BPO: Investment in process innovation and automation reaches inflection point

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According to Technology Business Research Inc.’s (TBR) 2013 Global Delivery Market Landscape report, investment in process innovation and automation has reached an inflection point, where the automation of service delivery is tangibly reducing the headcount required by services companies to support new business. This affects vendor performance as service providers submit lower-priced bids to capitalize on reduced salary overhead. While end users are still adopting services benefits in ever greater numbers, revenues are ultimately impacted as total deal sizes contract. The 2013 Global Delivery Market Landscape (GDML) report illustrates in detail how 14 large professional services organizations are performing across service lines, geographies and other KPIs in light of these market dynamics.

"We believe the inflection point to services staff hiring gains will be at least partially offset through process innovation, driving services on a nonlinear growth trajectory, and suggesting a slower hiring pace in future quarters," TBR Senior Analyst Ramunas Svarcas said. "This will vary by workflow and opportunity area depending on where process investments have been focused. BPO represents an area where we do not expect to see rapid hiring acceleration going forward due to the low-cost nature of the service and the continued customer demands for cost take out in contract renewals."

The detailed report segments vendors into three areas (Systems Integrators, Systems Integrators with support and maintenance, and India-centric providers), benchmarks their performance and reveals a strong resurgence from the India-based providers. The research indicates how and why these vendors are best positioned to benefit from this inflection point and how they are investing in onshore hiring of experienced professionals to improve their customer-facing interactions. This position heralds a renewed challenge to the multinational service providers covered in the report.

"India-centric vendors created the global delivery market for low-cost, process-centric professional services over a decade ago. The build out of process excellence for cost take out and to generate more revenue while holding the line on employee hires plays to their core strengths," TBR Analyst Bryan Belanger comments. "Some MNC firms, notably IBM, have similar process excellence, but India-centric vendors will threaten laggards that are slow to retool operations and instill process best practices," Belanger continues. "India-centric vendors are also able to take the margin advantage process excellence provides them and invest it, as they are doing now, in building out high-cost, onshore consultative labor pools."

The 2013 Global Delivery Market Landscape features in-depth qualitative and quantitative profiles of Accenture, Atos, Capgemini, Cognizant, CSC, Dell Services, HCL Technologies, HP Services, Infosys, IBM Global Services, TCS, T-Systems, Wipro ITS and Xerox Services.

Contact Alison Crawford, Technology Business Research Inc.


Technology Business Research Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors. www.tbri.com.