HfS Network

Monthly Archives: Jun 2016

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generation and the disconnected older generations, who've lost interest in the direction of the modern world that no longer represents their interests.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:

Click to Enlarge

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:

Click to Enlarge

Click to Enlarge

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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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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