Everest Group Report: Global Locations Annual Report 2014: Expanding Frontiers and Maturation
According to Everest Group’s recent Global Locations Annual Report 2014: Expanding Frontiers and Maturation, following a year of decelerating growth in 2013, the global services market is poised to regain its mojo, expected to grow at a slightly faster clip (9-11%) than in any of the previous five years. Growth slowed slightly in 2013 as the key markets of North America and Europe experienced weak macroeconomic circumstances. Market growth is expected to rebound based on both an improved economic outlook, as well as growing interest in emerging markets such as Asia, Latin America & the Caribbean, and Eastern Europe.
The global services market is increasingly driving activity in Tier-2/3 cities; in the past several years, the majority of new delivery center set-ups have been in non Tier-1 cities around the globe, including key locations such as nearshore Europe, Latin American and, increasingly, Asia. Movement toward these lower-cost cities is driven by the improving economic outlook, technology and infrastructure developments in these locations, and market saturation/competition in tier-1 cities in lower cost locations.
Global services players are continuing to increase their presence in onshore locations, doubling their share of new center set-ups between 2012 and the first half of 2014 (albeit at a smaller size – the average onshore center is about a third the size of the average offshore center). Several factors are contributing to this development:
- Service complexity is rising faster than adequate offshore/nearshore support skill depth
- Buyers are pressing for easier coordination and better alignment than offshore/nearshore centers can provide
- Data security regulations are driving a preference, if not a requirement, for onshore services
- Providers are increasingly exploring new models and newer tier-2 locations in onshore geographies
In addition to offering details on those developments, the report also addresses the following trends:
- Share of business process services (versus IT services) increased across all regions in 2013 to H1 2014
- Service provider activity is likely to return to pre-2013 levels after a significant decline in 2013; GIC activity remained steady throughout 2011 to H1 2014
- Large service providers are showing interest in Africa, as market sentiment improves
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More information and full report