a student, I had enough spare time (this was before the internet era in India), and I used to read a variety of books. I didn't care about the advice of experts back then. I used to go to bookshops, browse the books and bought the ones I liked. When I say bookshop, I don't mean likes of Borders or Barnes & Noble. In India, especially in Delhi, students hang around these kinds of weekly book markets that open on streets—only on Sundays, when regular shops are closed and are student-pocketbook-friendly. These markets have second-hand books, stolen books, pirated books, all in one place—and believe me you can't tell the difference!

I was amazed at the risk these weekly booksellers would take and physical hardship they endured moving the books books in and out every Sunday. I asked a bookseller once how he decided on his book selection because he’d have to carry unsold books back home at the end of the day via not-so-friendly public transport. He said he asked people around in the trade which books are being sold in the big bookshops, and he tried to procure them in a cost-effective way. I didn’t ask details of his cost-effective procurement ways, but this bookseller—along with other booksellers in this market—relied on the wisdom of crowds. 

Fast forward to the internet era: Amazon and its best seller rankings in different categories play the role of the wisdom of crowds. Later on Goodreads came along, which took the wisdom of crowds in book selection to an another level; Amazon acquired Goodreads in 2013.

By the time Goodreads came, I was few years into my professional life and had loyalty cards of many leading bookstores. I didn’t need to visit Sunday street bookstores any more. But my behavior remained same (i.e., I still relied on the wisdom of crowds). I was buying books using Goodreads/Amazon recommendations. But there was one problem—I didn’t have enough time to read.

Also, I was frequently annoyed when I realized that my precious reading time was often wasted on books that didn’t really interest me. I later realized, using analytics on my unread books, that I could now read only 5-6 books in a year. My risk profile has become bigger because my time was now a more precious resource, as I juggled my professional and personal lives. I didn’t want to waste a couple of months reading a potentially boring book. Also, unread books in my library were annoying me because reading them were becoming my to-do list—and I hate to-do lists. The pressure of reading was overwhelming the pleasure of reading.

So I decided to rely on the wisdom of experts and not buy more than 5-6 books in a year. I now rely on book recommendations of few experts I admire, such as Bill Gates, Elon Musk, Warren Buffet, and Mark Zuckerberg. Also, there are a few more folks I know, who are not as famous, but nevertheless give equally good recommendations. I mainly select my books out of their recommendations.

In the outsourcing industry too, the wisdom of crowds and the wisdom of experts come into play but in a different way.

How does the wisdom of crowds play into the selection of service providers? The best example might be a service provider’s performance in the stock market. Service providers that are doing well in the stock market are better companies—at least according to wisdom of crowds. Who has not heard “No one ever got fired for buying IBM” in the last century?

But that was so 20th century! The companies performing well on the stock market might not fit an enterprise’s needs for a particular geography, industry vertical, service line or specific solutions. What about some of the companies that have are not listed in the stock market? 

Here comes the wisdom of experts—or analysts and sourcing advisors. Analysts come first in the value chain and give enterprises the overview of the industry and help them identify good companies in their choice of industry, geography and service lines. The sourcing advisors come later. They advise enterprise on their specific needs and solutions and run the sourcing process. Enterprises that can afford to pay for analysts and sourcing advisors can rely on the wisdom of experts. The rest rely on the wisdom of crowds.

What if one firm can offer the wisdom of experts at the price of the wisdom of crowds? I don't know if any of my sourcing advisor friends can do this (a disclosure: I am a former sourcing advisor), but analysts (not legacy) can do this, and that’s what HfS Research is trying to do by offering 75% of our research free. So enterprises/individuals who can’t pay for the wisdom of experts can also have a view of service providers better than the stock market!

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesThe As-a-Service Economy

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Christine's Chapel... Services Gospel

August 06, 2016 | Phil FershtChristine Ferrusi Ross

 

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

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

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

Read More »

Posted in: IT Outsourcing / IT ServicesOutsourcing HerosSecurity and Risk

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Who are the leading IT and BPO services firms in North America?

August 05, 2016 | Jamie Snowdon

Last week we wrote a blog about the leading BPO/IT services players in EMEA, this week we’ll look at North America. Conveniently the headline is more or less the same: the Global majors: IBM, Accenture, and HP, still dominate the top of the list. Although the question here is… for how long?

Click to Enlarge

Frankly, much of the same comment applies to the Top three in North America as it does to EMEA:

  • IBM is struggling to know what to do with its services business. The cash cow days of traditional large scale infrastructure and BPO deals are gone – with the remaining “traditional” large scale engagements much slimmer pickings and being very aggressively targeted by Indian-heritage competitive usually offering lower price points. Its pivot, like many of the technology players (but with more justification), is toward a more intelligent adaptive operations play driven by more advanced cognitive computing and analytics where clients pay for achieving business outcomes, not bill-by-the-hour labor rate cards. However, the industry is caught in a time lag between the old world scale deals and the coming intelligent deals, which could take several years to flesh out.  How IBM (and its ambitious rivals) can bridge both old and new worlds of service delivery is a significant challenge.
  • The “New HP” – is pretty much an unknown quantity in services with the announcement of the CSC merger. Obviously, the new entity will be larger, and likely to be in the number 2 spot next year. However, while, HPE is making announcements about its future, we have heard little about the new services firm. We apologize slightly for still calling them HP, but we just keep thinking there is no point changing it until we know what the name will be, and people understand whom we are talking about even if it should technically be HPE right now. What concerns us about New HP is it appears it could be planning to compete head-on for bread-and-butter IT infrastructure business against the likes of Wipro, TSC, HCL, and Infosys. Brand India is popular among enterprise clients these days, especially for operational delivery at scale. Hence, New HP has its work cut out attempting to preserve its slide of the North American IT services pie.
  • Accenture has managed to balance the worlds of operational delivery and consulting to become the industry bellwether. The one service provider which has firmly established itself with its 144 diamond clients is Accenture, which expertly manages them through the forces of change at a pace which suits them. Accenture’s path is on the face of it a little smoother, partly down to its market performance, its deep C-Suite consulting relationships and its reputation to bring sanity to complex IT and business process worlds – its services seem as in demand as ever, with many clients boating their “we use Accenture” badge with pride.

The differences appear just after these three service providers. With the offshore-centric firms making a much stronger showing with Cognizant and TCS in number four and five positions, not forgetting Infosys at 12. Ignoring the shenanigans at HP, you could argue that Accenture, Cognizant, and TCS are the top three performing IT/BPO services firms in North America in recent times.

Over the next two years, there isn’t likely to be much change in the top three. Accenture is unlikely to be caught by Cognizant and TCS in that time. This is unless IBM makes a similar move to HP, hiving off another part or parts of its services business. Although there is a question mark, at least in our mind, on the exact final number attached to the new HP entity – and this will depend exactly on what is included and not included in the final deal. However, it is still likely to be significantly bigger than Accenture. So - even with big declines and fair winds behind the offshore players, it’s unlikely they will overtake in this time frame.

Not to spend too much time dwelling on the comparison with EMEA, the lack of the European giants Atos and Capgemini in the Top 15 is worth mentioning. Largely given their recent focus and acquisitions, this demonstrates the level of investment and determination required to make a dent in the North American market.

The US government contractors would have also dominated a similar list to this in the past – with Lockheed Martin, Northrup and General Dynamics all having significant revenues in this space. However, thanks to restructuring and slowdown in US government spend, Lockheed Martin has slipped off the bottom of the chart. General Dynamics and Northrup still have a place in the list, but revenues have slipped significantly for both firms over the last five years.

Amazon Web Services (AWS) remains just off the list, but is likely to overtake CGI next year if it continues its current market momentum, we could also see other cloud players like Microsoft and Google in the years to come.

Bottom Line:  Agility to keep ahead of the market headwinds is still the critical X-factor

Although the global majors are likely to dominate the top of the list for at least the next couple of years. The direction of the market is largely being forged elsewhere, and unless they can tap into the zeitgeist more directly, most will end up as another CSC or EDS.

We have observed, in other blogs, that the competitive landscape was increasingly two-tier,  with the main differentiator between the two categories being inertia, however, it is those companies that are reacting quickly to the changing market conditions that are growing, and not necessarily the low-cost offshore-centric providers. We are sticking by this fact that the x-factor for an enterprise service provider is agility – both regarding the provider's ability to adapt to the market conditions and capacity to deliver adaptive intelligent solutions to clients.

You can read all our thoughts on the BPO and IT Services market in the Americas in our Americas IT Services And BPO Market Size And Forecast, 2016 - 2020 report

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

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Xerox, Accenture, EXL, Cognizant Round Out the Winner’s Circle of the HfS 2016 Health and Care Management Blueprint 

August 05, 2016 | Barbra McGann

 

This market for BPO and BPaaS is “poised to pop”

A year ago, we took our first look at population health and care management business process outsourcing trends and service providers. This year’s update considers the increased focus and impact on health, medical, and administrative outcomes through BPO and BPaaS engagements. We cover the availability of skilled resources, increasingly intelligent automation, analytics, and improvements to and bundling with componentized, cloud-based platforms. It’s quite a list, and there are pockets of momentum that hold promise for delivering more effective healthcare operations for these changing times.

At the Heart of Healthcare

The healthcare industry is looking to put the people, their lifetime and lifestyle, at the heart of the business in order to drive better health and care experience at a lower cost. And healthcare organizations—payers, providers, and others in the ecosystem—are challenged to deliver on this set of outcomes, and bridge the old legacy world to the new As-a-Service Economy. As people take on more responsibility for their own health and care, they want quality, accessibility, and affordability. And every part of a healthcare operation—front, middle, and back office—has a role to play to make it a more “intelligent operation,” one that is consumer focused and results oriented. 

A number of service providers are stepping in to help change the game, and partner to make healthcare business operations more effective, with an eye toward impacting these health, medical, and financial outcomes. We hear from service buyers that they are partnering increasingly for resources—to allow local clinicians more time and energy for interactions with healthcare consumers by rethinking what activity can be done remotely, through partners, or even automated.

In this blueprint, we take a look at the role of service providers in bringing together talent and technology to broker solutions through BPO and BPaaS engagements. The scope is:

  • Population Data Management and Analytics: identifying whom to target with what intervention
  • Consumer Engagement and Interaction: reaching out, engaging healthcare consumers
  • Utilization Management: processing authorizations, reviews, appeals and grievances
  • Care Coordination: coordinating care activity
  • Performance Management and Operational Analytics: program evaluation and assessment, quality and compliance reporting

Service Provider Landscape and Blueprint Grid Performance

As-a-Service Winners are service providers that are in collaborative engagements with clients, and making recognizable investments in future capabilities in talent and technology. These providers are also leading in incorporating analytics and BPaaS to deliver insight driven services:

  • Accenture: Sophisticated and innovative thought leader with a wealth of knowledge and experience looking to “change the game” in healthcare operations
  • Cognizant: Partnering and driving results with an increasing portfolio of BPaaS for population health and care management support
  • EXL: An operations management and analytics company that partners with the option of platform based and BPaaS services
  • Xerox: Coming out strong with refreshed focus on research-based population health that taps into healthcare heritage and recent acquisitions

The High Performers all execute well, are investing in future capabilities, but need to gain more consistency and traction among clients in defining and delivering against business outcomes, and using analytics in on-going services:

  • HGS: Building out a nicely comprehensive capability for enabling “healthy behaviors” and interactions between consumers, payers, and healthcare providers
  • Sutherland Global Services: Willing to align and invest in resources to partner with clients, creating a strong data-based starting point
  • Wipro: Using customer experience journey maps as a basis for helping healthcare address industry disruptions and drive outcomes 

A new addition to the Blueprint this year, HCCA Health Connections (although not new to the industry) is a solid Execution Powerhouse with energetic, high quality clinical process outsourcing.

Dell has High Potential for increasing momentum for BPO/BPaaS for analytics and unique IP around imaging, social, and telehealth, and a strong ecosystem.

HCL shows innovation in enabling healthcare management through digital channels—mobility and telehealth—for the life sciences that could be used more in healthcare as well.

Picking up the Pace—What’s On the Horizon for Population Health and Care Management Operations?

In the year since the inaugural HfS Population Health and Care Management Blueprint, we have seen an increase in the use of automation, analytics, and software platforms, attention to talent development, expansion in the location of resources, and blending of talent and technology.

But the pace is slower than it could or should be, due to continued concerns about data privacy and security, locked legacy contracts, and “old habits that die hard” in procurement. Compliance both hinders and helps progress, with constant updates and requirements from the government, but also promotions and clarifications that are meant to increase interoperability, transparency, data access, and quality health care. We have to choose and commit to doing something in a different way to get a different result.  

In Healthcare, more so than in other industries, service buyers are increasingly ready to switch out service providers that fail to help them evolve to a more flexible, automated, and insight driven operation. In our recent research, 66% of healthcare executive buyers—higher than any other industry—said they would likely look around when their contracts come up renewal. There is just so much at stake in the Healthcare industry now, between the driving forces of consumerism and compliance.

This side of the Healthcare Business Process Services Market—BPO and BPaaS addressing health and care management—is “poised to pop.” We have seen acquisitions and investments to get a handle on structured and unstructured data, change the mix in the workforce towards more use of automation and greater healthcare and analytics expertise, and momentum with one-to-many models and applications. We look forward to seeing how healthcare executives can partner with service providers to reinvent not just healthcare, but healthcare operations, and truly impact the health and care of consumers, driving toward higher quality, accessibility, and affordability. 

The HfS 2016 Population Health and Care Management Blueprint covers market trends and direction as well as the analysis of 10 service providers: Accenture, Cognizant, Dell, EXL, HCCA Health Connections, HCL, Hinduja Global Services (HGS), Sutherland Global Services, Wipro, and Xerox. For more detail—including visuals of the market and contract activity and analyses of the service providers—click here to access and download the Blueprint.

Posted in: Business Process Outsourcing (BPO)Healthcare and OutsourcingHfS Blueprint Results

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