We’ve been addressing the massive opportunity for the services industry as we move into times of unprecedented complexity. However, while complexity brings with it the opportunity to solve recurring problems and design new solutions, it also brings new workforce challenges that could prove insurmountable for many enterprises, without a radical rethink with how they design their business operations to get ahead of their markets where technology is increasingly at the center of their business universe.
As we recently discussed, this is especially the case for many Continental European organizations, where rigid labor laws and a pervasive “job for life” mentality makes it very challenging to find – and then fund – the new talent that can replace legacy staff struggling to meet the business-relevant needs of the modern workforce. We believe this inability to achieve greater workforce flexibility to gain access to new talent and skills is the main reason driving Continental European enterprises to evaluate alternative means to improve processes and drive more efficiency and effectiveness into their operations. One of the emerging areas where we are seeing a remarkable level of interest is that of Robotic Process Automation (RPA), where enterprises can develop an automation layer upon which to cement its operations and create a true analytical and digital capability for the As-a-Service Economy into which we are venturing.
Enterprises need skills to help them understand their financial data to make better investment decisions in emerging markets, to redesign process flows that get their products to the right markets quicker, to align revenue opportunities with their global supply chain activities, to understand where to make talent investments, based on high-growth market needs. They need to understand the viability of maintaining legacy products at the opportunity cost of investing in emerging product areas and other innovations. This means they need an operations infrastructure that has the process standards to help extract this data, with the right people that have been trained how to use it effectively – and can develop these skills on a continual basis.
However, if you cannot make the swift changes you need to augment your overall base of operations talent, surely the advent of effective Robotic Process Automation (RPA) platforms is providing an increasingly appealing alternative path for many enterprises to take: when you cannot augment your process people, why not replace them with automated process platforms? And, as the following chart clearly shows from our new global study conducted with KPMG, emerging interest in RPA is already prevalent in eight-out-of-ten European enterprises:
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The difference today is there is a provider side gearing up to deliver RPA platforms, with several enterprises piloting them
The service provider community is ready to respond to this increasing demand, and we have recently interviewed 16 buyers in various stages of successfully pilotting RPA (stay tuned for the results, but we’re already seeing significant progress being made). Capabilities to solution, implement and manage RPA deployments are becoming widespread in Europe (and globally) as we captured in the recent 2015 HfS Robotic Premier League of 20 BPO service providers. Europe is also proving to be a hotbed for start-ups at RPA specialist services including: Genfour, Symphony Ventures, Thoughtonomy and Virtual Operations who are all building solutions that respond to many of the particular labor challenges present in those markets today.
All of these service providers are able to tap into a growing community of leading independent RPA software vendors in BPO and IT including the likes of: Arago, Automation Anywhere, Blue Prism, IPsoft, NICE, Redwood, and UIpath as well as proprietary RPA tools from service providers such as Cognizant, IBM, Infosys, and TCS amongst others. In fact, many of these independent RPA software vendors are based in Europe which creates a reinforcing ecosystem to generate these new sources of capability, skills and savings required by European enterprise clients.
The Bottom-line: RPA could well be delivering a whole new alternative to Labor Arbitrage – and faster than we think
If the skills fail, but the technology is adequate, we believe we will see entire functions being replaced by digital portals, automation tools and functional business platforms that can get the job done in a low-cost, standard fashion. However, enterprises really need to develop a firm foundation for Robotic Process Automation to standardize processes and build the base upon which to develop their future operations.
The advent of the cloud, mobility and social media have changed the way we will forever do business, but we are already adapting to these new environments and starting to address what needs to be done to plug the gaps. Facebook, LinkedIn and Twitter are all decade-old developments and have changed little in recent years, with little further dramatic disruption on the horizon with regards to social media and communication. Mobility apps and capabilities are all mainstream today and the cloud infrastructure capabilities of all the major ITOs and SaaS providers are pretty robust, scalable and proven. We’ve emerged well from these “disruptions” to operate in much more global, virtual, adaptive playing fields.
Next on the horizon is the need to streamline, mine and interpret our data better – and we need to automate processes more effectively in order to get better data from them and apply them to our business needs. This is where we need to upskill – in process redesign, in managing and enabling analytics tools, in driving advancements in automation and cognitive platforms more effectively. And it is pretty clear – especially in Europe – that much of this help needs to come from external service providers, RPA specialists and advisors all skilled in moving clients into an automated process platform.
Tomorrow’s successful enterprise is as much about getting its labor and automation strategy right, as it is about getting its technology and business strategy primed for their markets. So make way for the emerging As-a-Service model where these capabilities can be provided on-demand to plug these gaps.
Click here to download the full (freemium) POV, “Europe: If you can’t do Arbitrage, then Automate”, authored by HfS analysts Phil Fersht and Charles Sutherland
The IT and business services industry is now navigating unchartered waters, where the common challenge for today’s enterprises is simple:
“How can we design our businesses and operations to run more effectively, so we’re geared up to get ahead of our markets where technology is increasingly at the center of our business universe. How can we understand data to respond to our market needs, and how can we be smarter and more creative about how we operate and go to market?”
The answer is pretty straightforward, really – go get the help you need to be this effective, whether you hire it, retrain what you have, outsource it, or simply buy on-tap consultative expertise.
We’ve recently discussed the fact that many service providers are struggling to find this talent, while many buyers also need real help to access business-relevant skills. So let’s now look at the great intermediary which can readily plug those talent gaps for a paltry $500/hour… the consulting firm. Surely these MBA-qualified guys and gals have these skills in spades for the needy enterprises ready and willing to pay for them? Let’s see what came out of our soon-to-be published study, conducted with KPMG, that covered the views of 492 industry stakeholders, which included 154 advisors discussing their major challenges:
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Dallas, we have a problem: Over half of today’s advisor shops are struggling to upskill their existing talent
This, to me, is the greatest cause for concern in our industry. Consultants are supposed to be like doctors – they need to use the latest tools, methodologies, technologies and knowledge at their disposal to help their clients. They are supposed to be trained to stay ahead of their fields of specialty to push their clients to perform at the peak of their abilities.
However, when two thirds (65%) of consulting firms are struggling to hire in business-relevant talent and 54% of them upskilling what they already have invested in, then, Houston, we have a problem. Or should that be “Dallas”, as that’s where most of them seem to stem from these days 🙂
Unspectacular outsourcing deals have created a negative mindset from enterprises towards advisors
Another area which our recent study fleshed out was the fact that two-thirds (67%) of advisors are tarnished by the fact that enterprises are reeling from feeling let down by their outsourcing experience – the very experience advisors previously developed their reputations selling. Why call the doctor for more help after they offered bad advice the first time around?
Advisors need to address their own talent crises as aggressively as their clients and the service providers need to. Too many entities in our industry are still living in the good old days, where providers and advisors got fat and happy feeding off the old scale beast of global labor arbitrage and cranking transactions. Those days are fast running out and a slimmer, fitter advisor is required which can roll their sleeves up and help their clients get ahead of their markets.
The Bottom-line: There is a massive opportunity for those advisors which can reinvent themselves to deliver “Expertise-as-a-Service”
Here are some potential steps advisory firms can take to broaden their skillsets and business relevant to enterprise clients:
Stop hiring so many average consultants who “know the process”. The science of running operations at scale is a commodity skill-set these days.
Stop hiring so many consultants who “know Big 4 culture”. The amount of times I have seen the Big 4 shops only wanting to interview candidates who have experience of the Big 4 legacy way of doing things is depressing. These guys will never change if they don’t have the courage to diversify their talent mix beyond the white shoe brigade.
Stop hiring so many white-haired grizzled IBM and EDS veterans. The outsourcing business will forever be stereotyped by these individuals if we can’t break from the old school meeting-room negotiator jockeys, whose focus on number-crunching scale deals is a million miles from any genuine “business transformation”.
Start hiring practitioners. People who really understand process and how to enable it more effectively with better technology are generally found on the buyside – people who live and breathe this stuff. And many of these people are not particularly well paid and may relish the increased salary and alternative career path.
Start hiring more millennials. People who have grown up in social media and mobile technology who can adapt their digital minds to the consumerizing needs of the enterprise. Yes, a challenge in today’s enterprise model, but when you need to be expert on digital transformation and as-a-service technology, you need people who have this embedded into their DNA.
Change (somehow) the old $500/hour legacy consulting model to “Expertise as-a-Service”. Just like the outsourcing FTE model, this needs to change and the focus must shift to outcomes. Start figuring out how to leverage virtual expertise-on-subscription models for clients, where they can pay for annuity-based relationships that are affordable, scalable and “as-a-service”. Research firms already service most their clients on these types of models, however, many fall short by lacking the right mix of experts to support clients and rely on drive-by consulting to get through the day. Smart consultants can change all that.
In short, this is all about the advisory industry getting ahead of the shift to the As-a-Service Economy, by adopting more “As-a-Service” delivery themselves. Again, it’s about shedding the bad habits picked up on the 90’s and 2000’s and making the brave changes to invest in skills, more than just scale.
Rick Simmonds, Founder and Managing Partner, Aecus
We recently had the pleasure of hearing from Alsbridge’s CEO, Chip Wagner, regarding his firm’s organic expansion plans into Europe as his firm cements its growing reputation in the sourcing advisory market. But what about the UK advisory firm formerly known as “Alsbridge Plc”? Answer, it renamed itself “Aecus“, named after one of the sons of Zeus, renowned for wisdom and piety, and his fairness as a judge. He was a resolver of disputes between the gods.
So we caught up with the firm’s founder and managing partner, Rick Simmonds, to find out more about his renamed business, the split with Alsbridge mothership, the renewed focus on the new firm and whether their famous “speed dating” approach to provider selection is effective for clients…
Phil Fersht (HfS): Good morning Rick – can you share your background with our readership? When did you get into this outsourcing business?
Rick Simmonds (Aecus): I’ve been in outsourcing for a long time. I started in the late 1980s with Andersen Consulting in the pre-Accenture days, working for David Andrews who went on to set up Xchanging. Then I helped Ernst & Young set up its outsourcing practice in the 1990s. They sold this division to Cap Gemini; which I left in 2002 to set up ALS Consulting.
Ben Trowbridge was a partner of mine at Ernst and Young; he left to start Trowbridge Group. We merged our two brands to become Alsbridge. Two years ago Trowbridge sold his firm to a private equity group and left last year.
We were structured a bit like a Big Four partnership, just two separately owned businesses. We were wholly owned in each country and shared a brand and IP. That’s the arrangement that came to an end. In December last year Alsbridge PLC left the Alsbridge group and rebranded as Aecus, a consulting and benchmarking firm providing tailored sourcing advice to its clients across Europe.
Phil: So what was the thinking behind the Alsbridge split, Rick?
Rick: Two things really, Phil:
The management structure. Neither side had control of the other. That created a control issue, which we happened to trigger. We couldn’t be sure there wouldn’t be a difference of view of the future in the future.
A difference of focus. We both focus on outsourcing and shared services advisory services. We have a strong BPO heritage, they have a strong telecom focus which we don’t have. So there were some slight strategic differences.
But there was no particular problem – the decision to separate was really just an evolution, things changing over time.
Phil: What geographies are you going to focus on? UK? Europe? Are you going to enter the US market?
Rick: Our focus is NOT just the UK, it’s the entire European market. Many of our hot spots are outside the UK; we are strong in places like Switzerland and the Nordic and Benelux countries and that will continue. We recognize the complexities of the European market.
We have no intention of entering the US market. We have a European heritage with European DNA. We have the biggest and most experienced team in the market from that point of view.
Phil: As you look at the current level of demand in the UK and Europe, we see a lot more BPO deals popping up. What does your current business look like? Is it a mix? More IT? Or are you getting into the BPO growth areas?
Rick: Traditionally our business has been 50 percent BPO and 50 percent ITO and it’s that way today. We have seen a lot of BPO activity recently as well and that’s good strength for us; our heritage has a strong emphasis on BPO.
The current business is very much multi-country–not necessarily global but within the European countries. That’s a strength of ours too.
The other thing we are seeing is second and third generation ITO deals coming through more and more, so that’s becoming more of a focus for us as well. This is how the market has changed.
We see some pretty big deals coming through in both ITO and BPO. There’s a lot of churn.
Phil: So, Rick.. do tell us about the “speed dating” we’ve been hearing about. Is it a one-off thing one of your employees dreamed up or an official company methodology?
Rick: Ben (Trowbridge) and I developed it years ago and we’ve been using it on both sides of the Atlantic for quite a long time. It will remain part of the Aecus methodology in a slightly different version going forward. We call it “Supplier Scan”, which focuses on the RFI part of the methodology. The point is to help clients quickly focus down on the few players they should pay proper attention to in the buying practice.
Here’s how it works: Instead of preparing a document-based RFI, which we found isn’t particularly helpful since we already have most of that information and it doesn’t differentiate organizations really well, we bring providers into short workshops with a client. We might go through 8, 10, 12 organizations.
The point of the session is not to test their fact base but instead to test the chemistry of the two organizations. We want to see to what the degree the provider can demonstrate a reasonable understanding of what the client is looking for. Can they create empathy? How would they work with the client? Will and how will they customize? That’s the process we have been using.
What have you heard about this?
Phil: There were a couple of disgruntled providers who went through the process; they were unhappy they were deselected!
Rick: The problem with this is it gives everyone an equal chance. Clearly, if you are giving 10 organizations an equal chance and the buyer picks four to go through the selection process, then you can have six who are disgruntled.
The advantage to providers over the traditional RFI process is it gives them an opportunity to engage. It might not work out for them. But they are not just thrown into a document-based process they can’t control.
Secondly, it doesn’t take a huge amount of effort for them either. They are coming to a two-hour workshop. As long as they bring people who are knowledgeable and engaged about what they do, they don’t need much customization. We provide a briefing on the client’s business context, challenges and constraints. Then they bring an expert, multi-disciplined team who can engage knowledgeably with the client about possible solutions and approaches. It is short, sharp and focused.
So there are two advantages to this methodology:
Providers actually get the chance to engage with the executives of the client.
They aren’t locked in an office preparing RFI documents for ages.
This process is clean and efficient. Personally I would prefer that to sweating over documents and sending them to be analyzed in isolation.
Phil: So there is no documentation at all? It’s just literally a speed dating situation?
Rick: It varies, to be honest. We’ve had providers make formal presentations before they engaged in discussions; it was a combination of the two. We are not fundamentalist about this: it’s what works for the client. We customize this for the client for whatever they want to do. We are always client-driven in this process. We don’t make down selection decisions for our clients, we just facilitate the process. We have never made any of these decisions for our clients; we just advise the community.
Phil: Please look into your crystal ball for 2015. What sort of business do you think you will be engaged in this year? A lot more BPO or will you be pulled into other areas like robotic automation?
Rick: Both actually. We carried out a lot of research into innovation in the outsourcing market over the last year. The Alsbridge Innovation Awards, which were purely an Alsbridge Europe initiative and have now been re-branded as Aecus, were well-subscribed last year and will happen again this year. Last year we had 50-odd submissions and gave out 15 awards in the areas of digital innovation, robotic automation, etc.
There’s a convergence now between BPO and ITO and the innovative technologies providers are using. We are trying to position ourselves to be in the forefront of that. One of the reasons we sponsor these awards is because it helps us learn and understand what’s really out there and therefore helps us advise our clients appropriately. So that will be the main thrust of what we are doing.
We have clients now in their second and third generation of traditional outsourcing; they already have good experience going through the process, so they are not looking to organisations like us for help with the basics of that any more. We now have to provide relatively forward-thinking, high-quality boutique services to differentiate ourselves from in-house providers or the contracting market. Part of that is to understand the supplier market, where it’s going and what can be delivered. That’s where our focus is going to be.
Phil: Rick – it’s been a pleasure and am sure many of our readers will enjoy reading your views. Good luck with the new venture!
Rick Simmonds (view bio) is Founder and Managing Partner for UK-based sourcing advisory firm Aecus. You can email him here.
We’ve talked a lot about the massive opportunity for the services industry as we move into times of unprecedented complexity. However, while complexity brings us much opportunity to solve problems and design new solutions, it also brings skills challenges that could prove insurmountable for many, without external support.
New data findings from our soon-to-be released report “From Human to Digital, the Future of Global Business Services”, conducted with KPMG, covered 492 industry services stakeholders and reveals some marked regional differences, when it comes to enterprises better aligning internal operations with their corporate goals and directives:
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Better IT, service provider collaboration and talent are the missing ingredients for European enterprises
Settling for the status quo is clearly not a viable option for 43% of European firms viewing a formal change management effort, or simply bringing in new talent, as essential actions to get themselves out of their current predicaments to get better value from their operations. While the need for better IT systems from all global enterprises comes as no surprise, the open admission, from more than half of European enterprise operations executives that they would benefit greatly from better collaboration with their service providers (compared to a third of their North American counterparts), brings us to the conclusion that the majority of large-scale European firms are in dire need of third party help to achieve better value from their existing operations.
What’s more, the real number of European firms in need of external help is probably much greater than this, and the fact that half are already acknowledging this is worrying. Clearly, rigid labor laws and the “job for life” mentality is still besetting many European enterprises, which this survey data substantiates. There clearly is a need for more flexible labor in many European countries, and the ability to source skills “As-a-Service” from providers is becoming increasingly attractive to those firms tired of being held hostage by stagnant workforces unwilling to change with the times. Simply put, driving change into your talent base is hard, and surely driving many firms, eager to roll with the times, to examine more flexible As-a-Service models to be more effective.
The more we struggle to improve our talent, the greater the risk we’ll simply digitize it
The talent crunch is prevalent right across our global industry, with services providers freely admitting that staying ahead of the talent curve is their number one challenge, as the demand for addressing ever-complexifying corporate needs is already reaching unprecedented proportions. We need skills to help us understand our financial data to make better investment decisions in emerging markets, to redesign process flows that get our products to the right markets quicker, to align revenue opportunities with our global supply chain activities, to understand where to make talent investments based on high-growth market needs. We need to understand the viability of maintaining legacy products at the opportunity cost of investing in emerging product areas and other innovations. This means we need operations that contain the technology and process standards that can extract this data… with the right people that have been trained how to use it effectively – and can develop their skills on a continual basis. We need skills and infrastructure that can support our business in an As-a-Service fashion… in an As-a-Service Economy.
My fear is where enterprises fail to develop their capabilities, they will simply settle for “good enough” and take as much cost out of them as they can. It’s like when most enterprises cut their HR departments down to the bone in the 90’s and 2000’s as they simply were not getting value out of them – they’d become transactional functions which kept things functioning, as opposed to really performing for the business. The same is already happening in other operational functions, such as IT, finance and procurement, claims processing and data management etc., where many enterprises are simply not getting enough value. If the skills fail, but the technology is adequate, we’ll see entire functions being replaced by digital portals, automation tools and functional platforms that can get the job done in a low-cost, standard fashion. Enter any major enterprise today, and I guarantee you their HR function is likely to be a portal with links and a 1-800 number to call on the offchance you can’t get services executed for you automatically. What’s preventing firms doing this for other operational functions, where automation becomes a more effective option for them?
However, I do not see this digitization of human services happening as ruthlessly as what’s transpired in HR – we’ve been through many inflection points in history, where the skills requirements evolve with changing needs and demands and today’s era of new digital capability is no exception.
The Bottom-line: We’re already adapting to the disruption, now its about skilling up to get the value out of it
Yes, the advent of the cloud, mobility and social media have changed the way we will forever do business, but we are already adapting to these new environments and starting to address what needs to be done to plug the gaps. Facebook, LinkedIn and Twitter are all decade-old developments and have changed little in recent years, with little further dramatic disruption on the horizon with regards to social media and communication. Mobility apps and capabilities are all mainstream today and the cloud infrastructure capabilities of all the major ITOs and SaaS providers are pretty robust, scalable and proven. We’ve emerged well from these disruptions to operate in much more global, virtual, adaptive playing fields.
Next on the horizon is the need to mine and interpret our data better – and we need to automate processes more effectively in order to get better data from them and apply them to our business needs. This is where we need to upskill – in process redesign, in managing and enabling analytics tools, in driving advancements in automation and cognitive platforms more effectively. And it’s pretty clear – especially in Europe – that much of this help needs to come from external service providers, advisors and contract staff. Tomorrow’s successful enterprise is as much about getting its labor strategy right, as it is getting its technology and business strategy geared up in the right way. So make way for the emerging As-a-Service model where these skills can be provided on-demand to plug these gaps…
“C-Suite leaders want to drive out cost? Tell us something new…” OK, I will, because this time, this cost imperative is different, as the traditional means of driving out cost are reaching their limits. 60% of enterprise C-Suites are actively seeking to reduce their reliance on labor in their operations – but most are discovering they need to work smarter before they can work cheaper.
Enterprise leaders can’t keep dipping into their operations functions to find more staff to shift into cheaper locations, or simply remove them – they are having to explore the emergence of As-a-Service solutions as that next lever to pull. The shift from labor to digital is happening, and this insatiable thirst to operate businesses as cost-effectively and flexibly as possible is the overwhelming driver behind this change.
Our new study, conducted with KPMG, shows an impetus on cost take-out coming from the C-Suite at an intensity never seen before: 90% now view cost reduction as an increasingly important-to-critical imperative for their operations. In addition, a similar number are very focused on achieving cost-effective, flexible services to support their businesses. And this desire to drive out cost is far more intense than other “value-based” imperatives for operations, such as addressing risk, analytics and talent:
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A paradoxial shift from human to digital has begun in earnest
This reemergence of cost as a key driver clearly indicates that executives believe significant inefficiencies remain in their current operations. It is, therefore, a priority for many executives to realize these cost savings, before shifting focus towards overall effectiveness, and driving new value in other ways.
However, here lies the paradox – the path to future “cost savings” can only be cleared once efforts have been made to standardize and rationalize processes. And these future cost savings are not only going to be derived from traditional means – i.e. shifting of onshore labor to offshore, elimination of labor through software investments, but a fundamental change in the way processes are digitized and automated.
Once processes are digitized and automated, enterprises can take advantage of the business value that analytics, mobility, robotics, cognitive computing and the Internet of Things can bring. This is about working smarter, not cheaper.
The Bottom-line: The as-a-service cost-reduction journey starts with effective SaaS functionality, but the longer-term value comes from the enabling digital skills
For example, many enterprises today have achieved considerable success rolling out the likes of Workday and SAP SuccessFactors to replace their hire-to-retire HR processes with something that is standardized, cloud-enabled and functions effectively. In other words, these solutions are “good enough” to get things done and drive out some immediate unnecessary costs on excessive labor, manual processes and dysfunctional technology. However, this only addresses the top two imperatives described above – some initial cost take-out and flexibility.
In order to achieve value beyond these two initial successes, enterprises need to figure out how to make these platforms work most effectively across their virtual and mobile workforces, how to extract meaningful data from their HR systems of record to manage and develop their people better, and understand how their process flows work end-to-end to help design robotic automation and cognitive capabilities. The SaaS solutions produce a base platform to begin the As-a-Service transformation, but the real value comes from the skills of the buyer and their services partners to apply these digital tools and capabilities to their businesses.
Similar analogies can be applied to most business processes – the more effective the SaaS platform, the more potential there is to develop As-a-Service functionality and capability, whether they be healthcare revenue cycle processes, banking trade settlement transmissions, insurance claim adjudications, procure-to-pay or cash management workflows, inventory management and so on.
To conclude, this is a massive opportunity for ambitious operations executives. While there is some stress in the services industry as service providers rationalize their current talent pools, we are experiencing an interlude where we need to refine the old model to get ready for the new. We need to train up people skills that can apply digital tools for enterprises, that can help with their process design thinking, that can provide analytics and data to support meaningful actions. Many of the legacy traditional skills are simply not as needed as they were, such as pumping automatable reports out of SAP R3, or managing cumbersome helpdesk tickets for apps where clients can use service automation tools. It’s time to upskill our workers – and ourselves to work smarter… not cheaper.
Anyone who knows me best, is privy to the information that I disappear up to the lakes, forests and pubs of Halifax, Nova Scotia, for my summers. Having spent so much time in the region over the last 15 years, and having both a sister-in-law and brother-in-law lead service delivery teams for a major provider and a major bank up there, I have, believe it or not, learned a thing or two about the province’s rich fertile ground for delivering IT and BPO services.
People are smart, very pleasant, well educated, and are a short hop into all major US cities… no wonder the likes of ADP, Convergys, IBM, Hinduja and all the major Canadian banks rely on the local populous to support their North American operations. And, despite the fact I married a girl from Halifax and have a large family in the region, I can assure you the following interview with Lynda Arsenault, who directs the provinces Outsourcing and Technology investment strategy for the Province’s excellent business development agency NSBI (Nova Scotia Business inc), contains very little bias on my part.
Yes, I actually believe this is a great province to invest in the local talent and resources, and we’ll shortly be able to share the news of a new As-a-Service investment in the region from one of the Indian-heritage global service providers…
Phil Fersht (CEO, HfS Research): Good morning, Lynda, can you explain to our readers in – one minute – why Nova Scotia is one of the best kept “sourcing location secrets”?
Lynda Arsenault (Director of Outsourcing & Technology, NSBI): Absolutely Phil, Nova Scotia is a prime sourcing location boasting one of North America’s most competitive business climates compared to other nearshore locations. Especially with respect to cost and quality. We’re also in a convenient time zone for servicing customers in North America and Europe. & We don’t want to keep it a secret – Nova Scotia is “Open for Business!”
Phil: There are several leading global services firms servicing their North American business from the region, such as ADP. Why did they choose Nova Scotia over other Canadian provinces, such as New Brunswick or Ontario?
Lynda: ADP has a long history of success in Nova Scotia, expanding their presence in the province in 2011. ADP chose Nova Scotia as they were able to match a significant amount of what they do with the labour pool here. The company has experienced a workforce in Nova Scotia that is service oriented, delivering excellence in customer service. So in short, the talent availability combined with loyal and hard-working employees has equaled success for ADP in Nova Scotia.
Phil: There are, I believe, 13 major universities in the region – how are you building links between their graduates and proving services resources to major corporations? What can you teach other global regions about linking education and commerce?
Lynda: Almost on the mark, we have 10 universities and 13 community college campuses in the region – we are known as “The University Capital of Canada”. This translates to a highly skilled and diversified talent pool and one of the reasons we have attracted global companies such as IBM, NTT Data, CGI, Xerox, Admiral Insurance and ADP to establish operations in the province. NSBI helps foster innovative partnerships between post-secondary schools, industry, and government, it’s a win/win linking education and commerce. In fact, when IBM chose “Nova Scotia” to open an IBM Services Centre, specializing in data analytics, they partnered with one of our top universities – Dalhousie to launch an Institute for Data Analytics.
Phil: And what skills are the local education establishments developing which you believe gives the region a competitive edge? What are you providing beyond the “bread and butter” call center services?
Lynda: Skill development is continually on the minds of educators and industry. The trends we have seen taking place include expanding skillsets from the traditional inbound customer care (call centre services), to a more robust specialist skilled in payroll management, HR functions, Tier 1 & 2 technical support, F&A, project management and research. Also, we can’t forget analytics, which is the fastest growing sector.
Phil: How sustainable is the local economy in terms of supplying talent and keeping wage inflation low? Isn’t there the danger than the region gets saturated and becomes less “economically friendly” for future investments?
Lynda Arsenault is Director, Outsourcing and Technology for Nova Scotia Business Inc
Lynda: Good question, Phil. In terms of supplying talent, we have over 10,000 graduates per year that are looking to land jobs with great companies already set-up here as well as new FDI opportunities we are constantly attracting to Nova Scotia. This large percentage of new graduates also helps keep wage inflation low, putting a downward pressure on possible wage inflation. And yes, there is always a chance that any region can face saturation however, I believe this is not for many years to come as employers are finding the talent they need.
Phil: And finally, are there any exciting new service provider investments in Nova Scotia for 2015, where you can share a sneak peak with us?
Lynda: My lips are sealed Phil! You will have to Stay Tuned!
Lynda Arsenault (pictured) is Director, Outsourcing & Technology with Nova Scotia Business Inc. (NSBI), the province’s business development agency. She is responsible for attracting Foreign Direct Investment opportunities into Nova Scotia. Lynda helps streamline the process for clients looking to invest in and grow the Nova Scotia business economy.
Where Deepak hits the nail on the head, is how IT services executives are promoting themselves out of relevance in the India-heritage firms (which is not too dissimilar from practices we observe in many Western-heritage services firms too). In plain terms, we’ve got lazy and arrogant, we’ve developed a sense of entitlement, where all we need to do is print money from the profits of maintaining legacy enterprise practices.
I won’t regurgitate all of what Deepak discusses, but do have a think about the advice he leaves us with, for services executive worried about losing their relevance:
Learn a new skill – either back to code and processes in newer technologies, or in a completely different domain. This could take months or years, but it’s necessary
Invest and create alternate sources of income
Keep debt manageable so a job loss will leave you with at least a year’s expenses in the bank
Stay humble: the people who reported to you could be your next boss
The context here is simple: the enterprise services gravy train is slowing down for those executives who aren’t staying ahead of the curve, and when India’s largest and most profitable IT services provider TCS is looking to decrease its reliance on legacy labor, you know the tide is turning – and turning fast. Intense competition for low-cost offshore delivery is reaching its commoditization point, and executives need to decide whether to protect their dwindling turf, or re-invest in their own skills to make themselves more marketable and valuable to the industry.
Increased complexity drives huge opportunities for services growth
It’s like going to a dentist and not being able to see a digital X-ray of your teeth? Would you keep buying services from someone who hasn’t read a text book, or had some form of new skill development over the last decade? It’s the same with business IT services – providers need to be able to do more than deliver the same old technology services and processes at scale – they need to introduce better ways of doing things. The development of new technologies, tools, process standards and capabilities are creating a whole new wave of possibilities for enterprises to get ahead.
The technology/business services industry was built on complexity, where services firms profited massively on enterprises’ need for skills they didn’t possess, to develop technology apps and services, to design processes and better ways to do things. There was money to be made designing solutions – and also maintaining and tweaking them.
In short, we’ve thrived on new innovations and disruptions for the last five decades… from mainframes to Client/Servers to ERP to web-based architectures to cloud computing. The only difference, today, is the pace of change and innovation is considerably more aggressive – digital technologies such as mobility, analytics and social are generating new business value when legacy business processes (and practices) are dragged into a digital business environment, while new developments in robotic automation platforms are making it much easier to create fluid workflows for operations to become more efficient. On top of that, add the possibilities of artificial intelligence, cognitive applications and advanced data science, and you have a maelstrom of immense change and new complexity challenging the status quo of corporate systems and processes.
Doesn’t that spell O-P-P-O-R-T-U-N-I-T-Y?
Complacency is our biggest enemy
Have we really become this lazy… have we really become this bloated and content, that we don’t have the energy to learn new technologies, new business standards and processes? Do we really think today’s customers are going to spend their days on a valueless mediocre treadmill of maintaining legacy ERP products, persisting with poorly run process flows?
This brings us to the pivotal data findings from our soon-to-be released report “From Human to Digital, the Future of Global Business Services” that discusses the findings from our new study, conducted with KPMG, that covered 492 industry services stakeholders. During the study, we posed a very poignant question to the service provider executives taking part about the key challenges impacting their businesses:
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Technology acumen and global scale must be enabled with relevant services skills
While we can get overly excited about the emergence of robotics platforms and Digital solutions to create all sorts of disruptive possibilities for enterprises, without the skills to take advantage of them, they’re not going to deliver much value for clients. All the smart service providers will be providing all the technology bells and whistles to compliment their global scale by the end of 2015. These are quickly becoming table-stake components of delivery, and we are already seeing several clients RFP responses in the field where robotic process automation (for example) is included.
However, when the vast majority of Indian-heritage provider executives view up-skilling their account managers as their number one challenge, then this is a massive, massive issue. In fact, it’s the biggest issue facing global services today.
What they’re really saying here is that they simply do not have the skills their clients are increasingly demanding and they are really struggling to either bring it in fresh (78%) of develop the ones the have (89%).
But why can they not develop the ones they have? Because their legacy model of promoting staff to project manage teams of coders / transactional processors is leaving them with a skill-set completely unsuited to helping clients which need orthogonal thinking, analytical context and an ability to redesign processes. And while this critical challenge is clearly becoming a huge issue for the Indian-heritage firms, it’s also besetting two-thirds of the Western-heritage providers, many of whom claim to boast superior consultative acumen.
The Bottom-line: We need to see a unique blending of consulting and outsourcing acumen
What’s abundantly clear today is that proving scale, standard platforms and technology tools will only get you so far with clients. Without the bench of talent to enable clients to use these effectively, several providers are going to get quickly ejected from client engagements and relegated to providing transactional resources for the diminishing number of clients who only care about the low-cost legacy model.
So if they can’t hire in the talent or retrain what they have, then what, pray tell, is the answer here? Simple: create, partner or acquire consulting firms which can develop and adapt the right skills and methodology to make this work. There needs to be a coming-together of consulting and outsourcing service delivery, the likes of which we have yet to see at a broad scale in the services industry. It’s clear the outsourcing culture fosters standardization and stability, not orthogonal thinking and creativity. Finding a way to bridge the two is what is key here – and it’s not something that can happen overnight for many firms so embedded in their current cultures.
Consulting firms know how to make money out of corporate complexity and insecurity, while outsourcing providers are very good and developing sticky delivery models to manage their clients’ processes and operations. Clients now need both – and want these services on a regular, ongoing, plug-and-play As-a-Service model. They need to be able to go that services dentist and see that digital X-ray of themselves…
Back in April, we released the first Robotic Premier League Table to capture the “pre-season” placement of 20 different BPO service providers who were in the early stages of adopting robotic process automation (RPA). We shook up the market with what is still the most comprehensive assessment of the strategies, marketing and delivery of today’s emerging RPA capabilities. In fact, it’s the only comprehensive assessment of the strategies, marketing and delivery of RPA capabilities.
Well, eight months is a very long time in the fast-evolving world or process robotization, so we’ve decided to update our analysis and provide a new RPL table to start 2015 to account for the early activity and investments being made in the space.
For this release, our resident RPL Commissioner Charles Sutherland caught up with several dozen service providers to look at just how far their RPA capabilities had evolved since April…
Congratulations to HP, TCS, IBM, Sutherland Global Services and Genpact for topping the table this time around and for Genfour and Symphony Ventures in setting the standard for a new emerging category of RPA specific service providers.
To establish these positions, Charles assessed each service provider using the criteria developed in his HfS RPA Maturity Model.
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It is still early in the evolution of RPA inside the outsourcing services market. Service providers are industrializing their capabilities to meet current and future client requirements. By the time we release our next RPL later in 2015 we expect to see the level of standard capability across service providers to have significantly matured further and for RPA to be part of most major outsourcing deals across the market. In short, RPA is becoming an arrow in every ambitious service provider’s quiver.
Ugh… What are we doing? We hate predictions. Predictions are lame, predictions are cheesie, predictions are either wrong, or just so generic that they could be automated every year with a “substitute this big trend for this one” script.
Hey – that’s actually not a bad idea, so why not throw a bunch of trends from the HfS analyst team into a cognitive application, add some robotics technology to mix them up with some humanoid analyst mimicry, and see whether the outcome could quite feasibly have been the product of some big legacy analyst house.
So without further ado, here are 17 predictions that will all come true. Just for you…
1. Old-school outsourcing becomes heroic as digitization of process becomes the new political enemy of the corporate masses
Suddenly, labor-arbitrage deals are good things for society. At least jobs are being created somewhere in the world, as opposed to being eliminated altogether by robots. This shift from “Labor to Digital” takes center stage across the whole operations, consulting and professional services industry. Outsourcing will no longer be a dirty word, as enterprises realize the digitization and robotization of business and IT processes is the only real lever to pull to provide them with future value and efficiency. However, this will create a level of fear and uncertainty much more intense than the old worries about having your job shipped off to India. “I’ll be back” becomes the watch-word of anti-robotics protestors, as those haunting words from Arnie’s 1984 Orwellian classic come back to bite us.
2. “Autonabalism” becomes central to ambitious BPO service provider strategy
With Robotic Process Automation (RPA) becoming more central to the strategy of BPO service providers, we think 2015 will be the year that a few BPO service providers institutionalize their RPA capabilities and decide to cannibalize the revenues of their existing FTE contracts in order to encourage the end to end transformation of their own businesses. This strategic retrenchment using automation and cannibalizing revenues is what we refer to as “autonabalism”, and a few bold and forward thinking service providers will be undertaking this next year.
3. The emergence of the As-a-Service Economy will see several niche As-a-Service providers smash the old model
Those traditional providers which fail to autonabilize their models, will come under increasing threat from the emerging wave of specialist As-a-Service providers, which can deliver standard processes enriched with value-added services at much lower cost, and easier “plug and play” capability. Examples already include the likes of OneSource Virtual, Aasonn, Genfour, Bluewolf, Fruition, Symphony and CloudSherpas. We also predict that we will see new BPaaS-driven firms spring up that have not even be formed yet.
4. Focused service providers will decide definitively where they want to play to survive
5. Crowd-sourcing will play a role in the service delivery model for sourcing
In business functions like marketing and industry-specific health, where there are ad-hoc projects like product releases and surges of demand for processing such as enrollment periods, an enterprising buyer/service provider will experiment with a crowd-sourcing approach. It will allow vetted service delivery people who finish their assigned tasks early, have available time as a part-time worker, or want to apply their skills in a new way or prove what they can do, to match their skills and interest with a job or task that needs to get done.
6. Healthcare starts to live up to the concept of “patient-centered”
…with the help of service providers behind the scenes who bring experience, ideas, and practices from industries like retail and banking that have been steeped in online services, net promoter scores, and customer service indexes. As “e-Health” joins “ecommerce,” we’ll see some very specific analytics-based offerings emerge as a service that will be tied to helping health plans and providers with consumer and patient satisfaction and compliance.
7. A major global DiSaaSter will occur
A major enterprise blames its SaaS or outsourcing provider for a loss of data or information and either direct costs/valuation/brand loyalty loss. There will likely be a breakdown in personal leadership accountability on both sides of the relationship, (think SAP/Nike from the 90s and the recent hacking of Sony entertainment), and it will become big media: is SaaS safe? Is it delivering value and business differentiation or just more predictable revenue models to financial analysts and investors? Which will lead to:
8. Increased regulatory intervention in business
Led by the European Union and followed by Asia, governments will start to institute stricter Personal Identifiable information (PII), contract labor, and business operation outsourcing and offshoring laws to counteract the loss of control with the digitization of business and information “in the cloud.” This will make employers which are thoughtful both about how they use automation, do workforce strategy and planning, and deliver a good “employee experience,” the employers of choice as Western economies come back to stable growth and restless workers sick of being poorly treated and managed take the recent 5% GDP growth in the US as a sign it is OK to move on to the next firm. Which will lead to:
9. A major War for Talent as the legacy employment model continues to lose favor with an increasing army of talented workers
Today, workers can increasingly dictate their employment terms, with recession-induced personal financial planning discipline and regulatory changes like ObamaCare making it a lot easier for individuals to accept the old employment model just isn’t in their favor anymore. Organizations are left with the legacy talent least likely to take initiative and will be forced to make the investments in the remaining workers and automation solutions just to stay in business, but will rationalize partners and look to the service-oriented firms that are willing to flex with them to adapt to the ever changing economic conditions.
10. Talent development takes center stage for analytics differentiation
Instead of the latest and greatest BI tools, cloud-based proprietary analytics platforms, open source mashups, in-memory computing or the data visualization darling app of the day, the industry will finally realize that it is the talent – both at the client and service provider sides – that will ultimately impact the long-term success of analytics initiatives. Instead of boasting about the largest catalogues of predictive models, service providers will use their talent development investments and techniques as a source of differentiation. Developing capabilities at the intersection of data sciences, statistics and domain knowledge will also help service providers gradually move past the staff augmentation model of simply offering up resources to do siloed analysis tasks. Think beefed up analytics academies, significantly deeper relationships with academic institutions across global talent hubs to develop curricula that relates to actual business context, and innovative new models of hiring and training employees to become creative problem solvers. Client organizations will take advantage of service providers’ learning infrastructure by sending their own operations and management staff to take crash courses in how to do better self-serve analysis, and make better use of analytical insights generated by their service provider’s staff.
11. Social becomes a creepily-effective means of running customer service
By the end of 2015, we’ll start to see clearly defined service offerings around social care as a critical part of omni-channel CRM BPO. The move towards impacting the overall customer experience can no longer ignore the fact that consumers have their own preferred social channels that each brand has to have relevant presence in – not just to do cheesy marketing promotions, but take the opportunity to proactively service customers in these channels of their choice. Social CRM BPO won’t mean responding to a tweeted complaint by saying, ‘Please call us to resolve this offline’, as some service providers have started to do for their clients under the guise of ‘omni-channel’. With the use of increasingly sophisticated social listening and moderating tools, intelligent automated agents, 360 degree customer views, and analytics using multiple sources of data (call center, surveys, consumer databases, social, point of sale, etc.), you can expect the BPO agents of the near future to proactively respond to your Instagram of terrible airline food with resolution and support within the channel and device of your choosing.
12. Vertical-specific processes must move to BPaaS… or perish
BPO delivery of several vertical-specific processes are at a point where the ‘big bang’ cost and standardization benefits have been achieved, service provider staff have gained significant domain experience and understanding of industry workflows, and providers have made investments in introducing options for running them on modern business platforms, either internally developed or acquired. These are most often areas that client organizations view as non-core or non-critical, meaning they aren’t willing to invest in updating the underlying technology infrastructure for them vs. other core revenue-generating activities. Examples include claims administration and policy serving in insurance or payment processing, retail wealth management and retail origination in banking and financial services. 2015 will pose an inflection point for BPO clients to evaluate BPaaS delivery, or risk an increasingly stagnating value proposition as competitors access new sources of platform-driven cost reduction, standardization and flexibility.
13. SCM SaaS breathlessly enters the enterprise mix
We will close out 2015 talking about Supply Chain SaaS platforms in the same breathless manner in which we currently look at Salesforce and Workday in particular. The opportunities for increased agility, flexibility and reduced operating costs are too great in supply chain for this not to take root in a much more significant way in 2015. The set of SCM BPO service provider offerings around such a platform (or platforms) should be integral to the way that we evaluate service providers in our next SCM BPO Blueprint in 2015.
14. Engineering services finally evolves from niche to mainstream
There is a latent outsourcing potential in engineering services, but it is trapped inside clients’ shared service and captive centers. Now with the emergence of engineering analytics, M2M and IoT, service providers have better value propositions to offer engineering services in the third-party outsourcing model. We predict that top 6 India-centric service providers – TCS, Cognizant, Infosys, Wipro, HCL, and Tech Mahindra – will be interested in acquisitions of both captives and niche service providers in this space in 2015.
15. Consolidation among India-heritage service providers has to happen
In the As-a-Service Economy, service providers needs specialization to triumph scale. But for mid-tier broad-based service providers the “as-a-service” economy may be the end of the road, and they may well start cashing out to tier-1 service providers before it is too late. Our top prediction in this space is that Tech Mahindra might be interested in a BFSI acquisition which inches them closer to their internal target of $5 billion in 2015. We think Mphasis or Polaris might be a good target for Tech Mahindra. Virtusa is also an increasingly attractive ITO prospect with its grounding in the insurance sector and high growth potential. On the BPO side of the fence, EXL would make an attractive target for one of the larger service providers wanting more chops in the insurance industry and WNS has come off a good performance in 2014. There may also be some interesting developments with Genpact which could either acquire of be acquired to fuse more tech-enablement scale and skill to dovetail with its huge base of BPO clientel.
16. Wearables – watches and glasses – suddenly begin to displace smartphones as the interface of interest and intent
It has been a long time predicted, but 2015 will finally see this opportunity become reality. Driven by Apple’s iWatch, Sony and Google’s glasses – we’ll start to see real applications of extending data and compute more directly into our personal environments in a way that makes the 2 dimensional smartphone appear like a brick.
17. IoT becomes the new catch-all… and for good reason
Driven by the trend on wearables above coupled with ongoing attention to M2M, mobility, and a need to move Digital discussions down to a level of action from the lofty level of strategy, IoT will become the new call to action and not just for large scale field assets but also for, say, bridging the actions of mobile workforces with centralized systems. i.e. It becomes the UberMobile and marketing efforts get spent around pushing this message out.
Phew. If you made it this far, you’ve already got one foot into 2016…. Happy New Year!
10 years ago, you most likely checked your email once in the morning, once after lunch and once at the end of the day.
You actually spent your day being productive, writing reports, presentations, attending meetings that actually had agendas, going to client meetings that had been organized weeks’ ago. You might even have had time to read things and educate yourself… In short, you probably had some semblance of an organized work day, and there was a clear delineation between your work life and your own life.
And after work, you’d perhaps meet some colleagues for a drink and a bite to eat, then (heaven forbid) go to a karaoke bar or hit a dance floor. In those days we were physically social with each other. You interacted, you got stuff done, you had fun, you let your hair down occasionally.
Today, you probably wake up at 6.00am and wearily reach out to your mobile device to check your email, before you’ve had time to even think about anything else. And you’ll probably spend your entire day checking it at a minimum rate of once every 15 minutes, getting precious little work done, reacting to memos, getting added to meetings with no agendas (that you probably should never have been invited to in the first place) that have zero follow-through or real purpose.
That ppt deck you started at 6.45am has barely progressed, as you decide to check your LinkedIn updates for a third time that morning to see who else had viewed your profile, or join into electronic congress with someone who trusts you, even though you have no recollection of ever having met said person. It’s now 11.00am, and finally you’re ready to write your name on the front cover of that ppt deck, but then – lordy lord – you just realized you’d (gasp) forgotten to check your twitter feed all morning. A welling of fresh excitement bubbles up into your electronic life as you check out those three retweets from your late night tweeting bonanza, but this quickly extinguishes when you realize these weren’t done by actual people. Instead, you retweet a few articles your have no interest in reading, but it’ll look electronically cool that you might actually read stuff and have an opinion.
It’s now 11.30am and you’re just about to add your job title to your name on the intro slide, when you just have to check your email for the 17th time that morning. Oh boy – someone at work is having a rant about something. Quick, drop everything and spend the next 30 minutes carefully composing your angle to the issue before pushing “send”. Made it to lunch.. you run out for a sandwich, but you better take the mobile incase you get tagged in a critical Facebook post… Then, shock horror, some old colleagues from your previous job are having a get-together tonight and have invited you along. Weird – why would you want to seepeople? Better come up with a good excuse…
The afternoon meanders along with an orgy of more disorganized tele-meetings, a failed attempt at a videoconference from someome trying to be really “electronically social” (puke), a series of emails flying around that are all ignore-able, more LI updates that actually cause you to pause for a second with the thought “why do I keep checking these things?” (but you do anyway), the obligatory check-ins to twitter to parse around more crap you pretend to care about, before finally getting back to your ppt deck at 5.00pm, when you realize you hadn’t checked into your Facebook since lunchtime. Oh my god. A whole afternoon of pics of peoples’ kids, the obligatory narcissist who seems obsessed with updating their profile selfie every bloody week (and gets 75 ‘likes’), and the person who thinks you really need to know they just checked in for their DFW flight…
So evening arrives and you realize you’ve barely eaten all day, rather just guzzled coffee to jet-fuel your electronic fervour, when the dreaded email lands from your boss…”Hey, really looking forward to reviewing your slides”.
So there goes your evening – three hours on the couch to knock out this baby… thank god you didn’t accept that drinks invitation.
The Bottom-line: We need to get smarter about how we work and interact with each other
So where, oh where, did our lives go? Wasn’t the advent of the internet supposed to transform our lives? Well, that it did, but the question I’ll leave you with: did it change your life for the better?
In all seriousness, we’ve now reached a point in our Digital lives where we need to use it more smartly than we have been. The initial excitement, and buzz around social media and the availability of all these really cool communications technologies is now wearing off and we need to take a serious look at how it has impacted the way we work and interact with people.
What I love about our evolving Digital existence today is the ability to communicate with each other on so many channels, depending on the type of conversation, or the level of intimacy of the relationship. It’s also damn easy to track people down if you need to! However, many of us are falling into bad Digital habits where it can seriously impact the quality of our non-Digital lives – and even the quality of our work performance.
Think about it this way – when you get back from a week’s holiday, I bet you can clear your inbox in barely a morning. The very same inbox you probably would have spend that entire week spinning cycles over. We need to spend time focused on meaningful activities that add value to our lives, and less on the Digitally-driven crap that is sucking the time our of our week and the human interactions that used to mean so much…
We’ve been addressing the massive opportunity for the services industry as we move into times of unprecedented complexity. However, while complexity brings with it the opportunity to solve recurring problems and design new solutions, it also brings new workforce challenges that could prove insurmountable for many enterprises, without a radical rethink with how they design their business operations to get ahead of their markets where technology is increasingly at the center of their business universe.
“C-Suite leaders want to drive out cost? Tell us something new…” OK, I will, because this time, this cost imperative is different, as the traditional means of driving out cost are reaching their limits. 60% of enterprise C-Suites are actively seeking to reduce their reliance on labor in their operations – but most are discovering they need to work smarter before they can work cheaper.
I was recently inspired by a refreshingly simple and unvarnished blog on the 
10 years ago, you most likely checked your email once in the morning, once after lunch and once at the end of the day.