We’ve never seen a boom in demand for tech and business process services since the dot-com days (hopefully some of you can still remember those when we texted on flip-phones with 12 keys and thought it was cool to put an “e” in front of everything we did). However, we believe the services market for the virtual economy is only just ramping up, and this is merely the hors d-oeuvre before the real feasting starts…
What is driving this new phase of growth in IT services?
Accenture has performed quite the pivot since the pandemic rocked up, de-emphasizing themselves as an advertising firm and reinforcing their prowess in cloud and IT services. Capgemini has raced on since its acquisition of Altran and making some long-overdue leadership changes internally, which has reflected in a strong uptick in performance that actually saw the French firm sneak above TCS last quarter. Cognizant has quietly picked up its performance after taking a write-down of its Samlink Finnish nightmare in Q4 last year and has bedded in several new leaders right across the organization. After a challenging pandemic that included a ransomware attack, the firm is finding some stability to support this renewed growth curve.
While IBMsold-off of its commodity services business lines, it is still struggling to post any significant growth, but at least this is a major improvement from its difficult years where the firm posted declines for several years. The business is stable, its focus on retaining and growing complex engagements is bearing fruit, but there seems to be an eternal conflict from its leadership on whether IBM’s long-term future lies in services or software. With the future of services tied intrinsically to the intersections across SaaS solutions and the services to enable them, IBM needs to forge a clearer path for itself and the role it wants to play.
TCS‘ performance going into the pandemic was lackluster, after being the market’s most consistent, aggressive and dominant Indian-heritage performer – and by some margin – for several years. The firm seems to be ingesting these last few years of heavy growth, but struggling to pivot as quickly as some of its competitors in this market, where responding to demanding clients and aggressively investing in new engagements are the watchwords. There was a time when TCS could win any large IT services deal in the world if it wanted to… those days seem to be from a different era in this environment. However, the TCS rebound is strong since last year and the “Walmart of IT services” definitely seems to be finding it feet again in this virtual economy.
When comparing the growth over the pandemic itself, comparing Q2 2020 performance with Q2 2021, the two standout performers, in terms of revenue growth, are Wipro and Infosys. The first year of Thierry Delaporte at Wipro couldn’t have gone more smoothly, where much of the old guard were jettisoned in quick-time to make way for a host of new leaders from within the firm and externally. In addition, a restructuring of the firm around geographical locations seems to be paying dividends, despite some challenges, and the major acquisition of financial services consultant Capco has really improved the perception of the firm and encouraged several enterprise clients to increase their investments.
Infosys simply sailed into the pandemic after a series of impressive quarters and has continued unabated. It has a reputation for delivery reliability and has demonstrated real stability in leadership and focus. Moreover, investments in locations such as Germany and Ireland have helped pivot Infosys as the leading Indian-heritage provider from a perception standpoint. Pre-pandemic investments in its onshore US locations have also paid dividends as the firm continues its impressive growth across both IT services and BPM (BPO) lines. Infosys is arguably the leading Indian-heritage provider at present, giving the likes of Accenture and Deloitte and real run for their money on major deals.
HCL has continued to command a strong presence as an infrastructure and engineering-focused IT heavyweight, but hasn’t been quite as impressive with its performance over the past year, compared to its rise to prominence over the five years prior. Tech Mahindra has struggled greatly to command a market position and communicate to the industry where the firm’s direction is pointed, but its performance is at least stable and 2021 has been a better year for the firm from a financial standpoint. Atos promised a lot leading into the pandemic but seems to be drifting somewhat, as it continues to lose ground to the Indian heritage providers and hasn’t done much with its expensive acquisition of Syntel. Moreover, its weak US presence continues to plague the firm, not helped by a failed takeover attempt of the industry’s performer struggling the most: DCX. As for DXC? The firm continues to struggle to find any sort of foothold to stem the bleeding… maybe Atos needs to take a second bite at the apple when the stock prices level off…
The Bottom-line: The Pandemic has changed the IT service provider landscape quite significantly… and it’ll change even more as the Virtual Economy takes hold
Just observing the world of services providers over the past 18 months, we’ve witnessed a dramatic sea change in which firms are driving the market, and which ones are losing steam. Am pretty certain we’ll see yet more movements occur in the coming months and some firms come back more aggressively, while others get stuck ingesting their recent wins. I also expect to see consolidation as the impressive wave of mid-tiers continue to snap at the heels of the majors – and the dearth of talent will force inevitable mergers between service providers. The services market for the virtual economy is only just ramping up, this is merely the hors d-oeuvre before the real feasting starts!
If there was one corner of the services market which got severely disrupted overnight by lockdowns and unpredictable customer demand, it was customer engagement. For example, when Philippine’s President Duterte locked down the world’s call center capital Manila with 24 hours’ notice, there was an almighty scramble from the CX service providers to shift their agents to other locations, such as nearby Cebu, or to work at home agents in the United States or other locations. As the pandemic dragged on it became clearer than ever that this industry was in dire need of a long-overdue transformation from legacy people-heavy models to smarter use of automation and AI tools.
One thing I always struggled to understand was why several of the leading IT service providers turned their backs on the customer engagement market, such as when IBM sold off its CX division to Concentrix in 2013 and Capgemini exited the market. When the full value of automation and AI is realized in the revenue-generating processes driving customer engagement and predicting spending patterns, then the need to couple customer experience services and digital transformation is critical. This is why Infosys acquired Eishtec in 2019 (1400 seats in Ireland) and Tech Mahindra’s Business Process services has risen to number 5 in the rankings this year with 30%+ growth – these firms are able to manage the intersection between traditional BPO delivery and digital capability. This is also why the number one ranked call center provider, Teleperformance, is known to be exploring an IT services acquisition to supplement its global CX business. Simply acquiring more call center is no longer reaping exponential dividends as non-linear growth is only possible when embracing AI, automaton and digital workers.
So let’s check out the 2021 rankings (download report here), which clearly show which providers kept the wheels of customer services moving throughout the Pandemic and get the insights from the report’s lead analyst, Melissa O’Brien…
Melissa – what on earth happened to the CX services industry over the last year and a half? Was it pandemonium? What worked and what didn’t?
There has been a considerable boom in CX services in the past 18 months. This market was already in the midst of a significant revolution, and the pandemic forced a lot of changes and accelerated decision-making that had stagnated. As with every other industry, the most significant change was the end of resistance to work from home. The contact center providers we covered in this report largely succeeded in the shift to work from home and made it work really well, much to many of their clients’ surprise. What made the difference is that WFH was an already established and fast-growing business model in CX services, representing almost a quarter of FTEs in January 2020. A year and a half into almost entirely remote work, many enterprises say they’ll never go back to brick-and-mortar — in fact, most we spoke to said they don’t care whether agents go back to the office and will leave that decision up to the BPOs.
But there are dynamics at play in the contact center that will even out the WFH balance over the next year. The CX services providers have long known that employee experience (EX) is king, and employee engagement does not work the same in a remote environment, especially for particular demographics and geographies. Service providers reported lower attrition and absenteeism levels in the early stages of remote work. These have gradually increased as people lose patience and crave the engagement of working in the center (many of which were explicitly designed to attract and delight employees.) So while we don’t expect office staffing to go back to pre-pandemic levels (on average, providers said that 2022 will be a 50/50 split), the agent engagement aspect, which ultimately drives customer service excellence, will end up dragging a lot of operations back to the center.
The other big change was an acceleration of the adoption of digital tools – with all the disruptions in staffing and unpredictable volume fluctuations, digital associates (i.e., intelligent chatbots and IVRs) also had their burning platform in the past year and a half. But we also saw this interesting paradox: while volume volatility significantly increased the adoption of digital assistants, there was also a tremendous demand for traditional voice (human-based) interaction. The CX services industry now has an increasingly difficult challenge of balancing the right blend of digital and human interactions in a volatile pandemic environment. Enterprises now rely on their service provider partners more than ever to help them find the right balance and differentiate through a dual focus on employee and customer experience.
So who came out on top – and were there any specific examples of heroism/failure along the way?
On the execution side we see the “usual suspects,” the big boys like Teleperformance and Concentrix flexing their brawn with the global scale and breadth of services that many of the other providers can’t hold a candle. They are tops as far as robust global operations models, sheer breadth of delivery locations, and process consistency. So while shuffling work around and getting capacity sorted out was by no means an easy task, these guys are the ultimate pros.
Then you have the innovation leaders. As in the past, we were struck with Sutherland’s co-innovation and design capabilities but this time they were utilized to help clients get through this difficult time. We were impressed with how much proprietary technology Conduent is using in its service delivery, including a COVID-19 outbreak management tool. We also have new criteria for OneOffice alignment where Tech Mahindra and Sitel came out on top, demonstrating the pillars of OneOffice, including collaboration and internal transformation.
“Voice of the customer” was a tight category because virtually all the customers we spoke to were really pleased with their providers, particularly their ability to shift to remote work with minimal disruption. The pandemic separated the haves from the have nots in this market. Those that were just making their foray into work from home grappled with the shift. But firms that had made significant investments significant prior, particularly in the cloud, security, and remote employee engagement, were able to mobilize the work from home environment faster. SYKES stood on the tremendous foundation that is 2016 Alpine Access (a pure-play work from home platform) afforded it as an advantage of being WFH experts.
Of course, there were hiccups along the way which the providers largely were quick to course correct. Poor call quality as a result of inconsistent connectivity in certain geographies was the most frequent issue we heard from customers and was often resolved by pivoting calls to chats and sometimes by sending out 5G devices to augment agents’ internet. Analytics and engagement tools played a huge role in ensuring process adherence but, more importantly employee health and well-being. There were some examples of heroism for sure, particularly as these firms empowered employees to deliver on CX in spaces directly impacted by the pandemic – think of all the interactions fraught with real customer distress and anxiety in industries like healthcare and financial services during a global public health and humanitarian crisis.
We’re now seeing a lot of consolidation in the space, and while we expect the usual “just buy more call center” attitude from some, I am hearing that we may see some actual consolidation across the IT services / CX services space. Does this make sense to you? I thought the IT services firms were eager to offload their call ctr business in the past?
Yes, many IT services firms were eager to offload or de-emphasize these capabilities in the past due to their reputation as low-margin services anchored by labor arbitrage and mired in low-value interactions. But now, there’s a paradigm shift reversing this trend. As enterprises increasingly adopt a OneOffice mindset, barriers are breaking down between IT and business with ‘experience’ as a common goal. The leading and most serious CX services firms have known for a long while that having a holistic and technology-enabled capability including design, software development, etc. is required to have a value proposition beyond commoditized contact center services, even if it meant cannibalization of traditional business process revenues. Providers’ investment and focus have been very real and largely organic, but adoption from clients is still tepid – and it’s very hard for these firms to differentiate when literally each of them has a flavor of “digital contact center” offering. Close to 3/4 of the 50+ enterprises we spoke to as references for this study said they are not using their CX service provider for any technology or innovative solutions, opting for pure operations delivery. One CX executive put it well: “It’s not that the CX partners don’t have the capabilities, it’s that the enterprises are not open to using them. The number one problem is perception… I can’t convince my CTO to look at (a CX services provider) the same way she looks at a technology services provider or vendor.”
So, as much as we’ve seen some IT services firms bulking up their CX capability for a more holistic value proposition, I think we’ll see it happening on the other side too with the serious CX services firms buying their way into the IT side of the house — for example, Telus International’s acquisition of IT services firm Xavient. These kinds of moves will help to bridge both the perception and capability gap.
In your view, Melissa, what should CX leaders do to be effective in this hybrid work / business environment?
Firstly, have a relentless and continuously evolving focus on EX. The top providers know very well how important EX is to delivering quality CX services. The required expertise will inevitably change hybrid remote and WFH emerges, and as automation and self-service continue to take a bigger piece of the customer interaction pie. Well-designed CX and well-trained customer service agents are always going to be a part of the equation. Plus, the labor market is changing. There are pockets of staffing shortages, employee expectations have shifted, and gig work is going to be an even bigger part of the workforce of the future; all this demands an ongoing re-evaluation of how to recruit, onboard, train, retain and motivate people.
My second piece of advice is related to the first because people today care a lot about the values and philosophy of the companies they choose to work for. “Profit with a purpose” is becoming a mantra in our business environment, and it’s more than paying lip service to ‘feel good’ causes; so be very clear about what you stand for as a firm and take bold action to ensure you live these values. CX Services providers traditionally have awesome CSR programs that involve employees from the bottom-up; allowing employees to choose what programs to donate time and money to has been a staple of the top providers’ strategy to attract and retain talent. But this is becoming a bigger part of retaining and winning new business also. CX buyers have always cared about how their partners approached ESG efforts but are now devising ways to measure and assess potential providers in the RFP process. Diversity and inclusion are at the very top of the list, and sustainability is catching up. We saw some awesome examples of how CX services companies and clients are partnering to jointly address ESG initiatives. Bottom line, CX executives will not buy from firms that don’t share their core values beyond revenues and profit, and act upon them.
It’s been a good two years since a young German man sought me out to excitedly tell me about a process mining tool that was set to change how process wonks approached their operations. After a couple of beers he then ‘fessed up to driving around Germany in a crappy old car – as a twenty-something passionate process software entrepreneur – to deliver software demos driving a whole new area. This area is process mining – a novel analytical discipline for discovering, monitoring, and improving processes by extracting knowledge from event logs readily available in today’s information systems. While his firm smartly developed much of its earlier business courting customers of SAP, it is now evolving far beyond the traditional ERP platform to inspire process execution initiatives enterprise-wide as businesses move rapidly into virtual environments.
With a post-money valuation of $11b following a Series D round earlier this year, an impressive partnership with IBM, and a number 1 ranking in our September 2020 HFS Top 10 Process Intelligence Products, I was thrilled to end a forced 18-month separation with Celonis Co-Founder and Co-CEO Alex Rinke to get a real update of how his firm has driven incredible forward momentum – and investment – during this period of crazy…
Meet Alex, soon to become the youngest process software billionaire (who avoided buying an RPA product) to focus on adding value to CxOs much higher up the enterprise food chain…
Phil: Tell me how you got started in this game. Is this what you always planned to do?
Alex Rinke,Co-Founder, and Co-CEO, Celonis [Laughs]. Absolutely not, Phil. There was a lot of planetary alignment – a fancy way to say we were very lucky. I was a math student 11 years ago – and I read a paper about process mining and got really excited about the idea of extracting data from information systems and figuring out how an organization operates, and where they’re inefficient. At the time there was no practical adoption of it. I talked to my two friends, who later became my co-founders, Bastian (Nominacher) and Martin (Klenk), and we decided it had so much potential, we had to learn more about it.
We had an opportunity, through the university, to work with a business on a research project, and we applied process mining to one of their processes in the customer service and IT service domain. We were able to help them to cut their resolution times by 80% just through better process execution. Then we got so excited about it that we decided to start a company.
From boot-strapped to $1billion Series D Round
Phil: So how did you build out the firm, Alex? How has it evolved for you?
Alex: Early on, we bootstrapped the company. We raised the first round of funding in 2016 when we wanted to expand to the US market. We grew in three waves as the product has evolved. The first was an x-ray system so that any business can do an x-ray of their business processes with process mining. Then, as that got momentum, the second big evolution was to build a process data platform, to not just x-ray, but also to monitor the processes and connect to all the different data sources in a company. And then the third evolution is our execution management system, which takes this process intelligence, and turns it into more intelligent execution of your core processes – data-driven execution of your core processes.
We raised a Series C round, exclusively from private individuals. That helped us in establishing our brand further and building an executive team of seasoned enterprise leaders. We acquired Integromat, to boost our automation capability. The Series C funding round was really maturing the brand, the product, the company, to move beyond process mining. We crossed 1,000 people in headcount.
We launched our Execution Management System, in October of last year. That, plus the investments made from the Series C funding round, led to explosive growth momentum, so we decided to double down again, and raised this very large $1 billion Series D round to grow the company even faster.
We are working towards building more than a product and a company, but an entirely new software category and an ecosystem around it.
Phil: Where are you looking to invest to get you to IPO, Alex?
Alex: We have heavily invested in our go-to-market and are continuing to do so. That includes strengthening our ability to serve customers directly, but also investing in the partnerships we’re building – with IBM, and the global BPOs and SIs.
The third big area of investment (not in order of priority) is R&D. We have opened an international R&D hub in Madrid, and in the US we are expanding our resources from a product perspective. From an engineering perspective, we continuously evaluate whether to build or buy. We also continue to invest in the infrastructure of the business – HR, finance, all those things.
Meeting customers with an old Opel car to running a global enterprise company – the problems remain the same
Phil: What’s it like to start off driving to customers in an old Opel car, growing a very small business, and now being a hyper-growth enterprise software market shaper? How does that change how you work?
Alex: It’s obviously a little bit different, in terms of what you deal with every day. But it’s also not that different. Ten years ago, I woke up every morning thinking, “What do we need to do from a product perspective? What do we need to do to grow? Who do we need to hire?” The problems are very similar now – just at a very different scale.
We’ve got a really strong leadership team now, Phil, so I’m much less focused on the current quarter or the next quarter. I try to focus on doing the things that will help us in 18 months to three years from now. My focus is on building a company that stands the test of time.
Phil: You are just 32 years old. When you make a huge amount of money when you go to IPO, do you plan to stay in the technology space for the rest of your career?
Alex: An IPO is not really an exit event. It is a milestone on the journey. We had multiple opportunities to sell the company to big corporations. We just never thought that was the right thing for us. When the three of us wake up in the morning, we think about Celonis, and when we go to bed, we think about Celonis, and, personally, wouldn’t know what else to do. There is no plan B, at this point in time.
On a (fun-filled) mission to fix peoples processes
Phil: [Laughs]. It’s not all about the money, then?
Alex: Absolutely not. It’s just so much fun to be part of and to build Celonis. I always say our purpose is to unlock the world’s processes. So many processes are frustrating for people and are highly inefficient. And processes are an incredibly horizontal thing, everywhere, in every organization, touching so many consumers’ and employees’ lives. It’s both motivating and fun to be able to have a really big impact on something so pervasive.
Phil: So your life’s mission is to fix people’s processes. I love it. [Laughs].
Alex:[Laughs]. It’s pretty good, don’t you think? [Laughs].
Phil: Yes! You’ve identified something that is in dire need of fixing, and you’re out there doing it with incredible momentum. It’s great to see an independent organization building out both a successful platform and a thriving ecosystem. Am sure all of us here are excitedly watching you guys to see what’s next in this fast-moving market…
One of my heroes driving disruptive and practical thinking in global business models, the impact of the Internet and globalization and foreign affairs is three-time Pulitzer winner and NY Times columnist Thomas Friedman.
Tom came to prominence in our industry in 2005 penning the seminal book “The World Is Flat: A Brief History of the Twenty-first Century“. Was that really 16 years ago? If you’re a spring chicken and never read the book, I suggest find the time as this laid the foundations for the world we’re hurling into today. So you can imagine my interest levels bubbling when my friend Ravi Kumar “S” got some YouTube time with him last week:
Work has become separated from the workplace and jobs.
AI shifts the emphasis of human endeavor from problem-solving to problem-finding.
Companies have become giant education systems delivering just-in-time learning at the edge of the envelope; the linear integration of government-education-work is disrupted.
Universities should follow the Amazon Prime recurring subscription model to scale lifelong learning to the world
For any organization to win in the future will require them to be part of complex adaptive coalitions
Companies themselves have become giant education systems
When the industrial revolution hit we created something called the welfare state, basically a series of walls ceilings, and floors to help people make the best of the industrial revolution and cushion the worst. The politics has since debated how high, strong, etc the walls and ceilings and floors should be. This worked while the assumption was the pace of change would be linear.
In the last 40 years – since the microchip – what happened was four forces came together and blew up this grid of walls, ceilings and floors
The microchip
Software
Sensors
Bandwidth
And now the beginnings of AI.
This blowing up has created a world where the job of leaders and educators is to navigate now, a very different ecosystem: Characterized by:
Fast – the pace of change now
Fused – beyond connected and interdependent
Deep – Tech has gotten deep – Fakes, Mind, Research
Open – a radically open system in which everyone can play
So the challenge now is how you enable adaptation in this context.
How? We have to look at analogies from nature – when ecosystems thrive it is those with complex adaptive networks – where all the elements of the ecosystem network together (this is the hyperconnected org we discuss at HFS). Complex adaptive systems network together to provide resilience and propulsion. The organizations that will thrive are those that build complex adaptive coalitions to maximize (collective) resilience and propulsion.
Tom: What’s new is where companies are pushing the boundaries and realizing they need to train their own people faster and faster, how will companies, like Infosys and many others, become central players in the ecosystem of education?
Ravi: Nature, human behavior, and technology define how you can predict the learning needed for the future. The whole linear integration between work, education, and government – which was rooted in the industrial revolution – is changing
The world we are getting into is very digital, with rapid sentience, high-speed with rapidly changing business models. Now work, education and government must connect in an ecosystem. Education has never been impacted in the last 40-50 years. The cost of education has gone up 150% vs inflation in that time – and that is because it hasn’t really been disrupted.
Skills are getting depleted at rapid speed, people are having multiple careers, with work getting very modular and disintegrated from the workplace, the pandemic has taught us how to make hybrid models work…I can believe that work and education will get intertwined:
Example: Google’s six certifications. Anyone can do these, anyone without a degree, at the end of that we had a consortium of employers, including Infosys and Google ready to hire. We’re going to move to an era of skills process degrees – work and education intertwined.
Example: What we are doing. We are hiring without degrees, landing them on digital backbone jobs, and then have a runway of credits so someone can do a degree while they work with us, a learn-earn and work model of the kind that was popular in engineering apprenticeships.
Two-thirds of the workforce in the US doesn’t have a degree so I’m hoping this will lead to more diversity and inclusivity. We have community-led companies which hand-hold people as they land on those backbone jobs and then Infosys helps them to become life-long learners, navigating the credentials and micro-credentials they need.
The US should try out Education-as-a-Service, moving to buying a recurring subscription service – the perfect model for lifelong learners. A Harvard Prime (etc). This will address both student debt and the inclusivity challenge. The US now has a unique opportunity to get digital reskilling to the world, to make the world a better place. It can start to show its generosity to the world (a la post WW2). The US should take its education to the rest of the world.
Tom: The in-house universities of IBM, or Infosys or (etc) are delivering just-in-time learning because they are touching the edges. What does Infosys’ just-in-time platform look like?
Ravi: We have always focused on lifelong learning. We are building a corporate learning university in Indianapolis – and we are not only using that for our employees, but also for all large incumbent companies. They need to reskill their workforce more than we need. AI will mean half the workforce in the world will need to reskill. In creating just-in-time learning we hope to create learners who can adapt to this. We may have to take a hotel clerk and make them a cyber expert. We look for learnability, the aptitude to learn, then we create immersive templates and hand-hold to learn on the job. You start as an apprentice and learn forwards.
Tom: We have to build student agency, supporting independent learning.
Ravi: Over the last 50 years the workplace has created space for problem solvers. Now we must create space for problem finders. Problem finders will be the new human endeavor – problem-solving will progressively be moved to machines. We think workplaces will be flooded with more anthropologists, people with liberal arts, sociology etc backgrounds. Problem finders look for what the human desire is. The future is all about creating solutions at the intersection at the edge – maths and meds, arts and science, computers and anthropology – these are where you will find more problems.
Diversity will be better if we get this right, the model will be distributed around the world and into the homes of people who may only be able to join part-time, thanks to the new modular nature of work, enabled and orchestrated on a digital platform. It won’t just be humans + machines, it’s going to be gig workers, plus FTE plus part-time + machine. Gig work will extend to all industries and FTE will be only a small % of the working population.
Tom: How do people get healthcare and retirement when work is separated from jobs
Ravi: The key is the government’s role in protecting the workers, which will drive how well this is adopted.
What do you think governments should do, Tom? They seem built for your first and last 20 years, how do they deal with the middle years when all your change happens?
Tom: It took a consortium to write a law for safe self-driving (in Israel), governments must be participants and convenors of these ecosystems. They will have to test and be very experimental – and not dogmatically left or right.
Infosys is moving so much faster than the government (we see this with all tech), so the only way you can get on top of it is through collaboration
Do click on the YouTube link to hear this terrific discussion in full! Thanks, Ravi and Tom for airing this:
On the surface, not much has changed… we go to work, we try to do what we did before without physically engaging with each other. We talk a lot about a “return to normal,” but deep down, we’re starting to suspect those days are gone for good. So what’s changed?
1. Most of us now have a work-from-home mindset ingrained, whether we like it or not. We have become so efficient working from home, and we don’t have time to commute/travel unless there is some urgent need. If anyone hasn’t already noticed, most folks in the East coast of the US, London, and other major cities have had the green light for several weeks to meet up. And while the brave few have had a few socials, people aren’t exactly champing at the bit to “renormalize.” It’s not a fear of Covid as most folks in our industry in the US are fully vaccinated, it’s the new intensity of the virtual work culture – we just don’t have the hours in the day to give up Our calendars are constantly clogged up for immediate needs weeks ahead and our businesses will struggle to function if we started to block out entire days for conferences and meetings. While many employers will try and force an in-office culture, it will prove very challenging, getting many people to break from their ingrained work-from-home mindset.
2. The hype days of technology are over. It’s all about what enterprises need, not what vendors are trying to sell them. The change in the enterprise mindset towards technology has gone through a genuinely pragmatic revolution over the past year. The realization that being able to function in a virtual model has gradually drained the remnants of hype of the technology value propositions. Our Pulse study of 800 Global 2000 enterprises clearly illustrates two factors that dominate the focus of leaders: moving operations into the cloud at speed and training staff to understand how to balance digital business needs in a virtual environment:
Whether we talk about automation, AI, blockchain or quantum… every business leader will answer with “So what? we need data to be relevant… and it needs to be accessible and immediate in the cloud. Once we have that we can consider how to get smarter, faster and more efficient”.
3. We are not so afraid of change as Horizon 3 unfolds before our eyes. The last 12 months were the most significant change in our lifetimes, but we are still standing. Change does not sound so scary anymore. Embracing change has also made us more ambitious as business leaders. Are we satisfied with slightly cheaper, slightly better, or somewhat faster, or are we searching for fundamental new sources of value? The OneOffice approach now resonates with practically 99% of enterprise leaders. Horizon 3 initiatives to develop hyper-connected enterprises are also no longer five years away…Horizon 3 is now unfolding right before our eyes:
4.Locations have become irrelevant, as access to talent takes center stage. The days of resistance to offshoring are over as Global 2000 enterprises literally cannot function without access to IT and operations talent. In pre-pandemic times, many US politicians advocated against offshore resources, but this is no longer an option as the talent shortages in the US are a serious issue. We see a continued growth period for hybrid offshore/onshore outsourcing over the next few years, which will accelerate as we gradually emerge from the pandemic over the next few months. As the Pulse data shows us, enterprise leaders are looking at all business talent models to get what they need, whether offshore, nearshore, onshore, or from a location-agnostic model where they may have no idea where they are that resource is located. We also expect crowdsourcing to (finally) emerge as a significant model for access specific talent, especially in crucial areas where deep skills are scarce, such as cybersecurity, machine learning, and data science.
5. Values and philosophies beyond capitalism increasingly dictate where our emerging talent chooses to work. This forced embrace of change has had a positive impact on pure capitalism ideals. We have seen a big boost to a profit with a purpose philosophy with initiatives like sustainability and diversity becoming far more ingrained in enterprise-wide goals than just CSR initiatives. Three-quarters of major organizations are centering investments in emerging technologies to support initiatives around sustainability. We expect many employees to choose employers that stand for important values, beyond merely profit. CEOs’ personal views will become increasingly important to set the tone for their organizations as people increasingly look to leadership for purpose and motivation.
The Bottom-line: We’re ready for change, we’re truly virtual and we’re pragmatic about achieving real business outcomes
However which way we look at things, we’re becoming realists and the old days of technology hype and fear of change are receding into the past. Over the past year, we’ve gradually let go of the many shackles of the past and started to realize we’re in a new reality, a wholly new environment, where we’re all trying to focus on achieving real business outcomes, on values that are important to us, and a new work reality where its intense, high-touch and very real.
What Covid has taught us is there is no reason to fear change, and how important we are to keeping our organizations moving forward. We just need to keep our eyes wide open that the world has changed, we have changed and we have to accept and adapt. Onwards an upwards folks =)
As you all know by now, no one gets a prize for coming last at HFS… but you can now get one for coming first in each of eight different categories!
This Awards program is close to our hearts at HFS. It allows us to showcase and laud organizations who have embraced the opportunities presented by our new business reality, those that have taken a transformational leap rather than a simple step-change. Denise Colgan, the OneOffice Awards program director, spoke with me to learn more about the story behind the awards and the timing of the launch.
Denise Colgan, Director, Awards & Strategic Programs, HFS: Hi Phil – and thanks for your time. Nominations are now open for the OneOffice Awards and we are all very excited that the program is live. How are you feeling about it? And why has HFS launched an awards program in the first place?
Phil Fersht, CEO and Chief Analyst, HFS Research:Hi Denise. I am also excited that the OneOffice Awards are now live. HFS has always been a trusted resource for clients looking for data, information, and informed opinions about what is happening in the market, but we wanted to add another layer – real-life examples of truly transformational projects and programs. People want to be inspired. Being able to learn from the journeys of others and see the real, quantified results they have achieved can help spark the flame of their own transformation. And those who have led the way and taken those leaps of imagination and commitment should be applauded. So, it’s a win-win situation really – we can celebrate the great results achieved by visionary companies and their provider partners while inspiring and informing the next wave.
This is a great fit for HFS. We always strive to think differently and are passionate about combining knowledge with impact to help organizations realize long-term value rather than simple incremental improvements. I can’t wait for people to send in their nominations so we can see some of the great work people are doing – and their results!
Denise: It sounds really exciting – and such a great idea. But why now? Is there any significance to the timing of the OneOffice Awards launch?
Phil: Yes, there is – our research has shown that the pandemic has added another level of urgency to the need for transformation. Pre-Covid-19 organizations talked about transformation but were stuck doing so alongside legacy dragons and embedded thinking. The pandemic has flipped that one-track corporate mindset of resisting change to one of demanding change overnight. Business resilience is now front of mind rather than the old trope of quicker, faster, cheaper.
We are now seeing the dawn of the OneOffice organization, bringing together connected, global talent and intelligent, automated processes and data running in the cloud. The bold enterprises, who design their organizations to thrive in this era will be the winners – and we can’t wait to share their stories.
Denise: That’s wonderful to hear Phil. It’s great to hear that the OneOffice Awards are focused on the creative use of technology, data, and people skills to keep businesses relevant and successful in this new world. What award categories are being included?
Phil: We have decided on eight categories, each of which is close to our hearts and can bring about real and lasting business change.
Data and Decisions: Recognises organizations and teams that create a culture of data that drives new opportunities through interactions, insights, and predictive capabilities, giving the ability to access data at a speed that drives critical decisions for their business
Native Automation: Rewards organizations and teams that leverage a range of emerging technologies to create intelligent and automated workflows in the cloud, enabling the new “native” standards for consistent cross-functional enterprise operations
People and Process Change: Applauds organizations that develop and manage talent to build OneOffice skillsets, address process debt by eliminating wasteful activities that plague our organizations, and manage change across the organization to make a meaningful impact
Horizon Three Innovation: Identifies organizations that find completely new sources of value by collaboration across multiple organizations with common objectives and who demonstrate organizational characteristics like an infinite mindset, data monetization, and autonomous processes, while leveraging horizon 3 technologies such as blockchain, 5G, and/or quantum computing
Innovation Ecosystem: No one can be everything to anyone! This category recognizes the service provider that embraces collaboration across start-ups, technology providers, academia, industry bodies, researchers, influencers, and even competitors to drive unmatched value for its clients
Sustainability: Celebrates organizations that meet the triple bottom line: social, financial, and environmental. An enterprise that has a positive effect on the global or local environment, community, society, or economy
Diversity: Applauds organizations and teams that unleash human potential by getting serious about people diversity to maximize the potential of every person and drive real innovation
OneOffice Mindset: Recognizes an enterprise that runs processes end-to-end across the organizational value chain, focuses on employee experience as a significant component of the overall customer experience, and drives organizational alignment and metrics that measure value creation, not just cost reduction. It represents an organizational mindset that breaks down front-to-back legacy silos to create the only “office” that matters.
Denise: I can’t wait to see the entries flood in! Who can get involved? And where/how can they get started on nominations?
Phil: Everyone is welcome! Nominations are open to client-side organizations and their key partners worldwide and across all business sectors, including the public sector. Technology and service providers are also encouraged to nominate their own clients and share their success stories. All of the information needed can be found on our OneOffice awards homepage. We have a dedicated, easy-to-use awards platform where entrants can register and start their awards entry. It’s a really simple process. Everything can be saved in progress, so start your entry here.
Denise: Well, good luck to all entrants! Are there any key dates or considerations they should be aware of?
Phil: That’s a great question – thanks. The OneOffice Awards are open to enterprises from across the globe and must have been live at any point between January 1st, 2020, and the date of entry.
Nominations are now open, and we encourage people to get started as early as possible, especially if they need to gather information from different sources or get executive sign-off. Key dates for the OneOffice Awards are:
Nominations Close: Monday, 24th November 2021
Finalists Announced: Friday, 24th December 2021
The winner in each category will be announced at a celebratory event to be held in London on Thursday, 24th February 2022. We will share more details about that event nearer to the time.
Denise: Do you have any advice for companies considering getting involved?
Phil: Yes – just do it! Sharing our successes and inspiring others is so important. There is so much hype out there, so real stories about real projects and quantified results are a must-have for organizations who want to make lasting change. So, my advice is – just get started. And if people have questions or need any help, they can contact you at [email protected].
Many industries are experiencing more change during these times than they ever have… anticipating customer demand, staying ahead of emerging ecosystems, grappling with constantly-changing supply channels, regulations and logistics… the list of challenging for supply chain leaders is endless. So who’s helping enterprises stay ahead of these secular shifts in supply chains? Let’s hear from our very own Saurabh Gupta, who led our recent Top 10 research into supply chain services.
Saurabh – you’ve been researching supply chain services for 15 years (sorry, but I can remember when you started!)… how have they developed over the years, and why has the pandemic created the burning platform for the market?
Yes, Phil…about 15 years since my first report as an analyst … you’ve made me realize that I am getting older! The very definition of the supply chain has changed over the last two decades from linear supply chains (input, process, output) to circular sustainable supply chain (to re-use, re-make or refurbish). But I feel that the term ‘supply chain’ is a misnomer for meeting the realities of today’s world. It connotates constrained thinking. We need to break free. It’s time to unchain your supply chain.
For too long, supply chains have been shackled by the idea that they must be linear—a “chain.” But the pandemic shock changed the supply and demand equation. Business priorities changed overnight, creating new opportunities for some and threatening survival for others. Enterprise leaders finally recognized the need for supply networks. Supply chains need an ecosystem approach—both internally and externally. Organizations will need to collaborate across industries to pinpoint sources of disruption, where to disrupt, and how to keep reinventing themselves.
How have service providers evolved over the years to drive supply chain innovation? Which ones impressed in the recent study?
First, I’ve seen a convergence of third-party technology, business, and consulting services for the supply chain. They were three different market segments, but leading service providers realize that they need to operate at the intersection of all three. Second, the budding romance between the supply chain and emerging technologies is exhilarating. For instance, supply chain provenance (track-and-trace) is the no. 1 use case for enterprise blockchain technology adoption today. And third, the scope of third-party supply chain services has expanded beyond traditional areas like order management, inventory management, and sourcing & procurement into emerging areas like supply chain planning and design, aftermarket services, and sustainability services. Improving supply chain resiliency, transparency, and sustainability emerged as the top 3 areas of focus across 200 supply chain executives that we surveyed as a part of our 2021 OneOffice Pulse study.
We assessed 11 leading supply chain providers with robust supply chain credentials across a defined series of innovation, execution, and voice of the customer criteria.
The Top 5 service providers in the HFS winners circle were:
EY brings together the capabilities of all its service lines (Technology Consulting, Business Consulting, PAS (People Advisory Services), Tax and Strategy and Transactions) for the supply chain practice to offer services that cut across consulting, managed services, and technology products.
Accenture is delivering the promise of intelligent supply chains with its new “One Accenture” organization structure oriented around three markets (North America, Europe, and Growth Markets) that allows it to bring together all its services (strategy consulting, technology, and operations) to its clients in a simple and easy to consume way.
Infosys has developed “Live” supply chain solutions designed to make supply chains adaptive and resilient, resembling living organisms’ ability to sense, reason, respond, and evolve to uncertainties
TCS’ large scale, MFDM (Machine First Delivery Model) powered and end-to-end SCM offerings to deliver resilient, adaptable, purpose-driven, and future-ready supply chains
IBM brings to the supply chain a triple-A trifecta (automation, AI, analytics) powered intelligent workflow along with exponential technologies such as Blockchain, IoT, and Quantum, as well as championing open supply chain innovation through investments like RedHat.
Other notable performances that stood out for me included:
Genpact’s Barkawi Consulting acquisition enables it to deliver to clients global, end-to-end supply chain services bolstered by domain, digital, and data science expertise.
Capgemini’s frictionless supply chain vision is strongly aligned with our OneOffice mindset
HCL’s integrated digital portfolio and Inorganic strategy to build a services + product offering
PwC’s industry-focused approach and investments in digitally fluent talent
GEP’s expansion from sourcing & procurement provider to consulting, managed services, and products for supply chain
So finally, Saurabh, what will we talk about in the next couple of years as we see organizations become increasingly “hyper” connected? How fast is this new market moving, in your view?
Extremely fast, Phil! We are rapidly approaching Horizon 3 (the Hyper-Connected enterprise) of HFS’ Innovation framework. The scope of innovation is quickly expanding beyond the functional silos. It needs to extend beyond the four walls of your organization, and it requires collaboration across multiple organizations with common objectives around driving entirely new sources of value. Even the traditional boundaries of industry definitions are blurring, and new industries are getting created.
The scramble for talent and resources triggered by the virtual environment has thrown the world of global sourcing on its head. Our new HFS Pulse study covering 800 Global 2000 Enterprises clearly shows us enterprise leaders are evaluating all options (offshore, nearshore, onshore, WFH, crowdsourcing). Simply put, the need for tech talent and niche specialization is at an all-time high and we need more options available than merely the traditional vehicles:
Dr. Truong Gia Binh, Chairman of FPT Corporation, has a vision to bring Vietnamese capabilities to serve the world and make Vietnam one of its premier AI hubs. FPT has charted its roadmap to enter the Global Top 50 digital transformation provider list in the coming decade – the key drivers to this being FPT’s experience across multiple sectors, its focus on emerging technologies, a whopping 76% demand for digital transformation within Vietnam as a result of COVID-19, and a young population that excels with numbers. FPT formally launched its transformation consulting practice FPT Digital in February and raised its overseas transformation revenue targets by 50% for 2021.
Here are 5 key highlights about FPT you need to know:
FPT’s desire to be at the top of the game In the initial years, FPT started off by democratizing Office Computer Skills across all backbone sectors of Vietnam. FPT’s global presence now covers 26 countries around the world, with the goal of becoming one of the Global Top 50 digital transformation providers within the next ten years.
Vietnam: An Aspiring Digital Nation Vietnam is a young nation, and FPT desires to make Vietnam an AI hub of the world and bring Vietnamese quantitative capabilities to the world through implementations of Digital Transformation. Through encouraging support of the government, he is hopeful that the digital economy will contribute to 30% of the overall in the next 10 years.
COVID-19 as a catalyst for digital transformation Vietnam has been highly resilient during the COVID-19 pandemic, and technology has played a key role. Vietnam’s Government adopted innovative digital tools for contact tracing and disseminating information.
To respond to the COVID challenge, FPT transformed internally and changed the approach towards customer delivery. They became a comprehensive digital transformation partner of various industry leaders, enhanced their consulting capabilities through acquisitions, and set up new delivery centers in 2020 to expedite the new approach.
Emerging Technologies and Made-in-Vietnam Software FPT plans to bring its synergy of methodology and industry experience to the world. In the first 3 industrial revolutions, Dr. Binh notes they were busy fighting for survival whereas today, as the world embraces Industry 4.0, Vietnam has the opportunity to join the race from the same starting point – just as any leading country in the world. A lot of enterprises in Vietnam do not have legacy technology and are hence making a start directly in digital.
The Rise of Digital Platforms The world post-COVID-19 will look very different, and Dr. Binh believes a platform economy is on the rise. Most business leaders in Vietnam have planned for digital transformation, which is an indicator of huge market potential for FPT and digital platforms such as FPT.AI.
To go deeper, we invite you to dive into the full details of the discussion between FPT’s Chairman, Dr. Truong Gia Binh, and Phil Fersht:
Dr. Truong Gia Binh, Chairman FPT Corporation
FPT’s desire to be at the top of the game
Phil Fersht, CEO and Chief Analyst, HFS Research: Dr Binh, tell us a more about yourself and how you came to be Chairman of Vietnam’s premier IT service provider? Was this what you had always planned when you were starting out with your career?
Dr Trương Gia Bình, Chairman, FPT Corporation: Starting a business was not in my initial plan, Phil. In the late 1970s, the wars left Vietnam as one of the poorest countries in the world, with GDP per capita less than $100. Food was not sufficient to feed the population.
As a research fellow in Russia at the time, I noticed that Vietnamese people were often looked down upon. So I gave up pursuing my research career and joined 12 fellow scientists to found FPT. My strongest desire at that time was to get out of poverty, and entrepreneurship was the way.
Phil: How did FPT become a leader in the market?
Dr Bình: In the first 10 years, FPT democratized Office Computer Skills across all backbone sectors of the economy.
In the following 20 years, we decided to go global. Our strategy was to stand on the shoulders of giants. We partnered with global disruptors such as Microsoft, IBM, Siemens, and so on, and today, more than 100 of our customers are in the Global Fortune 500.
“Our strategy was to stand on the shoulders of giants.”
From easy projects worth $1,500 USD a month, we’re now charging up to $40,000 a month for complex projects that involve digital transformation (DX) consulting. FPT has entered the world’s most demanding markets: Japan, US, Europe. Today our global presence covers 26 countries around the world. But we won’t stop. Our next big goal is to become the Global Top 50 digital transformation provider within ten years.
Vietnam: An Aspiring Digital Nation
Phil: Can you share with us some insight into the business environment in Vietnam these days?
Dr. Binh: During the time FPT was set up, Vietnam changed to the policy named “Doi Moi”, which is a kind of market economy. And for the last 35 years, Vietnam grew by 7% annually. Vietnam is quite a young nation, with an average age of about 27 years, and every year we have 1 million more people in the labor resources. Vietnamese are very strong with numbers, and that is why we are trying to leverage the love of logic, love of math, and now it is Artificial Intelligence.
For the last 20 years, my dream is that Vietnamese intelligence should serve the world, and now I have another big dream that Vietnam should be kind of an AI hub of the world. We operate with the Mila AI Institute, and we are sending the PhD students there. We are developing our capabilities in new technologies like cloud, IoT, big data, robotics, etc.
Vietnam has decided to catch up with the world in the Fourth Industrial Revolution, and therefore digital transformation is the focus area for us. The government requests that every ministry and every province must have a program for digital transformation.
“The digital economy will contribute to 30% of the overall economy in next 10 years. They also plan 1.5 million of youth to be the resources for digital development. Although this is a challenge, it has been so far so good.”
The digital economy will contribute to 30% of the overall economy in the next 10 years. They also plan 1.5 million of youth to be the resources for digital development. Although this is a challenge, it has been so far so good.
Phil: How had things developed in Vietnam in recent years, especially prior to the COVID era?
Dr. Binh: We had grown at around 6 to 7% between 2016 and 2019. Last year, despite being affected by COVID-19, Vietnam still posted positive GDP growth of 2.8%. High tech exports were higher than competitive regional peers in APAC (60 B USD) in 2019 (World Bank, WEF 2019)
Phil: When compared with other countries, in which areas do Vietnam lead, and where do you see the country needs to develop further?
Dr. Binh: Vietnam is a rising digital nation. Vietnam’s digital economy is the second-fastest-growing market in Southeast Asia, according to a recent report by Google, Temasek, and the US-based global management consultancy Bain. However, the challenge is in shortage of digital workforce: we need an additional 190,000 IT engineers by the end of 2021. However, FPT is very optimistic and looking to become one of the leading companies in DX consultancy, bring Vietnam to the same level as technology giants.
Phil: Do you believe there is a pivotal role for the government to play?
Dr. Binh: The Government has shown its commitment to reinventing the country. An example of it is the National Program for Digital Transformation, which involves targeting the following by 2030:
Digital economy to account for 30% of GDP
Universalize Fiber and 5G cables
100,000 digital businesses
Digital workforce of 1.5 million people
COVID-19 as a catalyst for digital transformation
Phil: How has Vietnam coped with the Covid era, Dr Binh? How has this impacted the provision of services to clients? Have you seen business struggle during this period?
Dr. Binh: Vietnam has been one of the few highly resilient countries during the Covid-19 pandemic. It is the only economy in ASEAN that is able to hold onto a positive growth rate in 2020 (+2.8%).
“Vietnam has been one of the few highly resilient countries during the Covid-19 pandemic. It is the only economy in ASEAN that is able to hold onto a positive growth rate in 2020 (+2.8%).”
Technology played a key role in Vietnam’s COVID-19 success, besides bold and early measures such as targeted testing and tracking. Vietnam’s Government adopted innovative digital tools such as the contact tracing app BlueZone and an e-Government portal to disseminate information. E-government portal saw a 300% increase in traffic during the height of COVID-19 in Vietnam.
Phil: How did FPT bring about this change?
Dr. Binh: FPT enhanced its consulting capabilities through 90% acquisitions in US consulting firm Intellinet. Our global workforce is working round the clock. In 2020, we set up new delivery centers in India, Costa Rica, Middle East, and Canada, and we have a highly competitive pricing model which helps customers save 50% costs.
Data facts on how FPT responded to the COVID challenge:
Transforming FPT
Activated “wartime” mode.
Focused on improved productivity with 685 digital initiatives, maintaining double-digit growth in 2020.
Transforming FPT’s customers
US-leading automotive service firm with a customer base in 100+ countries.
FPT beat against 193 other vendors including Infosys, Tata, IBM, to become their Champion partner
We are their first choice in key projects worth 150 million dollars in total.
For example, during COVID-19, customer vehicle wholesale was affected. Fewer shoppers due to social distancing. Revenue down 90%.
Within 2 months, FPT upgraded its online bidding platform to give vehicle shoppers a full sight and sound experience with a 360-degree view and engine vibrations. Helped customer recover wholesale revenue.
It was just one of three deals worth more than 100 million dollars each (US, JP, Malaysia) that FPT won in 2020.
HelpingVietnam
Became comprehensive digital transformation partner of industry leaders in telco, real estate, aviation, fishery, power, manufacturing, etc.
Explored their pain-points and shared the best practices acquired from 30+years of experiences in IT services
Emerging Technologies and Made-in-Vietnam Software
Phil: What makes FPT uniquely different from other global business and technology service providers, and can you see the firm challenging the traditional service providers in the Fortune 1000? Or do you see a different set of emerging clients for the firm?
Dr. Binh: Over the past 3 years, FPT has focused on core technologies that are driving digital transformation such as AI, Big Data, Blockchain, RPA, IoT, etc. We’re on track to build a comprehensive ecosystem of world-class software to transform businesses around the world.
FPT is highly focused on new technology and on digital transformation. We have a methodology named FPT Digital Kaizen™. The ex-CIO of Dupont, Mr Phuong Tram, has developed this methodology together with FPT, based on the practice Dupont did for the last ten years very successfully. At the same time, we are developing new technologies, new products, digital products, to accelerate the process of digital transformation.
I think, so far, FPT, besides being the champion on competitive pricing, we are also trying to differentiate ourselves in new technologies, experience, and digital tools. An example of this is the akaBot, an RPA solution that automates repetitive back-office tasks. In 2020, we deployed 75 virtual bots for TPBank, helping the bank save workload for 45 employees. This year, we’re planning to double the scale, expecting to help the customer improve productivity by 20-30%. akaBot has served 40 businesses in 8 countries, automating 250+ processes/tasks in business operations and freeing thousands of employees for more creative and valuable tasks. In the last 3 years, akaBot’s revenue has increased 50 times, helping businesses save 90% processing time, 60% operational costs.
The Rise of Digital Platforms
Phil: As we slowly move out of the pandemic, do you see the world returning to the way things were, or do you envision the business landscape being different? And how will this impact the role of the IT services provider?
Dr. Binh: The post-COVID-19 world will look very different. Virtual and reality will become one. E-commerce, e-Government, digital businesses, and cash-less, contact-less, touch-less transactions are booming. There is going to be a rise of the platform economy.
“The post-COVID-19 world will look very different. Virtual and reality will become one. … There is going to be a rise of the platform economy.”
In Vietnam, 76% of business leaders have planned digital transformation as a result of COVID-19 which indicates a huge market potential for us.
In closing
Phil: With all that you are doing, can you close with some insight into your leadership influences?
Dr. Binh: I really admire Jack Welch, former Chairman, and CEO of General Electric. He insisted that GE must become a “No.1” company in its field, or get out. FPT also has big dreams. We wanted to put Vietnam in the world’s digital map. And we want to be on top of the game.
Phil: Thanks for the time, Dr. Binh, and fascinating to get your insights on the Vietnamese potential in the emerging new services environment.
It’s been a couple of years since we’ve seen any major consolidation in the contact center BPO top ten providers with Concentrix acquiring Convergys, but last week Sitel made it clear that large contact center acquisitions are still in vogue by announcing its intention to buy peer SYKES.
As for the $2.2b price tag, Sitel now expects to generate $4b in revenues from the combined entity. The combined revenues will be biting at the heels of their next-largest competitor, Concentrix, which is second only in revenue and scale to contact center BPO giant Teleperformance. In 2020 SYKES revenues grew 6%, whereas Sitel’s grew 18%. With this acquisition, Sitel jumps ahead of the now 4th largest competitor, TTEC:
WFH leadership is the significant boost behind SYKES’ appeal
SYKES has arguably been the work-from-home (WFH) contact center leader since pre-pandemic days, with the foundation of its 2012 Alpine Access pure-play home-based contact center acquisition. Since, SYKES has further developed this core capability into a very sophisticated recruiting, onboarding, training and collaboration platform – fully virtual. The long-standing WFH expertise and the capability of its OneTEAM platform enabled a successful shift to remote in early 2020 and continues to be one of SYKES’ major differentiators.
With 40% of staff expected to be working from home across Global 2000 organizations over the next year (see below), having the broadest geographic experience and depth will surely align the merged entity with the strategic resourcing desires of many leading customers. If Newco leads with WFH, customers will surely entrust more with them.
In addition to the WFH and tech capabilities, SYKES offers an attractive and complementary geographic footprint, including a European multilingual hub with delivery out of Egypt.
SYKES brings the only scaled-up global automation services capability that could position Newco at the heart of OneOffice
Its other key capability, which we touted as the first real automation investment by a contact center in 2018 is the RPA strategy and implementation capability of Symphony ventures. While the Symphony resources have largely been held together by SYKES, the firm declined to embrace automation into its core value proposition and failed to excite the market by rebranding this unique capability as the bland “SYKES Digital Services” last year. If Sitel can embrace automation to drive front-to-back processes and a OneOffice mindset for its clients, it’s not too late to revitalize the former Symphony team to create a genuine edge for itself in the market.
In a OneOffice organization (see Exhibit 4), automation becomes a native competency, where human performance is augmented by unleashing creativity and personal interaction, where the immediacy of data creates insights to support decision-making that can make or break the firm. The only true way to create a OneOffice experience is to be able to integrate the front office processes and interactive technologies (most of which are embedded in the call center) with the operations of the organization:
OneOffice is where teams function autonomously across front, middle and back-office functions to promote broader processes with real-time data flows that support rapid decision making. It’s where front, middle and back offices will cease to exist, as they will be, simply, OneOffice. Sitel+SYKES has a unique opportunity to consult to enterprises to make these front-to-back connections and weaves these capabilities into their managed services offerings. The merged entity can offer real expertise to provide automated processes as-a-service and help their clients through the journey.
Bottom line: While scaling up to compete with Teleperformance and Concentrix is clearly the game-plan, Sitel/SYKES needs to focus on the value of the parts and integrate at speed
Sitel is virtually unrecognizable from the firm it was six years ago. A debt restructuring plan following its sale to French conglomerate Groupe Acticall was completed in 2018, opening up the firm to footprint expansion, digital investments, and a major rebrand which unified the company and all of its complementary assets. Sitel has recently made major investments in growth. Its design thinking and discipline organically, including hiring design experts and developing its MaxHub and EXP + model.
This latest major announcement sets in stone the firm’s intentions to be a leader in this global, remote, and increasingly digital contact center market. Now speed is of the essence to integrate the two firms, and we can expect an aggressive competitive response to this. Sitel and Concentrix were widely rumored to have come close to a merger, and neither top two firms will stand still and take this new competitive threat lightly. There are several mid-tier CX providers which will struggle to maintain growth in the coming short-medium term, and we will be surprised if we do not see some more large-scale CX services mergers over the next 6-12 months.
Not only is a clearer picture of the “future of work” emerging in today’s new reality, but its very nature is also changing day-by-day. In short, no one can paint an accurate picture of what the emerging work environment will eventually look like, but we can develop scenarios to understand how this will play out in the coming months and years. What is clear is enterprises are grappling with the need to drive unprecedented innovation in a work-from-home culture, and are figuring out how to arrive at a more predictable, acceptable, and effective work culture as we look beyond this pandemic era. Developing a work-from-home capability is the table-stake to survive in today’s environment, but innovation will only thrive in a hybrid work environment where people can inspire and motivate each other.
There is only so much you can achieve remotely – the smart way forward is a hybrid work model
We’ve talked to hundreds of executives over the past year, and they all complain about the same thing – they are managing an almost unmanageable amount of internal meetings over video calls, simply to keep the wheels on basic task management and accountability. Simply put, it’s becoming increasingly complex and awkward to run business operations in a remote model where training is a huge challenge, where motivating people is almost impossible, where getting beyond the basics of keeping activities functioning is a huge challenge. Communicating, collaborating, idea-sharing, white-boarding, etc are critical for taking businesses forwards and driving real innovation. They are also critical for helping employees become comfortable with change, to be comfortable with automating mundane elements of their jobs, and to become adept at embracing ways of accessing the data needed to exploit market opportunities.
With industry lines blurring, supply chains fragmenting and new opportunities and challenges springing up at a breathtaking pace, the time to bring people back together is fast-arriving, and so many enterprise leaders are now seeing this in spades.
Embedding digital fluency into your workforce is paramount to drive a truly cloud-enabled business architecture
The clearest barometer that shows the major changes facing Global 2000 enterprises over the next 12-18 months are the clear priorities to develop “Digitally Fluent” workforces to be best equipped to function effectively in the cloud.
Digital Fluency describes the ability to drive the seamless interplay between business and technology:
Ability to translate the understanding of digital tools to create new ways to serve customers’ needs and drive value;
Ability to consider how digital technology will impact every aspect, every functional area of the organization;
Ability to examine the organization’s business model, strategy, and operations in the context of digital technology.
While the magic number from the new HFS Pulse study of 800 Global 2000 indicates that 60% of staff will return to the office over the next year, we must recognize that this is not a static metric — this will be fluid in the coming months as we grapple with the complexity of a pandemic recovery and fluctuating hybrid workforces.
These undulations of work-from-home can be viewed at three levels: organizational, functional, and individual.
Organizational cultures. There are dictating some return-to-office mandates, with Goldman Sachs ordering employees back in the office and JP Morgan CEO Jamie Dimon saying that WFH is a problem that needs to be fixed, citing business lost to competitors due to lack of focus in a remote environment.
Functional needs. Some roles and departments that have depended on socialization (we dove in on this in call centers here), or on collaboration (such as design experts), are eager to get back to in person.
Individual preference. Some of us are just more social creatures that miss the camaraderie, whereas others perform and focus better at home or are still wary of offices given the pandemic-induced fear, or have been based at home for so long they struggle to “snap-back” to going back to an office environment. This varies generationally as well, with a widespread sentiment that millennials prefer to see their colleagues in the flesh, whereas their older and younger colleagues are more content to work remotely. While we’re confident that the 9-5 is dead, and companies have learned to keep the wheels turning in remote environments, the question remains how to sustain innovative mindsets to remain competitive regardless of where the dust settles for our hybrid workforce.
We’re entering a hybrid reality, where digital and physical work cultures are blended
The digital exuberance of 2020, where declarations from many leading enterprises – the likes of Unilever, Hitachi, Mastercard, Google, and Amazon – that they had become “work-from-anywhere enterprises” is clearly losing steam as so many enterprises have struggled to maintain a motivating, dynamic culture. From leadership down to interns, employees are burned out with the sheer monotony of a 100% digital environment and the inability to whiteboard ideas, share ideas, collaborate on process design, and embrace emerging tech. This is especially the case with Gen-Z and Millennial staff desperate to get back to an office environment. In fact, many are choosing to work for firms embracing an in-office culture – something we have already seen happening aggressively in the call center environment (download POV here).
Leadership has a laser focus on the employee experience in a remote environment
The pandemic ushered in a new wave of thinking about how leaders approach staff management and motivation, and our recent HFS Symposium showcased the breadth of thought from leaders across industries. As Debjani Ghosh, President, NASSCOM, rightly called out on our “Power of One” panel, the industry’s focus during the pandemic shifted completely to wellness and health. And as Paul Papas called out in our “People Process, Change” discussion, leadership at IBM turned into looking at colleagues and direct reports through a more empathetic lens.
While the early stages and stabilization of Work-from-home focused on immediate needs, as lockdowns dragged on for months into a year plus, business leaders are thinking forward to making remote/ hybrid optimized in the long term. The focus of employee experience and performance management continues to shift, or instead broaden as if climbing Maslow’s hierarchy of needs toward self-actualization. With ensuring security and wellness as a baseline, employers then began ensuring employees had collaborative tools and virtual workspaces that attempted to emulate physical environments that promote camaraderie. They focused on ‘unleashing’ talent by giving them ‘satisfying’ work, empowering people to perform at their highest capability. Companies also dug deep to talk about culture, mission, vision, and what kind of “profit with a purpose” values are important to them. As we continue up this ladder, an element seems to hang in the balance: how can you nurture innovation in a remote environment?
What’s next? Unleashing innovation-from-anywhere
For many during the pandemic, jobs became a “tick the box exercise,” moving from task to task, and once completed, preparing for the next Groundhog Day. Despite the efforts above, what seems to have been lost for some firms and individuals is the element of innovation. While innovation may seem to flourish in a physical environment, we can do things to ensure we innovate as individuals and as organizations.
Innovation as a culture. Whether remote or physical, adopting innovation as a culture is critical. An innovative culture encourages new ideas and doesn’t punish failures (unless done with incompetence). This applies to companies as a whole as well as individual contributors. As Marie Myers of HP (noted, companies must not let having a fear of failing to impede innovation. Sharing success stories of ideas coming to fruition supports this culture. Individual incentivization plays a role as well; Kaushal Mody of Accenture noted that their staff is rewarded for transforming their own roles.
Innovation as a discipline and a mindset. It may sound counter-intuitive at first – isn’t innovation born out of spontaneous, imaginative ideas? No, innovation is developed and cultivated. Innovation doesn’t have to be a group of creatives in a room solving giant problems. Innovation doesn’t have to be grand. Often it can come from the most straightforward thought of, ‘what if we did it this way?’ This can come from anyone in any role and at any level of the organization. The trick is to get in the habit of training our brains to think this way. Are all of your staff meetings focused on blocking and tackling problems at hand, or is there time set aside for brainstorming new ideas and ways of working? As an individual contributor, are you too focused on checking the tasks off your to-do list to wonder how we can improve this process or what new service or product we could be offering?
As Manish Sharma of Accenture operations boldly declared at our symposium, “Work-from-home innovation is here to stay.” We are optimistically in agreement with his sentiment, particularly as the OneOffice experience mindset matures and employee and customer experience get more tightly aligned. As people increase embracing change, have better data (that they trust!) at their fingertips, ideas will flow more easily. As we reskill our workforces for digital fluency, we’d be remiss not to adopt innovation as a culture and discipline to take full advantage of innovation at scale.
Work-from-home innovation is here to stay if we make It a discipline, and a fabric of our culture
We can’t deny the experience of the last year has driven a genuine need to configure business operating models to function in a remote virtual environment, as most businesses simply can no longer limp along with on-premise systems, fragmented processes, and an inability to operate in the cloud. However, as we evolve towards a new reality where we can visualize a physical future for businesses, it’s also become clear that companies are struggling to function entirely in the cloud and depend more than ever on a people-driven culture.
In this vein, organizational leaders today must be thinking more about how to innovate in a virtual and physical hybrid model and align your people to the needs and goals of the business across remote teams. Even more importantly, do your innovation goals engage diversity, sustainability, and purpose? We are stepping into a new era of cultural innovation in a work-from-home environment.
This is the time for leaders to provide the vision and the tools to innovate from anywhere, and for individuals to figure out how they can unleash their creativity and motivation to work toward a shared goal. Leaders must not assume that innovation will happen spontaneously, and individual contributors must take the responsibility to be diligent about their innovation.
Bottom-line: Much can be achieved in a pure remote model, but it’s simply not sustainable for a healthy, energizing work environment in the medium-long term
While many businesses struggled – or failed completely – during the pandemic, many have thrived as costs have been decimated and a return to growth has created so many new markets to exploit and customer demand to satisfy. This has also created a highly fluid job market, where people can get hired rapidly over Zoom and staff can dictate where they want to work. Companies with strong, dynamic leaders who inspire staff to learn new things, collaborate, and focus on purposes beyond mere profit and efficiency are fast becoming venues where ambitious staff want to apply themselves.
While much can be achieved in a pure remote model, it’s simply not sustainable for a healthy, energizing work environment in the medium-long term. Running data and processes in the cloud is critical to keep companies operating effectively, but those are merely the baseline table-stakes to survive in this new hybrid reality. Technology is essential to provide the infrastructure to exist, but it doesn’t dictate the business model… people do.
